Talk about testing your emotions. And your relationship with your lifetime partner.
You set a certain budget and know more or less the general areas you’d like to move in to. What you can’t control all the time is the choices that follow. Your REALTOR sets out to find and filter out some possibilities, and you go on the usual online search spree to add to the basket of choices. You also find some foreclosures listed on a public real estate auctions site, and add them to the pot for good measure.
Next comes the drive-by adventure. You come across one of the homes you had liked online, and indeed it looks stunning. Brand new, near schools and transit, and it satisfies many of your other parameters. Most important of all, you know the brand new stainless appliances await, two fireplaces are in stock and the counter tops are beautiful granite and in your favourite colour. That’s the house indeed.
Something nags you though, as the other homes on the street seem quite old. You’re not certain if the general surroundings are exactly what you had hoped for. Surely you could grab one of those older properties for half the price if any went on sale. So the question becomes whether your investment is being made in the right place.
You drive to the next property on your list and lo and behold, you pull into this really nice area with great landscaping and a good community feel. Many new or newer homes on the street, but the one you were looking at still stands from the dear old days it was built. Obviously very well cared for though.
You guessed the dilemma. This house sits in a great neighborhood but is unlikely to offer many of the things you desire. Like the walk-in closet and the shiny new kitchen island. Or the open layout concept. The floors may also not be fresh hardwood. In fact you may have to contend with some weird colour carpeting and wall paper until the renovations you must do are completed. A year or two down the line.
Which of the two homes would you choose to invest your dollars and the next many years in? Which of the two would be the better investment and the better move?
The older street may be due for some tear downs and new build outs. In time, the entire street will get upgraded and the value of your property would be supported along the way. But that’s never a guarantee. Some neighbours may decide to sit on their childhood property, as is, for another 20 years. It’s a gamble. Meanwhile though your home is the best looking one on the street, and you get to live in the house of your dreams.
On the newer street, you get to live in a superb neighborhood where your investment is more likely to hold up and grow, especially if you completely renovate or rebuild the house in the future. In the interim however, you must compromise on the quality of the house you’ve always dreamed of, and you become known as the one who lives in the old house.
This is when I run away from both options and look for a happy medium. Or simply give up the entire thing and hunker down for another couple of years until I can afford a larger budget.
When buying a home, always discuss and decide on your top priorities first. Why are you moving to begin with? What drives you? When we last moved, we really needed to get away from the neighborhood.
Is it a newer neighborhood that you most desire where you may compromise on the home itself a bit, or is it the home that drives you and you’re willing to get into a slightly inferior neighborhood but in an overall good area? Knowing your priorities from the start should minimize surprises, control stress levels a bit, and set your expectations right.
Some investment gurus suggest the older home on the newer street is the better bet. But can you emotionally deal with that and put your dream home aspirations on hold?
Check out some properties in your area that are being sold through online auction. Which would you instinctively want to bid on? The hot deal or the hot property?
If you’re lucky, and patient, you’ll find some that offer the best of both worlds.
How much more can I get for my property is a question that every home seller thinks hard about.
The answer of course depends on many things, including time of year that you plan to sell, if the market is hot or cold, and if you are prepared to do any renovations ahead of listing the house.
In a recent post in the LB Social Forum we listed the top ten features and upgrades you’d want to do and how much more buyers are willing to pay for each.
However, at any time during the year, working with your REALTOR to sell your home using the auction strategy can yield magnificent results.
Certainly the auction process must be handled and marketed well to start, as REALTORS do on any of the traditional deals they represent. That’s a must. All done right, it is not unusual for properties to sell for up to 10 percent, 20 percent or even more, than the reserve listing price.
That’s one good reason to list and sell via auction, versus going the traditional route.
If you are considering selling your property, speak with your real estate agent about auctions. Progressive sites like ListedBy.com cater to real estate auctions, be it distressed properties, REOs, traditional residential real estate auctions or public commercial auctions, completely free of charge for sellers, their REALTORS and buyers.
