Coming Soon Listings... Big Scam or Big Opportunity?

If you're a buyer and come upon a property marketed as "Coming Soon", how does that help you?  It's so exciting, right!?  You might be the first one through the door!!!!!!  Here are a few things to consider.  If it's really coming soon, that means it's not yet available to be sold by definition.  It will be, but not yet.  If you contact the listing agent on the property and they're willing to show you the home and give you the opportunity to purchase it, they've just proven that they're willing to lie to get a deal together.  They've used false advertising to build an artificial level of excitement with buyers.  What is going to keep them from lying again during the transaction?  They've given you a window into their ethical compass and have already proven they're willing to scam in order to put a deal together.  Do you really think they're going to put you first for some reason once you make the offer?

If it's truly not available for one reason or another, why are they marketing it?  Does it need repairs before it even hits the market?  Are there title issues?  Is it just a marketing ploy to try to get you to make an unwise decision?  Who knows, but can you imagine a scenario where a seller would choose to begin marketing their property even though they aren't ready to sell?  Under all the scenarios I could possibly come up with, it's not a beneficial situation for you, the buyer.

How about sellers?  Whey would they want to market a home as "Coming Soon"?  Some REALTORS will tell sellers that it will build a sense of urgency with buyers and they'll all pile up at once to make amazing offers over full price!  Good luck with that!  I recently pulled up every residential sale in Grand Traverse County between $100,00 and $300,000 for the past year to do some number crunching.  There were more than 1,200 sales in this segment over the past 12 months.  Of those, 94 closed within 30 days (basically under contract day one) and only 11 of those sold for more than full price.  Barely more than 10%.  If an agent, at least in this area and price range, suggests you'll get more than full price because of a fast sale, they're either lying or not educated on the local market.

And how about the idea of a quick sale?  For some seller's it's essential to sell right away and their REALTOR should certainly suggest a price that will achieve a quick sale.  But is that really the best way to get top dollar?  Supposedly build fast interest to maximize dollars?  Nope.  In crunching that same data, an interesting trend was seen.  I compared the days on market (DOM) to the average sales price.  Again, these are all homes in Grand Traverse County over the past year priced between $100,000 and $300,000 (our sweet spot basically).  The lowest average price was for homes that showed 0-15 days on the market.  Keep in mind, days on market is the time between entering it in the MLS and the actual closing.  It's pretty tough to close a bank deal in 30 days. Anything that shows 45 days or less on the market means the buyer was found likely within the first week or so or even before it hit the market.  30 days or less and it almost surely was sold before ever being exposed to the entire pool of possible buyers.

What's the point of all this?  There is simply no better way to sell a home than to market it well and expose it to as many possible buyers as you can.  You're looking for the buyer who sees value in more of your homes' features than others do.  By exposing it to the largest possible pool of buyers, you're more likely to find the one that will pay the most because it's the best fit for them.

Real estate is a serious profession.  We are entrusted with the largest financial decisions in most people's lives.  It deserves to be treated with that gravity.  If you are considering buying or selling real estate, I highly recommend you interview at least 3 agents.  One will almost certainly stand out as more knowledgeable, more genuine and a better fit for you personally than the others.  I'd suggest making sure one of those is a Homewaters Agent (I'm admittedly a bit partial).  Learn more about our company and our team of exceptional agents and brokers at www.homewaters.net.

You're not going to find serenity on the highway...

More and more often, we get requests for buyers who want a high level of privacy and seclusion but they also want to be on a paved road with cable internet.  Good luck with that...  The reality is, true peace and quiet are most often found off the beaten path.  Another scenario never to be found is someone wanting a downtown condo with space for a large garden.  Not...  Gonna...  Happen...

I can certainly understand the desire to be close to amenities like health care, dining, shopping and the like, especially for those looking to live in an area full time or spend the entire season there.  In northern Michigan, however, access to those amenities from a secluded cottage in the woods most often involves travel down some gravel roads.

Connectivity to the internet is also very important to most people and frankly, essential for many in order to operate business while away from home.  Fortunately there are a number of options including satellite internet, cellular internet and others that don't require hard lines run to the property.  Better yet, take some time away from the internet!  (not right now, you should keep reading this blog)  Paddle a river, walk a woodland trail, lay in a hammock near running water or find any other way you can to truly unplug.  It's good for the soul.

I guess what I'm saying is, you usually can't have it both ways.  If you want to watch deer wander through your yard and see an eagle snatch a trout from a stream while enjoying your morning coffee, you're more likely to find it a few more miles out.  Add 10 minutes to the drive into town and it's amazing how much serenity can be found!

