Gary Bolen

1
Gary Bolen Richard Bolen

• How to Sell a Home

How to Buy a Home
In todays Real Estate Market
2
How much did Tom lose?

• Seller Tom paid 200,000 for his house 10 years
  ago. He decides to sell.

• Tom is sure his home value is 575,000.

• Market facts reveal its closer to 475,000.

• Tom lists for 599,000.

• House sits on market for a year.

• Tom changes agents. Lists again. House sells at
  450,000.

• House sells six months later at 450,000.

• How much money did Tom lose?

• How much did Tom lose in 1.5 years it took to
  sell?

3
Our Purpose
To put you in Front of the market
Fact-based Information
Information you can Trustabout Lake Tahoe and Us.
Not Hearsay
No Agenda
and not let the market put itself in front You.
Not to get You to Sell
Rumor Free
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The National Statistics

• www.ofheo.gov

National Home Price Index
Issued quarterly
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Your Market Statistics Resource

• Articles

• Statistics

All of the Information

• Charts

• www.laketahoerealestateblog.com

All of the Time!

• Absorption Rates

• Constant Flow Updates

• Fact-Based Information

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Market Reality

• A reasonably priced home always sells

• PRICE is always barrier to successful transaction

• Disconnect between what most Sellers want and
  what Buyers are willing to pay.

• The successful Seller / Buyer narrows this
  disconnect...

• The successful Seller prices a home according to
  market facts not for what I must have.

7
Market Reality
So what does Tom do?
I know my house is worth 600,000
Successful Seller?
My Neighbor said its worth every bit of it!
Professional Seller!
I dont care about all your numbers
I got an agent who tells me prices are 20 up.
Ill get 600K or I wont sell at all!
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Two forces that characterize a RE Market

• Demand

• Supply (or inventory)

What is a hot Market?

• Greater demand than supply

What is a cool Market?

• Greater supply than demand

9
Every Real Estate Market is Cyclical

• Up

• Down

• Flat

• Up again

• Repeat

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The Lake Tahoe Real Estate Cycle
Average House 3BD, 2BA 2-Car 1,500 sq ft
15 Interest
Longest Sustained Increase ever!
1988 uptick
Dot com
Another Flat Cycle?
Flat for 8 Years
Flat for 7 Years
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The source of real estate data

• MLS

• Members only

• SOLD data County Recorder

• Best indicator market condition

• Best indicator market value

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Recent Article

• April 12, 2007

• Tahoe home price 1.4 million.

• 20 price hike.

Mythbusters?

• Number sales dropped slightly.

• Median Tahoe home price up 6.2.

• 873,800 median now v. 822,500.

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Statistics CA NV market
SLT Total Number SFR Sales by Year
Off 54.7 Since 2004 Mkt. High
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Statistics CA NV market
Stateline Total Number SFR Sales by Year
Off 55.5 Since 2004 Mkt. High
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S. Lake Tahoe, CA Median Prices
3.5 difference
Flat!
2K to 5K increase, or 1
Based on only 80 Sales?
Enough for a trend?
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S. Lake Tahoe, CA Median Prices
Flat?
3.8 Up Skew
Stable?
Flat!
Not Up!
20?
30K - 50K decrease
Based on few Sales?
What is the trend?
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Stateline, NV Median Prices
14 difference
7 increase
An increase (22)
Only 23 Sales!
Was 20 increase fact based information?
A decrease (4)
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Stateline, NV Median Prices
17.5 UP Skew!
2,000 increase 35K decrease from all of 2006.
6,000,000
3.5 to 5 decline from all of 2006.
9,000,000
Prices have Gone down
12,500,000
But what about all of this?
22 sales in 90 days 9 sales in 30 days
W/out Lakefront Glenbrook support
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That article?
Re Average single-family home at Tahoe 1.4
million by Anonymous on Thursday, April 12 _at_
065951 PDT That is bunk. The average of the
homes "sold" may be 1.4 million but we have a
slow sales market in which the higher priced
homes are selling while the cheaper homes are
stagnant.Let's not get nuts or use bad
statistics that are "sales skewed", due to a
certain segment of the market moving, to
establish what the perceived home value is at
Lake Tahoe.
20?
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That article?

