Home values in El Dorado County are rising. The median selling price of a county home in July was $285,000. That’s 11 percent higher than June and 8 percent higher than July 2011. Of the 230 monthly sales, about half sold in less than 30 days at or above the listed price. With only 650 homes for sale in the county, sellers have the negotiating advantage over buyers. It’s a seller’s market.
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While half the closed sales for the month were REOs or short sales, the percentage of individual sales is up over last year and will continue to increase as the number of financially distressed property listings decline. Currently, of the 650 active listings only one in five were REOs or shorts. Foreclosures will continue to plague the market for another two years but their dominate influence at depressing neighborhood values is over. New REO listings will have higher prices thus reversing the downward spiral that we have experienced for the last five years.
Low interest rates and a lean selection of homes have created a small buying bubble. Homebuyers are willing to pay more in order to lock in a good home and a once-in-a-lifetime interest rate. A $10,000 increase in the purchase price and loan amount at 3.75 percent interest only adds $1.50 a day to the monthly payment.
If sellers plan on taking advantage of this window of opportunity, they need to avoid the many costly mistakes I see every day while previewing homes. One of the biggest mistakes is listing the home for sale before it’s ready. Here are a few agent comments regarding their listing I found printed in the MLS recently. If you were me and selecting different homes to show your clients, how interested would you be in including these?
“Owner not allowing home to be shown. Write up offer subject to inspection.”
“Restricted hours. Show only from 8 to 10 a.m. Monday and Wednesday. Tuesday 3 to 5 p.m. Thursday noon to 2 p.m. No showings Saturday but Sunday okay with 48 hour notice.”
“This is a short sale with B of A. Only patient buyers need apply. This will take 3 to 5 months.”
“No Lockbox. Do not bother owners! Submit offers subject to inspection. Restricted hours. Call agent to coordinate a showing.”
“Bring your tool box. Dog will bite.”
I did not put any of these homes on my list to preview with clients. These sellers are making a big mistake by not prepping their house for sale and making it easily accessible. They or their agents should take a lesson from REO sellers who have become experts at “putting lipstick on a pig.”
Before listing a home for sale, most REO sellers will ensure it’s vacant, free of debris, painted and new carpet installed. So why are we surprised that it sells quickly and for more than the listed price? The home may have other issues but it looks good.
Admittedly, every seller’s circumstances are difference. However, when a homeowner makes the commitment to sell their house, their agent has an obligation in attracting the highest price possible for their client. Even rookie agents carry a check-list of helpful tips for sellers. Yes, it’s inconvenient living in a fish bowl and de-cluttering and painting is time consuming but the rewards are worth it.
Another mistake some sellers make is hanging on too long. They may need to sell but are still too emotionally attached. They often over-price their home. They will not de-clutter, remove bulky furniture or clean out the winter clothes in the closet. Showings happen on their schedule. When they receive an offer at market value but below their listed price they become insulted and will not negotiate. These sellers need to get over it. Once they decide to sell, their home becomes a commodity and should be prepared and marketed as one. I nearly lost a deal with a buyer who was offering full-price but wanted the 10-year-old custom window coverings that the seller wanted to take with her. The seller was prepared to lose the deal rather than part with her blinds that didn’t even fit her windows in her new home.
Often, I discover the biggest mistake sellers make is hiring an inept agent. They base their selection on non-business factors. It might be nice to hand over your largest asset to your niece who just got her license and works part-time but she should have an experienced mentor helping her. Selecting an agent based upon whoever has the highest suggested listing price or is most complementary on a seller’s home décor is like selecting a surgeon based upon their smile. Most agents who work part-time provide part-time service.
Just as bad as hiring an inept agent is hiring a good one and not following their advice. At some price, any home regardless of its condition, availability or weak marketing efforts will sell. But there are better alternatives to leaving good money on the closing table. Most agents know what is necessary in order to obtain the highest profit possible for their sellers. If they don’t share that information with their clients, they are guilty of malfeasance. If they share the information with sellers who automatically discount the importance, the seller is guilty of wasting time and money.
Ken Calhoon is a real estate broker in El Dorado County. He can be reached through his Website at kencalhoon.com.