Psychology of Marketing Real Estate, Part 3: Where

The Internet of Things
The Internet has forever changed the way we market real estate.

Welcome to my third and final piece to the puzzle on the Psychology of Marketing Real Estate. This time we’ll be looking at the “where.” If you missed either of the first two parts, I’ve linked them here.

Where Part 1: Who looked at the people involved in the real estate process and Part 2: What looked at the home itself, today we’re going to focus on the places or locations where the actually marketing will take place. It’s traditionally the kind of real estate promotion that we’re all familiar with.

So without further ado, let’s begin!

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Psychology of Marketing Real Estate, Part 2: What

Photo of the entry to a Townhome in Louisville, KY
First impressions are a powerful thing. Make sure you listings are making highly positive ones! (Photo: www.jljordanphotography.com)

If you didn’t check out Part 1 in this series—the Psychology of Marketing Real Estate—I encourage you do so. We started with the most important ingredient, people, and now we’re moving on to the physical product itself… the home!

There’s a great deal that goes into a purchase decision involving a new home. First off, it’s one of the largest investments most of us make in our lifetimes. That, by itself, is enough to set many folks trembling.

Yet besides the money, there are a large number of complex emotions that also come into play. As with anything that we humans interact with, things can get complicated quickly.

Let’s get started!

Continue reading “Psychology of Marketing Real Estate, Part 2: What”

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.

Continue reading “Psychology of Marketing Real Estate, Part 1: Who”

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.

Continue reading “When Is the Best Time to Sell a Home? Learn here!”

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.

Now 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.

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!

Tre Pryor Interview on MSN.com

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.