Consider these properties as great examples

Located on a phenomenal trout fishing section of The Manistee River, this well done 3 bed, 2 bath cottage home offers stunning river views, a huge river side deck and gazebo and over 1,100' of pristine, secluded frontage.  It's within 40 minutes of Traverse City and is adjacent to 100's of acres of state land.  Offered at $229,900.  Click HERE for details.

This one comes pretty close to that dream scenario.  It offers over 20 wooded acres within 10 miles of Traverse City with over 700' of frontage on both sides of the river.  A large building site and separate garage site have already been approved and developed offering great river views.  It's ready for your foundation and dream home or cabin.  Offered at $229,900.  Click HERE for details

He who has the most signs loses...

It is truly interesting how perception becomes reality.  The one that comes up most often in real estate is the perception that the agent with the most signs out and about is likely the most successful agent in the area.  Every one of those signs is in the yard of a property that agent has been UNABLE TO SELL...  The agent with the most signs in yards is just the one with the most unsold properties.

My goal is to have absolutely no signs in place because it will mean I've successfully sold all my clients' properties.  Go ahead and interview that agent whose signs are all over the place but talk to at least two others you get through recommendation or your own online research.  You'll be more likely to find the agent who is truly the best fit for you and your property.  With any luck, you won't have a sign in your yard for long.

Let people show your house!

It's incredible to me how often we have difficulties simply getting in to see homes that are available for sale. It's not uncommon for 1 out of every 4 properties we try to set up showing appointment on are unavailable for one reason or another.  Excuses range from difficult renters in a property to visiting family to minor repairs being undertaken.  If you want to get your house sold, make it available for showings.  That means you may have to inconvenience yourselves or put in some extra effort to get it ready on short notice.

Despite the national media building up the housing market, it's still difficult to find the right buyer for any property.  If you have your property listed for sale, jump through whatever hoops you have to in order to accommodate showings.  If you don't, the otherwise perfect buyer may simply write off your home because they don't feel you're serious about the sale.

Make this easier by always keeping your home in show condition.  Be willing to take the dog for a walk on short notice so you can get out of the way when an agent calls with last minute buyers.  Treat buyers and their agents as if they're customers and you'll be a lot closer to actually getting your home sold.

The Market is NEVER Coming Back!

Believe it.  There are segments of the market in more rural areas that may never reach the pricing they did in the mid 2000's.  If you own a home or cottage in communities closer to downstate or areas like Traverse City, good times lay ahead in the very near future.  If, however, you're in rural northern Michigan away from amenities, the highest values for your property are in the rear view mirror most likely.

When those in the baby boom generation were in their 40's and 50's, they were clambering to buy their cottage "up north".  It was almost a sign that they had "made it:".  They didn't mind putting in a little work each weekend and had the know how to do many of the common household fixes that were needed.  This drove prices through the roof until 2007 or so.  Now those same buyers are still driving the market but they're looking for homes for retirement closer to amenities like health care, shopping and dining.  They want to live up north, but now that they're going to be there full time and not just for a weekend, the importance of a larger community has moved to the forefront.  A modest, charming little cottage was great for short getaways but many don't want to give up the comforts of their primary residence when moving to northern Michigan for good.

The next generation of buyers simply don't hold those same dreams or have the same skills.  Frankly, many young professionals are living beyond their means already and coming up with the 20% down payment for a cottage just isn't going to happen.  Even if they inherit the family cottage, the taxes may be too great and the idea of working every weekend they're up north doesn't sound too great.  Perhaps more importantly many, younger buyers simply don't know how to do basic home repairs and would have to hire everything out at a substantial cost.  They'd rather take a weekend getaway to Chicago or stay in an all-inclusive resort somewhere tropical.  The mentality is simply different.  There are, of course, exceptions and we're thankful there are more younger buyers entering the market all the time.  Many who are interested in getting a second home and have the means to do it don't seem to want to settle for a modest getaway, though.  Fine finishes and Pottery Barn decor are more the norm.

Where does this leave you as a seller?  First, recognize the situation and plan for it.  Simply waiting around for things to recover is not a strategy because it isn't going to happen anytime soon, if ever.  The best thing to do is make your property as appealing as possible to those who are in the market and be realistic with your price.

This is not going to work today...