• Why?
• An agenda
• To make a high-end market.
• To motivate high-end Sellers.
• Get more high-end listings.

• The affect?
• The overall Market.
• Keeps Sellers prices up
• Keeps Buyers away.
• Extends market down cycle.
• Makes Tom really happy.
• Misleads the public.

If it doesnt seem right
Call us.
Blog.
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Statistics CA NV market
SLT Difference Original List v. Median Sold
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Statistics CA NV market
Stateline Percent Difference Original List v.
Median Sold
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Statistics CA NV market
Average Price Reduction Last 365 Days
South Lake Tahoe
Stateline
-10.6
-15.1
1.3
-11.9
4.8
-19.9
48,018
120,800
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SLT Diff Avg. List Price of what SOLD and what
DIDNT.
In the last 365 days!
Many homes have more than a 10 reduction to sell!
25
SLT Difference Time on Market of SOLD and what
has not
In the last 365 days!
It takes a lot longer to sell an overpriced house!
26
SLT Difference Median SOLD and Current Price
Many reduced Homes need to be reduced more!
27
NV Diff Avg. List Price of what SOLD and what
DIDNT.
In the last 365 days!
Many homes have more than a 15 reduction to sell!
28
NV Difference Time on Market of SOLD and what
has not
In the last 365 days!
It takes a lot longer to sell an overpriced house!
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NV Difference Median SOLD and Current Price
Many reduced Homes need to be reduced more!
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Sidebar Recent Sales Success Story
Owner paid 145,000 Date June 1999
Listed 425,000 Date May 2006
Sold 410,000 Date June 2006
24 Days on Mkt.
182 return in 7 years
Owner made 265,000
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Sidebar 2006 Sales Success Story
Stateline, NV High End - 3,000,000 plus
2005
2006
Increase
Sales
11
14
11.5M
12M
Highest Sale
Days on Mkt
404
375
Decrease
Prices have remained flat for last 3-4 years
32
Statistics CA NV market
Difference Last 365 Days Sales v. Current
Inventory
and More Supply coming!
More Supply than demand
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Active Listings compared to current Escrow
Nov 1, 13.3
Feb 20, 12.4
Nov 1, 7.9
Feb 20, 8.9
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Statistics CA NV market
Escrow Failure (sales that fall apart)
Normally it is about 3
We have a lot more escrow failure now!
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Listings that did not sell w/in list period
(Expireds)
633
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Increasingly, Over Priced Listings Do Not Sell at
all!
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S. Lake Tahoe Mkt. Performance
(SFR Last 365 Days)
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Stateline Mkt. Performance
(SFR Last 365 Days)
38
Carson City Mkt. Performance
(SFR Last 365 Days)
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Gardner/Minden Mkt. Performance
(SFR Last 365 Days)
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Statistics CA NV market
Summary Market Conditions

• Decline in demand

• Decline flattening of Value

• Increase in Supply

• More Expireds

• Takes Longer to Sell (more DOM)

• More Escrows fail

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Sidebar Recent Sales Success Story
Owner paid 116,000 Date June 1987
Listed 695,500 Date Jun 29, 2006
Sold 655,000 Date Oct. 4, 2006
97 Days on Mkt.
464 return in 19 years
Owner made 539,000
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Sidebar Recent Sales Success Story
Owner paid 389,700 Date Dec. 1993
Listed 1,395,500 Date Jul 14, 2006
Sold 1,275,000 Date Sep. 11, 2006
59 Days on Mkt.
227 return in 13 years
Owner made 885,300
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Who actually Sells a House?
Im the Best
I Sell More
Im Agent of the Year!
My Numbers
Im Number 1
I Sold more than Him
My Production
I Outsell Everybody
The Agent-Centric business model.
Where are YOU in this picture?
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The way its supposed to be
You are Number 1
Your needs
Your Instructions
Your time frame
Your Expectations
Your best interests
Your Service
Your House
The customer-centric business model.
YOU are the picture!
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What SOLD really means

• Almost 9 out of every 10 Buyers comes from an
  Agent other than the Listing Agent.