If you plan to sell your home, an online auction will likely generate a bidding competition and fetch a price higher than you or your REALTOR anticipated.
However, there are also features and upgrades that buyers value and are willing to pay extra to get. Discuss these ideas with your family and real estate agent, as completing one or more of those renovations can further increase the sale price of your property.
According to research by the National Association of REALTORS (NAR), home buyers are willing to dish out up to more than two thousand five hundred dollars for certain upgrades.
This also means that when competing for buyer dollars, offering these upgrades could give you a significant advantage.
Here is the top ten list of upgrades or features and how much a buyer is willing to pay extra for them:
#10: A fireplace (or more than one) – up to $1400 extra.
#9: Eat-In Kitchen – $1770.
#8: Stainless Steel Appliances - $1,850.
#7: Kitchen Island – $1,370.
#6: Ensuite Master Bath – $2,030.
#5: Hardwood Floors – $2,080.
#4: Granite Countertops – $1,620.
#3: Walk-In Closet In Master Bedroom – $1,350.
#2: New Kitchen Appliances – $1,840.
#1: Central Air Conditioning – $2,520.
How can you truly trust someone when you can’t see their eyes?
If any business is a people business, it is real estate. Real estate auctions expert or not, an agent depends on networking to build their client roster and a solid referral network, over time. The first order of business is to build familiarity and trust with people we meet, and work to expand that pool every day. The first step is to genuinely connect with potential clients and come across as honest human beings they can trust. We must ‘connect’ with them.
Here is a question every agent needs to ask themselves.
How can I effectively connect with people when the first thing I do when I slide out of my house is to cover my most powerful asset for building trust and connect with people, my eyes?
We grab the darkest set of sunglasses we can find on the store shelf, and as long as we think we look cool in them, we slap them on our faces and walk the streets all day forgetting about the opportunities we are missing along the way. Every single day. Where did the good old days where everyone made eye contact and greeted other passers by? What would you be able to do if you were able to make eye contact with ten additional people each day whether on the street, at the neighborhood store or on the restaurant patio? How much more effective would your meetings be with prospective clients if you remove the mask off off your eyes when you meet with them?
If on the odd occasion you must don glasses during a showing outdoors on a very sunny day, it is best to do so after excusing yourself and preferably after building a relatively reliable level of trust with the prospect.
The next time you reach for the Zoro mask, no matter how expensive or cool it is, ask yourself whether it is really helping, or hindering your growth as a real estate professional. If stacking the odds in your favour means suffering a bit of glare every once in a while, that just may be the compromise you need to edge out your competition.
Not long ago, many markets were literally frozen. Today we went to the opposite extreme. Agents and investors in a number of markets are complaining from low inventory, with many having closed over one hundred deals last year. A good sign if banks are able to continue to manage the inflow of foreclosures into the market. While inventory control and Federal Reserve money printing policies have directly led to a demand-based market within an inflationary environment that further helped to boost prices, the reality is that agents and investors are now looking for ways to manage multiple offers more efficiently. Irrespective of market conditions, allowing offers to fall through the cracks has deep implications on sellers, agents and buyers, and must be effectively addressed.
One of the emerging trends in real estate is fully transparent public real estate auctions. The idea of ‘auction’ is making its way into agent and investor plans, slowly but surely. But if the statistics offer any reliable indication, real estate auctions will become significantly more prominent over the next 2-3 years. In fact, NAR (National Association of REALTORS®) projects that the auction market will consist of one of every real estate transaction, by 2014-15.
As in any industry, there are visionaries and pioneers who embrace new technologies and adopt new ways to manage and grow their businesses. Automating offer management is now emerging as an effective means for real estate agents and real estate investors to manage incoming offers and counter offers while maximizing property value at the same time.
The idea and execution are both extremely simple:
1- Set a start and end date to auction a property online. Traditional on location auctions tend to be relatively cumbersome, resource intensive and expensive. New 100% online auction platforms are replacing the old model and are entirely free of charge.
