The Charleston Coast From Our View...
One of the services I provide to my sellers is a Comparative Market Analysis, or “CMA” – free of charge, of course. This is a giant step beyond just looking at comparable properties (comps) that sold in the last year. Comps are necessary to be sure, however they do not tell the whole story or prepare sellers for what they should expect in the selling process.
I want my clients to have a realistic expectation of how many days they might likely be on the market, and how the existing inventory of similar homes will affect their pricing strategy. Many sellers want to start with a higher price and see if they can get any takers. I believe it is smarter to see what the market is “telling us” about the average, percentage of asking price sellers typically receive, and then price wisely from the start to avoid becoming stale or missing actual buyers at the right price. Price per square foot can be a useful tool, but only if the data is informed about condition – it’s another way to “listen” to what the market is saying. Depending upon how many comps are used, one outlier can distort the square foot price significantly. It’s also important to think about how many showings sellers might anticipate before receiving an offer.
Friends are always asking me “how’s the market?” as if Mt. Pleasant, Seabrook, Wagener Terrace, and Hollywood are all alike. It’s important to stay up to date on local news and understand what factors, besides a new roof or remodeled kitchen, might be affecting pricing and sales. I like to start with a big picture explanation of housing in the region, and then focus on a more granular analysis to make sure my clients have the whole picture.
In preparing a CMA, I start by determining their particular market. As I noted, the Charleston market is large and widely varied. It’s important to understand the idiosyncrasies of particular neighborhoods and when and where mere proximity does and doesn’t work. If I compare homes in Carolina Bay or another more homogeneous, larger subdivision, I can use just that neighborhood to determine pricing. Sometimes it makes sense to set a physical radius from a major employer or school and use that to determine their specific market. In other more rural areas, using a 10 – mile radius might capture a horse farm, house on the water with a dock, and older ranch homes from the ‘60s and ‘70’s. This is not a true “market” for my seller’s 6 – year-old home on a .25acre lot.
Finally, there are uncontrollable factors that affect pricing. Brand new construction with gleaming features throughout can be adversely affected by the next door neighbor’s hot mess in the back yard. If your Hampton Park home faces the park, real value can also be added that cannot be easily quantified. Establishing the market is certainly not an exact science, it requires experience, and it requires discernment.
New construction neighborhoods can be very appealing. You get to choose your floors and cabinets and they often have great design studios with lots of choices for light fixtures and counter tops; but, the one thing they don’t have is your back. When you sit down with a site agent you must always remember that they have the interests of the seller as their top priority. That’s why it is so important to have a Buyer’s Agent representing you. Think of it this way, the site agent wants to make sure that his or her client is protected against any potential harm. When you put all your trust in that agent you become the second most important client. New home builders are not actively working to harm you, but protecting you is not their first priority.
1. First and foremost, remember that this representation costs you nothing. Sellers pay the buyer’s agent’s commission, but that buyer’s agent works directly for you.
2. It’s not always a good idea to just “stop in” to check out a new home community. Make sure you have a signed agreement with a buyer’s agent before you visit. Site agents log you in and will note if you are working with an agent. If you don’t hire an agent before you go you could lose the opportunity to have your own representation.
3. South Carolina has an eight-page contract for the purchase of an existing home designed to protect consumers. Often there are addendums and disclosures so you are looking at 15+ pages of contracts. I know them in detail and use them every day, but your typical home buyer does not. In new construction the contracts are often 25+-pages of details you may or may not have ever considered. They are written by the builder’s attorneys and are designed to protect their interests. It’s important to have someone advise you who understands the implications of what you are signing.
4. New home builders don’t typically negotiate price. They have sold 22 Magnolia floor plans in that neighborhood at $375,000 and that is the price they expect. The only real negotiation is on the lot you choose and premium lots have a premium price. A good buyer’s agent can help you find the places where they do have some wiggle room such as the selections. I convinced one builder to throw in the upgraded refrigerator and exchange carpet on the stairs for wood treads for my new construction client. In addition, I have been in thousands of homes and can help with selections to know what is on trend (and more importantly what’s no longer trending and why) and help identify punch list items you might not notice.
5. Builders also frequently offer enticing incentives like money for closing costs to make sure buyers use their preferred lender. Why not, it’s easier for them in the long run. Loans are actually products with lots of options to meet many different goals. Their preferred lender may not have the product that best meets your particular needs. Once again, you are not their number one priority in that relationship either, you are the second most important client. I have a fantastic team of lenders, real estate attorneys, home inspectors and more who will have your needs as their only priority.
6. Follow up is critical. I have a system for follow up that keeps me on top of my transactions. It’s my job. You probably have a great method for doing your job well, but you may not be as attuned to the timing of real estate transactions to stay on top of everything. Buyers are busy with their own jobs and lives, and packing to move. Let a professional handle the calls, reminders, headaches, and deadlines, and let the builder pay him or her to do it!
I received a phone call recently from a woman who mistakenly thought that I had listed the property in her neighborhood that had just sold. She said she was planning to list her home for sale to which I said “Great, I can help you with that.” She did not want to talk to me because she thought she should list it with someone who “knew her neighborhood.” Before I could explain why that kind of thinking was counter intuitive she had hung up. I wanted to get that message out to others who might also be thinking that way about how to make the decision about who should represent their interests.
In the last two years, I have listed and sold six properties in neighborhoods in which I had not previously sold a home. All five were on the market for less than a week, and four of those sold for at least 97% of asking price, the other at 95%. One property was sold before it ever hit the MLS. Here’s how I did it.
Comparative Market Analysis
I do my homework. I don’t guess. I derive hard statistics about days on the market for specific types of homes in specific areas. It’s important to know what properties have sold and the price per square foot on average but, I also know going in to meet with prospective clients how many months of inventory for similar properties there are and what that means to sellers when they decide their list price. I make sure they also know how many new listings are likely to come on the market and become their competition. I also represent buyers as well as sellers. Many agents do not. That means I am showing properties in all neighborhoods so even if I haven’t listed and sold a home there, I know the market from both sides.
It’s ever so much more than taking pictures with your phone and sticking a sign in the front yard. I meet with my marketing department in advance to discuss the strategy for that particular home and together we develop a plan of action. In addition to the photos, signs, and flyers, there is a social media strategy, agent outreach strategy, and we carefully craft the description and curate the photos for maximum click bait. The front of the house may not be the most compelling picture so if you think about the time you spend deciding to click or not, it’s got to grab the most eyeballs and quickly.
I personally invest in hiring professional architectural photography and conduct professional staging in order to make the photos drive showings immediately. In 2019, everyone starts his or her search for a new home on the internet and the photos and key words are mission critical to generating excitement.
An offer is the sum of its parts and I know the contract. The price of course is important but so are the other elements such as closing, earnest money, and the addendum(s). I carefully read the details to see not only if the buyers require financing but also how much. Are they scraping every last dollar together only to have the financing fall through 3 weeks after we go under contract thereby taking the home off the market only to have to reactivate the listing? It’s also important to negotiate the repair requests so as to minimize the sellers’ risk. In nearly every deal, the repair request is the most stressful aspect for sellers and buyers. I have 20 years of experience in construction and real estate and I understand how to manage that risk and can help guide both sides through the process.
Certified Negotiation Expert
Selling a home quickly often involves managing multiple offers. When a property is hot – it’s hot. There are at least six options to successfully negotiate multiple offer situations and simply taking the highest price offer may not result in the greatest net to my sellers. Let me show you how I can do the same for you no matter what neighborhood you call home.