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$elling Your Northern Virginia Home
in Today's Changing Market
Course F201Z

This analytical course covers the entire selling process tailored to our local market. Critical topics include developing a strategy, preparing to market, and negotiating an offer into a contract. David will share 3 decades of experience to debunk popular myths, help you take an active role in the sale, avoid fatal mistakes, and sell a home for more money in less time with less stress. Learn the perfect time to put your home on the market, exactly what type of exposure will produce your buyer, and how much "fat" you need in your asking price. Information is power; get it months ahead of others.

Click here for a link to all David's GMU talks.
Click to read David's $elling Your Home book free online NOW.
* * * * * * * * * * * * * * * * * * *
Video of meeting 1: Planning I
Video of meeting 2: Planning II
Video of meeting 3: Marketing
Video of meeting 4: Finishing

The course outline below has active links to additional information.

SELLING YOUR HOME

• Objective: Provide a better understanding than . . .
  
• Focus: Northern Virginia – normal & hot markets
  
• Questions will be handled during Q & A time
  – Making notes? Use the #s in the slide headings
  
• Please MUTE your microphone NOW! – Thanks!
  
• This course versus the book – some topics omitted
  
• Textbook – Free online. No hard copies.
  – Crown books/Borders/711/Giant // Karrass
  
• Contact Info: 703 434 0773 / david@DrRealEstate.net
  
• Information is POWER
• News is 95% Recreational & 5% Actionable - Sorting it out
  
• Media objectives – recent news
  
• The Monthly Report by email - free
  
• Questions after class by email
  
• Course outline is on the web at . . .
        https://drrealestate.net/GMUsellingM.html
  
• 50% planning/25% to offer/25% to closing
  

STEPS IN A SUCCESSFUL SALE

• Analysis - The market and the value of your home
  
• MLS: Words and Price - The objective
  – MLS – multiple listing service
  
• Traffic: Showings
  – Arrival
  – Entry
  – Approval
  
• Remembering
  
• Return for second visit
  
• Offer
  
• Agreement
  
• Removal of contingencies
  
• Settlement

There is NO magic in selling a home.

PLANNING - 1
Initial Considerations

• More $$$/faster/timing/avoid pitfalls
  
• Inside information/DrRealEstate.net
  
• The national real estate market! / New homes
  
• MLS database value/the buck starts here/history
  
• MLS objective/4,000 words?/photos/virtual tour
  
• Sell?/equity greater than zero
  
• Tax free gains/Section 1031
  
• Tax Publications 523 / 527 / 530 https://www.irs.gov/
  
• Governance: NAR / VA / Federal
  
• Grains of sand or snowflakes? Or just flakes?

Imagine yourself a home buyer.
Your most efficient and complete home search will be conducted by . . .
– Reviewing “Homes For Sale” magazines
– Looking for “For Sale” signs
– Reading newspaper ads
– Attending open houses
– None of the above

PLANNING - 2
Some Basic Ideas

• Agents, brokers, and Realtors
  
  
• What it takes: Education/Tests/Experience/$$$
  
• Most customs are area (market) based
  
• Most laws are state-based
  
• Procedures and forms vary accordingly
  
• How our market works!
  
• Online searching/lockbox system
  
• Their last home/live here forever/shelter
  
• Investment/entertaining
  
• Sold prices define market values
  – Market exposure/arm's length/no pressure
  – Loss of income/serious health problems.
  
• The market knows/orderly market
  
• You need up-to-date market info/the news . . .

PLANNING - 3
Put the NEWS into Perspective

• Who is the target?
  
• What decreased 3%? Number of sales or prices?
  
• Compared to: Last month? Last year?
  
• Is data recent or months old
  
• Seasonally adjusted?
  
• Resale homes? New homes? Both? Rentals? Resale Appraisals? Other?
  
• There is NO national real estate market
  
• Conclusions should be supported with data
  
• Some start with a conclusion and support it with anecdotal evidence
  (condo popularity!)
  
• How the value of a home is defined - Not by an “expert’s” personal opinion
  
• Do they comprehend statistical significance?
  
• Do they make the distinction between correlation and causation
  
• Standard & Poor's - Case-Shiller Report
  
• What everybody knows - not always right - Even when it sounds right
  
• I could write a book! (LOL?)

