Do Open Houses work…Or are they a waste of time?

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home selling strategy, open house, real estate, real estate advice, real estate jacksonville fl, Real Estate Team, real estate tips, selling your home, The best real estate agent in Jacksonville

There are definite reasons to hold open houses, and reasons to not. Read more to evaluate your best course of action!

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When you hire a real estate agent to sell your home, one of the first things they’ll suggest is hosting an open house so that potential buyers can casually check out your property on a weekend afternoon. But while open houses are promoted by agents as a great way of finding a buyer, a US study by the National Association of Realtors (NAR) found that the success rate of open houses is a mere 2% to 4%. Similar studies in other countries have mirrored these results.

That means out of 100 open houses, only 2 to 4 homes are purchased by buyers who came through the open house. Of course, the vast majority of open houses are not conducted well, and many are unnecessary. Out of 100 open houses, perhaps only 20 are done correctly. 

They’re held at the wrong times, wrong days of the week, wrong times of the year. They are not marketed effectively, the homes are not prepared, and the agents are unskilled at communicating value to potential buyers. Eliminating the 80 useless open houses would make the purchase percentages look more like 10% to 20% of homes being sold on open house. In other words, the chances of selling your house based on an open house are higher if the open house is done well, according to best practices. 

Consumer sentiment about open houses has waxed and waned over the years, along with the ups and downs of the real estate market. In 1995, 41% of sellers tried open houses to sell their homes, according to data from NAR. By 2000, it had dropped to 28%. Beginning in 2003, however, as the market started to heat up again, that number began rising. By 2014, 51% of all sellers were using open houses, though not all agreed they were effective. 

Some 45% of sellers have recently found open houses only “somewhat useful” and another 12% didn’t consider them useful at all, according to the NAR. This is survey data, so there is no evaluation of what those sellers meant by “useful” and “somewhat useful.”

So with all the sketchy data, why do real estate agents still promote open houses as a listing and selling tool? Let’s look at a few arguments for and against open houses, and explore the pros and cons.

Reasons not to hold an Open House

There are many people—agents and consumers—who argue against open houses. Some sellers just don’t like the idea of random people and neighborhood “lookie-loos” traipsing through their house. Some are concerned about theft. 

Some agents are concerned about their own safety when holding an open house, especially in out-of-the-way locations. Some agents consider it a waste of their time, based on the low potential results…they’d rather be managing other aspects of their business (or golfing) during that time. 

One of the main arguments used by sellers and the general public against open houses is that agents only use them to find buyers that they’ll take away to other houses. 

But this is not necessarily a bad thing. Real estate is a community product and selling it is a community event. Buyers may meet an agent at your open house, then go buy another house…but another buyer somewhere is meeting another agent at another open house, and that agent is bringing the buyer to your house. 

Open houses bring buyers out. By having an open house, you’re contributing to the overall health of the industry. As many as 45% of buyers use open houses to research the market. Many go to open houses, then discover they like the neighborhood and look for other homes in that area with their agent. Your house might be one of their “test” houses, or it may be one that they decide to buy because of another person’s open house in your neighborhood. It’s a network.

Reasons to Hold an open house

In addition to being part of a network of buyers and home sellers, consider these five additional reasons to hold an open house:

1. Get “shoppers” out of the way

A lot of buyers will want to see your house as soon as it’s listed. You can quickly become overwhelmed by the repeated appointment requests. Showing your home is disruptive and quickly becomes annoying. Having to keep the place clean and be ready to vacate on the spur of the moment may seem fine for the first two days or so, but you’ll quickly lose patience. 

A better approach would be to take a day trip away from your home on the first weekend of your listing and let your agent hold an open house. 

Your agent can get a ton of those early “shoppers” through your house at one time, rather than bothering you with appointment after appointment. Most of those buyers (99.9%) will eliminate your house as an option during the open house. Some will want to view it again. And some very small percentage may want to make an offer. But the biggest reason to hold the initial open house is to get the lookie-loos and initial round of buyers out of the way. They’re just shopping, not buying.

