Psychology of Marketing Real Estate, Part 1: Who

Psychology of Marketing Real Estate image of parts of the brain

The Psychology of Marketing Real Estate is rather complex but let this handy, three-part series sort it out for you.

As with any business where humans participate, there is a psychology involved. Real estate is no different.

In fact, it’s more varied and diverse because there are a larger number of roles interacting with the buying or selling of properties.

In this article, I’m going to look at the psychology of marketing real estate from the Listing Agent’s perspective. While in my home city’s market is tilted towards home sellers just a few short years back this wasn’t the case.

And even expert Realtors can learn a thing or two when it comes to such an incredible complex entity we call home buyers.

Who: Psychology of Marketing to Humans

Photo of some retirees

Marketing real estate to retirees is vastly different than to other people groups. Understanding your clients is key to being successful.

Let’s first speak to the idea of personas. According to wiki, personas came to marketing in the early 90s from a gentleman named Angus Jenkinson. The idea is simple, here it is:

A persona is a fictional person with distinct goals and behaviors.

There you go! Next, make sure your marketing messages target each persona appropriately.

Test. Measure. Tweak. And, voila, marketing is enhanced and sales improve. (For more on this topic, visit How to Create Detailed Buyer Personas for Your Business.)

In the field of real estate, the following list covers the most common people types. I’ve created some fun names to make things more memorable.

Sample Real Estate Personas

  • Frank Bailey (First Time Home Buyer)
  • Mark and Melissa Fenton (Moving Up Families)
  • Vincent and Bethany Lawrence (Luxury Buyers)
  • Anabel Palmer (Business Professional)
  • Hank and Jill Farmer (Farms and More)
  • Lawrence and Gladys Ragsdale (Retirees)

[Note: Renters might be another persona but in my market, they’re most often on their own as there is little financial incentive for professionals to get involved.]

Of course, there can be other personas that make sense as well but these cover most of the real estate transactions professionals deal with today.

Let’s take a look at each persona and see what motivations are involved.

Frank Bailey (First Time Home Buyer)

For Realtors targeting this persona, the name of the game is full service. Given that these clients have never purchased a home before Mr. Bailey is going to need someone to explain all the many details and walk him through every step.

Setting expectations is especially important with this persona. No one likes surprises and no other persona is likely to be surprised more often than first time home buyers.

Mark and Melissa Fenton (Moving Up Families)

This persona has some experience with the process of a real estate transaction. They are extremely family focused and will place a greater emphasis on things like quality schools, larger lots and more spacious houses.

Targeting these topics with your marketing efforts will pay dividends. Communicating your expertise in these areas will further enhance your reputation to this people group.

Also remember, sharing common experiences builds rapport. We all should know that excellent interpersonal skills are an important asset to the successful real estate agent.

Vincent and Bethany Lawrence (Luxury Buyers)

The Lawrence persona has achieved some level of success in this world. Building up wealth isn’t easy and now they’re ready to enjoy the results of their labor.

When Realtors target this persona, marketing your own professional success resonates with the client. Setting yourself apart from the crowd and highlighting your expertise catering to the high-end of the market should be your goal.

This real estate client will likely be the most challenging of all. Expect challenges both in the home search process and with the client/agent relationship during the transaction. The good news is that compensation for these transactions are generally worth the additional trouble.

Anabel Palmer (Business Professional)

Photo of some young professionals

The Psychology of Marketing Real Estate understands that young professionals, like Anabel Palmer here, respond differently to various triggers.

Anabel is a mover and a shaker. Buying a home is just another task that needs to be “checked off” even though it is still a very important one.

Being able to save Ms. Palmer time and energy is paramount. Target properties are often located in more urban areas. Condos may be preferred to a single-family home to these busy individuals.

Put yourself inside this persona and feel what her life is like, then as her real estate professional you can anticipate her requests and have solutions at the ready.

Hank and Jill Farmer (Farms and More)

This farmer family will place a premium on the land—does it provide the necessary space and topology to accomplish their most vital tasks. The house often plays second fiddle to the parcel.

Again, Realtors that can share similar life experiences will always have the upper hand with any persona but it’s especially true with this one. Are there horses that need a barn? Other livestock? What about space for agricultural plantings?

In recent years agents haven’t specialized in specific aspects of the market but farm experts may be the one persona that thrives with a niche specialist.

Lawrence and Gladys Ragsdale (Retirees)

The fastest growing persona is this one, as more and more Baby Boomers are looking to downsize. We’re not talking about nursing homes here, just smaller homes.

Number one on the list is low maintenance. A close second is few, if any, stairs. The home’s level of finish is still very important but perhaps more so is the proximity to both amenities and family support. This persona wants to feel safe and in control.

Upcoming

Stay tuned for parts two and three of this series on the psychology of marketing real estate.

  • Part 2 – What: Psychology of Marketing the Home
  • Part 3 – Where: Psychology of Marketing Online

The Big 17 Home Maintenance Tips for Spring

Photo of a home in Louisville KY

Great home maintenance begins outside, from the roof to the foundation and all points in between. (Photo: www.jljordanphotography.com)

Looking for Home Maintenance Tips for Spring? You’ve come to the right place! I imagine you’d be hard pressed to find any Spring home maintenance tip not listed here.

Inspect Your Home’s Vitals

1. Inspect Roof Shingles, Chimney

Let’s start at the top! Whether you are the one doing this job personally, or you hire a professional, making sure your home’s roof is in proper working condition is critical to avoiding those expensive repair bills should something go wrong.

2. Inspect Foundation for Cracking

Next up, your home’s foundation. Perhaps even more important! As much as is feasibly possible, inspect the foundation both inside and out. If you find holes or low points in the ground near your home’s foundation, fill those with compacted soil.

3. Inspect Attic

It’s easy to forget about your home’s attic space as we are all less likely to be spending much time there. At the start of Spring is a great time to take a quick tour to make sure no “critters” have made a home there. While you’re up there, check the insulation to see if it’s still evenly covering where required.

4. Inspect Windows for Gaps, Screens for Tears

Many of your home’s components expand and contract with the seasons. Take some time to inspect windows for gaps that might need repair. Window screens may have been damaged by a particularly strong Winter storm.

Routine Maintenance

5. Exterior Outside Faucets

It’s generally a good idea to turn off outside faucets before the first freeze. Now that freezing temperatures are behind us, it’s time to turn them back on! Makes sense, right?

