Marketing Your Home

Harnessing the Power of a Real Estate Agent to Market and Sell Your House

In the following sections, I offer guidance on finding an agent who’s qualified to sell your house, tell you how to increase the agent’s motivation, and discuss how to take advantage of your agent’s access to the MLS listings in your area. For general information about the qualities to look for when you hire any agent, whether you’re selling or buying a house, head to Chapter 4.

My offer stands firm. No matter what market you’re in, I can help you find the top agent in your area. E-mail me at ralphroberts@ralphroberts.com.

Knowing why you should hire a seller’s agent

When the time comes to sell your investment property, the temptation to sell it yourself and pocket that 6 percent or 7 percent agent commission is enticing. When you’re selling a property for $100,000 or more, 6 percent to 7 percent represents a pretty good chunk of your profit. However, after looking at what a seller’s agent can do for you, you may want to reconsider. A seller’s agent can

Price your property accurately for the current market. See the section “Setting an Attractive Asking Price,” later in this chapter, for more information.
Develop an effective marketing plan.
List your property in one or more area MLS listings, advertising it to all buyers’ agents in the area. I cover your agent’s access to MLS listings later in this chapter.
Show the house to prospective buyers while you work on finding other flipping opportunities.
Sell your property in half the time, on average, it would take you to sell it on your own. Holding costs average about $100 per day. If an agent sells a house in 30 days that would take you 60 days to sell on your own, she’s already earned back $3,000 of the commission you paid and saved you a lot of time and trouble.
Assist you in negotiating a higher price and picking the best offer. Chapter 22 has the full scoop on negotiating the sale of your rehabbed house.
Offer the security of agent-accompanied showings to pre-qualified buyers so you know you’re showing the house only to serious prospects.
Present competitive market analysis to convince a buyer that your asking price is right. A prospective buyer is more apt to listen to an experienced agent than to a seller.
Ensure that all the necessary paperwork is completed and that the process flows smoothly from offer to closing.

I recommend that you sell the property yourself only if you meet the following conditions:

Someone walks up to you while you’re rehabbing the property and is willing to sign a purchase agreement on the spot.
You’re in a sellers’ market — an area where you have significantly more buyers than sellers.
The house is on a street that already has plenty of buyer traffic, and you have the best house at the best price. (Of course, if you follow my guidance throughout this book, you should always have the best house at the best price.)
You have the time and desire to show the house at any time of day or night when a buyer calls to see it.
You have the computer skills required to produce slick marketing materials and advertise on the Internet.
You’re able to show the house without tipping your hand.
You intend to hire an attorney to approve all the documentation and attend the closing.

By listing your house with an agent and paying a fair commission, you strengthen your relationship with the agent and provide the necessary motivation — money. In the future, when your agent discovers a great investment opportunity, she’s more likely to call you than some other investor who doesn’t use an agent to sell his properties. In real estate, you must give to receive — the more you give, the more you get.

Negotiating with an agent during the selling process

Although agent commissions are negotiable, I discourage sellers from being too stingy on their commissions. An agent receives 6 percent or 7 percent only if he delivers a buyer who ultimately purchases your house. If the buyer’s agent delivers the buyer, your agent has to split that commission with the buyer’s agent — the split is typically 3 percent or 4 percent for the seller’s agent and 3 percent for the buyer’s agent. If you go much lower than the standard 6 percent or 7 percent, the agent is going to work harder selling other houses that offer a higher commission. In addition, agents talk, so low-balling an agent could hurt your reputation and harm future sales opportunities.

A more effective way to negotiate with an agent is to offer a higher seller’s commission, especially if you’re flipping in a slow market. Offer top of the scale — 4 percent. (That’s the seller’s cut. You pay the buyer’s agent the standard 3 percent in addition to what you pay your agent.) When the agent sees that you’re willing to reward performance, she’s much more motivated to work for you and do an outstanding job.