PLANNING - 4
Exploding the Local Specialist Myth

• MLS 50 times more important
  
• Agent will not find your buyer directly
  
• Your agent is your connection to a buyer
  
• Your agent should be marketing not selling
  
• Buyers come via the MLS through another agent
  
• Agent will rarely show your home in person
  
• What does your local specialist know?
  
• Separate important from sounds important
  
• Seller beware: Listing tools!

PLANNING - 5
The MLS sells homes!

PLANNING - 6
How’s the Market?

• “The market” knows/every home is unique
  
• Buyers search wide area & see many homes
  
• Know the market in order to compete
  
• Buyers don’t care . . .
  – What you paid
  – What you spent on improvements
  – How much money you need
  – The profit you believe you are due
  
• Supply/demand/seasonality
  
• Market index database
  – Resale homes?/new homes?/rentals?/detached?/attached? – townhomes???
  – NAR areas 50%?/Case-Shiller 20 areas?/FreddieMac resales?/appraisal?
  
• The monthly market report is in its 32nd year

PLANNING - 7
Market seasonality.
Supply: The number of homes on the market.

PLANNING - 8
Market seasonality.
Demand: The number of contracts entered.

When is a home really SOLD?
Who cares and why?

PLANNING - 9
Market Seasonality

• Media information is 2 to 4 months out-of-date
  
• Based on closings not contracts
  
• An additional lag before publication
  
• June sales reported in August are April contracts

Real estate market conditions change according to the time of year. The best time to put your home on the market is during the month of . . .
February? April? May? June?

Market conditions favor home buyers most in the month of . . .
May? June? September? December?

PLANNING - 10
Market seasonality.
When is the best month for home sellers?

The new seasonality for our market, since 2008, is above.

Under 1.5 is a hot market / 1.5 - 3.0 is a sellers market /
3.0 to 5.0 is a neutral market / over 5.0 is a buyers market

Northern Virginia: Alexandria, Arlington County, and Fairfax County.

Seasonality from the NAR does not take this quantum-shift into account.
Their database includes all years since 1999, which is only one of the factors that skews their information.

For meeting #2 — Key points so far

• We all want to sell quickly for a high price
• Maximum market exposure is key – the MLS
• Tax-free gains! $250,000 ???
• Our market is an orderly continuum
• Sold prices define market values
• Real estate “news” is recreational
• Your agent should be marketing not selling
• Supply / Demand / Months Supply / Seasonality

If you requested the free monthly report, you learned the months supply is 0.6, that 63.0% of sellers got multiple offers, buyers had to offer 13.8% over asking to have a 90% chance, and much more.

I will be speaking on buying a home at GMU’s Arlington campus April 13.

General Information
Web address (URL) for this outline is . . .
     https://drrealestate.net/GMUsellingM.html
Sign up for the free monthly market report by email
Contact David: 703-434-0773 or david@DrRealEstate.net

PLANNING - 11
Market Value Analysis

• Tax assessments/Zestimates/Appraisals
  
• Similar sold homes are adjusted - comparables
  
• What a buyer will a pay for a feature
  
• Not original cost nor replacement cost
  
• Condition
  
• How to use asking prices – and how not to
  
• The beginning of Zillow ???
• A special case: the condo algorithm

PLANNING - 12
Tax Assessments

• Value government assigns for tax purposes
  
• Mass confusion: Assessor versus appraiser
  
• Assessing at “100% of fair market value”
  
• Average relationship between assessments and values (assessment plus 15%)
  
• The range - minus 15% to plus 85% *
  
• Relationship to market value is valueless
  
• Tax assessor seen your home? Zillow?
  
• Zillow relies heavily on tax assessments
  
• No one knows, checks, or cares except . . .
  
• Mortgage lenders do not rely on tax assessments
  and neither should you
  
• Appraisers are State licensed professionals:
  education/exam/2,000 hour apprenticeship

*Raw data from this study is available by email.