6. Service Your AC Unit

Photo of AC Unit

Taking care of your AC unit really comes down to one seasonal tune-up.

Summer may not be here yet but it’s coming. Have your AC unit professionally serviced every year. And if there’s vegetation getting too close to your compressor, cut that back to improve air flow.

7. Change HVAC Filters

Most filters are easy to change. Some take more time. But it doesn’t matter, changing your HVAC filter regularly is the best thing you can do to extend the life of your home’s largest machine.

8. Replace the Batteries in Your Smoke Detectors

It doesn’t have to be Spring but why not? Make sure you have a regular point in the year when you change your smoke detector batteries. Remember, safety first!

9. Outdoor Furniture, Grills

Now that warm temps are here, it’s time to spend some time outdoors! Let’s clean up that patio furniture and spruce up your grill. You can almost taste those delicious burgers now.

10. Prepare Yard Equipment for Spring

If you want your lawn mower to last longer, it is recommended to have it serviced each year. This generally includes sharpening the blade and replacing the spark plug and oil. It might need a new air filter too. Consistently maintain your equipment and you’ll save money in the long run.

11. Clean Your Gutters

Cleaning your gutters may not be fun. In fact, if they’re too high for your ladder you might have to hire someone. But don’t neglect this home maintenance tip because it could lead to a serious problem with water entering your home.

Cleaning Inside

12. Spring Cleaning

It’s Spring! Of course Spring cleaning would be part of Spring right? Dust those baseboards. Clean those windows. Clean out those overstuffed closets. It’s the best time of the year to take care of these tasks because we have great things ahead of us!

13. Clean Dryer Vent

Here’s one that may be new to you. Did you know that fires caused by clogged dryer vents is a very real danger? Well, it is! Take time to clean out your dryer vent every Spring and hopefully you won’t make the evening news.

Repairing Outside

14. Repair Any Rotted Exterior Trim, Repair Cracked or Peeling Paint

Wood exposed to the elements will eventually break down. Spring is a great time to walk about your home and evaluate the condition of any wood trim on the exterior of your home. Once the wood is repaired, take care of any cracked or peeling paint. Not only does it enhance the beauty of your home, it extends the life of your home.

15. Repair Deck, Driveway and Sidewalks

Your deck, patio or driveway might only need to be pressure washed every so often. But it might also need to have some cracks sealed with the appropriate product.

Going Above and Beyond

16. Vacuum Refrigerator Coils

Ok, I’ll admit it. When I first heard about this one I said, “Seriously?” But it’s true, once a year grab your vacuum’s hose attachment and clean the coils of your fridge. Don’t forget, for many of these home maintenance tips for Spring there are helpful YouTube videos that will walk you through the process.

17. Drain Your Water Heater

Did you know you needed to drain your water heater? Well, you’re not alone. Most people don’t but it’s actually something that can extend the life of your unit. Well, come to think of it… now I understand why there’s that little spigot at the bottom of mine! *wink*

When Is the Best Time to Sell a Home? Learn here!

Photo of a Louisville KY home

Obviously, not every home is the same but also your particular situation will help determine the very best time to sell your house.

One of the most popular questions I get is, “When is the best time to sell my home?” And it really increases as we get closer to Spring.

There’s a quick answer but where’s the fun in that? Instead, let’s look at the Top 10 tips that will help you answer this tricky question so you can better understand all the factors at play.

Finding the Best Time to Sell Your Home

The following advice is designed to help you assess your situation and make an educated decision based on both financial data and personal goals.

10. Sometimes There’s No Choice

To be completely honest, for many there’s no choice. Everything else in this article is meaningless. You have to sell. If an unbelievable job opportunity opens up in another city, then you have your answer! Now is the best time to sell.

It’s important to remember, when you must sell quickly, you shouldn’t play around with overpricing your house hoping to “catch someone off guard” because that’s a very, very rare event. Price it at or a below market value and move forward.

9. Crowding the Calendar

Part of what makes house hunting in the Winter less popular is the cold temperatures, and that does play a big role, but also people are busy with other things — namely the holidays.

For many, once Thanksgiving arrives, all “major projects” are put on hold until after the new year. And buying a new home definitely qualifies as a major project.

Life is hectic enough around the holidays to throw more items on your To Do list. Once the New Year is past, there are far fewer items crowding your calendar that could a great time to sell your home.

8. Take Advantage of Competition

Believe it or not, there are times where some competition is actually a good thing. For example, if you notice a couple of properties that are currently for sale in your neighborhood. Talk to your real estate expert and find out where your home’s price would be relative to theirs. If it’s lower, the other listings in your neighborhood will actually drive additional traffic to your listing!

The reverse can work against you. If your home is the highest priced property in the neighborhood, it might be better to list when there aren’t so many homes under your price point.

7. Seasonal Demand

It’s been a wide-held belief in the industry that you never list your home in the Winter. Waiting until Spring, was the thing to do. This new report says that might be a mistake.

Chart of homes sold within 90 days

Most experts would call for a Bell curve here, but Redfin’s data says otherwise. This chart shows national number but, of course, each market behaves differently.

There are more buyers in Spring but at the same time, the increased number of home listings might wipe out that benefit. Speak with your Realtor to learn about your specific market conditions.

Here in Louisville, inventory is currently at incredibly low levels.

6. Time of Ownership

Whenever you buy a house, the closing costs  are part of the transaction. The longer you stay in a home, the longer those closing costs are spread out over the span of years.

So, if you just recently moved into your current home, selling it now and buying another will lump each of those extra costs into a shorter time frame. These are dollars that could be set towards building equity.

Bottom line, the longer you live at any address, the more those transaction costs are spread out over a number of years and improves your investment. Now, home repairs, that’s a different story.

5. Optimum Condition

If your house isn’t ready… it’s not ready! Just like people, your home only has one chance to make a great first impression.

Don’t put your home on the market if there are still a number of updating projects to tackle. This is a big deal!

Today’s buyers are looking for move-in ready homes, so let’s give it to them! Faster sale, that’s a good thing, right? Your updated home will look amazing in the high-quality photographs which will help your home sell faster and at a higher price.

4. Days on Market

Every home seller wants a quick sale. (Acutally, there are cases where this is not true but that’s a story for another time.) How much fun is it to continually have your home ready for some buyer to barge in at a moment’s notice? Don’t answer, I already know. It’s a giant bother!

