Real Estate Then and Now

How Technology Changed Real Estate
After 8 years as a full-time realtor, I’ve seen some changes in my career and that got me thinking about how much buying and selling a home in Phoenix has changed in the last 20 years:

– MLS (all listed homes are online in our searchable realtor database vs found in a printed book much like a telephone book)
– Docusign (approve documents with a few taps on your phone, table or laptop vs having to sign paperwork with a pen)
– Pictures (homes for sale have lots of professional photos online vs one blurry shot of home exterior taken by agent to print in book)
– Lockbox (agents obtain key at property using their phone vs driving to listing agent office for key and returning it)
– Internet (nothing could function without it today vs somehow millions of homes have been bought and sold without it)
– Zipform (documents generated and completed online vs having to press hard with a pen to be sure you could read carbon copies)
– Drone (home pictures and video taken from remote controlled aircraft vs nothing like it)
– Matterport (gives viewer 3D experience of walking through home vs nothing like it)
– Phone apps (closing cost estimator, mortgage calculator, value estimates and MLS search vs nothing like it)
– Texting (texting for property info vs calling an agent for details)
– Short sale and foreclosure (very common in 2011-2014 vs essentially non-existant)
– Mortgage interest rate (30-year fixed 7% then vs 4.75% now)

These are the big changes I could think of and I’m sure there are many other smaller ones I have omitted. As with most everything the past 20 years, technology has revolutionized how we work, play and function.

Solar Panels

Solar Panels in Phoenix
Want to make your home easier to sell? Don’t install a solar system in Phoenix. As an real estate agent, I am often asked by homeowners who are considering adding a solar system whether or not it will have any impact on their home value. Most are surprised to hear me say, in the absolute best case scenario it will not hurt your home’s value and in most cases it will be a negative to future buyers considering your home for purchase.

With all the full sun we get (over 300 days a year), why not install solar in Phoenix?

1. It’s leased so any buyer of your home will need to qualify for assuming the balance of your lease. Solar leases work just like car leases – except car lease payments don’t rise every year on you.
2. It often can damage roof at time of install. I have seen several instances of damage to tiles and flashings, not to mention the need for installing a pigeon/bird net under the panels to stop them nesting.
3. It voids your manufacturer warranty on roof tiles (usually lifetime). Plain and simple, if you install solar you lose your tile warranty against manufacturer defects.
4. It’s hot! Most people don’t realize solar panels feed an inverter in the garage to produce energy and this generates heat. Stand in a closed garage in summer with solar and you’ll see.
5. It doesn’t generate enough power to be off the grid. Most systems on a typical home max out at 9kwh production, which may be just enough to cover power use in winter but leave you a big summer electric bill.
6. You will never own it, even after you make 20 years of lease payments. So after making 240 payments what is your reward? They show up to take the entire system off your roof and promise to fix any damage.
7. The lease payments rise every single year, on average 2.9% compounded annually. To put that in perspective, this increase has been 41% higher than the annual rate of inflation the past 20 years.
8. It’s unproven long-term. What about the company’s chances of being around for the next 20 years? If they disappear, who’s going to repair it when a panel fails? And wow are these things unsightly!
9. What happens when you need to re-tile (and change the weatherproof underlayment) or re-shingle your roof? You must pay the company (assuming they still exist) to remove the panels, store them and then re-install them so you can fix your roof.
10. All else equal, when two homes have identical features, I’ve never met a buyer who prefers the one with solar. The reasons are probably all of the above.

What are the tangible, measurable and direct benefits to a homeowner installing solar in Phoenix?