You may want to ask your agent to hold the house open on both Saturday and Sunday of that first weekend. By doing a “new listing” open house, you won’t eliminate all appointments (some people can’t come during the open house time), but a large percentage will come during the open, and that means those people won’t be bothering you during the week to set appointments.

2. Create an “auction effect”

There is a principle in psychology called scarcity – it’s the desire that’s in all of us to want to get something valuable before someone else does. For instance, have you ever heard of a situation where more than one person was interested in a house? In those situations, there was a bidding war, where several buyers competed for the same house. In most cases like this, the house sold for more than the owners were asking – and the buyers felt great about it because they won. Someone else wanted the house, but they got it first!

Situations like this are called the auction effect. Your agent can orchestrate a sense of scarcity using an open house as the centerpiece of a plan to generate a lot of interest very quickly.  Again, this is best done at the start of the listing period, or at a significant price reduction if the house hasn’t sold yet.

3. Raise the profile of a community

While open houses may be declining in many parts of the country, some neighborhoods are finding them effective ways to raise the profile of an entire community, if a number of open houses are all done at the same time. 

Recently, four neighborhoods in the Lemon Grove area of San Diego teamed up for a joint open house with 25 of the area’s homes open for viewing on a single day. The result was that the entire area saw a spike in sales of 20%.

4. Get valuable feedback

A new listing open house is a great time to get feedback on the property. Information is valuable. Your agent should be asking things like, “How does this house compare to others you’ve been seeing?” “What do you like about the home?” “What would prevent you from making an offer?” Your agent can use different techniques to gather feedback, such as surveys, direct conversation, feedback forms, etc. 

It’s very important that you then take that information to heart. If you keep hearing the same messages over and over again, then those things are real. Those are the very things MAY prevent your home from selling for as much as you’d like, or as quickly as you like. It doesn’t hurt to listen and then have an open-minded discussion with your agent about how to remedy those issues.

Contrary to popular opinion, most agents are not trying to keep your house price artificially low in order to move it out of inventory and get paid faster. Most agents will just tell you the truth, and back it up with evidence, including comments by buyers. 

5. Showcase a unique property

In some cases, a house is just too unique to market without an open house.  Art professor Mercedes Teixido and her husband had three open houses in six weeks showcasing their Pasadena, California home. Their house, they say, was the kind you had to see to believe. “It had a unique sensibility,” Teixido said, with spacious rooms and a large amount of built-in furniture that was crafted by hand. Sometimes you have to get people into a house in order to get them to fall in love with it. Many houses in less desirable locations have sold because someone went inside on an open house and fell in love with it.

Final Word

When you hire us to represent you in the sale of your home, we’ll discuss the pros and the cons to having open houses as part of your marketing plan.

We’ll let you know what’s happening in the market—whether open houses are effective right now or not—and whether your house would benefit from open houses, given its style, price, and location.

Please call to set a listing appointment, if possible at least 2 months before your planned move. Kevin and Jennifer Hanley, REALTORS http://www.HanleyHomeTeam.com Keller Williams Realty Atlantic Partners Southside

Home Flipping Hits 14-Year High

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buying a flip, flip, flipped homes, flipping homes, Hanley Home Team, real estate, real estate advice, real estate investing, Real Estate Team, The best real estate agent in Jacksonville, the time to buy is now

 

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While the real estate market in general is adapting to new challenges and market conditions, one segment of the market is going strong. Home flipping is boasting its best numbers in 14 years.

The newly released first-quarter 2020 U.S. Home Flipping Report from ATTOM Data Solutions shows that “53,705 single-family homes and condominiums in the United States were flipped in the first quarter. That number represented 7.5 percent of all home sales in the nation during the quarter, up from 6.3 percent in the fourth quarter of 2019 and from 7.3 percent in the first quarter of last year.” Those are the highest numbers since the second quarter of 2006.