Therefore, if your home has been listed for a very long time, it’s smart to take the listing down, perform some updates and (possibly) lower the price. Each house is different and other variables come into play but buyers always see it as a negative when a property has been listed for a long time.

3. Hot Property Types

Some times there’s a rush on a particular home type. Currently, first floor master bedrooms are more desirable than homes that have the master on the second floor. The whole baby boomer bubble and all.

If you’re lucky enough to have one of these hot property types, the higher demand will mean a higher sales price. List it sooner rather than later. But don’t neglect the other items on this list to do it. Consider all the factors, then go!

2. Low Interest Rates

The lower the interest rate, the more house buyers are able to buy with their money. Most of today’s buyers will finance the lion’s share of the home’s cost. This means interest rates play a huge role.

Because interest rates are still at historical lows, now is a great time to lock that rate in with a new mortgage. It wasn’t that long ago when interest rates were double-digits… whoa! Now, we’re spoiled by these crazy, low rates.

1. Your Situation Trumps All

This should be quite obvious but just so we’re all on the same page, there’s an uber important factor to answer the question, “When is the best time to sell a home?” and that factor is “When you want to!

There’s a giant benefit to being properly motivated, right? Being excited about the process of housing hunting is huge! Some find it a taxing time so if everyone is “on-board” the whole process is more fun.

Your next home is the incredible “carrot before the horse” when it comes to getting your current home sold. Get psyched about your next, new home then hit the ground running.

How to Become a Successful Real Estate Agent – Set the Right Goal

Screen shot of Google results for search how to become a successful real estate agent

It looks like there a lot of people who want to know “how to become a successful real estate agent.” This article charts to the clearest path.

One of the most searched for themes on all of the Internet is:

how do I become a successful…
how do I become a successful blogger
how do I become a successful student
how do I become a successful author
how do I become a successful real estate agent

It’s obvious that people are searching. What’s not clear is how to achieve it. With more than 30,400,00 Google results to this query, that’s an ocean freighter, sized load to delve through.

Before we get to any recommended best practices, it’s important to take a step back and analyze which goals you can choose from in the crazy, up-and-down world of real estate.

After considering the choices, it might surprise you to learn which one that I put at the top of the list for successful agents.

It’s not setting goals. It’s setting the right goals.

Let’s brainstorm! When you think about successful real estate agents, what comes to your mind?

Photo of a Mercedes E550

This Mercedes certainly looks like the kind of car a successful person would drive.

  • Do you think about having your face on billboards across the city? Maybe a glossy ad on the back cover of your favorite local magazine?
  • Do picture yourself behind the wheel of a new Mercedes E550? Oh wow they are beautiful.
  • Does the image of you attending a closing every single business day for a month really get your blood pumping?
  • How about getting that phone call from a celebrity who heard you were the best agent in your city and he’d like to use you to buy a million dollar mansion?

These are all things that might come to mind when you think of becoming a successful real estate agent. And to be truthful, they’re not necessarily wrong.

Most people would start by defining success in the world of real estate in terms of dollars made or properties sold. Companies like REMAX, Century 21 and others have yearly award banquets to honor their “most successful agents.” And these are the criteria they use, when deciding who to hand those brass embossed plaques… that we then take and toss in the storage bin in the basement.

If I may, I’d like to offer a different goal. Making the multi-million gross sales club is difficult. My goal is not so hard.

Trying to sell 100 homes in a year is incredibly difficult. But I have a goal that if you set your mind to it, I guarantee you can achieve it.

Curious? Just a minute more and I’ll share my secret with you.

Good is the enemy of best

Have you ever heard this saying? Good is the enemy of best. I can hear some of you now… “Tre, you’re not making much sense here.” Fair enough, let me explain.

There are times when you do a good job. The client’s home closed. The funds are out of escrow. The moving trucks have come and gone. And, of course, you received your commission check… we can’t forget that.

But on your drive home you may think, “I could have done a better job.” And that’s true! All of us, every one, can do better. We can move up the rankings from good, to better, to best.

So, are you ready? Here it is. This is the goal that I think all of us should rank first.

Be the best real estate agent your client has ever had.

Now, it’s not easy. It’s going to take some hard work.

You’ll need to answer your cell at times you’d really rather not. You may need to show your buyers a couple of homes, you know deep down, they will never buy.

Photo of a happy young lady

When your real estate client feels like the woman above, that’s when you’re on the path to true success.

But by going to the extra mile, by always showing up with a smile on your face ready to serve your clients to the very best of your ability, to quote Charlie Sheen, you’ll be winning. I believe that the highest goal of the most successful real estate agent is 100% customer satisfaction.

Now, you will not achieve this goal with every client. Sometimes things happen that are beyond your realm of control. That’s life. But that doesn’t mean this should cease being your primary goal.

Want to know how to become a successful real estate agent? Create clients that are raving fans of you and the service you gave them.

Then, almost miraculously, the other goals on your list are going to happen as well.

Tre Pryor is an Internet-veteran turned tech-savvy Realtor. One of the top Louisville agents, you can find his work at InsiderLouisville.com, Louisville Homes Blog or follow him on Google+ or Twitter.

Property taxes too high? Here’s help!

Photo of woman on laptop looking at her Property taxes too high bill.

Does it look like your propetry tax bill is too high? Never fear, here’s what you do.

In this world nothing can be said to be certain, except death and taxes. – Benjamin Franklin

Today’s tax environment gives new meaning to his nickname, Poor Richard. Am I right?

Once new tax systems are instituted our government is jealous to keep them in place. Sure, taxes may drop for a season but they’ll be back.

Now, property taxes may be some of the most irrational of all taxes. Stop and think about it. You’ve already paid some kind of tax when the purchase took place but the government isn’t satisfied, not while you still have more money they can take.

Property taxes too high? Should you throw your hands up and give in? This reminds me of another quote.

Don’t give up. Don’t ever give up. – Jimmy Valvano

I wrote on this topic back in 2011 when the WSJ quoted Jim Kane as saying, “More than half of homeowners are paying too much in property taxes.” What was true then may still be true for you today.

But how do you know?

Step 1: Determine Market Value

In order to learn if your property taxes are too high, we need to learn true market value. Having an appraisal done will give you a value but before you decide to pay $400-$500 to an appraiser, call your trusted Realtor to do a manually adjusted competitive market analysis (CMA) before you spend any dollars. A quality Realtor, who wants your business in the future, will do this for free.

