Staging

Now I want to focus on what I was thinking while listening to Gary Keller’s presentation for Sellers. There are five considerations when selling property: 1.Condition 2.Price 3.Terms 4. Marketing 5. Location.

Consider these examples to define the list of 5:
1. Condition is focusing on how well the paint job is inside/outside
2. Price needs to be relative to other similar homes which are sold/pending/active in the market place
3. Terms could relate to the seller carrying financing, providing better terms than a 3rd party lender (highly unlikely in today’s low interest markets)
4. Marketing requires that the Realtor catch Buyers/other Realtors interest to see the home
5. Location putting emphasis on what the market will pay for the house next to a business, near a busy road, in a poor/better school district.

The 5 items above were intended to warm you up to the key word for this entry, STAGING! When a property is correctly staged, the condition will shine and the seller stands the best chance of getting top dollar on price.

Staging is not a fancy word for major home improvement requiring major dollars to be spent. There are a number of affordable ways to make a home shine before it goes on the market. If inventory of homes climbs higher and higher, it is going to be more important to allow a property to show well when the Buyers visit. High inventories in the housing market mean longer periods of showings because Buyers will want to see everything in case there is that one property that has all 10 of their wish list. If a home has a repair, or requires painting or new carpet, Buyers could decide to look further and state, “lets look at some more, we can come back to this one” – which is a killer for a listing because rarely do they come back.

A home must create enough of an impact to create the natural Buyer urgency. This Buyer urgency is a healthy concern from a consumer that the house is so attractive and priced well, therefore, it is highly possible someone else is after it also. This statement relates to Gary Keller’s discussion on timing a real estate market.

There is no way to time any real estate market. When a property is priced right and staged (good condition, clean kitchen, etc.), it will sell. Areas to focus on include: the kitchen, appliances, baths, storage areas, floor coverings, (and flooring itself), walls, mechanical systems, windows, the entry (front door paint job!), and finally curb appeal.

Begin by any caulking needs around the bathtubs and sinks, patch any cracked grout. Clean out the oven, microwave, interior trash ‘areas’, refrigerator and make sure all are odor free. Clean windows, window sills and window coverings (remove elaborate window coverings to allow rooms to be bigger OR to save them from being part of the purchase) and let as much natural light in as possible. Go to the trouble of replacing light bulbs for extra light, and dust off ceiling fans. Another round of simple ‘staging’ is outlined with making sure all doors latch, don’t stick, knobs turn, toilets don’t run, faucets don’t drip, etc.

Sellers must take a closer look at the appliances in a kitchen. Review the comparable properties with your Realtor to see if top dollar sales are offering newer updated appliance packages. Sometimes just ordering newer doors or face panels can be done through the manufacturer. And a basic is keeping the same color scheme throughout the kitchen with appliances.

Here is a great “2 for 1” when dealing with the extras that fill up a garage and all available storage. Plan out the right approach for you with a garage sale, consult with people for the best, safest way to hold a garage sale (don’t let anyone inside your home, send kids away for the length of the sale, have a friend/family member with you at all times). By cleaning out garages, organizing closets, packing up what is no longer needed you could find a lot of the stuff to do the staging through this garage sale. If you have additional furniture that you can live without, get a storage room if the furniture does not qualify for the garage sale. You want to keep horizontal surfaces empty so prospective buyers can visualize how their own possessions will look and fit into your home.

Finishing up with the interior, keep floors and floor coverings clean. Attempt a professional carpet cleaner before just replacing the carpets which could save some money (except for houses with inside pets). Walk around your house and really look at the paint in every room. Do you see smudges on doorframes? Around light switches? Front of cabinets? New paint makes everything look cleaner and brighter and brighter can equate to a room looking larger. Consider using lighter colors in dark rooms and most interior designers will recommend a lighter contrasting ceiling.

And while curb appeal may be the most obvious on the list of ‘’first impressions’’, it can be forgotten. Make sure the entry is fresh of cobwebs, bugs, pet dishes and toys. Get a new doormat, fresh paint/stain on front door. Consider what a planter or series of plants around the front could do. Take a look at the hardware around your main entry, consider replacing it with more substantial handle –and-lock set. Keep your walkway freshly swept, edged, and your lawn mowed. All gardens should be weed free with well placed evergreen shrubs. And one of my favorites is power washing all concrete and rock walls in both front entry and back patios plus driveways ($70ish per day).

