Help Traditional Sellers Compete with Distressed Properties
The buyer put an offer in on a short sale. "Then, came the waiting," says Marie Avery CIPS, CRS, GRI, PMN, of RE/MAX Alliance Group in Bradenton, FL.
"This was a cash buyer and a higher-end property, and we waited six months for short-sale approval, then another 30 days to close. When that day came, the sellers refused to close on the property," Avery said. "Against their attorney's advice, they decided to let the property go into foreclosure. After seven months, my buyers had to switch gears."
"They decided they didn't want to look at distressed properties. They found a traditional sale and were able to close in a week. It was a success story that came after a lot of frustration."
According to our interviewees, depending on the location, more and more buyers are seeing the benefits of working with traditional sellers. Sure, the price of the homes may be a tad higher, but for those wanting to move quickly through the transaction process and get a well maintained home, it's the way to go.
"In our market, a traditional seller is like gold," says Yvonne Leonard of Coldwell Banker Shepherd Group in Riverside, CA. "For many years it was difficult to get short sales closed, so a traditional seller was considered a sure sale," she says. Of course today short sales are easier to close, but the process can be long and tedious.
That's not to say traditional listings always run smoothly. "If a traditional seller wants to get what the home is worth, it's not going to happen in our market," says Monica Foster of Lynda's Real Estate Service in Boyne City, MI, a resort area. "There are too many properties out there in foreclosure that are affecting prices. It's affecting a traditional seller's ability to sell, and it's driving prices down, although prices are stabilizing."
So, what can you do to prep your traditional sellers, and how can you get their properties sold? We've got some tips:
1. Set expectations. "It's important that you be realistic from the beginning, so I am very specific with my market analysis," Ross says. "I use charts and graphs to show what's happening in the marketplace." Sellers must understand that their home may be priced lower than they'd like.
Avery agrees. The first thing she does is educate the seller on the difference between a short sale and a foreclosure. "They need to understand the process," Avery says. "Then, I show them distressed properties with similar features so they know what the competition is. Their home has to look better than the competition."
Also, traditional sellers need to be prepared if the buyer presents a low offer. "If there aren't enough traditional sales, the appraiser will use distressed properties to come up with the price."
Avery also suggests completing NAR's Certified Distressed Property Expert (CDPE) training so you can understand the competition as well.
In fact, Leonard says, "Some of the initial offers are very low so you need to mentally prepare sellers for this and give them an action plan so they will counteroffer."
2. Price it right. "Many of the traditional sellers have withdrawn homes or delayed selling because of the frustration of competing prices," Avery says. "To get showings, traditional sellers have to price their homes close to distressed property prices. In some circumstances, they really should avoid listing right now."
3. Clean it up. One huge advantage a traditional seller has is the condition of the property.
"In the past, you might make suggestions to a seller, such as paint this room or plant some flowers. Sometimes they did it, and sometimes they didn't," Ross says. "Today, if they want to get a good price, they have to do some work. I stress the importance of curb appeal and decluttering the home."
Leonard is a strong proponent of staging. "Traditional sellers have the advantage in this area," she says.
4. Be flexible. With a traditional sale, our experts agree flexibility is key. "Sellers must be flexible with their showing times and allow open houses," Leonard says.
Flexibility in negotiations is also important. "Most distressed homes are sold 'as-is,' but a traditional seller can offer incentives, such as credit toward closing costs, credit toward repairs and updates, home warranties and more," according to Avery, who says you should stress those benefits.
5. Market it everywhere. When it comes to marketing the property, it's important to play up the benefits of buying a traditional listing: a secure closing date, a smoother transaction, a better maintained home and some negotiating wiggle room as far as repairs go.
"Let the neighbors know, and get lots of great pictures up on the Internet," Ross says. "Give prospective buyers as much information about the home online as you can."
In Leonard's market, she says it's vital to get the word out through several different mediums. "We use Facebook, the Internet, open houses, office meetings and our WCR network," she says. "It's a contact sport, and relationships are important."
The truth, according to Avery, is that in areas where distressed properties rule, traditional sellers need to bring their "A" game to compete. "Regular sales need to be in the best showing status that they've ever been in to beat the competition."
Tracey C. Velt is an Orlando-based freelance writer.
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