Preparing to Sell Your Home

firstimpression

Putting Your Home on the Market: Making a Great First Impression

Our Springs Homes agents work with a lot of Home Buyers and subsequently, show a lot of properties. This experience makes them an invaluable resource, especially when it comes to advising Home Sellers on how Buyers think, what they see, how they react and how you can make a great first impression when they tour your home for the first time. Especially when if you’re considering putting your home on the market.

We asked a couple of our agents to share something that Home Sellers often overlook or forget to take care of prior to allowing their home to be shown. In other words, what turns off potential Home Buyers during the critical first impression of the home?

Pet Evidence

Nicole Happel:
One detail Sellers often overlook is the importance of removing pet evidence before a showing. Colorado Springs is known for being a dog-friendly city, so most folks here appreciate fellow pet owners. But when those folks are buying a home they do NOT appreciate your dog beds covered in fur, dog slobber on your sliding glass door, claw scratches on your hardwood floors, toys and food bowls in the middle of the kitchen, and especially doodies in your yard (however small).

When a Buyer walks into a home that screams DOG they are pretty grossed out. And then they wonder how much cleaning will be needed in order to make the home sanitary and livable according to their standards.

It seems this culture of “accept our pets” transcends into all price ranges too. I’ve seen some high-end homes which reek of dirty dog. And Buyers are not only turned off by your home, but they begin to question me as to why I would even consider showing them this home. It’s embarrassing to walk into a “dog overload” situation having not seen it coming. And of course, sometimes this stuff isn’t obvious in the online pictures we see prior to showing.

I know it’s a hassle as Sellers, but dog owners have to stay on top of such things while selling. If you don’t, it just might cost you that one solid Buyer. Just sayin!

 

Don’t Slam the Door on a Sale

Jennifer Boylan:
This one seems really obvious and simple, but I’m constantly amazed when a Home Seller completely ignores the front door and entry to the home.

When I walk up to a house with a nasty door or entry with Home Buyers in tow, I say “I hope this isn’t foreshadowing”. A nasty entry and doorway puts the prospective Buyers on alert. It’s like from that point forward they’re looking for problems.

  • The solutions are really simple but require a little attention and time:
  • If the front door is chipped, peeling or faded, paint it.
  • If the doorbell is broken and/or has a hole thru the button, replace it.
  • Check to make sure all glass is clean
  • Repair any broken glass or shutters
  • Replace or repair torn or worn-out screens. Ace True Value Hardware stores here in Colorado Springs make this really easy.
  • Make sure the path to the door is clear; no dirt, trash, toys, newspapers or other obstacles.
  • In the wintertime, make sure the sidewalk and entry are shoveled and clear of snow and ice
  • Add some plants, even if they’re fake. The Buyers usually don’t notice if they are real or artificial and if they do, it still shows that you care.

If you make the entry to the property appealing, you’ve done your best to start out on the right foot. This is just a smart move regardless of what condition the real estate market is in.

 

You Never Get a Second Chance

Brooke Mitchell:

One of the biggest things homeowners overlook when it’s time to sell… and I know it sounds cliché… is curb appeal. I firmly believe that “You never get a second chance to make a first impression!” I’m going to address curb appeal, and a bit more.

Dead or overgrown grass & shrubbery looks like a lot of work to first-time homeowners, so spruce up that front yard. Clean weeds out of rock & mulch beds.

  • According to a variety of experts, front doors tend to yield around 100% return on investment, one of the highest percentages for a minor home improvement. Imagine if you didn’t even need to replace it, but merely give a fresh coat of paint. Pick a neutral or trendy color.
  • Clean windows and glass doors are also in this curb appeal category. It makes your home feel fresh from the outside and helps you enjoy the sunshine while inside! I can’t believe how inexpensive a good thorough window cleaning can be. Once inside (I know this extends beyond curb appeal, but work with me here), Buyers will see the details that you have grown accustomed to while enjoying your home.
  • Worn flooring or carpet that needs to be stretched is distracting to the Home Buyer. First of all, we understand you live here, and it’s a royal pain to move your furniture out, but in the end, it will be worth it. Buyers will discount your home or overestimate the cost of this repair, so it’s better not to give them an opportunity to object. Replace the flooring or stretch the carpet.
  • Smells… pee-ew! When we sold our second home, we’d just had our first child. Sadly, we had grown immune to the grotesque diaper genie smell. Once it was pointed out in a feedback form we got it OUT of the house. Other smells can turn a Buyer off as well. You may have a litter box, but non-pet-owners can smell that ammonia scent right away. Buyers automatically assume it’s in the carpet, pad, sub-floor, floor joist, the room below… okay, I’m kidding, but seriously consider replacing flooring. Again if it’s something you live with all the time, you may not notice.
  • Pet hair and messes. It’s hard for pet owners to not become unaware of the pet hair in their lives. But again for Buyers who don’t own pets or those with allergies, this is an issue. Get a complete professional cleaning, and maybe put Fido in the kennel the first week you have the house on the market. Side note – the barking dog, even safely kenneled in garage or basement bedroom makes some people very nervous and on-edge, so they don’t have a warm feeling when viewing your home. Some people are flat-out afraid of dogs, no matter how small or far away they are.
  • It’s nice if you can “stage” your home. You don’t need a professional; just tidy up, thin out closets, slim down on excessive family photos and personal (religious, political, hunting) décor.