The gross profit for home flips across the country also rose over the same time period, to $62,300. “That was up slightly from $62,000 in the fourth quarter of 2019 and from $60,675 in the first quarter of last year,” the report said.

If you’re looking to get in on the flipping trend, here are a few insights:

• You don’t need to buy a million-dollar fixer. “Homes flipped in the first quarter of 2020 were sold for a median price of $232,000.”
• Profits will be larger where the home prices are higher. “The highest first-quarter 2020 profits, measured in dollars, were concentrated in the West and Northeast. Among metro areas with enough data to analyze, 13 of the top 15 were in the those regions, led by San Francisco, CA (gross profit of $171,000); San Jose, CA ($165,000); Los Angeles, CA ($145,000); New York, NY ($141,899) and Honolulu, HI ($140,190).”
• The lowest profits were generally in southern metro areas, such as “Springfield, MO ($20,203); Daphne, AL ($20,650); Raleigh, NC ($21,250) and Durham, NC ($25,000).”
• Don’t think you have to turn the home around and sell it in 30 days. “The average time to flip nationwide is 174 days.”
• You don’t need to pay cash upfront for the home, as the percentage of flipped homes purchased with financing in the first quarter of 2020 was 40.5 percent.

Need some advice on investing and flipping? Get in touch today!  Kevin and Jennifer Hanley, REALTORS – The Hanley Home Team of Keller Williams Realty Atlantic Partners Southside – 904-515-2479 http://www.HanleyHomeTeam.com Team@HanleyHomeTeam.com

When Should You Stop Renting and Buy Your 1st Home?

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buy now, Buying a home, buying a home for the first time, buying a home in Jacksonville, buying your first home, first-time homebuyer, real estate, The best real estate agent in Jacksonville

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This choice often comes down to a financial decision: Can you afford what you want? But that’s not the whole story. There are more things to think about when trying to decide if it’s time to take your first real estate plunge.

Cost-Benefit Analysis is the term for figuring out if something is worthwhile doing or not. When you analyze a situation and decide that the benefits are greater than the cost, then you may want to go forward. Conversely, if the cost exceeds the benefits, you may decide to wait.

Sometimes when you weigh the benefits against the cost, the benefits are higher, but not high enough. In that case, you might want to increase the benefits or lower the cost before taking action. These are exactly the thoughts you should be having as you plan to buy your first home.

To help you weigh the benefits and costs of buying vs. renting, this report offers key elements to think through, including evaluating the monthly payments correctly, estimating home ownership costs, weighing location against price, evaluating purpose and home investment strategy, and improving credit and interest rate to decrease payments. 

The most important factor when thinking about buying is to not “panic buy.” Don’t jump in just because interest rates might rise or prices might rise. Buy when you are ready and don’t let the market dictate your timing.

What are the benefits of renting? 

• One benefit is living in a property without having to spend great chunks of money to replace the roof or fix the plumbing. 
• Another benefit is that you may be able to rent a type of home or in a location that you could never afford to buy. 
• You have no stress or worry about maintenance. That’s the landlord’s job.
• You can pick up and move without wondering if you can sell your house. 
• If your income drops, you can rent somewhere less expensive. It’s a pain to move, but you won’t face a foreclosure or fire sale. 
• If you are late with a payment, you can discuss it with the landlord. 
• You probably won’t get a serious ding on your credit if you’re a month late. 
• In many places, renting is the only option because there isn’t enough housing for sale, or the prices are beyond reach for the average mortal.

What are the costs of renting? 

The landlord charges you X amount and as long as you pay that amount, you get to live in that property. The cost is X. But there are other costs:

• By renting, you lose the opportunity to build equity (the money you gain if you sell the property). So when you move, you move with no money in your pocket.
• You lose the opportunity to pay off the house and eventually own it outright.
• You lose the opportunity to put down permanent roots, do what you like to the property, and raise capital by getting a second mortgage or home equity loan.

What are the benefits of owning?

