On a fairly regular basis I find myself competing for a listing with a “discount” broker — one whose fee is 4% or so, as compared to the 5% that I, and most full-service agents in this market, charge.

What I share with my potential clients is that in my experience, these discount brokers simply take a few photos of the property (often REALLY bad ones), post the listing to MLS, throw a lockbox on the door so that they don’t have to actually accompany any showings and call it a day. And generally people understand that this is not an ideal strategy for selling their home, and appreciate the marketing and sales services that I offer. However, there have been a few times that I have lost listings to agents who offered a cut-rate fee and/or “bought” the listing by coming in with a ridiculously high list price instead of one that will realistically move the property in a reasonable timeframe.

So I was thrilled to discover Justin Rollo’s recent Boston.com piece looking at the financial implications of listing a property with a discount broker compared to a full-service agent. The results are no surprise to me, but the data is very interesting. I encourage anyone thinking of selling their home to read Justin’s article, “Is a Discount Broker Really a Bargain.”

Is a discount broker really a bargain?

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There are many things along the course of a real estate transaction that can cause problems or even kill a deal: a bad inspection, issues with a condo association, disagreements over P&S language, financing… And even in the final days before closing, when buyers and sellers assume it’s smooth sailing, a problem can still arise over something as seemingly trivial as whether a ceiling fan is supposed to stay with the house. The New York Times recent article, “How Fights Over Fixtures Can Derail a Closing,” offers some real world examples of this phenomenon. It would be funny if it wasn’t so true…

NYT_fixtures

It really pains me when I hear people reference “Zestimates®” of their homes. The Zillow algorithm for estimating a home’s market value may be a fun tool to play around with, but it is not an accurate indicator of value in our market.

So how off is it?

To find out, I took a look at a few recent Cambridge and Somerville sales and ran the properties through the Zestimator® to see how the numbers compared. Here are the results:

23 Harvard Street U:2, Somerville (Spring Hill condo)

  • Zestimate® says… $399,651
  • Actual sale price… $460,000 — 15% higher than Zestimate®

17 Tremont Street U:3, Cambridge (Area Four condo)

  • Zestimate® says… $463,581
  • Actual sale price… $538,000 — 16% higher than Zestimate®

48 8Th St, Cambridge (East Cambridge 2-family)

  • Zestimate® says… $529,504
  • Actual sale price… $440,000 — 17% less than Zestimate®

The net? If you really want to know what your home is worth, have a local agent come out to visit and prepare a comparative market analysis — you can read more about how I personally handle pricing in my post on the topic.

About a month ago I was interviewed by a writer for Boston Magazine about what’s going on in the Greater Boston real estate market. I gave her my two cents on the Cambridge & Somerville side of things, which you can read about in the article, which just came out today…

Boston Magazine: Getting in the Game

Back when I worked in the corporate world and was interviewing for jobs, I read something that said you will be offered a higher salary if you wear a suit to your interview. I mostly worked in academic and high-tech environments, so suits were not the usual dress code. And frankly, I don’t think I could ever work in an environment that required me to wear a suit on a regular basis — just not my thing. HOWEVER, if wearing a suit to my interview meant I’d command a higher salary, you can bet I was going to wear a suit!

Same goes for selling a home.

In this market, with high demand and very little inventory, yes, you could probably sell your house just as it is, assuming it’s properly marketed. But why miss the opportunity to make a little (or a lot!) more money by doing some pre-sale spruce up? To get back to my analogy, why not dress your house in its best suit?

My seller did a great job with this bedroom -- it shows beautifully!

My seller did a great job with this bedroom — it shows beautifully!

Following is my advice for maximizing your home’s appeal and commanding the highest sale price:

#1 — Purge! You have two goals here: (1) to maximize a feeling of spaciousness and (2) to clear out enough “you” to allow buyers to imagine themselves living in the space.

For me, the easiest way to manage a purge is to start big and then go small. In other words, first look at your furniture and determine if any of it is too large for the space, or if there’s simply too much of it. You’re ultimately going to have to pack and move it all anyway, so why not rent a Pod and put a few things into storage? Ask for your realtor’s advice and clear out as much as you stand. You’ll be amazed at how much bigger your home feels.