Home Seller Mistakes

Phoenix home seller mistakesIf you are planning to sell your home, but secretly want to make selling it difficult, please make sure you:

– have such a restrictive schedule that showings can only be Tue mornings
– close all the blinds and keep all the lights off so it’s nice and dark
– don’t pick up after your pets outside so buyers have to dodge land mines
– have your house looking like you just threw a bachelor party last night
– leave your barking dogs caged up at home for all showings
– quietly sit in back yard anxiously waiting for buyer to leave
– stay inside your home sitting on the couch watching TV during each showing
– put a handwritten sign on a random bedroom door saying “Do Not Enter”
– follow buyers and agents all around your home explaining every detail
– confront buyers and agents directly for honest feedback when they try to leave

You may be thinking “I would never be that foolish” but I raise each of these real world scenarios because I have encountered them (numerous times each) over the many years I have been practicing real estate.

It’s mind-boggling to think people believe nothing is wrong with some or all of the above actions. It’s even scarier that their agents may not have stated the obvious to them, when trying to make it easy to sell their home.

Homes don’t sell for at least 1 of 3 reasons (and sometimes it’s all 3): it’s overpriced, it’s poorly marketed, it’s hard to show. The first two are obvious, the third not so much. By hard to show, I mean a combination of any or all of the above, whereby the home does not present well or a buyer cannot be comfortable while viewing the home.

Please keep this in mind to make selling your Phoenix home a pleasant experience!

Instant Offer

Instant Offer to sell your homeWhat is an instant offer? There has been growing interest of late (the earliest programs started in 2014) in getting an instant offer to sell your home, without making any repairs or improvements, and close in a 2-3 weeks. Known as iBuyers, companies like 0pendoor and 0fferpad have taken the original concept started by We Buy Ugly Houses and given it a much-needed improved image. Simply put, these are investors who will purchase your home in any condition at below market value in exchange for the convenience of a guaranteed quick sale.

Why would anyone want to sell their home for less than market value? This could make sense for people relocating, divorcing or selling an estate. In other words, for anyone looking to give up money to save time. It’s the paramount of all trade-offs, where humans trade time for money every day, in a quest for convenience. Think of it like eating: cooking a meal from scratch takes the most time but costs the least money; cooking a prepared meal takes less time but costs more money; eating out takes no time to cook but costs the very most.

Are these instant offer programs here to stay? Things just got very real when Zillow recently announced a test program to act as a buyer of homes in Phoenix. So now they will provide you with an estimated home value for your property and offer to buy it from you. Hmmm… hardly seems independent or objective to me. How do you really know what your home is worth? Without getting an impartial 3rd party opinion, it’s like taking collectibles (think baseball cards) to a store, asking the clerk what they’re worth, then accepting their offer to take them off your hands. Does “in that condition, the most I can give you is $20 for the Babe Ruth rookie card” sound suspicious to you?

Does it make sense to sell your home below market value in a hot and rising market (ie. a seller’s market)? Probably not. The majority of homes are selling within 30 days (time on market) then buyers typically need another 30 days to close the deal with their lender. The homes of my clients are selling much faster, often getting multiple offers in the first week. Which brings up another point: exposure to the open market is good for sellers since it allows them to experience price discovery (the process of determining the price of an asset in the marketplace through the interactions of buyers and sellers). So if you don’t expose your home to the market and choose to make a private deal with one party to buy it, how can you be sure you got a fair price? You can’t.

What to do? As with most things in life, price shopping will be rewarded. That is, get several opinions of value. Perhaps you get an instant offer, then get a realtor’s opinion of value, and finally order an appraisal on your home. Review all three numbers carefully and be sure to look at your expected net proceeds under the instant offer versus selling with a real estate agent. With the instant offer companies charging 7-13% in fees to take your home off your hands for below market value, the typical 6% commission model suddenly looks pretty good. And with a realtor, you have someone working for you instead of against you like with the instant offer. The more you make, the more the agent makes. The less you make in the instant offer, the more profit the buyer company makes.

Phoenix Home Selling Tips

Get your home SOLD FAST for TOP DOLLAR! With these Phoenix home selling tips you will discover how to protect and capitalize on your most important investment, reduce stress, be in control of the situation and make the most profit possible.