When you list your house, as a Seller, be Switzerland… neutral, lacking strong opinions displayed around your home. Based on our experience, we have far more detailed help that we are happy to share when you’re ready to list. Let us know how we can help!!

 

Smell Ya Later!

Maggie Turner:

Having one answer to this question is tricky. I’d say for first impressions, smells are the most important thing that Home Sellers can overlook. If a Buyer walks into a home and smells something bad, it’s an immediate turn-off. Bad smells create red flags and cause concern for lack of cleanliness, maintenance and overall care of the home. If a Buyer walks into a warm and inviting scent, it’s a pretty good sign that the home is cared for.

I was recently showing homes to an experienced and savvy Home Buyer. We went into a great property and I thought for sure this is “it”. The Home Sellers had left the trash in the kitchen trash can a little too long. There was an odor of decomposing something emanating from the can, it was pretty bad. The Buyer wouldn’t even consider the home and we left immediately. As we continued to look at other less ideal homes, I kept trying to bring her back around to what she now referred to as the “Stinky House”, but there was no interest. I kept thinking to myself, “whatever was stinking up the kitchen just cost the Home Sellers a sale”.

Oftentimes we get really used to smells in our day to day environment. If you question if your home has offending odors, an easy solution is to ask a friend to come over, walk through the home and be honest with you about what they smell in the home.

 

The Big 3-D’s

Kelly Raffelli

Decluttering, De-personalizing and Deep cleaning are the big 3-D’s when getting ready to put a house on the market. A Seller should give potential Buyers the opportunity to see a blank canvas. I recently was showing a house to a client and the downstairs family room was so entrenched with memorabilia and family photos, the entire conversation while we were down there was about that family and all of their stuff. That is NOT what you want the Buyer to be focused on. You want a Buyer to walk in and picture their own family pictures, decor, and life happening in that family room.

It can be hard to declutter and de-personalize, but the more you do you create an opportunity for the Buyer to “paint their lives” on the blank canvas and see themselves living in the home. Sellers don’t want Buyers distracted when they arrive for a showing. They want them focused on the question, “is this the right home for me?”

Deep cleaning is equally important and relatively straightforward. Buyers need to see the home in it’s very best condition. Sellers have to bring their “A Game” when presenting their house to potential Buyers. A deep clean and some light touch-up paint and other small repairs will go a long way to getting your home sold quickly and for the highest dollar.

Don’t Forget the Garage

Joe Boylan
For me, the garage almost always tells the truth. At least when it comes to getting an idea of how the home has been maintained. If The garage is a total mess, packed to the ceiling with boxes and junk, I always figure that the well-staged interior is just a facade. Now, if the garage is neat clean and well organized I always assume (right or wrong) that the house has been well maintained. If this is not the case, we find out at the inspection.

Take the time to clean out your garage, it’s worth the price of a storage space for the time your home will be on the market. Matt Casady from STOR-N-LOCK has some great suggestions about how self-storage services like his can be a huge help.

Most storage units in Colorado Springs can be rented on a month-to-month basis so you can use it for as long or short as you need without being locked into a contract which makes it a great option as a Home Seller looking for a short-term solution. Plus, many local facilities offer move-in specials like one-month free (especially in the fall and winter when they’re less busy) so using the storage space is even cheaper upfront.

Storage units come in a wide variety of sizes with a variety of features so you can store nearly anything you need to there. If you’re just looking to tidy up your garage by getting rid of boxes or junk, a 5’x10’ or 10’x10’ storage unit would be sufficient. If you’re looking to remove clutter from around your whole home by removing excess furniture from multiple rooms, then you may need a larger unit like a 10’x20’ or 10’x30’ unit.

Plan what you’re going to be storing and how long you plan to store it before selecting your storage unit. For example, if you’re selling your home during moderate weather months like in the spring and would only need the storage unit at that time, then a non-climate controlled unit would probably work just fine. However, if you’re selling in the winter and the items you’re storing are more sensitive to temperature fluctuations like electronics or family heirlooms, then a storage space that is climate controlled/heated would be worth the extra few dollars a month.

If you know you’ll be keeping your stuff in storage more long-term while you move and get situated in your new home self-storage can be a great option as well. Many local facilities offer discounts to customers who pay 6-months or 12-months upfront so if you know you’ll be storing for a while that’s a great way to cut down on the storage costs.

Because of the wide variety of storage unit sizes and optional amenities (like climate control), there’s a storage space to fit really any need you have during your selling and moving process.

Just make sure your garage looks like a maintenance ninja lives in the house.

No matter what the condition of the market, there is always competition for the best Buyers.

Don’t fall into the trap of assuming everything sells for top dollar in a Seller’s market. There is always another house and more deals fall out in a hot Seller’s market than in a normal market. It’s in a Seller’s best interest to sell to the most motivated, best-qualified Buyer. One of the best ways to motivate a Buyer is by impressing them every time they see the house.

We hope you have found this information useful. If you have any questions, please feel free to contact any of our agents.

 

Additional Resources:

If there is one thing Realtors love to talk about it’s selling houses and what that takes. Here is some more great information on this subject from some of the best real estate bloggers around the internet.

selling

Preparing for Selling – Checklist

Getting ready to sell your home can be an overwhelming task. There are things that a Realtor needs to know about your home in order to list your home with optimum efficiency and effectiveness. This information assists with pricing, communication, entering data into the MLS, generating a Comparable Market Analysis and scheduling showings. This step must come first prior to scheduling the photo shoot and marketing of your home.
Please gather this information and provide this to us as soon as possible.