Taking advantage of your agent’s access to the MLS

When you hire a contractor, you indirectly hire his tools. The same is true with a real estate agent. When you hire an agent, you gain access to the most powerful tool for selling houses — the Multiple Listing Service (MLS). The MLS accounts for the sale of nearly 75 percent of all homes. Through the MLS, your listing goes out to virtually all the real estate agents in your area and eventually ends up in the hands of prospective buyers who are looking for homes comparable to yours. Make sure that your agent has access to all MLS listing services if your area has multiple services. Some MLS listings overlap, while others have county line borders.

You can find plenty of companies on the Internet or on TV who offer to list your home for a flat fee, usually ranging from $250 to $500. Avoid the temptation to list your home with them for the following reasons:

As soon as the buyers’ agents in your area see that you’re listing your house with a discount broker, they don’t show your property unless it’s a last resort.
Your reputation in your real estate market suffers because you’re undercutting the current system that butters everyone’s bread.
You lose all the benefits (discussed in the section “Knowing why you should hire a seller’s agent,” earlier in this chapter) of having a full-service agent working for you.

Setting an Attractive Asking Price

Asking price is the biggest factor in how quickly a property sells. Set the price right, and the house should sell within the first 10 to 15 showings. Aim too high, and the house languishes on the market for months or even years. Aim too low, and you risk either shortchanging yourself or spooking buyers who think that the house must have something seriously wrong with it.

In the following sections, I lead you through the process of exploring the main factors to consider in order to establish a realistic asking price that doesn’t sell you short.

Whenever you try to sell anything, you have to make sure that your price is competitive with the price of comparable products on the market. Even if you choose to sell the house yourself, meet with several agents to pick their brains for an asking price based on comparable houses in the area. Compose a one-page defense of your asking price that proves your property is worth that price. Your one-page defense should include information about the sale prices of comparable properties, along with improvements you’ve made and how much they’re worth.

Don’t be greedy

In a sizzling housing market, you may get away with padding your asking price by a few thousand dollars over comparable properties in the hopes that the market will eventually catch up. If, however, the house sits on the market for several months because you set the price too high, holding costs chip away at your profit, and you often have to lower the price anyway.

Price the house right the first time. Set a realistic asking price that’s in line with or slightly below recent sale prices of comparable homes in your area. Set the price with your head, not with your heart. The amount you have invested and what the property actually sells for are two different things.

If you’re debating between starting low and starting high, starting a little high is always better. List the house at the higher price for 15 days or so to test the market and see whether you get any bites. If the market shows little interest in the house at that price, then reduce the price.

Understand the current market

If you’ve ever invested in mutual funds, you’ve seen the standard disclaimer — past results do not predict future performance. What’s true for the stock market applies to the housing market as well. Housing prices fluctuate, so you need to keep your finger on the pulse of the market and set an asking price that’s in line with recent sale prices of comparable homes in the same area. To assess current market prices, do the following:

Consult your agent. A good agent keeps tabs on the area’s housing market and can help you set an accurate asking price.
Visit comparable homes. As part of your ongoing research, visit comparable homes for sale in the area to determine asking prices. See Chapter 14 for information on visiting homes in your market.
Research comparable sales. Find out the prices that comparable homes have sold for within a one- to two-mile radius of your house in the last 6 to 12 months. The easiest way to obtain this information is to ask your agent, who can look it up in the MLS.

The entire time the house is on the market, keep a close watch on market conditions and be prepared to lower your asking price. The housing market can shift faster than you can say “flip.”

Know the price you need to make the profit you want

One of the worst ways to establish an asking price is to base it on your desired profit, but you should know your bottom line before you put the house up for sale. Do the math to determine the lowest price you can afford to accept. You can then bump up your asking price based on the other information you gathered to bring it in line with prices of comparable properties. Chapter 12 provides guidance on how to crunch the numbers to determine how much you can afford to sell the house for and still earn a decent profit.

