Are you more interested in price or getting your home sold quickly? And I don’t mean giving away your property.
Some of our leads for real estate sales come from property that was previous listed as For Sale By Owner (FSBO). In contacting some of the homeowners, they were attempting to sell the property themselves rather than use a listing agent or even consider an auction.
When asked “why” they would not use an agent or consider an auction to sell their home quickly, there were primarily two responses we were getting. First and most dominant response was, “We want to save on the commissions.”
When asked how they were marketing their home, we were told they put a sign out front and ran a week-end ad in the local newspaper. Some bought the FSBO package that included signage and an ad in the regional For Sale By Owner (FSBO) magazine.
The second response is something we are running across more and more: “There is not enough equity in the home to pay commissions.”
In either case, we would ask what they had been asking for the property and how that figure was determined. In some cases we were told that the house down the street sold for so and so a few months ago, and their house was very similar or in better condition. Some said their brother-in-law said to take nothing less than $______(you fill in the blank). A few paid to have their home appraised. Some even used the tax value as their asking price.
We would ask if they received any offers on the home. In most cases they said no and for those that did get an offer, they felt the offer was too low. And then we would ask what is the bottom dollar they would take for the property. In most cases, it was thousands of dollars less than what they were asking. (Remember, they want to save on commissions. They are now motivated sellers).
Many of these homeowners had attempted for six months or more to sell their home without any success. Depending on their response to a few other questions, we would go through a little “holding cost” analysis with them. For example, if they were spending $1,500 a month for a house payment, that was $9,000 over the six months. If their utility bill was $300 a month (electricity, water, sewage, garbage pickup, etc.), that would add another $1,800 to their holding cost. And let’s not forget taxes and insurance that could add another $2,400 or more to holding cost. We won’t add the cost of maintenance (cutting grass, repairs, etc.), advertising and appraisal, during this six month period.
All in all, we are looking at a minimum $13,200 holding cost for this six month period. Remember again, they wanted to save on commissions. The cost is more if you go over six months. Through proper marketing, they could have cut this expense by 2/3’s or more.
Finally, we would ask, “If you could cut your holding cost by 2/3’s or more, get the home sold in 30-45 days at fair market value, would you be interested?” What do you think their answer was?
Let me ask you, “Are you more interested in price or getting your home sold as quickly as possible?”