✓ Home Documentation

    • Blueprints
    • Plat maps
    • Warranties
    • Schematics
    • Manuals
    • Survey
    • Improvement Location Certificate ILC

✓ Loan Information

    • Loan Company
    • Payoff Amount

✓ Contact Information for all Owners

    • Names, email and phone numbers

✓ HOA information

    • HOA contact information

✓ Appraisals

    • Any past appraisals

✓ Security System

    • Access codes for security system and system lease agreement

✓ Property tax information

    • Copy of your most recent tax information

✓ Utility Bills

    • Average utility bills for previous 12 months

✓ Special Features

    • Complete list of special features of your home

✓ Upgrades/Improvements

    • List of all improvements you have made to the property

✓ Keys

    • 2 sets of keys to the property
Understanding Your Relationship with your Broker-Seller Agency

Understanding a Seller or Dual Agency Relationship with your Agent

So you are ready to put your house on the market. What’s next?

You have decisions to make. Do I want an advocate looking out for my interests as I sell my home, or do I just want someone to handle the paperwork? This is the most important question to ask yourself as you begin the process of selling your home. You’ll want to understand the different types of real estate broker relationships you might choose, and even MORE important, the duties and responsibilities on your behalf that those relationships require.

The Role of Your Agent

There are several types of relationships between you as a seller and your real estate broker, but the most basic comparison is between Transaction Broker and Seller Agency. A Transaction Broker works with one or more of the parties to meet all the legal requirements of the transfer of property from one party to another, without an advocacy role for either party. Seller Agency is a relationship designed to provide expert help with not just the paperwork, but with guarding your interests regarding the process, price, marketing strategy, and offer negotiation.

If you are looking for a real estate professional to assess the current market, offer advice on the best ways to present your house in that marketplace, and get that house sold as quickly as possible for the highest possible value, you are looking for a Seller’s agent.

Springs Homes Managing Broker Jennifer Boylan recently met with a couple interested in selling their home. The couple had interviewed several brokers for the job. This particular home was in a price range just below the median price for Colorado Springs, a very popular price range.

This home was VERY outdated and other brokers had advised the sellers to update the big money rooms like the kitchen and baths. Jennifer, on the other hand, advised the sellers to do nothing. she felt like the home was going to sell fast because of the condition and price.

Jennifer knew it would most likely sell to an investor or somebody who wanted to remodel to their own tastes. Jennifer’s take was to go ahead and sell it as is, don’t spend tens of thousands of dollars updating when the potential buyer will probably end up tearing stuff out and redoing it anyway.

This advice got Jennifer the listing which sold the first day at significantly higher than asking price.If she had not been an advocate for the sellers, she couldn’t have given this opinion.

What is Seller Agency?

Seller Agency in Colorado is spelled out like this: A seller’s agent (or listing agent) works solely on behalf of the seller to promote the interests of the seller with the utmost good faith, loyalty, and fidelity. The agent negotiates on behalf of and acts as an advocate for the seller. The seller’s agent must disclose to potential buyers all adverse material facts actually known by the seller’s agent about the property. A separate written listing agreement is required which sets forth the duties and obligations of the broker and the seller.

Springs Homes Associate Broker Brooke Mitchell recently had a listing that perfectly illustrates the power of Seller Agency. Brooke now admits that the home was priced a little high, against her initial advice. The home sellers were moving into a market that was significantly more expensive than ours and they really needed to maximize their profits.

After the home had been on the market for just over a month, the sellers choose to do a $10,000 price reduction. They had gotten nervous about their timeline and anxious to get on to their new life.

This price reduction brought an offer, unfortunately, the offer was significantly lower than asking price. As a Seller’s Agent Brooke knew that there wasn’t much inventory in this price range, so they were able to push the price back up in a counter-proposal.

As the inspection process got underway, polybutylene plumbing was discovered. The buyer’s inspector recommended replacement of all of the plumbing due to a class-action lawsuit. Because Brooke was a Seller’s Agent, she was able to meet with the buyer and plumber at the property. The plumber was very knowledgeable and reasonable, so Brooke was able to convey the opinion as a Seller’s Agent that complete replacement wasn’t necessary. The buyer agreed to future repairs on their own. Brooke also met with the septic company at the house in order to be aware of any possible repairs (none needed in this case). The buyer also claimed the dishwasher didn’t work. Brooke also went to the house and displayed all functions to the buyer on behalf of a moved-away seller.

As a Transaction Broker there was very little she could have done on these items. On the other hand, as a Seller’s Agent, she was able to help the seller get a higher sales price, and complete fewer unnecessary repairs, netting them much more in the end.

What is Dual Agency?

Your listing agent will act on your behalf alone. If a potential buyer inquires about your home, the agent will disclose their relationship with you as the seller. Some states allow a relationship called “dual agency.” Dual agency allows for an agent to serve on behalf of both buyer and seller. While it is possible to advocate for both, dual agency creates an obvious potential for conflict. So rather than leaving you wondering whose side they are on, Colorado real estate transaction law does not allow for one agent to hold both a seller and buyer agency relationship within one transaction.

