Expert: Diann Tonnesen - 10/23/2010

Question
QUESTION: I am not sure if I am expecting too much, or should be concerned our realtor is not doing enough.

We have had our home listed for a little over two months (short sale). We are in an area of the country where the housing market is one of the worst.

We have a fairly new home (2007) and decent size, about 3,100 sq ft. For our zip code alone there are over 1200 homes for sale and in our city, close to 4,000. Plus, over 12,000, if combined with another really close city. People looking for homes in our area would likely look in that area as well.

For the size of our home, in our area, we are competitive (if not lower) and have seen three recent sales in our gated community (consists of 77 homes) that ranged from $177k to $187 (sales happened May through September, $177 was the latest).

Our realtor has listed it on his site and on MLS, which I am assuming feeds to other aggregator sites as I have seen our listing on other sites.

To this point we have received one call, which turned into a showing. However, nothing past that point, not a single call. Our realtor wants to start dropping the price $10k each month until we get a bite. Also, to document the price drops and market resistance for when we submit the short sale to the bank.

I am in marketing/advertising and I am concerned our realtor is not doing enough to get our listing in front of people's eyes. Yes, it may be listed on all these sites, but when competing against 12,000 potential competitors you are a drop in the ocean. I am not expecting him to use TV, radio ads, etc…but I expected more than one call in 2+ months.
We may need to end up lowering the price, which is fine, but I want to make sure we are actually trying to get in front of people's eyes and not just "post the listing and hope someone sees it".

Plus, we are going into the holidays and I would think people are less likely to purchase a home during this season. When we come out on the other end we have already dropped it $150k when people start looking again. Am I expecting too much?

Thanks.

ANSWER: Hi David,

You mentioned that your home was priced competitively, but didn't mention what price you were listed at compared to the sales at $177 to $187. And you need to know if those recent dales were also short sales or if they were bank foreclosures or even "classic" sellers. Short sales typically sell for less than foreclosures or "classic" sellers because they are so complicated and take so long.

I hate to second guess your agent as I don't know your market, so I can only tell you what we would do. With short sale listings, we tend to be much more agressive on the pricing right out of the gate. Consumers are looking online at price more than anything else in this economy, so if your property is priced right, it will attract their interest and generate showings. (Just from the outside, if you have only had one showing in two months, it seems that pricing is the major hurdle.)

Initially we price a home to the existing comparable sales on the low side, and then every two weeks we reduce the price $5k (in your price range) until we get an offer that we can submit to the bank. The bank will then perform a BPO (basically an appraisal) and then submit your entire file to the investor that actually holds the note. As long as you can document that you started within comparable price range and then document the drops in price until you get an offer, you have made a strong case for a lower sales price.

Remember, the investor is the only one that really cares how much you get for the home. The bank is usually just the servicer of the note and does not have a financial stake in the outcome. I can show you two identical homes with two identical offers serviced by the same bank and one offer will be accepted while the other is rejected. It all depends on what YOUR investor will take. But until you have an offer in hand and get some sort of response, you have no idea where you really stand.

So our primary objective is to get a viable offer within 30 to 60 days. Even if the investor rejects the offer (or possibly counters and the buyer rejects the counter) at least you will know how much you need to get to make the short sale work. And then your agent can market the property as a "pre-approved short sale." That is MUCH stronger than one that is not. Most buyers (and agents) have gotten burned too many times waiting on short sales that don't happen. They would rather make offers on "sure" things like bank foreclosures or classic sellers. So you want to do everything you can to assure them that this one can go.

In addition to aggressive pricing, the MLS description should be complete with all the possible amenities of your home and should include lots of pictures and a virtual tour. I am also a big fan of open houses every three weeks. And color magazine advertising is also a part of every listing strategy.(Most color magazines also have online versions.)  

A prominent Internet presence is VERY important in marketing these days. If you do a search for homes or real estate in your area, you want to make sure that your home is listed on a site that comes up in the top three places on Google and is easily found on that site. Realtor.com, Trulia.com and Homes.com come up in most markets in one of the top three positions, even if your agent's personal site does not. Make sure that your home is listed on at least one (or more!)of the top three sites on Google.

I hope that gives you the information you were looking for? If you have additional specific questions, feel free to fire away!

---------- FOLLOW-UP ----------

QUESTION: Thanks for the quick response. Actually, I didn't look at your profile before sending the first question, but just did. You actually do know our market. We are in North Las Vegas. I pulled the number of houses currently for sale from doing searches on Zillow by zip and by city.

Sorry. I thought I included the price in the last email. We are at $180K. I was wrong about only three being sold. I looked at some market analysis our realtor sent us back in early September and it shows 6 sales (starting in May) and then another has sold since then, for a total of 7. The prices ranged from $165k to $227k, three of those (all over $200K) I believe were models or final builds. I don't know about the others.

As far as the marketing aspect, yes we are on all three of the sites you mentioned. I know we haven't done any open houses, but not sure on the real estate magazines.

At least what you said about dropping the price every 2 weeks makes me feel a little better about what he's suggesting. I just want to make sure we are performing due diligence before we just keep dropping the floor.

The reason I care is because of the deficiency issue. I don't really care if we were to sell it for a dollar as long as we aren't stuck with the entire deficiency.

Thanks again for your insight.

Answer
Hi again, David,

Since I now know that you have a property that is listed in our market, I unfortunately can't make any more suggestions or give any advice as that is against the ethics of our Board of Realtors. I can wish you much good luck and I hope your home sells soon!