I'll Sell It, or I'll Buy It... REALLY?

I'll Sell it, or I'll Buy It..!  REALLY..? There are a "few" real estate agents out there who have decided to implement the "I'll sell your house in 60 days, or I'll buy it!" program. I've been fielding questions on this approach, so I thought I would toss in my two cents. Are they illegal? Well, anything can become illegal if you break the law doing it, but the way these programs are designed, they are perfectly legal (read the fine print). ALL OF THESE PROGRAMS have a wide range of conditions you must MEET to "qualify". I'm going to mention a few, but ANYTHING can be included, as long as it's disclosed to the seller (you) when the deal is struck. The home must be "sellable".  If you have unfinished projects, no landscaping, damage of any kind, they must be fixed, or remedied.  The Agent wants your home to sell, and if it appears you're unmotivated to correct the problems, they will pass offering you the program.  - If you disagree, the Agent will still offer to list your home without the contract). The Seller must agree to the Agents price recommendation.  Again, the Agent wants your home to sell, and in order for this to happen, it must be priced right.  Comparable homes in the area will be looked at, and you'll be required to price your home 5%-10% BELOW market value.  By the way CMA's (Comparative Market Analysis) are more of an "art-form" than a science.  Five Agents could have a slightly different CMA on your property. In other words, an Agent could have a CMA that is 5% below market, and be able to explain why (in his OPINION)...  -  If you disagree, the Agent will still offer to list your home without the contract). The Seller may be required to agree to a graduated price reduction.  You've agreed to a below market sales price, but after 10 days, no offers.  At this point it's time for a reduction.  EXAMPLE:  If after 10 days no sale, the price drops 5%, or set amount.  Another 5% after 20 days.  30 days, another reduction.  Completely legal, if disclosed up front.  Imagine what your home will sell for after 50 days, and possibly 5 reductions...?  Of course it sells. -  If you disagree, the Agent will still offer to list your home without the contract). Anything goes when it comes to these contracts.  The contract could include provisions stating your home must remain "sellable" during the contract.  If the Agent does an inspection (which you also agree too), and finds "what he feels" is a HUGE problem, they can cancel the contract (if it's not resolved to his standards).  It's much like the "inspection period" when you're buying a house.  This is an "out" built into the contract for the Buyer.  The same goes here. - If you disagree, the Agent will still offer to list your home without the contract). ANYTHING is fair game.  The contract could require the Seller to make a Facebook entry every week.  Park cars inside the garage (clean it out if it's full of stuff - not a bad idea anyway).  Limit children toys to a single room.  Hold open houses EVERY weekend.  Allow Agents to show the house at a moments notice, and have the home "sellable" as outlined in the contract during these showings... If the Seller fails to abide by the contract, it's void. - If you disagree, the Agent will still offer to list your home without the contract). Are these programs a scam?  Simple, not if EVERYTHING is disclosed.  Let's face it, us Agents make our living SELLING homes, not buying them.  We also face huge challenges in accomplishing this goal.  Homeowners and Agents don't always see, eye to eye, on many points.  These contracts put the Agent in charge, and leave the Seller to simply follow along. Who can benefit from these programs?  Up front, I'm not a fan of these programs.  My job is to work as a team with my clients, and far reaching contracts can get in the way. With that being said, there are SELLERS out there that agree to follow these contracts.  Most NEED a fast sale. They're moving, bought a second home, and can't afford two mortgages.  Divorce.  Parents home after their death.  Loss of job.  Disability.  Whatever it might be, they're willing to do ANYTHING to sell their homes, and they don't mind taking a back seat to the person getting it done.  A GUARANTEE sounds good, and in their minds takes away some of the stress. Do I recommend them?  I don't have an opinion.  I'll admit, there are times when having this much control over a sale sounds GREAT..!  However, I feel that terms can be agreed upon without a complex contract.  If my client needs a fast sale, but they aren't willing to make the changes to their property to make it happen, I'll simply walk away.  Chances are if I offered them a contract with a guarantee, the terms wouldn't be met...  Putting something on paper doesn't always guarantee success. Why do Agents go this route?  My comments, and those of Agents following these programs, will be VERY different. I've attended seminars (Craig Proctor) where these programs have been outlined in detail, and they don't center on SELLING your home.  It's about you, the home owner, CALLING the Agent. While the program exists, it's about generating a sales lead.  A guarantee is a GREAT "call to action" (sales lingo for motivating you to do something).  A way to get you to call.  Even if you choose not to follow the program, you're having a conversation ABOUT SELLING YOUR HOME!  It's now up to the Agent to "sell themselves" to you at that point, and get your business. Put the apparent NOBLE gesture of offering a guarantee on the back burner, it's simply comes down to you dialing their number. Final thought.  VERY FEW Agents end up buying their clients home.  Either it sells, or the contract is broken.  If the Agent does buy, it's WELL below market.  It has to be, since they have expenses above and beyond the purchase (up-keep, Realtor fees, improvements). Know if you're considering a program like this, you might take a hit on the sales price.  At the end of the contract period (if all terms are met), you're home will be gone.  If you went without a contract, the "right" buyer could appear on day 62,  buying your home at fair MARKET VALUE.

What if you want to SELL..?