Since the State of Colorado does not allow Dual Agency, we have included a thorough examination on the subject by Bill Gassett entitled: Dual Agency, Why Avoid It.

So what exactly is a transaction broker relationship? The Colorado Real Estate Manual puts it this way:

“Under Colorado law, a broker is presumed to be a transaction-broker unless a single agency relationship is created by a written agreement between the broker and the party. A transaction-broker means a broker who assists one or more parties throughout a contemplated real estate transaction with communication, interposition, advisement, negotiation, contract terms and the closing of such real estate transaction without being an agent or advocate for the interests of any party to such transaction.”

There might be instances where you would choose the transaction-broker relationship. But for the intricacies of listing a home, marketing and advocating on your behalf, a seller’s agent relationship provides you a value-added service.

Want to learn more about the market in your neighborhood? Wondering if now’s the right time to put your house on the market? Contact Springs Homes – let us know your needs and how we can be of service.

Additional Seller Agency Resources:

Selling Your Home: A Little Prep Goes a Long Way!

Selling Your Home: A Little Prep Goes a Long Way!

So, you’ve decided to sell your home. Let the party begin!

Selling your home can stir up a variety of emotions and can affect each family member in different ways. But once you’ve decided that selling is really going to happen, it takes a bit of mental toughness to dive into those tasks that need to be completed to ensure your home will appeal to the largest number of buyers.

One thing to keep in mind is what I heard Dave Ramsey say in one of his seminars; when you decide to sell your home, you must act as if “You no longer live there!”.

Here are some home selling tips that will increase your chances of a selling your home fast.

Think Like a Customer

Just like a retail manager, occasionally you need to step back and assess your environment. Pretend you are looking at your home for the first time. What do you see that needs your attention? Take a good hard look at your home from the street, the backyard and then every room. How does it measure up?

Consider the following hints for staging your home to sell:

What Does Your Home Look Like from the Street?

Buyers can tell quickly if a home shows pride of ownership. Your home may not be the newest one on the block but it can be well maintained. It only takes one glance to form an opinion. Clean out the gutters, trim any overgrown foliage, and prune trees properly. The yard should be mowed regularly in season and edged to give it a sharp appearance including the backyard. Pick up any trash, leaves or debris as soon as it appears and put away the toys. Make sure screens and shutters are in great shape and touch up any faded or peeling paint.

Declutter Your Home

Let’s be honest. We all own too much stuff! Go through every room, closet, drawer and cabinet and remove approximately 30-50% of the items. Don’t forget the garage, attic and the backyard. Host a yard sale or donate items you no longer need. Even if you just can’t part with certain things, box it up and store it off-site. This will create the impression of a more spacious home. And believe me, your buyers are going to look into every area to see if your home will work for them. And they need to be able to inspect plumbing under the sinks and other systems in mechanical closets. You’re going to be moving soon anyway, why not let go of those items you aren’t using?

The Entryway is the First Impression

A prospective buyer gets a good impression while waiting for their agent to access the lockbox. Remove any cobwebs, add a nice welcome mat, clean the door and light fixtures and touch up the trim. Ornamental items and plants should be kept to a minimum and make sure all the glass sparkles. This is an easy area to maintain and can create an impressive welcome for your guests!

Scale the Furniture to the Room

Remove any over-sized or bulky furniture to open up every room of your home. Don’t crowd any windows, doorways or main walking areas. Your home should flow well and feel airy and spacious.

Depersonalize and Make Appealing

Remove family photos or special collections and replace them with more generic but tasteful accessories that reflect current trends. Repaint rooms that have extremely unique colors to more neutral tones. Most of the time this can be done without a lot of cost. If you don’t know what to do, ask for help from someone who can add that special touch and is not afraid to give you an honest opinion.

Main Focus: Bathrooms/Kitchens

Kitchens and baths sell homes so make them sparkle everyday! After you have cleaned out from under the sinks and thinned out the cabinets, clean all glass, tubs, showers, floors, countertops, baseboards and behind major appliances. Remove bottles and toiletry items from tubs and showers and store them out of site. Eliminate extra items from the counters to make them appear larger. It is a good idea to wipe down the shower or tub after each use so that they are dry when your buyers are visiting.

Free Some Space: Closets and cabinets

Remove about half of the items in these areas. Take all of your off-season clothing and put into storage and clean out extra shoes and clutter from the floor so that the entire closet seems roomy. Cabinets should be neat and well organized so that buyers can see the actual space and not a lot of extra stuff!

Garages Need Love Too

In spite of what most people think, garages are for cars! Not overflow for items you just can’t part with. Make sure you can actually park your vehicles inside. This will go a long way in showing the functionality and convenience of your home. Clear out any cobwebs, sweep the floors and clean up any oil or fluid stains. Outdoor tools should be kept at a minimum and be stored neatly into racks so that the floor space and walkways are not blocked. If your breaker box is located in this area be sure there is a clear pathway for access and that nothing is blocking doorways or windows. Make sure that automatic doors are functioning properly.

Hide Your Pets and Their Accessories

Not everyone is a pet lover so you must think like that. Make sure your pets are placed in a secure area that won’t hinder your buyer from viewing your property. If possible, take them off-site during showings. Make sure your home is free from pet odor and hair and store feeding bowls and beds out of site.

