How important is the marketing of homes for sale in Silicon Valley?  First it’s important to understand what we mean by the term marketing: generally, it is the way we attract potential buyers to the homes for sale.  This is more than just the flyer or newspaper ads.  It includes:

• pricing the home
• photographing the property
• describing the home on the MLS (and including good pictures)
• the quality of the flyers
• the print advertising
• the online advertising & exposure
• the networking with other agents
• the direct outreach and appeal to consumers
• the accessibility of the home
• staging the home to sell (appeal, cleanliness, no odors, etc.)

Marketing can be good, bad, or somewhere in between. Bad marketing will likely cost sellers money and good marketing will likely make them money.  

Today we’ll go over the most important elements of marketing because sellers should evaluate them when hiring a Realtor to assist them in the marketing and sale of their home.  While there are many areas of marketing, the most crucial, by far, are these three: pricing, photos, and the description on the MLS.

Pricing:  The biggest marketing mistake which is commonly seen is overpricing.  Sellers sometimes believe that their home is worth more than the buying public do and a home will remain unsold no matter what else is done right.  In fact, you could fly airplanes aroud the home and put full page color ads in every paper around the world but if the home is overpriced, it still won’t sell!  Pricing is the most important part of marketing.   With a too-high price, traffic will be diminished and offers will be low at best (lower than actual market value).

Of course, most homes are worth not just one exact dollar amount but somewhere within a range of prices, depending on terms, the speed of the sale etc.  If the pricing is well done and the rest of the marketing is also quite good, the home ought to sell on the high end of what is possible at that time.

Pricing mistakes are very costly and very easy to make.  Here are some of the ways which sellers can be misled about the probable market value of their home:

• using old comps
• relying upon online home valuations
• basing their home’s sale price on what they “need”
• hiring an agent based on his/her suggesting the highest list price (we call that “buying the listing” when an agent overstates value to secure the listing)
• expecting 100% back from all improvements done to the home
• believing buyers can “always make an offer” (if it’s overpriced, they usually won’t)
• thinking there’s no harm in just reducing the price later (if the market is going down, you will be “chasing the market down”)

The one thing that neither the sellers nor their Realtors control is the real estate market, which is fickle and can change.  In recent years it’s been up and down, depending upon location, price point, school districts and more.  Using six month old comparable sales to establish current market value just isn’t appropriate.  Sometimes even the most recently closed sale is not enough, especially if the market is sliding.  Instead of just relying on the solds, also look at the pendings and the current competition.  The less competition your home has, the better odds you have of selling it – and for more.  But a surge of inventory will cause home values (including yours) to drop.   To understand the probable buyer’s value, all of these must be factored in together.  (The online valuation sites do not do that.)

I should add that it is harder to sell a property that has issues such as high voltage power lines, deferred maintenance, messy tenants who make showings difficult, busy road, junky neighbors, or some other undesirable element.  Many agents will suggest a lower price to compensate for whatever issue is hurting the marketability of the home.

While it’s true that there is no problem that a better price cannot fix, most sellers are trying to maximize their sales price.  For that reason, I’d always suggest asking your real estate agent if there’s anything that can be done to improve the market value aside from that lower price.  Sometimes fresh paint and carpet and a professional house cleaning can do wonders for the home’s saleability.  Or giving tenants a lower rent in exchange for their cooperation during the sale will create an easier time for buyers wanting to see and purchase your home.   A little effort may have a great payoff.  (Some agents focus almost exclusively on price and may not be worried about any other element of marketing.  This is a mistake, so be aware that you may run into an agent with this belief.)
(more…)

Normally I do not reference other Realtors’ blog posts on any of my blogs or sites, but this morning I read one worth calling out because it raises a good issue that home buyers and sellers often never consider: the ongoing exposure of sold listings’ information, videos and photos on the web will continue to be present long after the home sale is closed.

The post, by Norma Toering of ReMax Palos Verdes Realty, is entitled “Please remove my home from the internet” and can be found on the Active Rain website at the link provided above.  This conscientious Realtor sold her listing and got it closed last week.  Now the buyer, the new owner, wants all traces of the listing removed from the internet.  Many people are private and may be uncomfortable with videos and pics of their home online (even if with the last owner’s consent, decor and furnishings).  But it is nearly impossible to remove all online photos because they are syndicated or pushed to other sites where we agents have no control. 

One commenter suggested that perhaps we need another disclosure so that buyers know and understand that what’s out there on the internet cannot be removed (and for that matter, that agents don’t want to spend many hours to remove them – a challenging task for which there is no compensation).  Having photos on the web is part of marketing and once it’s done it simply cannot be undone (at least not fully and certainly not easily).  I don’t think a new disclosure is a bad idea.  Our purchase agreement forms or contracts inform buyers and sellers that there will be dissemination of information on the MLS regarding the sale status and later the closing price and terms.  It wouldn’t hurt to also warn the parties that once images are disseminated on the internet, they are very likely to remain online a long, long time.

Recently I took a client of mine to see about a half dozen homes in San Jose (Cambrian and Blossom Valley areas) and Campbell; all of them happened to be Open Houses situations. We saw an incredible range of marketing styles. Some agents were so “sleepy” that they didn’t get up to greet us. Others were orchestrating traffic of such high levels that we felt like it was some sort of overpacked party. It was so busy that you could hardly even pay attention to the house.

In that last example, with the frantic levels of visitors to the property, the listing agents had grossly underpriced the house to attract attention. It did – there was virtually no place to park on the street!

Why would the Realtors underprice a home by a very large amount? Here are a few reasons why they might:

• traffic – the agent can bring a lot of people through the house (granted, many cannot afford what it’s actually worth)
• that traffic can provide great leads to the agents for future buyers and sellers – the spin is “look how differently I market the home”
• get a ridiculous number of offers on the home – with more offers, agents hope to get massive overbidding and sell at a premium

By creating an extraordinarily chaotic environment, the listing agents hope to motivate serious buyers so that they feel compelled to write their best offer. But if it’s underpriced by $100,000 or more, how many of those buyers will be able to compete or really understand the game at hand to write a viable offer on the home?

Those browsing Silicon Valley real estate & visiting open homes may not be armed with a good agent. In a scenario like the one I described above, hapless consumers may find themselves with an aggressive listing agent who’s (understandably) anxious to claim more clients. My client and I overheard a consumer speak with an agent and tippey toe around the subject of whether or not he had a Realtor. “You’re working with me, now!” exclaimed the hungry agent. It felt downright predatory.

Should the buyer work with that agent to write an offer on the home? Would you?

(more…)