What if you want to SELL..? "OK Todd, you have ZERO issues talking about what 'Great' deals are out there, but what about us that want to sell?  Are we going to take a hit?" This is a question I get asked everyday.  Even buyers ask me this, since many have a home they're looking to sell, before they can buy. Pre-2002 Owners Here's the simple answer, and like anything, there are ALWAYS exceptions to the rule...  If you bought your home before 2002, you're most likely OK when it comes to resale.  Sure, it's not worth what it was on the market 5 years ago, but you're most likely into it LESS than what it's currently worth. Example, I fall into this category.  I purchased our home in 1994 for about 100k.  If I had sold it in 2005 (we almost did...!) homes exactly like ours, just feet away, were selling for 360k. Oh, and they were on the market less than a week...  Today, I would expect somewhere around 190k.  Shocking to think that my home has taken a 170k price hit in the last 7 years...  The upside is that if I had sold, and bought something larger, that home today would be worth 50% what I paid, and I would be underwater like so many of my clients. After-2002 Owners If you purchased after 2002, and before 2010, you've taken a hit.  That's it in simple terms.  Is your home worth less than you paid?  More times than not, yes.  Say since you've owned it you've done improvements. Put in a pool, updated the kitchen, baths.  Is the picture looking any better?  Well, it depends.  If a buyer LOVES what you've done, maybe.  If it's their taste, exactly, then you're going to get some of that money back.  But here's the reality, if you're home is priced too high, the typical buyer is going to buy the home down the street for 40k cheaper, and put in their own dream kitchen and bath... So, is it a good time to sell?  I still say YES, and here's why. Lets say you bought your home in 2005 for 300k, and you put the standard 20% down (60k) so you now owe something like 200k to the bank (you paid down a little of the principal).  Homes in your area are selling for 240k.  By the time time you pay me (the Realtor) and all the fee's, you're breaking even...  Yes, you've lost your down payment, but at least you don't owe anything to the bank once the home is sold (short sale).  This is where the other side of the coin comes in... The home you want to buy is a Short-Sale, Bank Owned (REO), or just a standard sale(just like you). It's twice the size of your current home; needs work, but is still VERY nice inside. It's right at the limit of what you can afford, 400k.   Now remember, we're talking about a home, that when you bought your old home in 2005, was somewhere North of 700k.  You get the financing, and you've now moved up to a larger home, but AT THE BOTTOM of the market. I DON'T have a crystal ball, but I think EVERYONE is in agreement that home values are near the bottom. With this being said, the home you just bought could very well be worth 20% more than you paid in 5 years (a 4% a year increase - we were at over 20% during the boom).  The math on that is... a 80k increase.  Here's the kicker, if you had stayed in the first home, you would be simply breaking even... It's not entirely about what you SELL your home for, but rather WHAT you're buying on the other end...  If you're selling to make money on the direct sale, the chances are you're not going to be happy, even if you bought before 2002.  If you're reinvesting, there are opportunities.

2012.. Better..? YES, if you Market..!

2012.. Better..?  YES, if you Market..!

I'm a FIRM believer that often EXCUSES get in the way of actually doing something. It's easy to point at various events/happenings and blame those for not getting something done.  The challenging housing market has been a HUGE excuse for many Realtors who refuse to change with the times.

Granted, this is an overly general comment, and isn't meant to encompass EVERY scenario, only to point out the obvious... There are a ton of people looking for an EXCUSE, rather than a SOLUTION.

I personally feel that 2012 will remain challenging. I've heard a few fortune tellers out there, claiming 2012 is going to be a breakout year in the housing market. I would love to see their crystal ball... I break down my view of the market in this way...


First, if you have a nice home, and it's marketed well, it'll sell. I did a search the other day for Realtors who do video on their clients properties. Out of a general search with over 10,000 results, only 240 had video. Out of this 240, only 2 (yes, 2) had someone actually in the video pointing out features. Oh, and those two were on million dollar plus homes.  The other 238 just walked around holding the camera...  I guess this was to allow us (the viewer) to get a view as if we were there.  I don't think it works very well.

I spent 2 hours playing these videos, and only a few came across as “helpful”. Why did I spend 2, looong, hours clicking on video links?  I was hoping to find something interesting I could possibly use in my videos.  I didn't find anything...lol.

While I would like to think what I do is special, PLEASE..! When I've asked other Realtors why they don't take more effort, the EXCUSES abound. They either have a dated system that they're comfortable “Selling” to their clients, or they're embarrassed to be in front of the camera, or they simple refuse to spend the extra time.

Back to my main point. I feel 2012 will be the year homes will continue to sell, but only those that are marketed with EVERY new, and now “mainstream”, venue. 

You know what, I'll give you a quick example.  To the left is the image I use for my vacation rental on Facebook.

Most people have heard of Facebook. By using Facebook for a HOME, you can add a TON of information otherwise missed. I now create a Facebook page for EVERY cliet, listing additional photo (with captions) Video, I even ask the homeowners to post interesting information on the “Wall”.  Information on the local schools, parks and shopping.  Also, personal messages on why they liked living there, and sometimes why they're leaving (move, downsizing, etc.). Those that visit get a WAY more rounded picture of the home, and the AREA it sits in... This sparks interest, and many times a visit. Visits lead to sales...

Oh, and then there's YouTube.

Yes, 2012 will be a good year to sell your home, and a great year to purchase. Whether you use me, or another Realtor, make sure they market your home effectively, in a way that makes sense to you...