If you can’t sell the property for a profit, you have two options. You can sell at a loss (ugh!) and claim the loss against profits on other profitable flips (unfortunate, but it happens) or hold the property and lease it until market conditions improve.

Staging a Successful Showing

Products sell more quickly and for more money when they’re properly showcased, or as those of us in the real estate business like to call it, staged. Auto dealers wax and polish a car and detail the interior before parking it on the lot. Department stores meticulously dress their mannequins to flaunt the latest fashions. Yet, when some real estate agents and homeowners put a $100,000+ home up for sale, they completely overlook the staging process, cheating themselves out of potentially thousands of dollars.

Recognizing the value of staging

A brief visit to any of the top staging company websites can convince you of the value of properly staging a home. In about ten minutes of searching the web for “staging a home,” I learned that a professionally staged home sells in half the time for 7 percent to 10 percent more than a comparable un-staged home. Given those numbers, a home that would normally take two months to sell at a price of $500,000 would sell in a month for $535,000 to $550,000 with professional staging!

Making your staging checklist

You can hire a professional home stager to do the job for you, but you can probably do a great job staging the home yourself for a fraction of the cost. Staging isn’t about spending a lot of money. It’s about clearing the clutter and creatively rearranging the stage. Follow these basic guidelines:

Landscaping: Mow and edge the lawn, pull weeds, fix any cracks in the pavement, and sweep up after yourself. Lay fresh mulch and plant fresh flowers (if in season).
Entryways: Sweep the porch and stairs, lay down an attractive new doormat, fix the screens, wash the windows, polish the doorknobs, and clear the clutter out of the entryways. Make sure the doors open and close with ease.
Interior: Scrub and shine the house throughout. Hide family photos, religious icons, political paraphernalia, and anything else someone may find offensive. Prospective buyers need to envision themselves living in the house, and this stuff clutters their minds.
Kitchen: Clean and polish everything and clear off the counters, removing items such as knife racks, dish drainers, rags, towels, and soap. Clear out and clean the inside of the refrigerator, oven, and dishwasher; people do look inside.
Living room or den: Clear the clutter and dust everything. Rearrange the furniture and place excess items in storage. If your furniture is an eyesore, you may want to rent something that’s more attractive and tasteful and that makes the room look larger.
Bathrooms: Empty the trash, scrub down the tub or shower (especially any mildew), keep the toilet seat down and covered, and get those toothbrushes off the vanity.
Bedrooms: The master bedroom should have a good-sized bed and a small dresser. The other bedrooms should follow suit or be empty.
Just before showing: Do a final walk-through to tidy up the place, turn on all the lights, and open the windows to let the fresh air in. Most stagers recommend against using heavy air fresheners, scented candles, and potpourri. Set out a bouquet of fresh-cut flowers instead — bring the outside in (weather permitting, of course) — or bake cookies or brew fresh coffee.

The best way to get a firsthand look at a properly staged home is to visit a builder’s model home. You quickly notice that the model is impeccably clean, sparsely furnished (though not completely empty), and tastefully decorated. That’s your goal. With a modest investment of time and effort and very little money, you significantly boost your chances of selling the house fast and for top dollar. Don’t be a staging stooge.

Becoming a Real Estate Marketing Maven

Marketing begins as soon as you begin renovating a property and chatting with your new neighbors, but the official kickoff for your marketing campaign doesn’t really start until a couple of weeks before you put the house on the market. Then it’s time to execute a marketing blitz that’s guaranteed to deliver an enthusiastic herd of house hunters to your newly renovated doorstep. The day you put the house up for sale, your marketing campaign should hit high gear and flood the market with advertising.

When you sell a property through an agent, the agent takes on the role of marketing maven and consultant. He’s a hired gun who handles the marketing and advertising for you and ensures that the buyers’ agents in the area are in the know concerning your property.