• Build equity through rising values and making payments. 
• Pay off the home and eventually have the security of owning outright. 
• Be able to increase your wealth…by selling and profiting, by renting it to someone else, or by getting a home equity line to use the money in some other way.
• Put down deep roots in the house and community.
• Do what you want to the house…paint it orange and pink if you want (as long as you don’t live in a Planned Community or Condominium).

What are the costs of owning?

• Monthly fixed and variable maintenance costs are significantly higher than renting.
• Interest on your mortgage loan (which may be a tax deduction, so that may actually be a benefit)
• Time involved in maintaining a home that would not be involved when renting.
• Possible falling values making it harder to sell when you want to. 
• Inability to work with the loan holder when you’re late with a payment.
• Possibly higher monthly payments than would be with renting.
• Possibly not being able to live in the community you want because you can’t afford to buy there.

Compare Costs and Benefits 

Here are several questions that will help you decide if it’s time to buy, or if you should keep renting.

What can you REALLY afford to pay each month?

Let’s look at an example. (This example uses US$.)

• Suppose you feel that you can afford to comfortably pay $1,500/mo. in a mortgage payment. 
• Now, imagine putting aside a little each month to pay for maintenance and improvement projects (painting, new roof, new kitchen, emergencies, etc). Let’s say 10% per month for homes in decent condition. That’s $150/month, based on your $1,500 comfort level.
• Now, instead of paying $1,500/mo, you’re really looking at paying $1,500 + $150 = $1,650. Can you afford $1,650? If not, then you need to be looking at a monthly mortgage closer to $1,350.
• That small difference in monthly payment can mean a difference of $30,000 in your purchase price, so it is important to calculate maintenance costs before buying. 

If you don’t include maintenance costs up front, then the costs will come from somewhere else after you buy—your vacation budget, your new car budget, etc. You could become what’s known as “house poor,” a term that means you have a house, but a lower quality lifestyle.

So before you buy, try to look at you monthly payments realistically, inclusive of your lifestyle goals.

What mortgage would you qualify for?

You may feel comfortable paying $1,500/mo, but the important question is ‘What loan amount will that qualify you for?’

Several factors go into determining what the lender will decide you can pay and what you can buy:

• Your loan amount is based on your income, debt, and interest rate.
• Your interest rate is determined based on your credit rating—which is based on your history of paying your debts, as well as the amount of overall debt you carry.
• The interest rate you are given may mean a $20,000  to $40,000 difference in the price of home you can buy. 

So, although you feel comfortable paying, say $1,500/mo, the mortgage lender might say that based on your income, debt, and credit score, you really are more comfortable paying $1,400/mo.

And that means, instead of getting a mortgage for $239,000, you can only get a mortgage of $219,000.

So work with your mortgage professional, and go through the entire loan application process. Fill out the loan application. Provide the documentation. Yes, it’s arduous. But it’s the only way to get accurate figures, and get the coveted “pre-approval letter” that you need when buying a home.

Why do you really want to own a home?

Here are your choices: 1. Financial reasons.  2. Pride and roots reasons. Of course, it’s both for most people. As a first time buyer, you’re aware that ownership has financial benefits. And you also want to live in a place you love and put down roots.

 Unfortunately, for many home buyers, the price of a home in their desired location is too high for them. That means that first time buyers need to focus on the first choice: buying for financial reasons. 

Look at lower cost alternatives that allow you to build equity and eventually buy up into the area you want to put down roots. Here are a few ideas for first time buyers to make their first home a smart investment:

• Buy a much smaller home or condominium near the
  area you want to live.
• Buy a fixer-upper near where you want to live.
• Buy a home in an area you don’t want to live. After a few years, decide to either keep it, and put a renter in it, perhaps using the equity to buy another home, or sell it and use the cash to move up.

Each choice has its own costs and benefits. With each choice, the goal is to increase equity so that you can sell and have a larger cash down payment on a home in your preferred location. Create a long-range plan. Then work towards that goal by increasing savings, building equity, and improving your income. And always, always work on reducing debt.

Is your rent low enough?

