Timing the Market in Selling Your Home

Don't get me wrong based on the title of this article. I'm not suggesting sitting and watching trying to catch the week you should sell your home to get the most out of it. First and most important, homes don't usually sell that quickly, and you can't just call a broker and execute a sell order.

However, there are a great many homeowners out there who have considered selling, or even want to sell, but they're waiting and watching rising prices to get a bit more at the closing table. Some are retired and would like to move to a retirement or tourist community and enjoy life. Others will be downsizing or upsizing. There are many reasons that a homeowner can be ready to list for sale if they decide it's the right time market-wise.

It's tempting to keep waiting when the news is telling you that home prices are rising in your area. In many areas this can be the case when inventories are low. Some analysts are even blaming baby boomers for keeping inventories low as they are holding on instead of selling. Supply and demand will always rule the markets, so holding on and watching rising prices makes you a part of helping your cause by holding off the market.

However, when news stories with titles like More Markets Favoring Sellers popping up in the media, it can make you wait too long. The same supply-demand dynamic that you're using in your favor right now can come back to bite you. And, it can happen very quickly. You have real estate professionals out there soliciting listings, and often they're doing so using these news stories to convince owners it's time to sell. At some point, the tide can turn.

The "real estate is local" meme is also important in this decision. Suppose for example that your home is in a popular subdivision with perhaps 200 or so homes. Right now you're holding and watching prices rise because only around a half dozen or a dozen or so homes are for sale in your subdivision. There may even be some bidding wars on the best homes.

The question is just how many listed homes it will take in your subdivision to tip the supply-demand scales. If it's a smaller subdivision, it can take just a few. In our example subdivision, past sold property data may show that a "normal" market would have 15 homes listed in your subdivision.

Suppose the eight currently listed became 15 or 20 within a week or two. The bidding wars would probably disappear, and prices would very likely soften significantly. It happens. Remember, there are others in your area doing just what you're doing, so keep that in mind and don't wait too long.

Of course, selling a home is a major lifestyle decision and shouldn't be made based solely on current prices. But, if you're in selling mode but holding, don't hold too long.

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Negotiating with Real Estate Agents - Buyer or Seller

OK, maybe a tug of war image is overdoing it a little, but they say all life is a negotiation. When it comes to selling or buying a home, you can negotiate with the real estate professional. At least you can if they can. Huh? Most real estate agents are licensed under the supervision and responsibility of a broker. They get their instructions and business practices from that broker.

That doesn't mean that you can't negotiate with an agent who must get approval. But, get ready for some of that "used car" thing with "I'll have to check with my broker" thing. If the agent has certain latitude, it does make the process faster and easier. Let's look at both sides, first a home seller and then a home buyer.

Negotiating with a Listing Agent

Ten years ago, it was difficult to get a home listed at anything but an industry-wide 6% fee. Prices can't be fixed, but that was the generally accepted commission, and most brokerages just quoted it and stuck to it. However, the average commission has slipped, coming down to around 5% average nationally. So, just ask for a better rate and see what happens. If they tell you that they have to spend a lot of money to advertise your home in magazines and print, you could tell them to forego that, as it's most likely to be sold because it's listed in the MLS.

Another thing few sellers know about is the "dual variable" commission. You see, the total commission paid by the seller is split between the listing brokerage and another brokerage who brings the buyer (the most likely scenario). However, if the listing brokerage also brings the buyer, they double their commission, getting both sides. You can negotiate that dual representation commission down, usually by around one-percent.

Last, you could look for a "real estate consultant" or flat rate listing real estate company in the area. They may offer some reduced level of service or the consultant may charge a base and get paid for their time, but it's almost always significantly less expensive.

Negotiating with a Buyer's Representative Agent

OK, you're a buyer. Like many these days, you've spent days, weeks or months searching the Internet and locating a few homes for your short list. The agent isn't going to be showing you twenty or thirty, as you've done a lot of the prep work yourself. First, ask if they can rebate a portion of their commission. It's not legal in all states, but it's becoming more so these days.

If it isn't legal, don't ask them to do something that could cost them their license. It gets more difficult if legality is an issue. The seller is paying the entire commission, so you would have to get both sides involved in getting some relief. You could ask for a concession in the selling price if your agent will take less in commission, but the seller would have to be involved and their agent as well. Another option would be a credit from the seller for closing costs, but again, your agent would need to offer to give up that much in commission.

