Lessons from a Failed Bidding War Attempt

BAM! Another Buyer under contract for LESS THAN LISTING PRICE! I negotiated $60,000 off the purchase price of this classic north Everett home for my Buyer client.  Here’s some important take-aways for both Buyers and Sellers:

LESSONS FOR SELLERS — Failed Bidding War Attempt:
  1. LESSON ONE: You can’t overprice your home. If the seller had listed this home for $575,000, they would have had a bidding war and probably sold for $625,000 and maybe even got to their list price of $650,000. Instead, they tried to get the bidding war price without doing the bidding war process.
  2. LESSON TWO: The more flaws the home has, the more important staging is.  Like many classic homes, this one has some issues that need to be addressed (floor needs to be leveled and refinished, the kitchen is worn, no refrigerator, the electrical system needs some updates, some windows don’t open, etc.)  The sellers chose to show the home vacant without staging.  Staging distracts the eye from flaws. Without staging, all the flaws become glaringly obvious. Also, staging gets buyers emotionally attached to the home which is imperative if you want a bidding war.
  3. LESSON THREE: Seller-provided pre-inspections are great — if you fix things before going on the market! This seller had pre-inspections available for the buyers (sewer and home inspection), but they did not fix any of the items called out by the inspector.  So in effect, you are handing the buyer a list of things that are wrong with the house.  Not the best strategy to get multiple offers!
LESSONS FOR BUYERS — How to Buy Without a Bidding War:
  1. LESSON ONE: Homes that need some work are opportunities. Many buyers do not have the ability or financial means to fix up a home, so the competition on these homes is reduced.
  2. LESSON TWO: Overpriced homes are opportunities, especially if you have any type of financing challenges. My buyers had 5% down, which would make it difficult to compete with other buyers who had larger down payments.  We were the only buyer that was willing to make an offer in the 12 days the home was on the market, so the seller was willing to engage in negotiations resulting in getting $60,000 off the purchase price!
  3. LESSON THREE: You need an experienced broker to negotiate a lower price.  I wrote a 460-word letter explaining what my buyers love about the home, their financial qualifications, how they have owned two classic homes before, and why our offer price was lower than the asking price, providing a laundry list of items that need to be fixed.  This was not a “love letter” written by the buyer, but a calculated piece of salesmanship to convince the seller to accept our offer.

Maximize Your Buying and Selling Power

Contact me if you are thinking of selling to get a complimentary copy of my book on Maximizing the Return on the Sale of Your Home in Seattle which will help you avoid these and other Seller mistakes.

If you are thinking of buying, I provide a free, no-obligation strategy session to help determine your best path to winning your next home.

Home Staging 4 Year Anniversary

It was 4 years ago that I started my own staging company specializing in occupied homes. This was my first post with Before-and-After photos (click here for original Facebook post) — a condo in South Everett that had been on the market for two months with only 2 showings and no offers. I sold it in 5 days for $5,000 above their previous price. Starting my staging company has been one of the best things I have done in my business to help my clients maximize their return on selling their home.

Most people do not know that the majority of big staging companies will not stage your home if you are living in it because they do not like your dog, your cat, and your kids. They don’t want to mix their stuff with your stuff. But if you have dogs, cats and kids, chances are your home can really benefit from some staging to help you get it looking its best. Marketing your home starts with staging and photography. If your home doesn’t look good online, buyers will simply scroll past it and won’t come and view it. So the first thing I do is help you make your home look like the photos in a magazine.

Creating an Emotional Impact

Next is to make sure that your home has an emotional impact on the buyer when they tour your home. There is psychology behind my staging. My staging is accessible and designed to create an emotional connection with the buyer. The buyer feels comfortable enough to sit down on the couch and picture themselves and their children and pets living in the house.

I use soothing colors in the master bedroom and bath to create a feeling of a spa, an oasis away from the world. In other areas of the home, I use bursts of bright colors and large graphic artwork to create energy to motivate them to make an offer. I make the home memorable by place a quirky or fun decorative item here or there so it stands out in their minds after a long day of viewing properties. “I remember that house. It had the mermaid tail in the master bathroom shower!”

And last, but very much not least, my style of staging distracts the buyer’s eye from any defects that might exist in the house. Things like scuffed paint and tired flooring become less noticeable. I work with things that might be beyond your budget to change, for example creating an updated look with an outdated bathroom tile color.

In most situations, staging has one of the highest returns on investment for anything you do to improve your home. In the listing in the photos, the staging cost the client $1,200 and they made $5,000 more on the sale. That’s a FOUR HUNDRED PERCENT RETURN on investment.

I recently had someone tell me that she received a quote of $6,000 for a partial stage of their home. My price would have been around $3,000 for a full stage. I use your existing furniture whenever possible to help keep costs down and always work with you to balance things within your budget. My staging company exists to serve my clients — it is not a profit center in my business. The staging is done at my cost, so this saves my clients big $$ over the cost of independent stagers.

Maximize Your Selling Power

The real estate market is more competitive than ever, especially in the Seattle area. Standing out from the competition has never been more challenging or crucial to selling your home, which is why home staging is so important to maximize your home’s value during the selling process.

If you would like more information on my step-by-step process to help you sell your home, call today at 425.213.8761 or schedule a FREE consultation to learn more about staging your home.

