Thanksgiving is often seen in the industry as the end of the fall season for selling homes and the beginning of the “dead season” during the winter months.

It’s not true.

I’ve often wondered whether this myth was purposely advanced by successful agents so that they could either 1) Take a little break themselves for the holidays or 2) trick their competitors into taking off the holidays so they could have an advantage soliciting listings.

There may also be a bit of self-fulfilling prophecy here as agents advise potential sellers to “not risk looking stale in the spring by marketing a home during the winter.”  There are lots of other excuses…it gets dark too early for after work showings, the holidays are just too chaotic , there’s too much Christmas advertising going on to get noticed, yada, yada, yada.

In my market the numbers do confirm that there is a sharp drop off during the colder months, on average for the last four years about 40%.  That four year period includes two pretty good years and the last two not-so-good years .But that means that there are still a number of homes sold during the winter months and the market is anything but dead.

When is the best time to put a home on the market?

The conventional wisdom is that the buyers come out in the spring. But if so many people wait  for the spring to list their homes then it simply means there is more competition among sellers during the spring. The more you dwell on the pros on cons of the different seasons the more you conclude that there are lots of exceptions to the rule.

The best time to put a home on the market is when the seller needs or wants to and when the home is ready to be marketed.

Being ready for the market is more important than timing. Apple didn’t launch the IPhone before they had crossed all the t’s and dotted all the i’s in their product development cycle.  That included hardware (really cool), software (even cooler), distribution (AT&T -not so cool), pricing (make the early adopters pay heavily before lowering the price for the masses) and promotion (start a buzz at MacWorld with Steve Jobs’ presentation and let word-of-mouth take over.)

A seller shouldn’t put a home on the market until the same level of preparation is accomplished. It’s a little different when the product is a home but the process deserves the appropriate analysis, planning and preparation. This winter too there are significant buyer incentives available from the government for both first time homebuyers and those “moving up” after 5 years in their existing home.

Winter is not a dead time in real estate. It can be very lively for those sellers who have a tightly integrated marketing plan for their home.

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Four Key Questions for Pricing

Pricing a listing can be complicated but the pricing of real estate services could get complicated too. In fact, it probably will.  This will be partly driven by sellers demanding more marketing services and partly driven by agents wanting sellers to share the risk. It will also be driven by growing awareness that the traditional commission structure is not carved in stone,  much less in law or regulation.

My first real estate investment was a townhouse I picked up at a good price to renovate and flip. It was the first real estate transaction I approached as a business person and not a consumer. The commission to my listing agent, who had also been my buyer’s agent, was the largest single out of pocket cost I had other than what I spent to repaint the whole interior that she insisted was necessary to not lose the contract that she had brought me. So I got my real estate license originally not to make money but to save money on my next flip.  As equity contracts, lots of sellers will be thinking this way.

With sales stalled and home prices stagnant or declining the pressure is there to look at this from both sides.  Unfortunately this will be toughest on brokers with high fixed costs who counted on high margins and high volume to be profitable.  On the other hand it is an opportunity for low overhead operations to price their services aggressively to corral business.

So, if the first question is how do you price the listing, the second question is how do you price your service. The traditional commission is one way but there are infinite combinations of commissions, fees, and incentives. The third pricing question is how much. Not what is the commission but what is your targeted net.  The final pricing question might not be pricing as much an expense question.  In most areas there is a tradition of splitting the commission the sellers pay evenly between the listing agent and buyer’s agent. But there is nothing sacred about that, either. The question becomes how much you offer the buyer agent to incent her to show your listing.

If the New York taxi pricing  looks complicated, imagine developing something like this for your next listing:

1% commission to listing agent at closing

.5% commission bonus to listing agent for a home under contract within 30 days that eventually closes

.25% of list price to the listing agent as a monthly retainer during the life of the listing agreement

3% commission to the buyer agent.

Direct charges to the sellers for print advertising, staging, warranties, and an appraisal agree upon in advance.

$2000 offer to buyer for closing costs.

More complicated?  Yes.

Fairer to all parties? Probably.

Greater incentives for all parties to perform? Definitely.

Good marketing?…..hmmm

What’s your opinion?

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I originally got my real estate license when my agent made more money on the first property I bought to renovate and flip than I did.  There were a lot of lessons learned but one was that if you had a good product you could sell it. The listing agent spent a few hours on the deal and I spent most of a summer.

So, by the time I started another renovation I had my real estate license. Like the first property, this was an older condo/townhouse with a relatively high homeowners association fee…or at least that was my first impression and I didn’t mention it at all in my marketing. When I got a couple of negative feedback messages about the fees after showings I started investigating whether the fees where out of line.

I found out a couple of things.  First, what a HOA provides for the dues can vary quite a bit.  In this particular development the association had been mis-managed for a while and they had to play catch-up as decks and roofs started to require repair. On the other hand, some of the amenities…pool, tennis courts, club house, landscaping…where exceptional.

The second thing I noticed was that most agents totally ignored the HOA in the MLS write ups and promotional materials just like I had. Like me they probably hoped that HOA questions would only come up after the buyer had fallen in love with the home.

I concluded that the HOA information should usually be highlighted, not hidden. In some cases, it may contain the unique selling proposition you need. After all, the point of “condo-ing” is usually having access to amenities that might otherwise be out of reach.  For example, for many individuals owning a swimming pool isn’t worth the expense or hassle. On the other hand sharing the expense with a few dozen other residents is reasonable and may include some social benefits beyond the ability to take a dip on a hot July afternoon.

For my particular project, it turned out the dues where very much in line with other older properties.  Detached homes in similar external condition would eventually require additional investment or decline rapidly in value. My purchase price also reflected the condition. Even after my renovation the cost to the new buyer was less per square foot than new developments. In spite of the HOA dues the total cost of ownership was often still lower than the newer developments or a detached home.

The take away is that as a listing agent of a property with HOA dues,  you should anticipate the objection to a fee  by demonstrating the value. Those that aren’t interested in the amenities and the protections of an HOA are unlikely to buy anyway. It will appeal to many,  including empty nesters and busy professionals without the interest or time to maintain external landscaping or amenities like swimming pools.

Are your experiences with HOA’s similar? Please share your experiences in the comments.

In the approach used on Long Island the price range can be used to establish a basis for negotiating other factors, including contingencies, repairs, earnest money, closing dates, etc. In other words, the more favorable they are to the seller, the better the price will be for the buyer. The real key though is precisely what our guy in Florida is doing…getting traffic through the door. Few things will do that faster that the promise of a real bargain. Few houses are bought sight unseen and the more feet across the threshold, the better the chances are that someone will see something they love…or can live with at a great price.

The NY Times article is at http://budurl.com/jz1009

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