If you’re paying $1,000/mo in a $3,500/mo area, and you have a good landlord, maybe you’re better off investing in other things instead of buying a home. Or perhaps buying an investment home in a cheaper area. It is OK to not own the home you live in, if it makes financial and emotional sense not to. 

But be smart about it. Do the analysis. There are many factors involved in home ownership that may benefit you, such as rising values, interest rate deductions, and the potential to control an asset.

Using a Mortgage Calculator

Mortgage calculators should be used as guidelines only, as just another data point. Once you’re really serious about buying, the only truly accurate way to know what you can afford and what your payments will be is to go through a full pre-approval process with a mortgage professional. 

But until then, mortgage calculators can be a useful tool to help you see how adjustments in down payment, interest rate, and income can affect purchase power.  Just be dead sure that the estimate you get is includes Principle, Interest, Taxes, Insurance, and Extras charged on the loan, such as Private Mortgage Insurance. If you leave out any of these costs, you will be surprised when your mortgage professional shows you a figure lower than you thought.

 Calculators come in several varieties. Here are four calculator suggestions you can look up on Google. Use a calculator designed for your country.

1. House Price, Based on Payment

2. Payment, Based on House Price

3. Payment, Based on Income

4. Rent vs. Buy

Final word

As a first time buyer, you are swept up in the excitement of buying—the dream of owning. You look at homes online and imagine putting in your own garden, painting the baby’s room, and decorating the way you want. 

But you are smart. You know you’re making a financial decision, not simply an emotional one. You know the factors that go into deciding when to stop renting and buy a first home are complex.

There are no simple answers. But we’d like to leave you with this final word:

Don’t let fear of buying stop you from buying a home. There are plenty of professionals out there who can guide you through this decision and help you make a sound financial choice. If not me, then find a real estate consultant you trust to sit down with you and discuss the ideas presented in this report. Work with a mortgage professional to get accurate figures. 

We want you to know that I’m always available to you—or your friends and family—for a home buying consultation. And we want you to know that we’ll spend whatever time you need to answer your questions so you can make the right decision in your own time.

 Call to arrange a consultation appointment – Simply call 904-515-2479 OR email Team@HanleyHomeTeam.com Thank you! Kevin and Jennifer Hanley, REALTORS Keller Williams Realty Atlantic Partners Southside

WHAT TO REPAIR BEFORE YOU LIST

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home improvement, home ownership, home renovations, real estate, seller tips, selling your home

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When you’re getting ready to list your home, it’s of the upmost importance to ensure you are showing it in the best light. Taking time to highlight its strengths and fix up some of its possible weaknesses can make a big difference in how fast it sells. Here are our top five recommended repairs to make before selling your home.

Repaint walls.

Giving your home a fresh coat of paint is one of the most cost-effective ways to spruce it up, and generally, it can be a do-it-yourself project. Make sure cover any walls with scratches and chips and consider updating any accent walls with a more neutral coat.

Repair floors.

Hardwood floors are a very desirable feature in a home, so you want to ensure they look their best by fixing scratches or dull areas. If your carpet is worn or stained, consider replacing them. And don’t forget the tile in your kitchen or bathrooms. Re-grouting can go a long way in making dingy tile work look brand new!

Refresh the landscaping.

Show buyers your home is the full package by dressing up the outside as well as the in. Clean walkways and driveways, plant seasonal flowers and plants, trim hedges and trees, install outdoor décor pieces and fill in mulch and gravel.

Fix your fixtures.

Leaky faucet? Rusted drains? Loose drawer handle? Making these small fixes can make a big difference to potential buyers with detailed-orientated minds. Improve your kitchen. An outdated kitchen can be a real eyesore in a home. Updating cabinetry, repairing or replacing countertops, and installing new faucets and sinks may be worth the investment.

Have any questions or are you ready to sell your new home in 2019? Give us a call today!  Kevin and Jennifer Hanley, REALTORS Keller Williams Realty Atlantic Partners Southside 904-515-2479 http://www.HanleyHomeTeam.com