The manually adjusted process is the same one an appraiser will use. Many times a diligent agent will produce a more accurate value than the appraiser.

If it turns out your home’s current market value is less than your tax assessment, contact your PVA and ask for an adjustment. This should cost you nothing and could save you hundreds, maybe even a thousand dollars a year.

Step 2: Appeal the Decision

What happens if the PVA refuses to budge? Remember Jimmy’s words, don’t give up! Pack up your documentation and appear before the Board of Commissioners in person and state your case.

Believe me, it’s worth the time you invest because the assessed value is often used for 2-3 years before a new adjustment is made.

I’ve seen enough cases where the value was reduced to know that many local tax assessment organizations can be reasonable, if approached through the property channels and with the appropriate attitude.

Then, if you’re really smart, you’ll take the money you saved in property taxes and make some top return on your investment home improvement projects.

USAToday Ranks Louisville #2 Best Cities for Local Food

Louisville #2 Best Cities for Local Food

Photo courtesy of 21c Museum Hotels

I rarely tire of hearing great things about my city, Louisville. Well, I don’t actually own the city, I just live here, but still… I’m a huge fan.

So it’s great to hear national praise like this—the USAToday Reader’s Choice Awards ranks Louisville #2 in their list of Best Cities for Local Food. Jammin’! (Do kids still say that?!)

Here’s an excerpt from their site:

In a city known for small-batch bourbon, it’s not surprising that the restaurant scene likewise revolves around local artisans. Carefully curated relationships with area farmers lie at the heart of the menu at Proof on Main and Harvest, both downtown. One of the original farm-to-table restaurants in Louisville, Lilly’s highlights free-range beef, organic vegetables and artisanal cheeses. At 610 Magnolia, Edward Lee puts a contemporary spin on Southern fare, while Chef Anthony Lamas highlights fresh seafood at Seviche.

Planning a trip and want to know what other cities have great, local food? Check out this Top 10:

The top 10 winners in the category Best Local Food Scene are as follows:

1. Minneapolis/St. Paul, MN
2. Louisville, KY
3. Nashville, TN
4. Providence, RI
5. Raleigh, NC
6. Asheville, NC
7. Oakland, CA
8. New Orleans, LA
9. Portland, ME
10. Charleston, SC

The process worked like this. A panel of experts picked the 20 nominees. Once done, the rankings were determined by popular vote.

On the other hand, if we the secret keeps getting out, our traffic will only grow worse. So… please no more national attention. Thanks!

Top Return on Your Investment Home Improvement Projects in 2015

Photo of a young couple with their new house. smiling

If you think replacing your front door will be a good investment, you’re wrong. It’ll be a great investment! Year after year, it ranks at the top of NAR’s survey results.

For years, I’ve been tracking and publishing data on which home improvement projects give you the best bang for your buck. The National Association of Realtors (NAR) performs surveys each year they call their Cost vs. Value reports.

2015 Cost vs. ValueNow keep in mind, the values that are derived from these surveys are merely estimates. Sure, they poll real estate professionals, but the information we are given and asked to put a number on, is very limited. We should all take these results with a grain of salt the size of the Grand Canyon.

Let’s get jump right in!

Top Return on Your Investment Home Improvement Projects

So let’s see which home improvement projects will give you the highest return on your investment. The report separates the Midrange projects from the Upscale ones, which I don’t find to be particularly helpful. I’ve included two charts for your benefit, but I’m going to aggregate them for the purposes of our rankings.

1. Entry Door Replacement

Just as expected, our preeminent project is replacing your home’s front door. According to the survey, this home improvement project returns 101.8% nationally. Outstanding!

Now, this is only when you replace your current door with a steel door (midrange). If you go fiberglass, also considered midrange, the ROI plummets to 72%, which I find problematic. Sure, the fiberglass door is going to cost you more, but I would estimate the ROI to be well over 100% for this improvement as well.

2. Manufactured Stone Veneer

In year’s past, this option wasn’t included in the survey. In 2015, however, respondents estimated an 92.2% cost recouped when adding a stone veneer accent to your home.

It’s interesting that this merely visual enhancement returns such a large amount while more functional projects, ones that can actually add square footage to the house, ranked much lower.

Keep in mind that each of these high-return home improvement projects vary with their estimated values in different parts of the country. Feel free to visit the NAR website to get data more specific to your state.

3. Garage Door Replacement

Another door ranks third on our list. The survey reports a 88.4% gain if you replace your home’s garage door. This is the midrange value. Moving to upscale garage door, the value drops ever so slightly to 82.5%.

It’s interesting to note, that most values in this year’s survey have dropped from the previous year.

4. Siding Replacement

HardyPlan sample

HardyPlank is a recognized leader in residential siding with a large number of fiber-cement siding products.

HardyPlank is a recognized leader in residential siding with a large number of fiber-cement siding products.

Sliding into the fourth spot is siding replacement. Fiber-cement siding (upscale) achieved survey value of 84.3% nationally. This beat the vinyl siding (midrange) return on investment of 80.7%.

HardyPlank, a fiber-cement product, has long been recognized for its wood-like appearance but with low longterm maintenance and increased safety. Other companies have joined the fray, offering similar composite materials as demand has grown.

It appears the increased price of the upscale option is worth the money, if you are considering new exterior siding for your home.

5. Deck Addition

Nationally, it’s estimated that a standard deck addition would cost $10,048 and return a value of 80.5% to the homeowner. This is good enough for the fifth on our list of best return on your investment home projects for 2015.

Look through the included graphics to see how other projects ranked in this survey.

Key Observations

I think it’s important to note that these values are only estimates. As I mentioned at the start, without more specific data, such as the home’s location, level of finish of other homes in the neighborhood and the property’s current condition, throwing a number at a project is somewhat arbitrary.

At the end of the day, these bang-for-your-buck home improvement projects are fun topics of discussion but hardly something I would put much weight on if I were a consumer.

What I do recommend is for you to speak with a local professional who really knows the market. He could visit your home personally and get a first-hand understanding of your particular situation before making an informed recommendation.

I have zero doubt many home improvement projects would return more than 100% of their costs — far more than reported in these surveys.

Methodology

Here are the specifics of research.