Miscellaneous – Make sure all lighting is functional so that every room is bright. Doorbells, appliances, smoke detectors and exhaust fans should be in working order. Windows and doors should open and close properly and lubricate those creaky hinges. Check water faucets for drips and repair if needed. Drains should flow freely and the garbage disposal should be in good working order as well. Your buyer is going to order a home inspection in most cases so you may as well address these items on the front end.

While this may seem like a lot of work, you must keep the end goal in mind. And that is to get your home sold as quickly as possible and for the best price. Make your home easy to show and a joy to view. For more home selling tips, check out our selling section, or give me a call. You won’t regret the results!

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Why you should not rule out selling your home in the winter months

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Winter will here before we know it, but that should not give you any concern at all if you are considering putting your home on the market for sale in the next few months.  Here are my reasons why:

1. The winter market can be less competitive for Sellers since many families will wait until Spring to list their home. Economics 101: Supply and demand.  Supply goes down, price goes up. This creates a unique opportunity for a Seller to make a little more money just by selling in the Winter months.

2.  The smaller amount of inventory in the form of active listings will allow Sellers to get more attention from a bigger pool of Buyers. This bigger pool of Buyers creates another unique opportunity for Sellers in the Winter months.  A bigger pool of existing Buyers will typically translate into shorter times before a Seller can expect an offer.

3.  Many people do not know this, but many larger corporations will transfer existing employees or hire new ones early in the new year. During this time period, and especially in larger metro markets like Denver and Colorado Springs, this activity tends to produce highly motivated Buyers for Sellers listing their homes in the Winter.

4.  Buyers looking to purchase in the winter tend to be more bound and determined to buy. Most folks will not do a great deal of window shopping in the harsher weather months of December and January like they tend to do in warmer months like March and April. Listing your home in the Winter will likely eliminate some of the ‘lookie loos’ of the Spring months.

To support my rationale, I found a study that came out in late December, 2013 from the online brokerage firm, Redfin. This study found that Sellers net more above asking price during the months of December, January, February, and March than they do from June through November. Further, homes listed in Winter sold faster than those listed in Spring. The likelihood of selling a home when listing in Denver broke down like this:  If you listed your home in Winter, you had a 77% chance of getting it sold in six months or less, in the Spring, you had a 64% chance, in the Summer, you had a 63% chance, and in the Fall, you had a 68% chance.

Winter is coming friends, and numbers don’t lie! If you are needing or wanting to sell your home in the Winter months, you can and with confidence! Feel free to give me a call.

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What Day of the Week Should You List Your Home?

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Should you list your home on Thursday or Friday or even Sunday? There are many opinions as to the best day of the week to list your home. Redfin found that according to their analysis, homes listed on Fridays have a higher list to sale ratio compared to other days of the week. They also found that homes listed on Fridays had a greater likelihood of selling within 90 days. Fridays do tend to be the choice of most Realtors and statistically it is easy to see that Fridays have the highest percentage of homes listed on the MLS. Most home buyers are available to tour homes on the weekend with their agent giving your home a greater chance of being seen in person.

However Terrace 24, a brokerage in Atlanta did an analysis that showed that homes listed on Thursdays sold faster and for a higher price. Their analysis showed that of the homes that sold without a price reduction, homes listed on Thursdays sold for the fewest days on the market. They also found that in their area, homes listed on Thursday were more likely to receive an offer over the list price.

And what about Sundays? Redfin’s study showed that homes listed on Sundays received the most online views. And with the least amount of homes being listed on Sundays, won’t it stand to reason that your home will stand out more?

Whether you and your agent decide to list your home on Thursday, Friday or even Sunday, don’t forget to make sure that both you and your home are ready. A MLS listing that is complete, accurate and full of outstanding photos will have a big impact on how fast your home will sell. If you need staging or preparation advice or want to talk about listing your home feel free to let me know.

Real Estate Pricing

What’s My Home Worth? How Realtors Determine a Realistic Price

Pricing real estate is difficult for a few reasons:

  1. Real estate markets are in constant fluctuation. Real estate values can dramatically rise or fall over just a few months. So you need the most up-to-date information to properly price a house, and that price will only be accurate for a short period of time.
  2. There are many outside factors affecting values. School districts, local construction, even distance to a Starbucks…these all impact the price of local real estate.
  3. Every piece of real estate is perfectly unique. Even in a planned community with neat rows of identical structures, every piece of property is distinctive simply because of its location. There is no other property in the world with the same longitude and latitude coordinates as the property you’re pricing. And that location affects the view, the sunlight, the noise-level, the breeze…every property is one-of-a-kind.

But despite these challenges, real estate professionals price houses every day. And this post will show you how the pros do it and how you can find out what your home is worth.

One important note before we really dive in: there is no substitute for an appraisal. Appraisals are formal real estate valuations conducted by Certified Appraisers. The appraisal is the authority on the true value of the real estate in question.

With that, let’s start our discussion on how to price real estate like the pros.

CMAs are Your Best Friend in Determining What Your Home is Worth

CMAs (which stands for Competitive Market Analysis or sometimes Comparative Market Analysis) are the industry insider method for simplified real estate pricing.

A CMA is essentially a spreadsheet that uses formulas and market-specific data to establish the realistic price of a specific property. This specific property being priced is commonly called the “subject property”.

The key to a CMA is finding “comparable sales” (which are often referred to as “comps”). Comparable sales are exactly what they sound like: sales of properties that are similar enough to the subject property that they can be used as a guide to help establish the price of the subject property.