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What is The Role of the Listing Agent?
If 90 of all Buyers have their own agent

• Pricing Assistance Seller sets price!

Protectors of Your Equity!

• Exposure

- Marketing
- Compelling package for other agents

• Communication, feedback updates

• Negotiation offer, repairs, all releases

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What it really takes to sell a House

• Success comes from Agent and Seller working
  together as a team.

• Agent asks questions...

Seller indicates needs.

• Agent LISTENs carefully

gives Seller market Information.

• Seller gives instructions

Agent develops campaign.

• Agent gives frequent reports

and tells Seller everything.

• Team makes adjustments if needed

and House gets SOLD.
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What it takes for the Team to Work?

• Agent ability to listen

• Seller is motivated to Sell

• Seller / Buyer acceptance of market facts

• Constant communication

• Frequent Market review

• TRUST

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The Foundation of Trust

• INFORMATION

• All market facts are necessary not just CMA

• Reported without agenda

• Basis for all informed Selling and Buying
  decisions.

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The Best Agent for You?

• Is the best Agent one who recommends highest
  price?

• It is for Tom!

• The numbers are the numbers there are no others.

• You should get the same data from every Agent.

• The market is the message Agent is the messenger.

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What People look for in an Agent
1. TRUST
2. My Best Interests.
All aspects of Trust.
3. Agent who Listens.
4. Honesty Ethics.
5. Effective Communication.
6. Knowledge.
7. Save Time.
8. Reduce Stress.
9. Delivery on Promises.

• 10. Recovery takes responsibility for mistakes.

Source Council Residential Specialists
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Important to Remember

• Almost 90 of all Buyers have own Agent

- Buyers are informed
- They have access to the market data too

• There are 2 different Successful Teams

- Seller Agent
- Buyer Agent
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We are a Second Home Market

• About 65 of area Owners live elsewhere

• Most Buyers come from CA
• -- Sacramento, San Francisco, San Jose, Central
  Valley

• Florida, Texas, Mid-West

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Characteristics of 2nd Home Buyer

• 45 - 64 years old.
• Income usually exceeds 200,000 a year
• Married (82)
• Have no children under 18 living with them (71)
• Live in a suburb or subdivision (53)
• Buy to retire here, or for a family retreat (56)
• Buy for lake and outdoor recreation, rather than
  casinos (55 v. 4)
• Spend less than 3 months here a year (54), not
  rent (86)
• Find investment and appreciation benefits
  important (92)
• Live within 200 miles (85), and travel by
  automobile (88)
• Source 2006 National Association of REALTORS
  Profile of Second-Home Buyers.

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Profile of 2nd Home Buyer

• Environment, Lifestyle, Image are the most
  important factors.
• Emotional decision maker - supported with logic.
• Buying decision takes 28 months (meet very late
  in buying cycle).
• Concerned about absentee owner issues.
• Want low maintenance energy efficiency.
• Distance and transportation are a consideration.
• Influenced by family and friends.
• Over-qualified financially.
• Lack of urgency most of the time.

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Where Buyers first learn aboutthe Home they BUY
1997 1999 2001 2003 2004 2005 2006
Real Estate Agent
50 49 48 41 38 36 36
Internet
2 4 8 11 15 24 24
Yard Sign
17 15 15 16 16 15 15
Friend or Relative
9 8 8 7 7 7 8
Home builder
3 4 3 7 7 7 8
Print Newspaper ad
8 8 7 7 5 5 5
Home Book/Magazine
3 3 2 1 2 1 1
Source 2006 National Association of REALTORS
Profile of Home Buyers and Sellers
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Buyers who find home they Buy on Internet

• 1,200 increase from 1997 to 2005

• No increase last year.