“An online survey containing project descriptions and three-dimensional illustrations, plus construction costs and median home prices for each city, was linked via email sent to some 200,000 appraisers, sales agents, and brokers. Respondents were instructed not to make judgments about the motivation of the homeowner in either the decision to undertake the remodeling project or to sell the house.”

If you’d like more information about return on investments for your Louisville home, please contact me.

Chart of Midrange Home Improvement Projects Return on Investment

Chart of Upscale Home Improvement Projects Return on Investment

Top 10 Real Estate Myths Busted, Bonus 5 Industry Myths Debunked

Hello and welcome to this full-featured, tell-all piece that will expose you to the truth behind popular real estate myths. Many of these widely held beliefs seem, at first blush, like common sense but I will bust these myths and explain what’s really going on.

So hold on tight! These Top 10 Real Estate Myths aren’t going to go away quietly… things could get messy.

Myths of Real Estate Buying

I’ve divided the Top 10 real estate myths into two categories. The first group come into play when buying a home. You may currently believe a few of these yourself.

1. Find the Perfect House First, Then Talk to the Lender

Top 10 Real Estate Myths Busted! Find the Perfect House First, Then Talk to the Lender

Find the Perfect House First, Then Talk to the Lender – Top 10 Real Estate Myths Busted!

I put this one first because it’s a very big problem. It might just be the most common real estate myth of all! There are a number of reasons why it exists.

First, the fun part of buying a home is looking at the potential winners online, picking your favorites and visiting them in person. We all do it! It’s almost a national pastime! The looking is so enjoyable that we forget the better path.

Secondly, buyers often underestimate the emotional appeal that comes when buying a home. You might fall in love with that great, renovated Cape Cod with the open-concept kitchen and living room, only to find out later that it’s nowhere close to being a home you can afford.

Getting pre-approved with reputable lender is the smart first step. Then, and only then, is it safe to begin your house hunting in earnest. I promise, this is the right way to go.

2. Agents Have to Show Me Any Home I Want

Like most working people, real estate agents don’t work for free. They don’t have to show you anything at all. Most want to show you properties, in the hopes that you will purchase a home, but not everyone looking is a serious buyer.

Some state regulations are such that the listing agent isn’t even required to show you their listing unless another Realtor makes the request.

In our day and age, we can’t always trust that someone is what they claim to be. There are many jobs where service is optional and entirely up to the judgement of contractor.

It’s not uncommon for thieves to target high-end homes, so in these cases the real estate agent is doing the homeowner a valuable service by not showing their home to a suspicious caller.

3. I’ll Get a Better Deal If I Work with the Listing Agent

This real estate myth can be a costly one. There’s a certain mindset that some might have that if they come to the listing agent without representation, they can negotiate a better deal for themselves.

Let me just say, this is a big mistake.

Between the two, which person has more negotiating experience when it comes to real estate transactions? That’s right, the listing agent. Who has greater knowledge about the true market value of the home? Yes, it’s the agent again.

It makes perfect sense that the homeowner wants as much as possible for their home, right? And the listing agent’s primary fiduciary responsibility is to their seller, not the buyer. So why would the listing agent push the homeowner to lower their sales price when that person is their client too? Answer: They won’t.

We haven’t even talked about the other parts of a real estate deal, like the home inspection, title search, date of possession, and other contract details. I’m not saying a buyer without an agent will never get a great deal. It’s possible but it’s a long-shot.

And at the end of the day, would they know the price they paid was really a good price or not?

4. Agents Need to Tell Me About Crime, Schools & Ethnic Make-up of Neighborhoods

You would think an expert real estate agent would know all about the city he’s been living in his whole life. So, why would he not share this information with his client that he’s trying to serve?

It turns out the answer is, “It’s against the law.”

Federal Fair Housing laws are currently stated to prevent a real estate agent from disclosing anything that might reflect poorly on certain protected classes.

Real estate agents may recommend sources of information for the home buyers to use but they can not tell you which neighborhoods might have a larger Hispanic population or which schools get higher test scores.

5. Agents Can Only Show Me Their Own Listings

Top 10 Real Estate Myths Busted! Agents Can Only Show Me Their Own Listings

Agents Can Only Show Me Their Own Listings – Top 10 Real Estate Myths Busted!

I’m not really sure where this myth came from. It makes sense that real estate agents would prefer their clients to buy their personal listings if there was a good match, but even the listing agent with the largest number of listings in a given market still only accounts for a small portion of the housing inventory.

Even if you increase the share to include all the listings for that agent’s company, there would still be thousands of additional properties that you, as a buyer, would want to consider.

This silly real estate myth needs to be put out of its misery.

Myths of Real Estate Selling

Now let’s head over to the selling side of things. These real estate myths aren’t any less troublesome though, so be warned.

6. Selling “For Sale By Owner” Will Save Me a Lot of Money

This real estate myth can be costly. Not just your money though, your time as well!

The number of homes sold by owner has steadily decreased over the years. Back in 2003, about 14% of all sales were FSBO. This past year it’s 9%. The rationale makes sense, if I don’t have to pay those pesky Realtor’s commissions, I can save a lot of money. I mean, how hard can it be? Stick a sign in the yard and wait for the phone to ring, right?

Well, if you live on a busy street you might have a shot. But there’s far more to marketing a home for sale than a yard sign. These days it’s all about digital promotion. Then there’s the paperwork, negotiations, inspections, and the list goes on.

But let’s get back to those commissions. Even if you have the opportunity to save the listing agent’s commission by doing all this work yourself, most buyers come with their agents who’ll want to get paid for their work.

Now, do you have a solid grasp on the current market value of your home? I hope you’re not trusting Zillow for sales data. Surveys have shown their information to be only 79% accurate. What if you underprice your home? You could lose far more than that half portion of the agent’s commission.

What if you overprice it and it sits there for 6 months? What if you get your home under contract but mishandle a legal requirement during financing phase? It’s been known to happen. This real estate myth is easily busted.

7. Staging My Home Isn’t Necessary

Top 10 Real Estate Myths Busted! Staging My Home Isn't Necessary

Staging My Home Isn’t
Necessary – Top 10 Real Estate Myths Busted!

I find this myth hard to believe. But it exists… I’ve seen these homes in person!