What Makes a Good Comparable Sale?

There are many factors to consider when selecting comparable sales. Let’s look at the five most important considerations for finding the best comps.

1. Similarity of the Comp to the Subject Property

Is the comparable home roughly the same size, style, and quality as the subject home? Was it built around the same time? Does it have a similarly-sized lot?

What about the bed-and-bath count? The comps don’t necessarily have to match the subject property’s bed-and-bath count exactly, but they should be close.

Of course, the more similar the comparable property is to the subject property, the better.

2. Location

Location is an important component of comparable sales because of those outside factors affecting home values that I mentioned earlier. For example, if you are pricing a home in Southwest Colorado Springs, you would not want to consider comps in Southeast Colorado Springs. A similar home in Southeast Colorado Springs would be less expensive than Southwest Colorado Springs because of outside factors.

Population density determines how far you can look for comps. In an urban area, you may have hundreds of condos on a single block, but in a rural area, you might only have a few dozen properties in a square mile. The general rule-of-thumb is to focus on comps within the following ranges:

  • Urban neighborhoods: ½ mile
  • Suburban neighborhoods: 1 mile
  • Rural areas: 5 miles

3. Special Features

Does your subject property have a special feature? Maybe it has a pool, a barn, or a spectacular mountain view. Consider these special features when selecting your comparable sales.

4. Timing of the Sale

The timing of the sale is critical because real estate prices are constantly fluctuating. You really want to find sales that closed within the last six months. The more recent the sale, the better.

5. Arm’s-Length Transactions

It’s also important to confirm that the comparable sale you’re considering was an “arm’s-length transaction”. This basically means that both parties to the sale were acting in their own best interest and neither party was under severe pressure to buy or sell. Be wary of short sales, foreclosures, or transactions between family members.

Like I mentioned earlier, every property is different, as is every sale. So simply looking at the average sales prices of your comps isn’t enough to determine a reasonable price for your subject property. I’ll cover the ins-and-outs of using these comps to properly value your subject property in a bit. But first, let’s talk about how you can use the CMA to make sound real estate decisions.

CMAs for Sellers

For sellers, the main purpose of a CMA is to establish an appropriate asking price for their property

One of the biggest mistakes sellers make is overpricing their listing. They look at the number on the CMA and want to increase it by 5-10%. Sellers typically overprice for two reasons:

  1. They want to leave negotiating room in case they get a low offer.
  2. They figure they can always lower the price later.

This sounds reasonable until you look more closely at actual buyer behavior. That’s when you’ll find several problems with overpricing.

Overpriced Homes Have a Smaller Pool of Potential Buyers

Pricing a home too high could take it off the radar of some potential buyers. If a CMA indicates that a house should be priced at $245,000, and a seller decides to list about 5% higher at $257,000, the seller has just eliminated buyers looking to spend up to $250,000. The subject property won’t show up on buyer’s under-$250,000 search results.

Overpricing to create room for negotiations is another mistake sellers make. Bill Gassett discusses this and other pricing myths in this great article.

Buyers are Being Advised by Their Agents to Ignore Overpriced Listings

Buyer’s Agents can spot an overpriced listing from a mile away. And they don’t want to waste their clients’ time. So they will usually advise their clients to ignore the overpriced listing. Or they may make an excessively low offer to test the waters. Either way, they won’t take the seller seriously until the asking price is reasonable.

Overpriced Listings Go Stale

The problem with listing high, then having to implement a home price reduction strategy, is that the listing goes stale. There’s a fresh excitement around new listings that sellers should take advantage of. Every buyer wants to take a look at the new listing to see if it could work for them, and every Agent wants to look at the new listing to see if it could be the right fit for any of their clients. Interest usually declines after that first frenzy. And if the price is reduced, buyers start to wonder why. What could be wrong with that house to make the sellers drop the price?

Overpriced Homes May Fail to Appraise

“Failure to appraise” means that the formal appraisal value is lower than the agreed upon purchase price. This can be a real estate deal disaster because it means the buyers may not be able to get a loan for the purchase. Lenders will not allow borrowers to pay more for a house than the house is worth.

Realtors very carefully consider the available comparables and use the CMA to determine the right asking price for a property. Ultimately, the pricing decision is up to the seller, not the Realtor. So if you’re looking to sell, take advantage of the expertise and market knowledge your Realtor packs into his or her CMA to price your home right!

Then once you receive an offer, you can refer back to the CMA to decide if the offer is acceptable or if you would like to respond with a counter offer.

CMAs for Buyers

The main purpose of a CMA for buyers is to determine how much to offer for a property. Does the CMA match the listing price? That’s a strong indication that a full price offer is warranted.

Does the CMA show that the listing price is slightly too high? Perhaps a lower offer is in order.

If the CMA shows that the listing price is much too high, buyers may not even want to make an offer. A too-high listing price implies that the seller isn’t being realistic about the value of the property, and they may be difficult, if not impossible, to work with. General real estate wisdom is to ignore overpriced listings. Don’t waste your valuable time!

Does the CMA show that the listing price is too low? This could be because the seller intends to start a bidding war and actually expects the offers to be higher than the asking price. Buyers should consider offering more than the asking price in this case, offering an amount more in line with the CMA.