Source 2006 National Association of REALTORS
Profile of Home Buyers and Sellers
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Internet use to Search for Homes

• Increasing every year in use

and frequency!
Source 2006 National Association of REALTORS
Profile of Home Buyers and Sellers
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Lets Say it Again

• 80 of U.S. Buyers look first for a home on the
  internet.

• The internet is becoming the most important
  resource to expose a home.

• Buyers Agent is still most important information
  resource to a Buyer.

Source 2006 National Association of REALTORS
Profile of Home Buyers and Sellers
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What Buyers Want in 2nd Home
Close to ocean / river / lake
67
Close to recreation / sporting activities
39
Close to vacation / resort areas
38
Close to mountains / other natural attractions
31
Close to family members
19
Close to primary residence
13
Close to job or school
6
Safer than where they live
4
Source 2006 National Association of REALTORS
Profile of Second Home Buyers
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What 2nd Home Buyers Most Like to Do
Beach Lake Water Sports
Boating
Hunting / Fishing
Biking / Hiking / Horse
Golf
Skiing / Winter recreation
Tennis
Theme Parks
Gambling
Source 2006 National Association of REALTORS
Profile of Second Home Buyers
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What Buyers are Buying
What is Selling in Todays Market?

• Good Value

• New or Newer Homes

• Homes that are particularly Unique

• Excellent Location

• Exceptional Condition / Remodeled

Most sales are a combination of these factors.
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Buying a house is an Emotional Decision

• Good Value is based on

• -- Perception

-- Personal Need
-- Market logic (the numbers)
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What most concerns Sellers?

• Price

• Time

• More recently will my home sell at all?

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What most concerns Buyers?

• Did I pay too much?

• Did I miss anything?

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House Sales Marketing Fact

• The Best Marketing in the world

• The Best Agent in the world

• Can not sell an unreasonably priced house!

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How to Sell a Home Fast

• Price it reasonably

• Get it pre-appraised

• Get it pre-inspected

!

• Make all repairs

• Int. Ext. in excellent condition

• Create inviting curb appeal

• Agent marketing

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Why Get a Home Pre-Appraised?

• Certified, bankable document

• Check Balance of market value

• Help better position house for sale

• Lenders will not lend above appraisal

• Emotionally involved in Selling not an
  attachment to price.

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Why Get a Home Pre-Inspected?

• Eliminate surprises

• No need for second / repair negotiation

• Reduce incidence of Buyer remorse

• Reduce incidence of Escrow failure

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How to Sell for the Highest Price

• Set price at top of reasonable range

• Preview all homes w/in price range

• Understand current market absorption

• Get best market information possible

• Remodel Update if cost effective

• Pre-inspection

• Make all repairs

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How to Buy for the Best Price

• Get all market information

• Preview all relevant homes in price range

• Understand current absorption rates

• Know difference of list and Sold prices

• Offer at bottom of reasonable range

• Be willing to lose house if price not accepted

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Two Reasons why a House Fails to Sell

• Under Exposed

• Over PRICED

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To best Price a House

• Have an open mind

• Be unemotional

• Be analytical

• Look at price as buyer and as seller

• When I bought my home, was I willing to pay more
  than market value for it?

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Comparable Market Analysis (CMA)

• The Industry Standard what most do.

• Most Agents present your comparables

• You must be part of comparable selection process.

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• What you need to best understand Price.

• All Sales last 365 days

• All Escrow

• All Active Listings

• Start wide with everything

• The neighborhood know it all

• Then narrow

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• Information Funnel!

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• What goes into your information Funnel

• A Sales, all Escrow all Listings

• Spreadsheet workbook

• Size (200 sq ft or less)
• Year built
• Garage (SLT)
• View and / or location
• Condition

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• Your Neighborhood

• Size (200 sq ft or less)
• Year built
• Garage (SLT)
• View and / or location
• Condition

• From this, relevant homes emerge

• And YOU participate in the process!