Here’s the tip. Just because you like something, doesn’t mean that everyone else does. You see, we’re are all creatures of habit. We’re more comfortable in our surroundings and any problems with our house are easily ignored. Or, perhaps you just have more pressing business? Life can certainly be hectic.

So when you see those homes on HGTV that are picture perfect and look like they belong in a magazine, you can bet that the buyers who are coming to your home have seen these shows too.

When your home doesn’t “measure up” you only have yourself to blame.

8. If I Reduce the Commission, I’ll Make More Money

This real estate myth might seem like it makes sense but here’s the problem. Reducing the percentage for the buyer’s agent introduces a disincentive to show your home.

By law everything is negotiable. In some cases, like a very rare but desirable property, a lower commission might not turn off a buyer’s agent from showing the home to their client. But most of the time, the most popular commission rate is the most popular commission rate for a reason, it’s market value for the work involved.

This is true on the listing side as well. The best agents won’t discount their rate because, why should they? They’re the best!

So you’re left with only the desperate, hungry agents will agree to a reduced commission. In the end, we all get what we pay for.

9. When Setting My Asking Price, I Should Always Leave Room For Negotiation

This might be the most common real estate myth of them all! It takes true savvy to know how to price a particular home. You need a extensive knowledge of the current market, what is selling quickly at each price point for every part of your city. It’s not easy but it’s incredibly important!

Elite real estate agents understand this. They can accurately identify true market value. Once that’s done, it’s been proven that pricing the home competitively from the start is the best way to get top dollar.

This is true because your listing will always get the greatest exposure when it first hits the market. Therefore, a competitively priced home in a seller’s market can often attract multiple offers. Cha-ching! Then, your only hurdle is passing appraisal.

Overpricing a home from the start is the surest way to have your house sit and sit and sit some more. The home will eventually need to be reduced in order to sell, why not price it right from the start?

10. Open Houses Are the Best Way to Sell Houses

What once was true is now ancient history. Not only is it now rare for a home to sell due to an open house, it’s also often for the wrong reason. The National Association of Realtors estimate that only 2% of homes are sold due to open houses.

In today’s society, we’re all moving at a hectic pace. Time is valuable. The internet let’s us view listings at the best time for our schedules. Then we also schedule our showings the same way.

Waiting until Sunday is no longer the norm. The open house has now become a tool that listing agents use to try and get more real estate clients for themselves.

Don’t forget, most buyers prefer to preview a property in private without a listing agent walking around promoting everything in sight.

Myths of the Real Estate Industry

Here I’ve collected five bonus myths of the real estate industry. See if any of these are ones you believe.

Bonus #1: All Real Estate Agents Make a Lot of Money

Real Estate Sales Agent - U.S. National Averages

As you can see, the median national salary of $38,866 is not exactly Lifestyles of the Rich and Famous.

The chart above tells only part of the story. In reality, the curve looks more like this. So, while those high-performing agents make a great deal of money, most real estate agents make far less.

It makes sense for people who have bought homes to see the commission amount on their closing statement. What they don’t know is that this amount goes the broker. The broker splits it with the agent according to their agreement. Then, the agent needs to take taxes, insurance, supplies, marketing and other variable costs of it.

What remains is their profit. And that number is under $40,000 nationally.

Here’s a piece I wrote about salaries in my Louisville real estate market.

Bonus #2: Home Inspectors Always Favor the Realtor

Inspectors can be recommended by your real estate agent but they work for you. You are their client. To help you believe that you’ve chosen wisely, they’re going to do everything in their power to find as many problems in a prospective home as possible.

The other side of the coin is that some home inspectors will try and sugarcoat a problem that might be a serious issue. The reason they might try this is because they do not want the deal to die and potential hurt their standing with the agent. Trustworthy Realtors won’t let this happen but not everyone in the business looks out for their client’s interest first.

With that said, home inspectors want a positive reputation in the market as well. A great rule of thumb is to work with professionals who aren’t new to their occupations. These are people who might make a novice mistake or compromise their principles to make a sale.

Bonus #3: Agents Will Say Anything Just to Make the Sale

This real estate myth might fall under the category of “one bad apple spoils the whole bunch.” Do people still say that?

Listen, I’ve been in this industry for more than a decade. I’ve worked with other agents, loan specialists, home improvement contractors, and even lawyers. (Yes, I listed lawyers last.) But throughout my experience the vast majority of real estate professionals are honest, hard working people, looking to do a good job.

Of course, every occupation has its share of rats. The barrier to entry for real estate agents isn’t very large. So perhaps we might have a larger share than most, but for every sleazy sales person who calls themselves a Realtor, I could find you 50 who are honest and want to serve you to the best of their abilities.

Select a full-time agent who isn’t just starting out and understand that long-term success is the #1 priority for most Realtors.

Bonus #4: Agents Get Kickbacks from Inspectors, Lenders, Etc.

Since the Real Estate Settlement Procedures Act (RESPA) became law in 1974, getting a kickback from a service provider became illegal. This is definitely a real estate myth busted.

Some agents may try to skirt the law but the penalties are not worth the benefits; not by a long-shot. Losing their license would destroy years of work, not to mention harming their personal reputation.

Bonus #5: All Realtors Are Pretty Much the Same

Top 10 Real Estate Myths Busted! All Realtors Are Pretty Much the Same

All Realtors Are Pretty Much the Same – Top 10 Real Estate Myths Busted!

I saved this myth for last. Honestly, I’m not sure it holds much weight these days. It’s 2015! We’re all quite good at evaluating products and services, don’t you think? Why should real estate agents be any different?

There are outstanding agents! There are horrible agents! There are agents that quickly respond when you text them. There are also agents that couldn’t send you a text if their life depended on it.

Some agents focus on listing homes. Others prefer to help buyers.

We have agents who like to flip houses, while others prefer to manage rental properties.

Real estate agents are as varied as you will find in any occupation. Some like to have their faces splashed across billboards across the city. Others would be horrified that you even suggested it!

What it boils down to is what you need for your situation. Make a few calls. Ask lots of questions. In the end, just make sure you select a trustworthy Realtor that has your best interest at heart.

Top 10 Selling Mistakes in Real Estate

Photo of a Louisville KY home

Just because you love your home doesn’t mean every buyer will. Avoid these Top 10 selling mistakes and you will find success selling your home in Louisville.

I’m always looking for ways to help my clients. Today, I’m even going to help all of you who are not (yet) my clients. I present the Top 10 Selling Mistakes in Real Estate.