I threw a lot out there for the term staging, and only have one caution when preparing a home for the market – your neighbors. Over the years I have encountered the scenario where a next door house has never been fixed up, and this house is just short of having cars on cinder blocks with the proverbial toilet in the front. Don’t’ worry about them, you can’t change that neighbor just for your house selling needs and any attempts could be a disaster. Consider that this neighbor is tired of having you live next to them, and will be excited about seeing your for sale sign. By not saying or offering any advice to this neighbor (hoping they clean up so your sale goes smoother/quicker), you reduce the chance of any negative fictitious stories being created if this neighbor sees the buyer during the first showing.

Gary Keller

I have recently participated in a couple of fascinating meetings this month. The first one was with Susan Davenport, spokesperson with the Austin Chamber of Commerce and the second was with the owner/creator of Keller Williams Realty, Gary Keller. So much information was discussed that I will supply multiple entries to cover the high points. I will offer a quick study on each presenter so you can understand their approaches to our markets here in Austin. Once I have outlined each presenter, I will cover their presentation. Gary Keller wants to keep his offices profitable by knowing exactly what is going on Nationwide with real estate and lending. Susan Davenport focused on ‘’selling Austin’’, moving business here and the favorable future Austin has. This first entry will be focused on Gary Keller.

Mr. Keller is a graduate of Baylor University, late ‘70s I believe, with a degree in Real Estate. He calls himself a ‘’black hat’’ (possibly referring to some views of a pessimist?) and says he proves it by always wearing black. The day of the seminar, he proved it wearing black shoes/slacks/dress t-shirt/sports coat. He came to Austin and began selling homes with JB Goodwin (at that time JB offices had the dominance that Keller Williams has now).

Gary is not so much a ‘people person’ as he is a ‘thinker’ and he is the first to state this. Mr. Keller is more into operations, systems, strategy, ‘’x’s and o’s”. Keller is not wired to sit in a living room and offer tons of empathy if a house is upside down (worth less than what they owe a bank). Gary Keller pursues information, seeks to apply the information to prove its validity, then stands behind the proven results regardless of how it makes someone ‘’feel’’. I make this point because of what is happening in California and some other markets where the housing prices are falling 10% to 20%. I also believe Gary was wise to move into management as the profession of being a Realtor requires empathy at all levels and times.

During his entry into the real estate business when rates where 17% plus, and Sellers were having to pay TONS of closing fees to sell their house, Gary states he did not provide any empathy because that was just the market he was working in. Gary believes it was helpful to be young and new to a ‘’tough market’’ when he entered because he did not know any better. From selling real estate, he moved into management with JB Goodwin in what was then a very desolate part of Austin – Round Rock in the early 80’s. While Austin was BOOMING, Gary was growing an office in Round Rock, and he was successful.

Gary’s next move was his own office in 1983, with partner Joe Williams. Sometime around 1987, Gary acquired some information regarding the strategies of a multi-level marketing involving vitamins. Gary took pieces of that business model to revolutionize the residential real estate industry as we know it today. Gary’s changes blew the usual models of a real estate office by allowing the top 10% of his Realtors in the office to decide where the money was spent, when new computers were needed, and other office policies.

Gary also offered his Realtors a beneficial commission split, so Realtors could chose how to allocate their expenses rather than pooling money and spending as a group. In the 70’s & 80’s, Brokers operated ‘’top down’’, telling their office what would happen and also having closed financial books, opposite Gary’s model of Keller Williams.

Keller Williams Realty is now nationwide and ranked 4th in North America. Interested in going global, Gary’s main focus is taking over the #1 spot in North America first (supposedly the growth in the other top 3 real estate franchises is coming from China and Europe and that is of no interest until Keller Williams Realty is #1 in North America).

Nationwide, Gary noticed in 2005 that listings sold versus listings taken jumped dramatically. He believes this was the first sign of what is going on in markets like California. Gary reminded us that if housing prices shoot up 120% like they have in California over 5/7 years, and income does not stay with that growth (rarely does), a crash is coming. Real estate values only go up while income stays down, if people are buying and selling with tremendous loan incentives. And we have had some incredible lending opportunities for Buyers to chose from – bad credit with zero down, etc..

Austin did not rise like the markets mentioned above. From 2000 to around 2004, our average price hovered around $197k/$198k. We began to see an increase in 2004, and today we are around $248k average sales price (close to a $190median price).

Gary Keller is a “Realist’’ on the market, he wants to know the numbers and stick to a strict set of principles that will survive in any economical atmosphere. Gary is also very opportunistic when it comes to opportunities in our market. Gary is also closely watching what the result will be after years of extremely lose lending practices. In the 80’s, our market folded followed by California’s market. Gary, wearing his ‘’black hat’’ wants to make sure he and his offices are on top of any market should California ripple our way.