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What Else You need to understand Price

• National Home Price Index

• Absorption Rates

• Value Graph

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Absorption Rates

• How many homes the market absorbs over time

• 24 sales in 1 year is monthly absorption rate of
  2.
• 6 sales in 3 months is monthly absorption rate of
  2.

• 12 homes on market w/ monthly absorption rate of
  2 is inventory of 6 months.
• 24 homes on market w/ monthly absorption rate of
  2 is inventory of 12 months.

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Absorption Rates

• 6 months inventory is neutral market

• More than 6 months inventory is Buyers Market.

• Less than 6 months inventory is Sellers Market.

82
Absorption Rates

• Usually best home in a price range sells first

• Look at all homes in price range...

• Which one would you buy first?

83
Absorption Rates

• To sell FAST, you want to have the most desirable
  home in its price range.

• Often its necessary to position a home in the
  next price range below

• Especially in a Buyers market with more supply
  than demand.

84
The Value Graph

• A unique look at market value

• Cluster chart done in excel

• Intersection of price vs. size

• Cluster represents most activity, or market
  acceptance

• Where would You most want to be?

85
The Value Graph

• SLT Sales 1,300 -1,450 sq ft Jul 1 to present

Size 1,372 Sq Ft
Price 529,000
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The Value Graph

• SLT Active Listings 1,300 -1,450 sq ft a/o
  Oct 25

Size 1,372 Sq Ft
Price 529,000
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What if Value is less than you expect?

• The Change Process

• Denial

• Anger

• Sadness

• Acceptance

• Renewal Action

88
What if Seller will not accept current Market
Value?

• Dont list it

• Does not increase inventory

• Wait for market to change upward

• If Seller wants to wait

89
What if Buyer will not accept current Market
Value?

• Dont offer on it

• Keeps inventory up

• Wait for prices to drop or lose house

• What we are beginning to see now in SLT

• Prices have come down slightly

• Buyers eventually respond and cycle starts anew

90
What if my house is priced right and it still
doesnt sell?

• Review all recent data frequently

• Wait

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My house is listed for 699,000
But I cant even get an offer for 550,000.

• Buyers do not normally feel comfortable making
  what they consider an offer that is too low

• An Agent can not tell a Buyer to offer such a low
  price without your permission.

• Keeping the price up above the reasonable range
  drives Buyers to your competition.

92
What caused the Market to change?

• Poor Buyer Perception

• Resistance to High Prices

• Rise in Interest Rates

(Fear Perception!)

• Lack of Consumer Confidence - Fear

• Discouraging National News

93
What will cause Market to go up?

• Better Buyer Perception

• Better Prices

• Stable Interest Rates Change in Fed

• Rise in Consumer Confidence

• Less local reports w/ agenda

• A lot better National News

94
What to Look for when it starts to change?

• Increase in number Sales

• Increase in of Escrow

• Increase in monthly absorption rate

• Decline in Escrow failure

• Decrease in inventory

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How long will it take for Market to return to
where it was?

• Nobody Knows

• If you meet someone who claims they know for sure

• Run

• Or start partnershipand market him!

Because he can predict the future.
96
How will I know when The Market is starting to
change?

• Ask an Agent you Trust

• And Get all the Information!

97
Review

• House greatest asset.
• Cadillac effort responsibility
• From a professional w/ credentials.
• Hard work and truth.
• Equity Preservation Experts
• Credentials

• Design
• Copy
• Web / Blog
• Photography

• CRS
• ABR
• CLHMS
• SRES

• QSC
• 1M Guild
• e-Pro
• Sr. VP Mktg

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If you are thinking of Selling or Buying
Call us
800.923.9022530.544.9022775.588.9022
gary_at_thelistingcompany.comrichard_at_thelistingcompa
ny.com
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• Questions?

Anything new?
Anything helpful?
Anything we missed?