Selling Mistake #10: Lopsided Listing Contracts

When sitting down with your agent make sure you are comfortable with the length of the listing contract. This figure is completely negotiable and both parties should come to an agreement before signing.

Contract length should be at least as long as the average Days on Market (DoM) for your area. Here in Louisville, that number has recently dropped and 3-month listings are now the most common.

It’s also a very good idea to ask about any remedies you would have if your agent doesn’t live up to their end of the bargain.

Selling Mistake #9: Misrepresenting Your Home

While it may be tempting to describe your family room as “a dream come true with more space than you could possibly imagine” in order to entice prospective buyers don’t do it. You need to remember that once a buyer arrives and discovers the room is average sized and not what you described, they will wonder what else you might be exaggerating about.

Don’t stretch the truth about square footage either, as buyers represented by Realtors are likely to notice the deception. As in life, honesty is the best policy.

Selling Mistake #8: Negotiation Failures

When you pick up that phone and hear those wonderful words coming from the other end, “We’ve got an offer!” you may think everything is golden. Just hold on a second. If you don’t negotiate the deal properly, things could go sideways and fast!

I’ve found that some sellers refuse to give ground in negotiations because they believe the buyer is already getting “a great deal.” It is very common for sellers to fail to bebe objective about their home because they’ve built an emotional attachment to it.

Market value is determined by comps. This is how true professionals help set the price. It’s not the seller, listing agent, buyer or buyer’s agent telling us the value… it’s the Louisville real estate market.

Selling Mistake #7: Lacking a Sales Strategy

Selling your home requires more than simply getting it listed in the MLS. There are literally hundreds of ways to promote a property.

Open Houses aren’t the powerhouse they used to be. Newspaper classifieds are a punch line. Direct mail? Sure, if you like to throw money away.

The real move since 2000 is digital promotion. Make sure the Realtor you choose is an Internet expert! Not all Louisville Realtors are, ask for proof.

Selling Mistake #6: Bad Timing

Sometimes you don’t have a choice. Your boss says, “You’re moving to Topeka” and it’s just a matter of time. This is unavoidable.

But if you can choose when to sell your Louisville home, here are a couple of points to remember. First, if you’ve only lived in the home a short time, consider staying a year or two longer. After only two years, you’ve barely built up enough equity in your home to cover closing costs and other fees.

Second, avoid listing your home during the holidays. Most buyers are focused on family during this time rather than shopping for a new house. In real estate circles, we call this the “dead period.”

There are other tricks here as well. As your professional Realtor, “Which is the best day of the week to list?” and see what he says.

Selling Mistake #5: Wrong Realtor

I can’t tell you how many times I hear someone tell me they’re using their Aunt or their sister’s cousin’s neighbor as their agent. Just because someone is related to you, doesn’t necessarily make them a good Realtor. It also doesn’t mean the won’t be.

Studies have shown that more than anything else, people want their agents to be trustworthy and professional. When it comes time for you to sell, interview multiple Louisville agents and learn about their work ethic and their strategy for marketing your property.

Some of the more successful agents feel like they’ve already paid their dues and don’t need to do the little things. It’s those “little things” that separate the good agents from the great agents.

Selling Mistake #4: For Sale by Owner

Current data from NAR states:

FSBOs accounted for 9% of home sales in 2012 and 2013. The typical FSBO home sold for $184,000 compared to $230,000 for agent-assisted home sales.

But that doesn’t mean you should always use an agent to sell your home. If your home is in one of those ultra hot neighborhoods and you’ve got a good understanding of the home selling process and you know how to price your home appropriately, then you might catch a break.

Keep in mind that there are a number of variables that might arise that would make having a professional on your side a wonderful thing. Never say “never” but you could find yourself months into the process with very few showings and even fewer offers. There’s a reason why the number of FiSBOs have dropped nationally.

Selling Mistake #3: Big Red Flags

There are certain problems that will scare off prospective buyers in a New York second. If your Louisville property has any of the following problems, you need to correct them before putting your home on the market:

  • foul odors
  • visible mold or mildew
  • siding or gutters that are separated from house
  • broken doors or windows
  • problems with the heating/cooling systems
  • “soft” floors or steps

Assuredly, some problems are bigger than others but problems like these will overshadow the positive qualities of your home.

Selling Mistake #2: Wrong Price

What used to be the most important aspect to selling your home is now second, and that’s the price. If the price is too high buyers won’t even consider your property.

A savvy Louisville Realtor will help you find comparable properties that have sold, as well as, what’s currently on the market. Also, how do your neighborhood compare to other parts of the city with similarly priced homes.

There are a dozen important factors to consider when determining the appropriate price. In the end, a good Realtor will set an appropriate price range for you and then ask you to select the Asking Price. It’s very important that you feel comfortable with the price.

Even though you can lower your price in the future, new listings get the most attention in the first couple of weeks after they come on the market and homes that stay on the market longer than average usually sell for less.

Selling Mistake #1: Poor Property Preparation

In today’s market, condition is huge! The move-in ready, shining and spotless homes are selling in the first week! (As long as none of the other Top 10 Selling Mistakes are made.)

Before listing your home, perform the following exercise. Drive up to your house and park on the street. Walk up the drive evaluating everything from the mailbox to the lawn and landscaping all the way up to the front door. What did you notice about your home?

A wise person once said, “You never get a second chance to make a first impression.”

If a buyer doesn’t like your home the first time they visit, they surely won’t return. Therefore, it’s critical to have your house “on its best behavior” when the guests arrive.

Remove as much clutter as possible. Make sure the grass is nicely trimmed. Turn on all the lights and open the blinds/curtains. Every little thing you do to show that your home is well-cared for will improve your odds of impressing those buyers.

Conclusion

If you can avoid these pitfalls, you will find yourself ahead of the game and well on your way to selling your Louisville home!

Interview From the Past

A few years back, I was interviewed by a writer for MSN.com. For those interested, here’s the piece which, apparently, is no longer on their website.

10 neighborhood homebuyer magnets

By Scot Meyer of SwitchYard Media

John Donne wrote that “No man is an island.” If he had been a real-estate broker, rather than a 17th-century English poet, he might have added that no house is, either. Context is everything, and neighborhoods matter.