PLANNING - 13
Market Value Analysis

Comparables		EnglishMillCt	FoxMillRd	OaktonWoodsWay
Date sold		July 1991	Sep 1991	Dec 1991
Sold Price		416,000	410,000	430,000
Time Adjusted Price		416,000	410,000	430,000
Positive Adjustments
Backs to parkland		0	12,500	12,500
Location		0	20,000	0
Walk-out basement		3,600	0	0
Negative Adjustments
Extra bathroom(s)		(3,600)	(2,200)	0
Extra fireplace		0	(1,700)	(3,200)
Home size		0	(16,520)	(34,930)
Lot size		0	(20,000)	(10,000)
Pool		0	(15,000)	0
Total Adjustments		0	(22,920)	(35,630)
Adjusted Home Value		416,000	387,080	394,370
Subject Property		History Drive
Probable Sale Price		$395,000

Note that the probable sale price is neither the average of the
3 comparable homes, nor the suggested asking price.

PLANNING - 14
Marketing Strategy

• You do not control the market
  
• You will obtain market value for your home
  – A bit more in some cases / much less if things go badly
  
• Start with your home's value/add fat for negotiation
  
• The initial wave/later/price reduction
  
• You do control time on the market
  
• Price versus time on the market

PLANNING - 15

PLANNING - 16
Average Days on the market.
For sold homes?

A typical buyer is able to negotiate how much off a home’s asking price?
  0%   2%   5%   10%

PLANNING - 17
“Fat” for Negotiation

• Avoid following the market down
  – Never at a low enough price to sell
  – Until desperation shocks you into reality
  – “But I’m losing all that money”
  
• Be firm when negotiating/don’t appear anxious
  
• Too much “fat” for negotiating will mean no offers to negotiate
  
• Overpriced homes are not shown to the right set of buyers
  
• A home needs to be priced correctly to compete
  
• Perspicacity - later

PLANNING - 18
Important Statistics

• Selling-price to asking-price ratio
  
• If the ratio is 96% the asking price would be set 4% over estimated market value
  
• Homes do not obtain an offer until priced right:
  within about 4% of market value
  
• Sellers’ markets versus buyers’
  
• With price a bit too low . . .
  
• Today’s market: Multiple offers!
  
  
• “I’ve already got your buyer” (watch out!)
• Self-sold listings (watch out!)
  
• "Pocket listings" Yes, this happens. Why? How?
  

PLANNING - 19
Selling-price to Asking-price.

PLANNING - 20
Round Number Pricing

• Little-known advantage
  
• Online computer searches
  
• Get more showings
  
  
• Buyer A searching $550,000 to $600,000
  
• Buyer B searching $575,000 to $625,000
  
• Buyer C searching $600,000 to $650,000
  
  
• Priced at $599,999, buyer C will be oblivious
  
• Many third-party sites only offer round numbers
  
• How many sellers understand this?

PLANNING - 21
Put Your Best Foot Forward

• Don’t lose 10% to 15% of fair market value
  
• Avoid extended marketing time & aggravation
  
• First impressions are the strongest
  
• Obvious factors and qualities/curb appeal
  
• Recognizable, definable, not obvious factors
  
• Indefinable, subtle, and often unspoken feelings
  
• Find odors best, seconds after you return home
  
• Slip into the shoes of the home buyer
  
• Minor repairs should always be done
  
• Light & bright/neat/neutral/impersonal & inoffensive/clean
  
• Sell, donate, give or throw items away
  
• Secure prescription medicines/valuables/firearms
  
• Remove the spare plumbing fixtures and the old car up on blocks from the front lawn
  
• Virginia disclosure laws

        Home Preparation Checklist

Meeting #3 Critical points so far

• There is NO magic in selling a home
• If it sounds right, it could still be wrong
• The “appraisal method” of valuing a home
• Overpriced homes are not shown to the right set of buyers
• Round-number pricing
• Secure prescription medicines/valuables/firearms
• Use your price to control time on the market

VA law: Attached items convey – UK customs & gazumping
Appraisal problems in a hot market

      General Information
This outline is on the web at https://drrealestate.net/GMUsellingM.html
Sign up for the free monthly market report by email
Contact David: david@DrRealEstate.net

MARKETING - 1
Marketing Specifics

• It’s all about market exposure!
  