Now do the same for your basement, garage, and other storage areas. Anything you can live without for a couple months should go–camping gear, unused home gym equipment, extra bikes, boxes of holiday ornaments, out of season clothing, etc.

Once the big things are cleared out, start looking at the details. Kitchen counters are a good place to start: pack up or put away any small appliances you can live without. Now look at the other surfaces around your home–dressers, tabletops, bathroom counters–and declutter those. And do you really need five throw pillows on your sofa? Do your children need ALL their stuffed animals arranged on their beds? Think zen and go as minimal as possible.

While  you’re doing all this, also be thinking about depersonalizing your space. The occasional framed family photo is okay, but a wall-to-wall montage of your wedding photos is not. And your fridge should be a blank slate–no one needs to look at your shopping lists, magnet collections or motivational sayings. You may feel like you’re parting with pieces of yourself as you’re removing these items, and that’s exactly the goal! You want your home to appeal to the widest pool of potential buyers, which means it should be *neutral.*

#2 — Let there be light!

Light is one of the top things buyers tell me they look for in a house, so make sure your house is bright at all times of day. First and foremost, remove any extraneous window treatments that are keeping the light out–simple blinds or cellular shades will look the cleanest and should be kept open for daytime showings. Also move any furnishings or hanging plants that are blocking windows. And have those windows washed inside and out. It’s not very expensive and has a big impact.

If you don’t have a lot of windows, or don’t get direct light, you might want to add a few strategically placed mirrors to amplify the light you do get. And make sure you have enough lamps and light fixtures, and that all the bulbs are working and the appropriate wattage. When I list properties I generally put the lights on for all showings, day or night–makes a big difference! And be careful about the kind of bulbs you use–many of the compact fluorescents produce a blue, eerie kind of light that does nothing to make your house feel warm or homey.

#3 — Address any needed repairs and eliminate potential red flags for buyers. Walk through your home and make a “punchlist” of any items that need to be repaired or updated. Believe me, buyers will be doing this, at least mentally, and you don’t want to give them any reason to feel your house has been neglected or worry that if they bought the house they’d be overwhelmed with repairs.

We’ve all got a few home maintenance projects we’ve put off and learned to live with, and actually may not even notice anymore. Your realtor can help point out and prioritize things to take care of before listing: leaky faucets, cracked window panes, stained ceilings, etc.

Note that I’m talking about smaller projects. You don’t need to replace your roof or install a brand-new heating system–you’ll never recoup your money at the sale. But it might be worth replacing a few loose roof shingles, and having your boiler serviced and cleaned. These little things are well worth the effort.

#4 — Freshen & clean.

You can add a lot of new life to a home with just a little paint — remember to keep the colors neutral. Other details like new hardware for kitchen cabinets, a new shower curtain and hand towels for the bathroom can work wonders for short money.

And the fun part… cleaning. When you list your house to sell, it should be the cleanest it’s ever been. I’m talking *sparkling.* All surfaces should be dusted, grimy fingerprints wiped off woodwork and handles, floors swept, mopped and/or vacuumed. And kitchens and baths should look like they’ve never been used. I know this is hard to maintain when you do, in fact, live there and use these rooms, but the good news is that in our current market, you won’t have to show your home for long!

If you know you’re not a good cleaner or just really despise doing it, I recommend bringing in professional cleaners for a good once-over. But regardless of who is cleaning, try to stay away from heavily scented cleaning products–you don’t want your home to smell institutional.

And on the subject of smell… it’s generally bad, even when it’s “good.” Unless it’s freshly baked bread or cookies :) That means no scented candles or plug-ins, which are a big turnoff for many people. And it goes without saying that if you smoke or have pets, it should NOT be obvious by the smell–bathe your animals, limit your smoking to outside, shampoo your rugs & curtains, air the place out and place open boxes of baking soda in any particularly tough areas.

#5 — Make the first impression count!