Know Why You Are Selling Your Home
Your motivation to sell is the determining factor as to how you will approach the sales process. It affects everything from your asking price to how much time, money and effort you’re willing to invest in order to prepare your home for sale. For example, if your goal is a quick sale, this would determine one approach. If you want to maximize your profit, the sales process might take longer thus dictating a different approach.

Keep the Reason You are Selling to Yourself
The reason(s) you are selling your home will affect the way you negotiate its sale. By keeping this to yourself you don’t provide ammunition to your prospective buyers. For example, should they learn that you must move quickly, you could be placed at a disadvantage during negotiations. If asked, simply say that your housing needs have changed. The reason(s) you are selling is only for you to know.

Do Your Homework Before Setting a Price
When you set your price, you make buyers aware of the absolute maximum they have to pay for your home. As a seller, you will want to get a selling price as close to the list price as possible. If you start out by pricing too high you run the risk of not being taken seriously by buyers and their agents. Pricing too low can obviously result in selling for much less than you were hoping for.
If You Live in a Subdivision: if your home is comprised of similar or identical floor plans, built in the same period, simply look at recent sales in your neighborhood subdivision to give you a good idea of what your home is worth.
If You Live in An Older Neighborhood: as neighborhoods change over time, each home may be different in substantial ways. Because of this, you will probably find there aren’t many homes truly comparable to your own. In this case, you may want to consider seeking a Realtor to help you with the pricing process.
If You Decide to Sell On Your Own: a good way to establish a value is to look at homes that have sold in your neighborhood within the past 3 to 6 months and including those currently for sale on the market. This is how prospective buyers will assess the value of your home.
Overwhelmed? Let me prepare a free home evaluation on your Phoenix home – with no obligation!

Do Some Home Shopping Yourself
The best way to learn about your competition and discover what turns buyers off is to check out other open houses. Note floor plans, condition, appearance, size of lot, location and other features. Particularly note the asking price. Remember, if you’re serious about getting your home sold fast, don’t price it higher than your neighbor’s.

When Getting an Appraisal is a Benefit
Sometimes a good appraisal can be a benefit in marketing your home. Getting an appraisal is a good way to let prospective buyers know that your home can be financed. However, an appraisal does cost money, has a limited life, and there’s no guarantee you’ll like the figure you see.

Tax Assessments – What They Really Mean
Some people think tax assessments are a way of evaluating a home. The difficulty here is that assessments are based on a number of criteria that may not be related to property values, so they do not reflect your home’s true value.

Deciding on a Realtor
According to the National Association of Realtors, 2 out of 3 people surveyed who sold their own homes say they wouldn’t do it again themselves. Primary reasons include difficulty setting a price, marketing disadvantages, liability concerns and time constraints. When deciding upon a Realtor, consider two or three. Be as wary of suggested list prices that are too low or too high. All Realtors are not the same! A professional knows the market and has information on past sales, current listings, a proven marketing plan and will provide client references. Evaluate each candidate carefully on the basis of their experience, qualifications, enthusiasm and personality. Be sure you choose someone that you trust.

Leave Room to Negotiate
Before settling on your asking price make sure you leave yourself enough room in which to bargain. For example, set your lowest and highest selling price. Then check your priorities to know if you’ll price higher to attempt to maximize your profit or price closer to true market value if you want sell more quickly.

Appearances Matter so Make them Count
Appearance is so critical that it would be unwise to ignore this when selling your home. The look and feel of your home will generate a greater emotional response than any other factor. Prospective buyers still react to what they see, hear, feel and smell even though you may have priced your home to sell.

Invite the Honest Opinions of Others
The biggest mistake you can make at this point is to rely solely on your own judgment. Don’t be shy about seeking the honest opinions of others. You need to be objective about your home’s good points as well as bad. Fortunately, your Realtor will be able to discuss what should be done to make your home more marketable.

