How to Up-Sell in a Down Market
John Moe
APRIL 12, 2008
- After/before
- (Cotty Lowry)
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Bill Fairbanks is running an open house for a cozy West St. Paul, Minn., three-bedroom home. A few years ago, Fairbanks would lead off one of these chats by talking up the house -- bragging about the yard, for example, or pointing out the kitchen. Now, given the current real estate climate with its falling prices, rising foreclosures, and recession, he talks globally.
"The first thing I do in starting a conversation with [potential buyers] is it's not about the house there, or about any specific property, but more about the industry," he says. "What's going on, where their apprehensions may be in relation to friends or relatives they may have heard things from."
It's a buyer's market today, and buyers are doted upon. The strategy? Calm them down, earn their trust -- then get to the house later. As for sellers? "We'll go out and look at some homes in some areas they may want to purchase within, so that they're seeing it from a buyer's perspective instead of seeing it from their seller's perspective," says Bill. "And then we'll even role-play it and come to their house as if we're a buyer looking." It's fair to say that Fairbanks is kind of "good cop" with the buyers and "bad cop" with the sellers.
Twenty miles away in the posh suburb of Eden Prairie, Julie Trones is showing a home priced at $950,000. She too makes her sellers -- even the well-heeled ones -- hit the pavement and tour houses as if they were buyers. It's tough love, but it's a tough climate.
"They're savvy buyers," she says. "They want the home to be ready to move into. And sometimes they even aren't very interested if the paint color isn't what they're looking for, which seems very trite to us. But that's kind of where they're coming from."
Trones says prices are down, and so are sales. Meanwhile, she's spending more on marketing and skipping vacations. "It takes more time, energy and money to sell your listings than it did a few years ago," she says. People are working harder for those smaller numbers.
Up in Minneapolis, Cotty Lowry relaxes on a couch after a three-hour open house. "Lots of people want to buy -- I was inundated today," he points out. "But they all of course would prefer to buy at the bottom. But nobody knows where the bottom is until it's on its way up."
Even with the falling national numbers, some neighborhoods are actually doing okay. But in this real estate market, there's more psychology than math. "If you put their home on the market, even though they know that prices are falling, their home is special," Lowry says. "And they live in it and it's somehow exempt from the market because what they did to it is special. And every seller's home is special, it turns out."
Lowry regularly employs a squadron of staging consultants, plumbers, carpenters -- anyone who can make the house stand out in a tough market.
He looks around a recently "staged" home. "The woman that I used for this came up with a seven-page, single-spaced set of directions on what the sellers should do and where to put the furniture. Her deal is, anything smaller than your fist gets put away."
As news about the nation's real estate market seems to get ever bleaker, agents are working harder and getting more creative. They have to, to make those sales so they can pay their own mortgages.
Lowry recalls the lengths he recently went to in order to land a recent sale: "The stager felt there was some friction or bad vibes in the house. So they brought this woman in who burns sage, and she makes certain recommendations: In this house there had to be a green candle in the bedroom.
"This sounds crazy, but I gotta tell you, we're having showings like crazy on this house. And on another one, she insisted on having red tulips near the front door... I don't know, we'll see if it works."
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- Artist: Hauschka
- CD: The Prepared Piano (Karaoke Kalk)
Comments
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From Bellevue, WA, 02/21/2013
These are some pretty good selling tips. One of the most important things is to have an impressive bathroom. That's why I had to hire a plumber from framingham ma to help with our bathroom remodel and we sold at a much higher price than we originally anticipated.
From Barcelona - Spain, 04/16/2008
I am appalled to see prices fall in the USA.
Our government says that the prices do not go down, but you have always been our front for everything, for better and for worse.
From Minneapolis, MN, 04/12/2008
The real world scenario for the $950,000 home would probably go like this--buyer is moving up from selling a $500K house and puts down 20% or $190K & gets a $760K mortgage, fixed at 6.25% (although I just got a 5 year jumbo ARM in March 2008, no points at 4.75%)
Payment with taxes & insurance would be about $5,780/month in Minnesota. Less in most states because of our high property taxes. Using the standard 28% ratio, one needs to make $248,000 per year. At the 4.75% rate on a 5 year arm, one needs to make $217,000 per year.
While this is a lot of money, many folks could safely afford this, and many people would put lots more than 20% down. CL
)
From Framingham, MA, 04/12/2008
Correction: that was the Texas median family income. For the US currently in 2008, the median *family* income (more than only the household, which includes single persons), is currently about $60,500.
This would allow a mortgage of as much as $180,000.
But compare to median sales prices of homes recently close to $200,000, and higher house prices in many cities across the US.
From Framingham, MA, 04/12/2008
But the real catch is that by conservative traditional standards, a current median family income of $52,000 implies a maximum mortgage of only $160,000, and not more.....
This is why house prices are falling.
From Framingham, MA, 04/12/2008
To afford a $950,000 house, as mentioned in the article, requires an income of $300,000 or more, in order to qualify for the current traditional conservative financing.
The average household income in the US right now is less than $50,000. The median family income is close to $52,000.
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