Approach your home the way a prospective buyer would and note your impressions. Does it look well-maintained, clean and homey? If not, you’ve got some work to do…

If you have a lawn, it should be freshly mowed, plants and trees should be pruned, garden beds weeded. Bikes, snow shovels, and the like should be put away. If you live in a condo, the hallways should be clean, bright and uncluttered. If your neighbors tend to keep strollers, piles of shoes, or whatever outside their door, ask them if they’d mind bringing them in while your home’s on the market. I always tell my buyer clients to make note of the common areas as a good indicator of how a condo association is run, and it should look organized and cared-for.

For the finishing touch, paint the front door and add a new doormat.

#6 — Before the buyers show up, don’t forget these last-minute preparations for showings and open houses:

  • Empty the trash & recycling
  • Open all shades and blinds and turn on all lights
  • Make all beds, fluff your sofa cushions, wipe down all counters
  • Put toilet lids down
  • Make sure there are no dishes in the sink and no laundry in the machines
  • In the winter, make sure your path and steps are cleared of ice & snow
  • Add flowers — in vases for the inside, and in pots by the front door
  • Remove any litterboxes, dog beds and other pet accoutrements — and take the pets with you when you go!

That’s it! Now get ready for the offers!

In a market where most listings are being snatched up after the first open house (generally with multiple offers), it may be surprising that there are some properties are still not selling. As of today, there are 94 condos, single-family homes, and multi-families in Cambridge & Somerville that have been languishing on the market for more than 30 days (and up to almost 2 years!). (Side note: I love when list agents include language in MLS like, “Won’t last long!” and never remove it — even when the property has been for sale for over 100 days!)

So what’s going on? These stale properties are in a variety of neighborhoods and run the gamut of price points. Similar properties have come and gone during their time on market, so why aren’t these places selling?

Well, there are some that had accepted offers but the deals didn’t stick, so the “days on market” number may be artificially high. However most of these non-selling properties have one thing in common: they are overpriced. Because the reality is, in our market, there is a buyer for every property — even the worst of them — if the price is right. On that note, I thought it was worth reposting an article I wrote two years ago…

Pricing Your Home: The Science, the Art & the Unknown
Originally posted on August 16, 2010

If you’ve ever been through the home selling process, you may have met with more than one agent before selecting one to list your home. In that case, you probably received more than one opinion on the price at which your home should be listed. Perhaps the agents’ valuations of your home were within a few thousand dollars of each other, but it’s just as likely that they were wildly different. For example, I have a listing where my clients had received pricing estimates from other agents that ranged from $295,000 to $340,000. That’s quite a significant range, and there’s a reason this can happen…

Contrary to what Zillow may have you believing, there is no simple formula for pricing homes in our market. Forget price-per-square-foot. Forget zip code analysis. Forget what your neighbor’s house sold for last year. A home’s value involves many variables, some of which can be factored into a computerized analysis, but most of which require actual knowledge of the local inventory and current market conditions. And then there’s the flukiness that always factors in when dealing with human decision-making, which is nearly impossible to predict. But let’s take a look at each of these aspects, as I walk you through the steps I follow when determining pricing for my listings:

Step 1) The Science

Using the “Comparative Market Analysis” tool in the MLS, I first enter the basic specs for my list property. This includes things like address, condo v. single family, number of rooms, bedrooms, baths, garage and/or parking spaces, square footage, etc. Then I have MLS search for other homes that are nearby and have similar specs, which are currently on the market, under agreement, and recently sold. Here’s where the software’s usefulness ends. Sometimes there are way too many results and sometimes there are not enough. Sometimes the results are simply not comparable to my target property. This is where it gets fun!

Step 2) The Art

First I go through the results list generated by MLS and review each listing in detail — many of the homes I will already have seen during a broker tour, open house or client showing, and this helps me A LOT in determining whether they are actual “comps” for my new listing. At this point, I’m looking at things like the property’s condition, the very specific location (because in Cambridge and Somerville, the desirability of a street or neighborhood can change from block to block), proximity to the T, the home’s layout, ceiling height, outdoor space, etc.

If I haven’t seen an actual property in person myself, I’ll check around with my colleagues and can generally get more info that way. Sometimes I will also do a drive-by or, for the homes that are currently on the market, I may schedule a showing with the list agent or call him/her for more info. I consider all of this my due diligence in arriving at the most realistic current value for my listings. However, there’s still one more element to factor in and it’s not so simple.