2- Pre-market the auction to investors, brokers, agents, consumers and anyone you would usually reach out to through your usual marketing channels, and direct them to the online auction page. Include the auction open and expiry dates and times. Use email, post cards, your website and social media channels to create excitement around the auction, and include the link to the auction page.
3- Watch offers come in and get outranked automatically by other interested buyers, through your online dashboard and at your convenience.
4- Contact the buyer with the highest bid, at auction expiry (the auction end date and time), to begin the legal paperwork.
Along the way, advanced platforms such as ListedBy should enable you to view bidder profiles and contact information, so you may connect with them directly if you wish to flesh out the more likely buyers, much like you would in a typical, non auction environment.
Letting technology take in bids, update bidders and automatically increase bids based on preset limits each interested buyer inputs into the system is a surefire way to manage hundreds of offers simultaneously, especially important in a hot market. So you can seal that crack once and for all, and maximize sales and property value.
If anyone in the industry knows how to reach top producer status and hold it consistently, it’s RE/MAX REALTOR® and success coach Christy Crouch. We caught up with Christy to discover her top secret.
LB: Christy, many real estate professionals can and do benefit greatly from your experience. If you were to share your number one secret to success, what would that be?
R: Treating it like a business, as if you own the company and you are the CEO of your company. You have to make choices and behave like the CEO of a major corporation would. Consistency is key. The consistency of what you do day after day in this business determines the consistency of your income month after month.
LB: What is/are the main challenge(s) that you face in pushing through with this advice in your own business. How do you overcome them?
R: Schedule and time management. I have two kids under the age of 13 and juggling it all can be challenging at times. To overcome it I follow a daily schedule. I plan each month out ahead of time with what days I’m working, what activities are going on and work my personal and business life together. I ask myself daily… is what I’m doing today going to benefit me, my family, my business, or contribute to someone else? If the answer is no, I generally shift to a more productive action. On some level it’s simply a choice and you have to Just Do It every single day like the Nike ad says.
LB: What is the main downside for not applying this principle?
R: You’ll never become a top producing agent without treating it like a business. You may sell a lot of houses one year and not the next. You’ll experience inconsistency, overwhelm, burnout and breakdown much more often.
LB: How can listing or buying property using free online real estate auctions or ‘Best Offer’ technology on ListedBy or other platforms impact your business?
R: I believe the more exposure you can have for yourself, your business, and especially your listings, the better off you’ll be. The Internet puts the world at our fingertips and I think we should take full advantage of that.
LB: Anything else you would like to share?
R: I am just like anyone else. If I can do it, they can do it. It’s all about the choices we make every single day. Choose to win and you will!
LB: Once again, thank you very much for your contribution.
About Christy Crouch: Christy Crouch is the co-founder of You’re The Difference Sales & Life Coaching (www.yourethedifference.com), coauthor of the highly acclaimed real estate objection handler book, Now What Do I Say? Christy is an active agent in Virginia, has participated in closing thousands of transactions in her career, and was inducted in the RE/MAX Hall of Fame for her production. Christy is in the top 2.3% of her marketplace. Her goal is to share what she’s learned with other agents to support them in having a highly successful real estate sales business while having a happy and balanced life.
We’ve spoken quite a bit recently about the restrictive and compromising nature of the traditional real estate auction revenue model. Auctioneers generate their revenue mainly through a brokerage fee referred to as a Buyer’s Premium. This fee, typically between 2 and 10 percent of the value of the property, is added to the final purchasing price that a buyer must pay to complete their purchase.
Let’s say you or your client, if you are a REALTOR®, are interested in California residential real estate auctions and you find an opportunity to bid on a $100,000 house (starting bid). If you end up winning the auction at $105,000, you would be required to pay up to $10,500 on top of the final winning bid price. That’s $10,500 dollars more than you intended to pay for the actual house, and that anyone would naturally prefer to put towards closing costs, renovations, or trips to Hawaii for the next couple of years.