• Be sure to use the "coming soon" status
  
• The importance of a lockbox
  
• Items attached or fastened convey
  
• Replace that crystal and gold chandelier now
  
• Association disclosures and recission
  
• Remember that your home is on the market
  
• A personal letter? Into the MLS? A handout?

A Personal Letter from Mr. and Mrs. H

Welcome to 115 Ridge Road. We hope you will love and enjoy this home as much as we have. As you probably know from your drive through the area, this location is close to shopping, major roads, and even Fair Oaks Hospital. However, it remains quiet here because the street serves only the adjacent residential area.

We have enjoyed our home's particularly pretty site. The lot includes some woods at the rear where we have planted a few wild flowers along a short path. In the autumn these woods provide a beautiful backdrop with their colorful leaves. The edge of the yard also has dogwood trees and wild azalea plants which bloom in the spring along with the cultivated azaleas.

Although we have never had a problem, we did install a Honeywell security system for peace of mind. The system includes not only security features, but also a smoke detector as well as high and low temperature sensors. The monitoring office can notify the fire and police departments if needed. An external alarm will also alert the neighbors.

We are moving to another area since we are retired and desire to follow a different lifestyle. We are sure you will like the area and this home as much as we have.

MARKETING - 2
Critical Information

• MLS 50 times more important
  
• Well over 90% of all homes are sold thru MLS
  
• Your agent will not personally find a buyer
  
• Your agent is your connection to the buyer
  
• MLS information is critical to success
  
• Objective: Make the reader want to visit
  
• Get your MLS information & review it carefully
  
• Accuracy and no abbreviations or "Realtor-eze"
  
• Non-important info dilutes important info
  
• A new water heater? Hhhhmmmm
  
• Is a competitive commission offered in the MLS
  – Check your Listing Agreement Item 12.B !!!
  – This is the commission for the buyer’s agent!
  
• Check parking - MLS garage entry can be tricky
  
• There are many, many ways to go wrong
  
• Photos and virtual tours

How many times each month will your agent show
your home to a prospective buyer?
  1   5   10   20

MARKETING - 3
Bring on the BUYERS!

• Queue up/take a number/first-come, first-served
  
• Might take 2 or 3 weeks to assess progress
  
• A lockbox provides the best accessibility
  
• How they work/smartcard & PIN/recorded info
  
• Security problems are rare
  
• Showing agents should advise of a visit
  
• Your agent is not normally present for showings
  
• Not necessary to leave (COVID considerations)
  
• The planned arrival time is an estimate
  
• If you vacate for showings, you will go crazy
  
• Open-house/over 100 to sell/tire kickers
  
• A yard sign? A QR code on your sign?
  
  
  Do you have an APP on your phone to scan this QR code?
  
  
• Handling a hot market
  
• Adequate market exposure
  
• Multiple offers

MARKETING - 4
Do this . . . Don’t do that

• Drive-aways
  
• Home temperature/HVAC fan
  
• Meet visitors/no apologies
  
• No compromising info/no contract details/
  no why moving/no when moving
  
• No sports, religion, politics, sex, sale of items
  
• Stay focused and control your pets!
  
• Never, ever, tag along
  
• Unusual interest/second visit
  
• Surprise visit? Ask agents to enter with the lockbox
  to ensure they should have access to your home
• Refuse entry to anyone with no agent
  

MARKETING - 6
What works . . . and what doesn’t

• Exposure produces showings
  
• Signs and open houses
  
• Print/direct mail/personal contacts/etcetera
  
• Third-party sites/their info/effectiveness
  
• Listing tools!
  
• Pocket listings!
  
• Online searching
  
• Traffic/showings/need action? - later
  
• 50% of a contract
  
• You can review, negotiate, accept, and execute an offer from anywhere
  
• Do the right things/get the right results
  
• Buyers come from your MLS info

MARKETING - 7
The MLS sells homes!

MARKETING - 8
The MLS generates showings

• Buyers know how to find a home do an on-line search then
  call their agent to see homes
  
• Quicker than open houses or chasing signs
  
• Forget office walk-ins, personal contacts, and word-of-mouth
  
• Your agent will not personally show your home
  
• Data in the MLS computer rules!
  
• Over 50 third-party sites
  
• Searches are always conducted by price range
  
• Your home needs to compare favorably
  
• Will yours be visited or end up in the trash can?