Step 3) The Unknown

Because every home is worth exactly what one person is willing to pay for it, and because everyone has different needs, wants, priorities and quirks, there’s a certain element of chance that has to be taken into consideration with pricing. Sometimes it works in favor of sellers, as was the case with the recent sale of an architect-designed Cambridge home that was listed at right around a million, but was purchased for $1.5! This ONE buyer really loved the home’s design, expected a bidding war, and wanted to win. Happy sellers.

On the other hand, sometimes a house will have a feature such as an au pair suite or a great 2-car garage, that should, in theory, raise the price over equivalent properties without these amenities, and yet, for buyers who don’t have a particular need for these things, they may be entirely unwilling to pay a higher price. So where does that leave us on pricing?

Different agents have different pricing approaches, but one point most will agree on is that the initial asking price should be considered just that: a starting point. A good agent will pay close attention to the interest a new listing is receiving, the feedback coming in from buyers and their agents, and shifts in the market, and reposition the property as necessary to generate offers.

Most home buyers and their agents are not thrilled about competing in a multiple-bid situation, and contrary to popular belief, it can also be stressful for sellers and listing agents. BUT multiple-bids are a fact of life in this market, so if you’re buying or selling your home, you need to be prepared. Here’s my advice:

ADVICE FOR BUYERS:

1) Accept the situation. In an ideal world, you would be the only buyer for your dream home. You’d see a great place, take a few days to think things over, then make a fair offer, which would immediately be accepted, and you’d move right into your new place. But in the real world, there IS competition and you won’t necessarily get the first house you bid on. Maybe not even your second or third. None of this should deter you from buying, though–you just need to know how to play the game.

2) Know what you want, know the market, and be prepared to act. Many list agents are now holding off on showings until the Sunday open house, and then reviewing offers with their sellers on Monday or Tuesday night. This means you will have a limited amount of time to view the property, make a decision and prepare your offer–it’s all easier if you have your pre-approval ready, have enlisted a buyer’s agent, and have a comfort level with the local inventory and market values.

3) Put your best foot forward. In a multiple-offer situation, it’s a waste of time to come in low, expecting to raise your bid during negotiations. Fact is, you may never get that opportunity–if a seller receives several offers and one is significantly stronger than the others, they will likely accept it. Going back to all buyers for their “best and final” offers is not a given. My advice to any buyer going into a competitive situation is to offer no lower than asking price. If you don’t think the property is worth it, or if you can’t or don’t want to go that high, then this is likely not the home for you.

4) Don’t underestimate the terms of your offer. Price is important, for sure. But so is the strength of your pre-approval, the amount of your downpayment, your willingness to work with sellers’ preferred dates, and how your agent presents you: as a knowledgeable buyer, committed to buying this home, regarding the home inspection as informational, rather than as a tool for renegotiation, etc.

5) Don’t get swept up in the hype. Know what a property is worth to you and set a limit on what you will spend if the sellers do come back asking for “best and final.” It’s not worth *winning* the home if you regret it later.

ADVICE FOR SELLERS:

1) Make sure you and your agent discuss a plan for showings and offers. Will you begin showings immediately or wait until the open house? If showings begin immediately and a strong offer comes in before the open house, will you consider it or do you want to wait to get the full market exposure of the open house? There’s not necessarily a right or wrong answer here–what’s best for one client and property may be a bad idea for another–but you should talk these things through and have a plan.

2) When reviewing multiple offers, don’t put all the weight on price. The size of the downpayment is important, especially if there are not a lot of good comps for your home, because if the appraisal comes in low, a bigger downpayment may prevent the deal from tanking. Also consider the strength of the buyers’ pre-approvals, review their contingencies, and try to get a sense of their attitude toward this purchase–it is not uncommon for someone to get caught up in the competition and later second-guess themselves. An educated and level-headed buyer is a good buyer.

3) Be happy. We are incredibly lucky to live in a place where homes have retained their value through the national housing crisis. It’s good to remember this when things get stressful.