Three issues emerge from this typical scenario that, for now, still occurs every day across America:
1. Buyer Capacity Is Compromised – Technically, what would have happened under the $105,000 home auction example, if you had lost the auction to another buyer, is that you could have had another $10,500 to put towards winning the property. But because you knew you had to pay a ‘Buyer’s Premium/Penalty’ on top of the final winning bid, you would have had to stop your bids at $105,000, as your total payment at that price level would have been $120,000 (price of the house plus $10,500 for the auctioneer)!
2. Home Value and Home Seller Are Compromised – What this example highlights is the loss the home seller incurs under current Buyer Premium auction models. Instead of capitalizing on an extra $10,500 that bidders could use towards the purchase of your home, that same money has to go to the auction house. This caps the actual property value at $105,000 instead of a possible $120,000 ($105,000 + another $10,500 that has to go towards the Buyer’s Premium fee).
3. Slower Selling Environment/Market – The higher the price, the fewer the pool of buyers who can afford to buy a specific property. As simple as that. With an extra $10,500 taken out of play to pay for the auctioneer’s fees, fewer buyers are available to participate in the auction. More buyers directly lends to a more active, faster moving market where sellers can exit and can go on to purchase their next home more quickly, and where overall market inventory can turn at a healthier pace.
An entirely free model where neither buyer nor seller pay any fees to buy or sell at auction is packed with benefits for everyone involved, and is a recipe for a more efficient market where everyone wins:
- More money available to buyers to put towards a property;
- Optimized property value and more money for the seller; and,
- A healthier, faster moving market.
We’re pleased to announce the release of a new consumer handbook on real estate auctions, ListedBy – Real Estate Auction Primer for Consumers.
One of the terminologies explained in the booklet, which will be available for download right here within this blog post next week, is Transparency.
Transparency is one of the key advantages of real estate auctions, specifically online real estate auctions. That’s when bidders can see each others’ bids at any time, and can look up each others’ information, such as account profiles. Much like on LinkedIn and other social networks.
This kind of transparency gives everyone a greater sense of trust and confidence in the process, equal chance, and optimizes a property’s market value. New platforms such as ListedBy.com allow everyone to view other’s bids and member profiles including any ratings, recommendations or comments.
The guide also emphasizes the importance for consumers to engage an experienced REALTOR® when considering selling or buying a home through auction.
Click to DOWNLOAD ListedBy – Real Estate Auction Primer for Consumers.
Meanwhile here is the full News Release capturing the content of the booklet:
ListedBy Releases Real Estate Auction Guide for Consumers
Downloadable handbook outlines and explains basic auction terminology, strategies and ‘must-know’ guidelines for home buyers and sellers
NAPA, Calif. – November 30, 2012 – ListedBy (www.ListedBy.com), the first free online real estate marketplace and social network with live bidding auction and ‘Best Offer’ functionality has released ListedBy – Real Estate Auction Primer for Consumers, a ‘must-know’ guide for anyone looking to buy or sell real estate through auction.
“As the auction market gains traction, important terminologies and factors are a must for both buyers and sellers,” said Stephan Piscano, CEO and Co-Founder, ListedBy. “ListedBy’s model changes the auction practice almost entirely and adds new dimensions even experienced real estate professionals can greatly benefit from.”
ListedBy – Real Estate Auction Primer for Consumers will be available for download, free of charge, in the Knowledge Centre on ListedBy Blog, starting December 4, 2012. Consumers considering auctioning their home or purchasing a property at auction can also tap expert advice on the ListedBy Member Forum.
ListedBy – Real Estate Auction Primer for Consumers
Basic Terminology and Strategies
1. Auction – The term auction is derived from the Latin ‘augeō’, which means ‘I increase’ or ‘I augment’. It is a process of buying and selling goods or services by offering them up for bid, taking bids, and then selling the item to the highest bidder at a pre-set set auction expiry date and time.