The primary indicator of your home's suitability to the market
is measured by the traffic generated from your MLS entry.

MARKETING - 9
Showing traffic

• Best market indicator – showings
  
• Review every Tuesday
  
• No showings in the last 2 weeks indicates BIG trouble
  
• The answer is on your MLS printout
  
• There is NO magic in selling a home

MARKETING - 10
Does your home need a price reduction?

• Faster vs. more money – competing objectives
  
• "The market" controls your selling price
  
• Half the homes on the market need a reduction
  
• When?/How much? (later)
  
• DOM to sell half the homes that have sold
  
• DOM figures are terribly misunderstood (later)
  
• Don't languish: When the market speaks, listen
  
• Control time on market with your asking price

MARKETING - 11

Discrimination in housing: Perspicacity
(Why that 4 or 5%?)
How much to reduce your asking price.

• Ability to discern a difference – example
  
• Asking price 2 to 4% over market value/"fat”
  
• Want too much, ask too much, get no offers
  
• Buyers who can afford more, are looking for more and don’t want your home,
  even at 20% discount
  
• Too high a price attracts the wrong set of buyers
  
• Reductions less than 5% are not significant to the market; that means ineffective!
  
• Reduce your price to compete with lesser homes

MARKETING - 12

Days on the Market – DOM
When to reduce your asking price.

• Current MLS days and total days are published
  
• Interpretation of DOM is tricky
  
• For all homes on the market?
  
• For only homes that have sold
  
• Most useful: DOM to contract at the current price is difficult to find
  
• Media never tells you what they are reporting!
  
• Double DOM of homes on the market for worst-case planning purposes
  
• DOM to sell half the homes is the time to consider a price reduction
  
• Are average prices rising or falling?
  
• Consider months supply – the market index
  
• Media reports lag by at least 1 or 2 months, often 3 or 4
  
• A higher price means longer DOM

MARKETING - 13

Meeting #4 Critical points so far

• Combination lockboxes!
• Signs and the QR code!
• It’s all about market exposure!
• Your agent is your connection to the buyer
• Get your MLS information & review it carefully
• A plan to secure multiple offers in today’s hot market
• Surprise visit? Ask agents to enter with the lockbox
• Refuse entry to anyone with no agent
• Best market indicator – showings – weekly report
• Too high a price attracts the wrong set of buyers
• Interpretation of DOM is tricky
• Media reports lag by 2 to 4 months

Do you have an APP on your phone to scan this?
Will this bring your buyer, or is it merely a "listing tool."

      General Information
This outline is on the web at https://drrealestate.net/GMUsellingM.html
Sign up for the free monthly market report by email
Contact David: david@DrRealEstate.net

FINISHING - 1
Negotiating Basics

• Challenging/exciting/satisfying
  
• It’s about money and more
  
• Your choice of an agent will now be confirmed
  
• The offer is an insult!
  
• Control the process/control yourself
  
• Never let things get emotional
  
• If they do: Slow the process and table issues but delays are best avoided
  
• Focus on facts and resolving differences
  
• Stretch credibility and negotiations will fracture
  
• Consider compromising or just saying "NO"
  
• Avoid ultimatums (later)
  
• Negotiations are quicker and easier in a sellers’ market,
  slower and harder in a buyers’ market

FINISHING - 2
Presentation and consideration of the offer

• Well-defined and orderly ritual
  
• Standard forms and procedures
  
• Your agent provides a buffer
  
• Response to a verbal offer: Put it in writing
  
• Where is the buyer’s money coming from?
  
• Contingent upon the sale of a current home?
  
• Is the buyer approved for a mortgage?
  
• Lender-letter/proof of cash

FINISHING - 3
Accept, Reject, or Counteroffer

• Response options: Accept/reject/counteroffer
  
• Reject but entertain a second offer -
  sometimes it takes jacks or better to open
  
• Always project your sincerity and avoid emotion
  
• A counteroffer returns control to the buyer
  – Include an expiration date!
• Don’t get locked in with a buyer who is unable to close (story)
  
• Multiple concurrent offers – how to handle escalation clauses
  
• Imagine the offer has been finalized, you have had a night’s rest
  and it is tomorrow morning
  
• Could you have done better?