If you choose to bypass the agent, you assume the role of marketing maven. You set the asking price, build a marketing plan, and develop the advertising media that spreads the word. In the following sections, I guide you through the process of establishing and executing an effective marketing plan. Even if you use an agent, you can assist in the marketing by suggesting or implementing additional marketing tactics. Team up with your agent to execute an effective strategy.

To effectively market any product, determine who’s likely to buy it — in this case by consulting with your agent and knowing your market. When marketing a house to a first-time homeowner, for example, you may highlight the affordability of the house and provide a lead on where to go for financing. When marketing to movin’-on-up buyers, you may want to pitch the house as being spacious beyond belief. Empty-nester downsizers are often looking for something smaller that’s in move-in condition and has a spare room for guests or a home office. Modify your marketing materials to appeal to your target buyers.

Choosing a method of contact

Before you start printing your full-color flyers (which I cover later in this chapter), decide how you want interested buyers and agents to contact you. Do you want them calling you at work? At home? On your cellphone? Should they send you an e-mail message? Knock on your door at midnight?

To sell your house, you need to provide an easy and reliable way for interested buyers to contact you, but you also have to preserve your own sanity and the safety of your family. After you print your phone number on a flyer and post it around town, your number is available not only to interested buyers but also to agents who want to list your house and to prank callers and telemarketers.

If you plan on flipping long-term, consider purchasing a cellphone exclusively for your flipping business, installing a separate phone line at home, or signing up for an answering service or voice mail system to field and screen your calls. Expect to receive calls at any time of day or night.

Remain available and responsive. If you’ve chosen to sell a house on your own, you make a commitment to customer service. If a prospective buyer calls and you don’t answer or if you don’t call back or send an e-mail reply within an hour or two, you risk losing a sale. The buyer may get frustrated, assume you’re not interested, and move on to the next property on his list. By hiring an agent, you offload this sometimes onerous task to your agent, but some flippers like it.

Planting a For Sale sign on your lawn

The lowly For Sale sign is still the cornerstone of a solid marketing campaign. When you plant a For Sale sign on your front lawn, you automatically tap into what I like to call the Rule of 20 or the 5, 5, 10. The five neighbors on either side of you and the ten neighbors across the street immediately notice the sign and start telling their friends, neighbors, coworkers, and acquaintances about the house that’s for sale on their block. You now have your own personal sales force working for you.

Don’t settle for a skimpy For Sale sign that’s likely to blow over in the first spring storm. Invest in something solid with an attractive design. Following are some additional For Sale sign tips:

Check with the local government and the neighborhood association to find out whether they have any restrictions on For Sale signs. Some uppity neighborhoods ban them altogether.
Order a sign from a professional sign maker.
Use a sign that you can anchor soundly into the ground. I prefer a sign with a metal or wooden post that you have to anchor in the lawn with a posthole digger. Just be careful where you dig and how deep — you don’t want to poke a hole in a gas line or sever an electrical cable.
Make sure that the sign is built in a way that enables you to add banners to it, such as “Basement” or “Appliances Included.” A plastic box to hold copies of flyers is also a good idea. (I cover flyers later in this chapter.)
Include your phone number, not your name, on the sign. Leaving your name off the sign isn’t to protect your secret identity — it just keeps the information to a minimum so passersby can quickly jot down the phone number.
Omit the “By Owner” part to avoid getting low-ball offers from investors and to screen out calls from agents who think that you may need a little professional assistance. Some agents also may refuse to show FSBO properties to their buyers because they’re afraid you’ll try to cut them out of their commission.

Listing your home online

Several companies list homes For Sale By Owner, where buyers can search for homes without going through an agent. Before you sign up with one of these services, make sure that it’s legitimate, that it lists plenty of homes in your area, and that it’s used by many buyers in your area.

The Internet makes it easy for con artists to create a phony company that looks perfectly legitimate. Do your homework, check references, and make sure that the company has a phone number and a real mailing address before you sign up and pass along your credit-card number.