CMA’s are also helpful for buyers in anticipating the appraisal value. Before you close escrow on your new home, you’ll have a formal appraisal done on the property. If the appraised value is less than the agreed-upon purchase price, you have a problem. If you’re getting a mortgage, the lender won’t grant the loan knowing that you’re paying more for the home than it’s worth. And even if you’re an all-cash buyer, you just plain don’t want to overpay for a home, right?

Speaking of the appraised value, let’s briefly take a closer look at the appraisal.

The Appraisal

The process the Certified Appraiser will use to conduct your appraisal is very similar to the CMA process.

The most notable difference is that the Appraiser is certified, so the results of the appraisal are more official than the results of a CMA. The Appraiser will also look more closely at the details. For instance, they may pull permits to confirm that improvements to the property are properly permitted.

The comparable sales used by the Appraiser may or may not be the exact comps used in the CMA. The Appraiser will most likely choose a few of the same comps, but if there are many recent sales comps to choose from, comp selection can be semi-subjective, so the Appraiser may have a different comp or two.

The Appraiser’s comps could also be different based on the timing of the listing and the appraisal. While preparing to list the house, the CMA would consider sales within the last six months. At the time of the appraisal, the Appraiser is considering sales within six months of that date. So some of the CMA comps may have aged off the Appraiser’s comparable sales list.

CMA Details: How to Price Your Real Estate Just Right

We’ve discussed the purposes of CMA’s and how they relate to appraisals. So now we can jump into the nuts and bolts of the CMA. What makes it work?

We know that no two properties are identical. And without identical properties, we’re kind of comparing apples to oranges. So how can we use these similar-but-not-identical properties to arrive at a reasonable price for our unique subject property? The answer lies in comp debits and credits.

Debits and credits are used to adjust the sales prices of your comparable properties in every aspect in which the comparable properties substantially differ from the subject. Adjusting the sales prices of the comps for each material difference from the subject allows you to see what would happen to those sales prices if the comps were identical to the subject property.

Examples of Debits and Credits

In Colorado Springs, additional garage bays are worth between $5,000 and $7,500. Homes that back to open spaces are worth $5,000 to $10,000 more than those that don’t. And a good view could be worth anywhere between $5,000 and $25,000!

So let’s see how we can apply this data to a CMA. Here’s an example to clarify this important concept

Comp A sold for $300,000. It has two garage bays, but your subject property only has one garage bay. You need to adjust the sales price of Comp A to pretend that it only has one garage bay, just like your subject property. So you would subtract $5,000-$7,500 from Comp A’s $300,000 sales price. If this is the only difference between Comp A and your subject, the adjusted price for Comp A (the value you would actually use in establishing the price for the subject property) is between $292,500 and $295,000.

Make sense? Let’s do one more example:

Comp B sold for $260,000. It has no view; the house just looks out onto the neighboring homes. But your subject property has a stellar mountain and lake view. You need to adjust Comp B to pretend it has that same stellar view as your subject. So you would add $25,000 to Comp B’s $260,000 sales price. If this is the only difference between Comp B and your subject, the adjusted sales price for Comp B is $285,000.

Notes on Applying the Debits and Credits

Important: debits and credits are always applied to the comps, never to the subject property. This is because 1) you want to change your comps to match the subject, not the other way around, and 2) you won’t have a price for the subject property until all your adjustments have been made to the comps anyway.

You apply these debits and credits to account for any and all material differences between your comp and your subject property. Lucky for you, your Realtor already knows how much to adjust your comparable sales for each material difference because they know what each item is worth in your local market. This is where your Realtor’s knowledge and expertise is invaluable!

And the material differences aren’t just limited to the few listed above. There may also be adjustments for unequal numbers of beds and baths, square footage, finished basements, patios, and general upgrades.

Once your adjustments are complete, you’re effectively looking at sales prices for properties that theoretically match your subject property in every way that matters to determining the price of a property. You’re finally comparing apples to apples!

How Many Comparables Do You Need?

Three good comparable sales for a CMA is pretty standard across the residential real estate industry. “Good” is loosely defined as arm’s-length transactions of properties fairly similar to the subject, located within the rule-of-thumb proximities discussed previously, and sold within the previous six months.

It’s not always possible to find three comparable sales to meet the “good” criteria, particularly for unusual, custom-built homes or in rural areas with very low population density. In this case, it’s wise to find up to six acceptable comps in place of three good comps.

Appraisers will typically use three to six of the best available comparable sales for the appraisal.

Can You Use Active Listings as Comparables?

CMA’s can use active listings (properties currently for sale) as comparables. This can be a helpful exercise in tracking value trends as the local real estate market ebbs and flows.

But you should be careful using active listings as comps because the asking price and sale price of the home could be very different. Remember, sellers can list the property for any amount they’d like, but that price isn’t validated until a buyer is willing to pay that amount.

Summary

Pricing real estate is tricky but doable. A Competitive Market Analysis is a great tool to help you use recent comparable sales to determine the value of the subject property. CMAs help sellers decide on an asking price for their listing and help buyers decide how much to offer. But CMAs shouldn’t be confused with appraisals, which must be conducted by a certified Appraiser.

CMAs work by taking comparable sales and adjusting their sales prices to account for the material differences between the comps and the subject property. This allows you to calculate the value of the comps as if the comp properties were exactly like the subject property. And that’s how you can calculate a reasonable price for the unique subject property and have a good feeling for what your home is worth.