FINISHING - 4
Negotiating details: Information is Power

• A first-time buyer/cautious?/scared?/worse?
  
• An incoming transferee/don’t let them get away
  
• A serious local buyer/home to sell?
  
• A bargain hunter or "bottom fisher"
  
• A tire kicker or troller?
  
• Big trouble-A host of new considerations:
  – The market has suddenly worsened
  – The buyer can afford no more
  – Interest rates are about to rise
  – A similar home sold for 25% less
  – Your home will not appraise
  – The buyer likes another home/a close second
  – The offer is greater than your tax assessment
  – Some New York-based investment folks predict gloom and doom
  
• Disregard brand new, alarming, unverified, irrelevant info
  
• An emotional response is your biggest enemy
  
• Impart the understanding needed to bring the buyer’s view into line

FINISHING - 5
Common Negotiating Situations

• Price is the down payment plus the mortgage
  
• Never accept less than 95%/why
  
• Problems with verbal rejections/get closure!
  
• Split the difference
  
• Face-to-face talks
  
• Your agent insulates you from direct negotiating
  
• If you say this is your last offer, mean it, or the buyer will learn
  that you do not mean what you say
  
• Most final offers are not final offers (Mose)
  
• Make your last offer without any mention of finality; then resubmit
  
• The end might not really be the end
  
• Before you walk out, plan how to walk back in
  
• Some buyers just need to hear NO
  
• This negotiating info is the tip of the iceberg

FINISHING - 6
After the Meeting of the Minds

• Obtain any condo or homeowners disclosures
  
• Accommodate home, radon, termite, well, septic, mold, or other inspections
  
• If the home inspection results in requests, a negotiation might ensue
  
• Being already under contract, the buyers negotiating genes might
  kick into high-gear
  
• Ask your agent to periodically check the status of the buyer’s loan approval

FINISHING - 7
Onward to Closing

• A closing agent will prepare needed documents
  and coordinate mortgage payoff
  
• The purchaser’s lender will send an appraiser
  
• You will arrange movers
  
• There will be a title search to ensure that you have clear ownership
  
• You will transfer utilities etc. out of your name
  
• The purchaser will do a final inspection
  
• Closing takes less than an hour or can often be done by FedEx or online
  
• Transfer keys, garage door openers, etc.
  
• Do not cancel your homeowners insurance until you receive your proceeds
  
• In several weeks, your mortgage lender will send a mortgage satisfaction notice and a refund
  
• Save a copy of the closing documents and your original title insurance policy forever

FINISHING - 8
The Market Index

FINISHING - 9
Northern Virginia Home Prices

TMI ???

• BONUS - Help buyers win their home of choice
  
  
• 9 Critical Factors in Agent Selection
  
• 12 Interviewing Mistakes to Avoid
  
• Smart Negotiating
  
  
• Charts and statistics
  
• Decades of Timely Topics
  
  
• David's quotes in the national news
  
• Newspaper cover stories and series written by David
  
• David's articles for Realtor Magazine and other publications
  
• The Buying a Home book
  
• The Agents Guide book
  
• The Statistics PERSPECTIVE for the Experts book
  

The END
Information is POWER

• Read the $elling Your Home book free online NOW!
  
• Sign up for the monthly market report by email
  
• About David
  
• Contact David: 703-434-0773 / david@DrRealEstate.net
  

Final Notes — Key Points from 4 sessions

• There is NO magic in selling a home
• If it sounds right, it could still be wrong
• Round-number pricing
• Sold prices define market values
• Media reports lag by 2 to 4 months
• Real estate “news” is recreational NOT actionable
• It’s all about market exposure!
• Your listing agent is your connection to the buyer
• Get your MLS information & review it carefully
• How to secure multiple offers in today’s hot market
• The best market indicator is showings – get a weekly report
• Too high a price attracts the wrong set of buyers
• Interpretation of DOM (days on the market) is tricky

*   *   *   *   *   *   *

AFiRE — Florida-licensed real estate broker
A Friend in Real Estate, LLC

YFiRE — Virginia-licensed real estate broker
Your Friend in Real Estate, LLC




* Copyright © David Rathgeber *
* * All rights reserved. * *