Many sellers list their homes on FSBO websites and completely miss other sales opportunities on the information superhighway. Consider beefing up your online marketing with some or all of the following techniques, regardless of whether you use an agent:

Post a notice on your own website or blog, if you have one. Consider including links to neighborhood schools, parks, museums, clubs, organizations, local government agencies, and so on. You may even include a link to a loan officer who can supply information about financing (see the section “Offering to Help Secure Attractive Financing,” earlier in this chapter).
E-mail notices to your friends and relatives telling them you have a home for sale.
Post a classified ad on any website that provides free advertising space.
Post a message in a newsgroup, assuming the newsgroup’s rules and regulations allow for this. Most newsgroups have an FAQ (frequently asked questions) page that states the rules.

Designing, printing, and distributing flashy flyers

If you have a digital camera, a computer, and a color inkjet printer, you have all the tools you need to design, lay out, and print professional-quality flyers to advertise your house. Your flyers need to include the following:

One or more full-color photos of the house, showcasing its top features
The address of the property
Your asking price and terms
Property description, preferably presented as a bulleted list
Your name (it lends additional credibility to your flyer)
Your phone number and other preferred contact information

Figure 21-1 shows a sample marketing flyer.

Figure courtesy of Joe Kraynak

FIGURE 21-1: A marketing flyer contains important details for home buyers.

If you’re marketing the home to first-time buyers, you may also include the phone number of your loan officer, who can provide details about financing. A sample monthly payment schedule based on current interest rates can also be helpful in convincing interested buyers that they can afford the payments. See the section “Offering to Help Secure Attractive Financing,” earlier in this chapter, for more information.

Some sellers invest hours in creating beautiful flyers and then proceed to print them on cheap paper. Buy some quality paper stock with a high brightness rating so your flyers look good in print. Because color ink and toner is so expensive, you can usually save money by having your local copy shop run off a hundred copies or so, but ask about rates before placing your order.

Now that you have those good-looking flyers, where should you put them? Here are a few ideas, subject to your agent’s approval and any local regulations, of course:

Grocery stores
Restaurants
Churches
Gas stations
Area apartment complexes

Also consider e-mailing a copy of the flyer to hospitals, churches, relocation companies, and the human resources departments of local companies.

If you have the contact info for agents who’ve sold homes in the area, make a flyer especially for them without your name and contact information on it so they can tweak the flyer to add their name and contact information and distribute it to their clients. When you’re mailing or e-mailing the flyer to agents, be sure to include your contact information in the letter or e-mail message included with the flyer so they know how to get in touch with you.

Advertising your home in the classifieds

Taking out a classified ad in your local newspaper can generate additional buzz, but don’t go overboard. A small ad that provides the address and phone number along with a teaser description of the property is sufficient — something like “lakefront property,” “move-in condition,” “affordable living,” or “convenient shopping.” Your main goal is to pique the buyer’s interest enough to call you on the phone.

Hosting an open house to build word-of-mouth buzz

Soon after you place your house on the market, host an open house and invite the neighbors. Sundays are the day of choice for open houses because families are together and often looking for free food and entertainment. Pretty up the house, plant some Open House signs along the major thoroughfares, lay out some tasty hors d’oeuvres and drinks, and get ready for the after-church crowd. Be sure to distribute business cards, too.

In addition to the standard Sunday afternoon open houses, consider hosting an exclusive open house by invitation only for the neighbors. This prestigious event increases the neighborhood buzz and inspires your local word-of-mouth sales force to get to work. You may also do well with staging twilight open houses on a Tuesday or Thursday evening — after work but when a little sunlight still remains. Hosting a “broker’s open” for local real estate agents is also a good idea.

If you’re selling By Owner and an agent brings someone to purchase the property, the agent will ask you to sign a one-party listing agreement, which lists the buyers by name. Remember that everything in real estate must be in writing. The agreement is good only for the party (individual or couple) the agent brings to see your house, and it should have a price and a fee that you’re willing to pay the agent if her clients buy your property.