According to a National Association of Realtors survey released in November, homebuyers say that the quality of a neighborhood (cited by 67% of respondents) was the biggest factor in determining where in a given area they would buy. The next top responses were affordability (45%) and convenience to family and friends (39%).

If you’re a home seller, you should know that certain neighborhood features are like magnets for some homebuyers, generating interest in your house even if it’s the ugliest one on the block.

Here are 10 factors to keep in mind and emphasize in your home listing.

Access to transportation

The ability to get to and from their neighborhood easily is important to homebuyers. The NAR study found that being near public transportation is important to 8% of buyers. That increases to 20% for buyers in urban or central neighborhoods.

In addition, 49% of homebuyers say that finding a house convenient to where they work influenced their neighborhood choice.

Attorney, mortgage broker and professor Dale Siegel says that easy access to transportation is particularly important in places such as New York City, where the difference between walking three blocks and 10 blocks to a subway station in the rain can be significant. But access can also be a selling point in suburban communities.

Siegel, who lives in Fort Lee, N.J., across the Hudson River from Manhattan, says that residents of her community appreciate that they can travel into Manhattan by bus or ferry and that they are near highways that can take them almost anywhere.

Good schools

School-district quality influenced the neighborhood choice of 27% of homebuyers in the NAR survey. That jumped to 55% for buyers with children younger than 18 but dropped to 13% for buyers without kids.

“One of the first questions I get from people relocating to the area is about the quality of the local schools,” says Cara Ameer, a real-estate agent with Coldwell Banker Vanguard Realty in Ponte Vedra Beach, Fla. The issue is critical for people with children, she says. But it affects the resale value for buyers without children, too.

Nearby amenities

In a recent Coldwell Banker survey of real-estate agents, 68% say that their baby boomer clients sought proximity to restaurants and shops when looking for a home.

Siegel says the presence of these amenities signals that an up-and-coming urban neighborhood has “arrived.” “An area like Manhattan’s Lower East Side can become the hot new place to live, and everyone wants to move in,” Siegel says. “But that designation becomes more permanent when the services become available.”

Access to staples such as grocery stores and dry cleaners is important in suburban and exurban neighborhoods, as well.

Siegel says her brother chose to live in Surprise, Ariz., outside Phoenix, because of “the choice of stores, restaurants and other businesses within five miles of his house.”

Area architecture

In some neighborhoods, historical or architecturally significant homes can be a big draw for certain homebuyers.

“Other buyers are less specific,” Ameer says, “but they might tell me they’re looking for a neighborhood with character and charm or one that doesn’t look like the typical subdivision.”

Siegel points to Ridgewood, N.J., which has neighborhoods with Tudor-style homes and large yards, as the kind of community that would appeal to that kind of buyer. “Aesthetically, the town might be more desirable than places with cookie-cutter corner lots,” she says.

The NAR survey found that home design in a neighborhood is a consideration for 32% of homebuyers.

Reputation

Buzz about a neighborhood can translate into buyer interest and higher sale prices, real-estate agents say.

“It’s an interesting marketing phenomenon,” says Tre Pryor, a real-estate agent in Louisville, Ky. “When an area becomes branded as the hot neighborhood, that reputation tends to stick, even though often it’s only 80% based on reality and 20% based on what people have heard or read.”

In Louisville, this is the case in the Highlands neighborhood, Pryor says. “It’s amazingly popular, and because of that, some neighboring communities have co-opted the brand and use it for themselves, even though they’re not technically part of the same area. It’s gotten to the point that the Highlands has started calling itself the ‘original Highlands.'”

Parks and outdoor spaces

Prospective homebuyers often appreciate having a park nearby, especially if they have children or pets, Ameer says. She also says that in her market, just outside Jacksonville, Fla., golf courses have appeal.

The NAR survey found that 18% of homebuyers say proximity to parks and recreation facilities influence their neighborhood choice. Among households with children, the number increases to 23%. For people buying homes in urban and central-city areas, it’s 22%.

Proximity to parks and recreation also has been deemed important by 34% of baby boomer homebuyers, according to Coldwell Banker’s survey of real-estate agents.

Low crime rate

People want to live where they feel safe. A low crime rate is key.

“Clients do ask about it, and it does affect the home’s value,” Pryor says, adding that real-estate agents refer people to objective online sources of local crime statistics, rather than sharing their opinions about “good” and “bad” neighborhoods.

People often are swayed as much by a neighborhood’s reputation for crime and violence as by actual statistics, Matthew Kaliner of Harvard University said in a 2008 study. In the study, he says that in Washington, D.C., a slight increase in the number of crime- or violence-related newspaper articles about a neighborhood could mean a $1,300 to $1,700 difference in a home’s sale price.

Your neighbors

The people who live in a community are important to home seekers, of course. But generalizing about what sort of neighbors make an area appealing is tricky. Research suggests that conservatives tend to like to live among conservatives and that liberals like to live among liberals, for example.

One factor to watch may be how long people have lived in the area. A study on neighborhood satisfaction and reputation from the journal Urban Studies in April noted that residents “who are satisfied with their neighborhood are thought not only to be less likely to move, but also to have a higher general quality of life.”

“Buyers always want the neighborhoods where there are the least amount of properties for sale,” Ameer says. “That’s very telling, because if people aren’t moving, they’re probably happy there.”

Local economy and stable home values

A home is a big investment, so buyers naturally are attracted to neighborhoods where property values are likely to go up rather than down. That means they may find a community without foreclosures or distressed properties more attractive. Pryor says that these neighborhoods are likely to see more sales and higher sale prices.

The market’s overall economic health also matters to homebuyers. Pryor wrote in a blog post last spring that the unemployment rate in Louisville is a major factor in market activity there. When more people are out of work, fewer people buy homes — and when jobs are plentiful, people move around.

Proximity to cultural experiences

Author and urban-studies theorist Richard Florida says members of a “creative class” — people whom cities want to attract and whom companies want to hire — prefer to live in neighborhoods with ethnic and cultural diversity, as well as easy access to nightlife, recreational facilities and the arts.

Convenient access to entertainment and leisure activities is a consideration in neighborhood choice for 21% percent of homebuyers, and 24% of unmarried couples, according to the NAR survey.

“People who want to be close to art galleries or other cultural amenities will definitely factor that into their search,” Ameer says, adding that Coldwell Banker’s website has a Lifestyle Search tool that can help people find neighborhoods that are hip, artsy and trendy.