#1.  Make sure your home or cottage is updated and very attractive to just about any buyer.  Paint any brown paneling, remove old shag carpet and update the appliances if necessary.  If buyers walk in and see a lot of remodeling work to be done, they'll likely walk right out the back door.  The fact that you were happy there for 30 years with your avocado green Ford refrigerator does not mean a buyer will like it.  Buyers today, especially younger buyers, are much more drawn to aesthetics than true quality.  It's unfortunate but it's the truth.  You may have 2" x 6" framing and the most energy efficient home in the area but most young buyers would rather have a less substantially built home with stainless appliances and granite counters.

#2.  Price your home right.  The market dictates what your home is worth, not REALTORS or anyone else.  A solid agent can help show you the recent sold properties that are most like yours and help you determine a price that is within reasonable limits of what the market will bear.  You may not have to sell, but many of the other sellers in your market do and they're going to be the ones to successfully do it because you're too stubborn to budge.  Yes, there may be some rich guy out of Indianapolis with a pocket full of money to spend on a cottage up north.  They did not get all that money by spending it on stupid stuff, however.  They'll buy the home they like AND is a wise financial purchase.

#3.  There are exceptions.  We're seeing great activity in the lower price ranges (up to and around $100,000) for cottages closer to areas downstate like Clare, Gladwin, Houghton Lake, etc...  We're also seeing an uptick in activity on nicer homes in these same areas thanks to the easy drive.  Once you get beyond 2 1/2 hours or so from these areas, interest seems to wain quite a bit in the cottage market.  It also appears that this distance from downstate areas has an impact on lakefront and riverfront getaways as well.

What does this mean for buyers?

#1.  There are some amazing deals in areas like Crawford and Kalkaska Counties or the very northeast corner of lower Michigan.  They're sort of falling in that gap where they're a little too far north for many and don't offer the amenities that a Traverse City, Charlevoix or Petoskey might offer.  Especially if you're willing to do some fix up or remodel work, there's perhaps never been a time to get more for your money in these areas.

#2.  You're going to have to get off your wallet in some areas like Traverse City if you want to get a great property.  These conditions are basically concentrating buyers in areas like this and competition is high!  All these articles you read about the amazing northern Michigan cottage market are mostly in areas closer to downstate and higher end communities.

3.  Now is a great time to buy.  Interest rates have bumped up a hair over the past year but are still absurdly low on a historic scale.  If you can scrape together the down payment necessary, you can get a cottage for your family so they can enjoy some of the same great memories your parents made possible for you (Obvious guilt play there:))

Don't get all sad upon reading this.  Consume the information.  Read some other stuff to find out if you agree.  Most importantly ACT!  Do the upgrades, get your price in line and move on to the next chapter in your life!

Drop It Like It's Hot!

Too often sellers want to make a price adjustment that's simply going to have no impact.  If you refused to buy a Snickers bar because it was $1.99.  Would you all of a sudden grab one up if they dropped it to $1.95?  Not likely.  For a buck and a half, how could you refuse, though, right?  I mean, the caramel alone is worth $.75.  Add in the nuts, chocolate and...  Sorry.  I like Snickers.  The point is, if the decision has been made to drop the price, "drop it like it's hot"!  The purpose of a price drop is to accomplish one of two goals.  1.  Bring in new buyers and 2. Get previously interested buyers to move forward with an offer.  If you drop the price less than 5%, you're going to accomplish neither.  It typically takes a 10% drop in price to really have any impact.
Here is a general rule of thumb I like to use if there are no other glaring issues with the marketing strategy or the property itself.  If you've been on the market 90 days without a showing, you're likely overpriced at least 15% and possibly 20%.  Once you've had six showings without an offer, you can assume you're about 10% overpriced.
I also totally disagree with a philosophy of pricing high to build in some negotiating room.  If you're well priced, you're going to get more showings, more interested parties and, most likely, a decent offer.  Even if an offer comes in low, there's nothing that says you have to take it.  If you can't come to terms, so be it.  At least you had the activity and most buyers will circle around once they've identified the right property and do what it takes to make it theirs.

Motivated means you're going to sell for less

We hear very often that a seller is "motivated".  If you are instructing your agent to tell other agents that you're motivated, you're going to get low-ball offers.  Motivated and "desperate" are synonymous in the brain of a buyer and their agent.  There have been too many occasions where a listing agent advertised that their seller is very motivated only to then hold firm to their list price when the low offer comes in.  If you truly are motivated and want to sell your home as fast as possible, reduce the list price and stay more firm during your negotiations.  You're going to get more interest, more showings and potentially more than one party interested which could lead to achieving a much higher sales price.  If you've been on the market for three years at $350,000 and telling your REALTOR that you'd take $300,000, just drop your price to $314,900 and get it sold.  If you're home is only worth $250,000, this won't work.