Just know that everything is negotiable in a deal. It's a little more direct when you're the seller, but still doable as the buyer. Just asking can get some suggestions. They make no money unless you go through with a deal.

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Helping Tenants and Profiting from the Rental Crisis

There are now more renters in the U.S. than ever before in history, and the situation is still developing. Not only are more people wanting to rent instead of buy homes, there is a shortage of inventory. When demand is high and supply isn't keeping up, rents rise, and they're doing that aggressively right now.

There is plenty of media attention being paid to this situation, as well as many articles about the cost of renting versus buying a home. It seems that the ratio is not good, but people aren't clamoring to buy. This is in spite of continued low mortgage interest rates. It's partly a legacy of disappointment with housing as a wealth component after the market crash. Also there are far fewer first time buyers in the market. High student debt and an anemic job market isn't helping.

It would seem that this is still a great market for rental property investors, but maybe not for everyone. The higher prices for single family homes is making it more challenging to get them into the rental market at prices people can afford. The percentage of income on average going to rent is rising and at levels that are causing economic hardship for renters.

I believe there is still a great opportunity, if you respond to the market with affordable rents on homes people want. That "homes people want" part is crucial. Due diligence into your market's demographics is absolutely necessary. Baby Boomers are generally downsizing, so you'll be seeking to purchase smaller homes in markets where they are locating. In college towns, larger homes that will work for roommate rentals would be your target.

Once you've figured out the style and size of homes you want, then it's time to see how you can provide a rental that meets their desires, but at a more affordable rent than the competition. Your vacancy and credit loss numbers will be sweet if you can provide rental properties that are affordable and meet your tenants' criteria.

It's a more challenging situation, especially if you're buying ready-to-rent homes. If you are doing fix & flip, you have some leverage in the rehab project. Going cheap isn't necessarily the best approach. Using vinyl countertops may help you to set the rents where you want them, but they may not attract the best tenants. But, maybe something in between that and top grade marble is best. Maybe some tile that isn't too labor intensive can do the trick.

The point is to really nail down your costs before buying decisions, get the best deal on the property possible, then bring it to market with the fit and finishes that renters rate as important to them. But, do it at a value price to comparable sized units in your market area.

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Marketing a Home for Sale or Rent - Photos are Key

What comes to mind when you see this image? No, not a glass of wine. When I see this image, I notice what isn't there. There isn't a bright white blown-out set of windows. Instead, there is a pleasing outdoor view exposed properly. There are not a lot of dark areas inside, much darker that the mellow shadows on the floor and walls. Instead, the shadows and highlights are more as my eyes would see them. There just isn't a stark contrast because of the bright outdoors merging with the interior.

The fact is that real estate photography requires a lot of interior shooting. Surveys every year conducted by real estate associations and others tell us that people are using the Internet to shop for homes to buy or rent. They, at least 90%+ of them, tell surveyors that photos are the first thing they check out and they're very important to them. If they like the pictures, they'll check out the descriptive text and property information. If they don't, they move on to another property.

Many real estate agents unfortunately would rather close the curtains and turn on interior lighting than have those blown-out bright windows like big white boxes. Others have embraced HDR, High Dynamic Range, photography. Real estate investment is about numbers, and the number here is 3. HDR photography uses three to five, usually three, photos at different exposure settings to merge and create a single image with all of the bright and dark areas adjusted for a result like the one in the photo above.

I can't show you what this photo would look like if it was done as a single shot, but it definitely would have had the bright outdoors mostly very whitish to get the interior right. To get the outdoors right, the interior would be very dark, with harsh contrast between light and dark areas.

Most of today's digital cameras have a feature called "exposure bracketing." You set the camera to take your three photos with one underexposed, one properly exposed, and one overexposed. You should use a tripod, as you're going to push the shutter button once and all three exposures will be created in rapid order. There will be:

• The underexposed photo with the outdoors looking OK, but the indoors dark.
• The properly exposed photo will be something in between, too bright out and too dark in most likely.
• The overexposed photo with the interior looking good but the windows blown out.

Now you just need software to do the HDR process for you. There is free software out there, such as Picturenaut. There are many good software packages under $50 too. The software merges the three photos to create the perfect blend of exposures that are more like what your eyes do for you. Some of the newer digital cameras even have in-camera HDR, and the processing is done for you automatically.

If you are going to market homes for sale or rental, you should look into HDR to get the attention of your Internet property viewers.

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