Now that you understand how Realtors determine the asking price for a home, you can run your own numbers to properly price real estate on your own. Just keep in mind: Your Realtor knows your market, knows your comps, and knows the adjustment values of those material differences. Take advantage of their knowledge and expertise for the most accurate real estate pricing!

Additional Pricing Resources:

http://www.rochesterrealestateblog.com/how-to-determine-the-market-value-of-a-home/ via: Kyle Hiscock

http://merrimackvalleymarealestate.com/determine-homes-value/ Kevin Vitali

http://imagineyourhouse.com/blog/come-price-home-like-price-right-game-show-really/ Lynn Pineda

http://sellingwarnerrobins.com/overpricing-home-bad-idea/ Anita Clark

http://www.cincinkyrealestate.com/blog/price-my-luxury-home-for-sale/ Paul Sian

ready

Getting Your Home Ready to Sell

Make sure that you catch up on your deferred maintenance and give your home a little spring cleaning this year! Here’s a list to help brush off the cobwebs and spruce up your home whether you are ready to sell or just in the mood for a fresh start for the year.

✔ Organize closets

Linen, bedroom, coat, kitchen, laundry, and pantry closets are all good places to clean out. It’s a good time to eliminate clutter and donate to your local charities. Cleaning out clutter helps buyers to see the amount of storage space your home has to offer.

✔ Carpets and wood flooring

Have a professional company come out and clean your dirty carpets and ask them to look at your carpets to see if you need them re-stretched. If you have wood or tile flooring make sure you clean those as well. You can touch up grout in the tile or shine up the wood floors.

✔ Freshen up walls

Wipe down walls, trim, light switches, and molding from dirt and fingerprints. Then after you’ve cleaned up the walls and trim, go around and touch up any chipped or worn paint. Power wash the exterior of your home and do any touch-up paint on the base and trim.

✔ Windows

Clean windows and screens inside and out. A home shows better with clean windows to be able to see the green grass outside or those beautiful views.

✔ Tile

Bathroom and kitchen tile need that deep scrubbing to clean up the grout and re-caulk where needed too, especially in the tub and shower area where it gets a lot of moisture and use. A dirty shower/tub area doesn’t show well.

✔ Furnace

Have a licensed HVAC company service and clean your furnace and air conditioning units. This should be done once a year and your filter should be changed once a month during the time you use the equipment. When it is time for a home inspection, keep your receipts to show you had them cleaned and inspected!

✔ Garage

De-clutter….yes, buyers look in the garage and yes, it’s good to have them de-cluttered too! This is a good time to have a garage sale and eliminate all the items that are being stored in the garage.

✔ Fireplace

Have a chimney company come over and clean and check your fireplace. It’s good to have this done once a year and even on gas fireplace units. Also, keep your receipts to show prospective buyers this has been done.

✔ Gutters

Clean your gutters. This will help when we have rain so that the gutters can do their job and drain properly away from your roof and house. Also, make sure you have downspouts pulling the water away from the house and foundation.

✔ Fire and CO Detectors

Change out and check batteries for both devices. These devices do expire so make sure you check the expiration date on each device in the house. Did you know that it’s Colorado state law to have carbon monoxide detectors in your home no more than 15 ft away from all bedrooms? This is a must when you list your home!

✔ Lawn

Clean up all the winter debris and leaves so your grass can start getting all the spring moisture. Call a landscaping company to come out and aerate the lawn. Check all your sprinkler zones and make sure they are working properly and hitting all areas of your lawn and gardens. All of these spring cleaning ideas are a good idea every year whether you are thinking of listing your home or not.

Please call us if you need any additional suggestions to get your property ready to sell!

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How Important are First Impressions?

The saying “You never get a second chance to make a first impression” has never been truer, especially when it comes to marketing Real Estate.

In the 2013 National Association of Realtors Survey of Home Buyers and Sellers, Home Buyers were asked, “What actions they took as a result of an Internet Home Search?” 75% responded that they drove by or viewed the home while 63% scheduled a walk through. This reinforces our philosophy that the Internet is the new first showing.

This survey also supports our belief that professional photographs, video and virtual tours are essential tools used to drive traffic to our listings.

Here is the complete list of results from the survey.

ACTIONS TAKEN AS A RESULT OF INTERNET HOME SEARCH
Drove by or viewed home75%
Walked through home viewed online63%
Found the agent used to search for or buy home30%
Requested more information24%
Looked for more info on mortgage and home buyers tips13%
Pre-qualified for a mortgage online13%
Contacted builder/developer8%
Applied for a mortgage online8%
Found a mortgage lender online7%

If you would like to learn more about our listing process and what we do to get Colorado Springs Home Buyer traffic to our listings, please visit our Colorado Springs Home Seller Section.

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Homes for Sale in Colorado Springs, Colorado Springs Real Estate

Phone Number:

719.388.4000

Address:

Springs Homes
703 N. Tejon St. Suite E
Colorado Springs, CO 80903

Meet Springs Homes

There is nothing average about Springs Homes. Everything we do crackles with intention and intensity, because we believe that strategy always wins when employed by confident, knowledgeable and trustworthy agents.

We list and sell homes across the entire Pikes Peak region. Additionally, Springs Homes offers property management services. We work with a select few home builders in order to provide our clients with new construction options as well as resale opportunities.

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