Discrimination Liabilities When Selling Your House

Most home sellers are not aware that they must comply with the HUD Fair Housing Act when selecting someone to purchase their property.  The Fair Housing Act, as administered in the state of Washington, protects against discrimination on the basis of race, color, national origin, religion/creed, sex/gender, the presence of children, disability, sexual orientation and gender identity, marital status, and military/veteran status. These are known as “protected classes”.

In this very competitive market, many buyers write “love letters” to the seller explaining what they love about the home and often giving lots of info about themselves, sometimes including a photo with the dog and kids.  The problem is that the letters reveal many things about the buyers that fall under the protected classes.

These letters can sway sellers to select one buyer over another.  This is usually not done with malicious intent, but because they recognize something about themself in the buyer or they feel sympathy for the buyer’s situation.  “I’m a single mom, so I want to pick the single mom,” “I’m selecting the grandparents so they can be close to their family who lives on the same street.” Other times, it could be more openly discriminatory — “Their last name is foreign and I don’t trust someone from that country” etc.

So, as a real estate broker, how do I protect my sellers from discrimination liability? 
Let’s look at a recent example of a client we will call Mr. E. He had 9 offers on his home from people of various ethnic backgrounds, genders, and family statuses. Many of them included buyer love letters complete with photos of the buyer’s family.

To protect Mr. E, I put the information about each offer on a spreadsheet, assigning each buyer a number, and I did NOT forward any of the buyer love letters. This way, we were able to evaluate the offers based on:

  • The merits of the offer such as price, terms (amount of earnest money and down payment, closing date, inspection required or waived.)
  • The likeliness of the sale to close.
  • The financial condition of the buyer.

Mr. E made his selection based on these items without any risk of potential discrimination, as he knew each client only as a number.  The winning client’s offer was $30,000 over the asking price, had a $150,000 down payment, and I was to negotiate a one-month rent-back (at no cost to the seller), which was very important to him because his next home in another state would not be available until then.

My real estate process is not just about generating multiple offers —  it’s also about protecting you from the many areas with liability risks. When you work with me, you are getting a broker who is experienced and aware of the areas with potential risks that can arise and has a plan in place to protect you from those risks.  Call me to find out what I can do to help you maximize the return on the sale of your home while protecting you from potential liability risks.

Maximize Your Homes Value

When you’re looking to sell your home, the details matter. At the Pelham Group NW, we use our years of experience to advise you on the Pacific Northwest market and help you not only list your home but repair and stage your home to maximize its selling price.

Our clients are often surprised by the level of creativity and commitment we bring to selling their home. With our years of interior design and remodeling experience, our team has unique insight into how to showcase your home’s full potential and generate the best market response with a competitive pricing strategy and customized marketing plan.

Most of all, we handle all the details with the utmost care and discretion. Your personal and financial information is treated with sensitivity, and we always put your best interests first. That’s our promise to you.  Give Kim Pelham a call today at 425.213.8761 or schedule a FREE consultation today to learn more about selling your home this Summer.

Real Estate Selling Advice During COVID-19

During the first few weeks of the pandemic, there was a marked decrease in buyer activity, but once the ban on showings was lifted and people got used to operating in the new COVID environment, buyer showings steadily increased week-by-week.

Right now, supply is at a near all-time low, and demand is exceptionally strong resulting in near all-time high prices. I am predicting that there will be an influx of homes coming on the market in August which will relieve a little bit of the pressure on the market, but I expect that demand will stay strong through the fall since we have had a housing shortage for a very long time resulting in a large backlog of people who want to buy homes. It is unknown if the demand will remain strong through the holiday months, as traditionally people do not like to move at this time.

FORECLOSURES: Housing analysts do not expect a dramatic increase in foreclosures anytime soon for a couple of reasons.

  1. Housing prices are at record highs. This means that most people who are experiencing financial difficulty have equity in their home and can sell it. This was not possible During the Great Recession where prices had fallen 35% in 2008 alone.
  2. Regarding forbearance: Interestingly, it appears that people who requested forbearance seem to have done so as insurance just in case they lost their jobs, as 55% have continued to make their mortgage payments. Even if the economy worsens and there are many foreclosures, it could take a year or longer before we see those properties finally go on the market due to the lengthy foreclosure process.

For more details, check out this article on COVID-19 Foreclosures.

That being said, we are long overdue for a downturn in the market. Historically, the housing market cycles every 12 years. The last peak was in 2006, so we are due for a swing anytime now just in the normal course of the market.

COVID economic stressors and massive problems with Boeing might affect consumer confidence enough to slow down the real estate market. So my best advice for someone considering selling their home is to do it as soon as you possibly can to take advantage of the current market conditions which are extremely favorable toward sellers. We are at peak demand and peak prices right now, and there is no way to know how long this will continue.

Maxmize Your Homes Value

When you’re looking to sell your home, the details matter. At the Pelham Group NW, we use our years of experience to advise you on the Pacific Northwest market and help you not only list your home, but repair and stage your home to maxmimize its selling price.

Our clients are often surprised by the level of creativity and commitment we bring to selling their home. With our years of interior design and remodeling experience, our team has unique insight into how to showcase your home’s full potential and generate the best market response with a competitive pricing strategy and customized marketing plan.

Most of all, we handle all the details with the utmost care and discretion. Your personal and financial information is treated with sensitivity, and we always put your best interests first. That’s our promise to you.  Give Kim Pelham a call today at 425.213.8761 or schedule a FREE consultation today to learn more about selling your home this Summer.

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