Get it Spotless and Fix Everything
Scrub, tidy, straighten, lose the clutter, declare war on dust, repair squeaks and cracks, because these can be deal killers and you’ll never know what turns buyers off. Remember, you’re not just competing with other resale homes, but brand-new ones as well. Think of selling your home as a beauty contest and price war at the same time.

Allow Prospective Buyers to Visualize Themselves in Your Home
The last thing you want prospective buyers to feel when viewing your home is that they may be intruding into someone’s life. Avoid clutter such as too many knick-knacks and personal items. Decorate in neutral colors, like white or beige and place a few carefully chosen items to add warmth and character. You can enhance the attractiveness of your home with a well-placed vase of flowers in the kitchen or potpourri in the bathroom.

Strong Smells Must Go
You may not realize but smells like traces of food, pets and smoking odors can kill deals quickly. If prospective buyers know you have a dog, or that you smoke, they’ll start being aware of odors and seeing stains that may not even exist. Don’t leave any clues.

Be a Smart Seller by Disclosing Everything
Smart sellers are proactive in disclosing all known issues and defects to their buyers in writing. This can reduce liability and prevent lawsuits later on.

It’s Better With More Prospects
When you maximize your home’s marketability, you will most likely attract more than one prospective buyer. It is much better to have several buyers because they will compete with each other whereas a single buyer will end up competing with you.

Keep Emotions in Check During Negotiations
Let go of the emotion you’ve invested in your home. Be detached, using a business-like manner in your negotiations. You’ll definitely have an advantage over those who get caught up emotionally in the situation.

Learn Why Your Buyer is Motivated
The better you know your buyers the better you can use the negotiation process to your advantage. This allows you to control the pace and duration of the entire process. As a rule, buyers are looking to purchase the best affordable property for the least amount of money. Knowing what motivates them enables you to negotiate more effectively. For example, does your buyer need to move quickly? Armed with this information you are in a better position to bargain.

What the Buyer Can Really Pay
As soon as possible, try to learn the amount of mortgage the buyer is qualified to carry and how much their down payment is. If their offer is low, ask their Realtor about the buyer’s ability to pay what your home is worth.

Don’t Sign a Deal on Your Next Home Until You Sell Your Current Home
Beware of closing on your new home while you’re still making mortgage payments on the old one or you might end up becoming a seller who is eager (even desperate) for the first deal that comes along.

Moving Out Before You Sell Can Put You at a Disadvantage
It has been proven that it’s more difficult to sell a home that is vacant because it is perceived as forgotten and no longer an appealing sight. Buyers start getting the message that you have another home and are probably motivated to sell. This could cost you thousands of dollars.

Deadlines Create Disadvantages
Don’t try to sell by a certain date. This adds unnecessary pressure and is a serious disadvantage in negotiations.

Don’t Take a Low Offer Personally
Invariably the initial offer is below what both you expect for your property. Don’t be upset and evaluate the offer objectively. Ensure it spells out the offer price, sufficient earnest deposit, amount of down payment, mortgage amount, a closing date and any special requests. This can simply provide a starting point from which you can negotiate.

Turn That Low Offer Around
You can counter a low offer or even any offer that’s under your asking price. This lets the buyer know that the first offer isn’t seen as final and now you’ll be negotiating only with buyers willing to entertain serious offers.

Ensure the Contract is Complete
To avoid problems, ensure that all terms, costs and responsibilities are spelled out in the contract of sale. It should include items as the date it was agreed to, full legal names of all parties involved, address and legal description of property being sold, purchase price, concessions (if any), where earnest money will be held, date for loan approval, date and place of closing, type of deed, any contingencies that remain to be settled and what personal property is (or is not) included in the sale.

Be sure to request a FREE bonus report entitled “How To Sell Your Home Fast For Top Dollar” when you order the no-obligation detailed free Phoenix home evaluation. Save yourself the $410 appraisal fee and avoid having to speak to anyone!

Andrew Robb - RE/MAX Fine Properties, 21020 N Pima Rd, Scottsdale AZ 85255