2. English Auction – Is an auction where the price is driven up by buyers and where the highest bidder wins, at auction expiry.
3. Dutch Auction – A process where the starting price of an asset begins higher and scales down until the offer meets a bid.
4. Reserve Auction – A ‘Reserve Auction’ sets a minimum price below which the seller is not obliged to sell the property at the expiry of the auction. As a home seller, use this strategy to secure an absolute price below which you are not ready to sell, and to advise bidders that bids must go higher for an acceptable agreement to be reached.
5. No Reserve Auction – A ‘No Reserve’ auction, also known as an Absolute Auction, legally binds the seller to release the property to the highest bidder above the set starting bid price. This strategy is usually used to create early excitement around an attractive, lower but acceptable price. The approach can drive a bidding competition that can result in a final sale price higher than originally expected by the seller.
6. Buy It Now – By placing a bid under a Buy It Now price option set by the seller, the bidder instantly wins the auction and both seller and buyer are obligated to transact at the set price. Leverage Buy It Now to avoid entering into a competitive bidding scenario and to secure and close on the property quickly.
7. Buyer’s Premium – A traditional practice that new business models such as ListedBy.com are eliminating. Also referred to as a Buyer’s Penalty, or the fee that a winning bidder must pay over and above the price of the subject property. The premium is typically between two and ten percent of the asset value.
8. Open Outcry – Unlike sealed bid auctions, ‘open outcry’ auctions are ‘open’ or ‘fully transparent.’ The identity of all bidders is disclosed to each other during an open outcry.
9. Auction Expiry – An auction has a start date and time, and a close ‘expiry’ date and time after which new bids are no longer accepted. In cases where a last minute bid comes in just prior to the expiry, certain auctioneer rules may include a short extension, to give former bidders a chance to counter the late coming bid.
1. Fees and charges – New, advertising and service driven business models are doing away with all fees associated with buying or selling property at auction. As a seller, look for auctioning your property through a provider or platform that does not charge any fees or commissions. As a buyer, look for auction venues that do not charge any Buyer Premium or penalty.
2. Transparency – Sealed bids may have some advantages in certain cases. However, in buying or selling your home, it is important to first consider a fully transparent environment where everyone gets to see who is bidding and how much. Transparency gives everyone a greater sense of trust and confidence in the process, equal chance, and optimizes a property’s market value. New platforms such as ListedBy.com allow everyone to view each other’s bids and member profiles including any ratings, recommendations or comments.
3. Online Auctions – New, entirely Web-based auction platforms and service providers offer a simpler, quicker and more efficient avenue for buyers and sellers to engage in auction. An online avenue also does away with the added effort, inconvenience, resources and expenses needed to organize and run a physical, on-location auction.
4. Engage a REALTOR® – While buying and selling at auction online is relatively easy, look to engage an experienced representative who understands real estate marketing, knows the area, the auction process and various strategies that can be used to maximize your property value or clinch you a better deal, if you are a buyer. A local REALTOR® who also has experience in online auctions can bring significant advantage to the process. The Member Directory on ListedBy lists agents from across the U.S. and can be a great place to begin your research.
Benefits of Online Auction for Buyers
· Knowledge that the property will sell at auction expiry.
· Knowledge of who you are bidding against and where the bids are at any point in time. A fair play environment.
· Ability to participate free of charge and from anywhere, anytime.
· Ability to conveniently view and bid on multiple properties.
· No Buyer Premiums means additional funds to put towards a desired property.
· Significantly cuts down price negotiations time typically consumed in traditional buying and selling.
Benefits of Online Auction for Sellers
· Expose your property to cash-ready, pre-qualified buyers.
· Let the market reflect the right value of your property.
· Create excitement around the sale of your property.
· Certainty that the property will sell and by when.
· A way to potentially sell your property more quickly.
· Create competition among buyers.
· Less back and forth negotiations lends for an overall faster, easier process.
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