One of the most common things people fear about getting into real estate is they're afraid they can't sell the house and somehow they'll get stuck with it. I can understand why this would create anxiety for a beginner because they simply don't have enough facts to overcome the fear. However, if you're not a beginner and this is still a problem, there's no excuse for it. So let's get it fixed right now.
The truth is . . . selling should be the easiest part of your business
Are you not buying because you're waiting to sell what you have first? Is your income suffering because you haven't plugged the hole in the back end? Are you so afraid of selling you quit (or never started) buying?
In this article, I'll discuss the reasons why some people have trouble selling and how to fix them. In addition, you should know we now have a live, two-day boot camp I teach focused on the same thing…Selling Houses Fast.
I've identified 14 reasons here. Pay close attention to numbers 4-7 because combined they equal about 80% of why houses don't get sold quickly.
Most of the time it's a people problem, not a house problem. So here we go, in no particular order.
Why houses don't sell quickly…
1. Not ready to sell.
2. Poor area.
4. Salesperson's personality problems.
5. Inflexibility of seller.
6. Salesperson's lack of knowledge about financing programs available.
7. Salesperson's lack of knowledge about attracting & prescreening leads.
8. No follow-up system in place.
9. Functional obsolescence.
10. House very small.
11. Salesperson loses control of the loan process.
12. House located too far away from the city.
13. House is in high price range where few buyers can afford.
14. Only one bath.
Notice the majority of these problems are directly related to the person in charge of making the sale…and the rest should be fixed before you buy.
1. Not ready to sell.
2. Front appearance – Would you want to see the inside?
3. Roof – Does it need to be replaced?
4. Exterior paint – Is it at least 2 colors and looks fresh? Are the colors pleasing or gaudy?
5. Interior paint – Is it two colors or does it look like a white tornado went through it?
6. Interior trim – Is there color, paper borders, blinds, bath and kitchen accessories, lever door handles, shower curtain or door, etc.?
7. Carpet – Same old lifeless, ugly brown or have you tried hunter green? Would you want this carpet installed in your home?
8. Central heat and air – If you're in the southern two-thirds of the country, it's not an option. Do it.
9. Kitchen – Does it have plenty of cabinets or just enough to get by?
Customers won't complain about shoddy repairs. They just won't buy.
If it doesn't look good enough to satisfy your wife, your buyers won't like it either. Spend a few more dollars and make it a house you can be proud to sell and know your buyer will rave to others about.
If you do, amazing things will happen.
1. It will sell quickly.
2. It will appraise for more.
3. You'll sleep good at night.
4. Your buyers will send you customers.
5. Your good reputation will spread quickly.
6. The neighbors will send you customers or sell their houses to you.
7. Your attitude will improve and you'll enjoy dealing with buyers more because you know you have a great product.
8. You'll save the extra money you spent in holding costs. So, in reality all these benefits are free.
9. It'll probably even improve your sex life. Think about it. More sales means more money. More money means happier spouse or significant other. Happier spouse means more frequent and better sex. I heard that on Oprah the other day.
10. Poor area.
11. Is it a war zone? If so, you must learn to sell low income houses or don't buy there if you intend to retail.
12. In low income areas it's critical you master the art of financing. You will not survive if all your sales must be to a buyer or sold for 100% cash out.
Get educated or get out.
The good news…
A. You can make some large spreads on these houses because you can buy them dirt cheap.
B. Most of your competition won't touch them.
C. They're easy to find and easy to buy.
D. At today's interest rates buyers can qualify with small incomes.
E. Financing is plentiful. Some with no down payment.
F. You can always wholesale if rehabbing isn't feasible for you.
The bad news…
A. Vandalism is normal.
B. You'll have to screen out a lot of buyers.
C. You'll be tempted to break the law by falsifying down payments because most of your buyers are broke. Don't do it.
D. You'll have to take back a lot of seconds and 50% or more will default. So what? It's all free money anyway.
If you're going to work the low income or war zone areas, just be sure your exit is clear and you don't get into any traps. Don't rehab in a war zone unless you know where to get the buyer financed. You'll find a buyer who wants to live there and you can live with vandalism.
In addition, you must be flexible on terms, not expect to get cashed out 100% and clearly understand you will be prescreening one of the most uneducated segments of our society. It will take patience and practice.
3. Overpriced Is Not What You Think
Just for the record, all my houses are overpriced. And I'm proud of it, in case anyone asks. You should always set your sales price higher than what the house appraised for. If you don't ask for more I can assure you, you won't get it.
But there is a limit. You can't go nuts on me here. Putting a $125,000 price on a $100,000 house is pushing the envelope. However, putting a $109,900, or maybe even a $114,900 price on it may work fine.
Your market will tell you quickly. If the buyers all complain about the price, you know you have a problem and you may want to lower it a little.
Make sure the price is the problem before you go fixing what isn't broke. Only your buyers can tell you the price is too high. Not your spouse, your neighbor, your brother-in-law or even your Realtor. If I had $100 for every time a Realtor told me my price was too high, I'd be in a higher tax bracket. Actually, that's not true. They don't get any higher.
You can always lower the price. You can't raise it once it leaves your lips. I don't know for sure but I bet I haven't lowered the price on more than 15% of all the houses I've done to get them sold. As a rule, a 10% above appraised value or good comps is the upper limit. You'll have to decide the price based on the area, condition, salability and heat of the market. Just don't be giving away money because you're listening to morons.
4. Salesperson's Personality Problems
Have you ever talked to a seller or a Realtor you didn't like? A mean-spirited, grouchy, personality perhaps? How about someone who just won't shut up long enough for you to ask a question? Maybe you've encountered the prescreened type who treats you like the enemy until you pass their qualification test.
How about all those times you got the wife on the phone and she was afraid to speak without her husband's permission, or vice versa. That doesn't even count the ones who do talk but never say anything. Then there's the clueless spouse who can't even tell you the asking price, much less the other details. Sometimes I wonder if these folks ever talk.
How about the couple in the middle of a divorce who talk to you like you're the one who just slept with their spouse? Then there's the know-it-all. You know, the kind who wants to do a seminar for you on the phone to impress you with their intelligence in the art of real estate. They can't sell their own house but they can certainly tell you how to do it.
Of course we can't forget all the thinker brains trying to sell to the reptile brains, and vice-versa. Or the sellers so in love with their house it takes them 30 minutes to describe every little detail while you're trying to stay awake. Gosh, I'm getting depressed just writing this. I don't want to ever talk to a seller again. Just kidding.
The key for you is not to become like one of those people I just described. If you already are, you can fix it once it's identified. Here's a hot tip. Record your calls and listen to yourself selling your house. If there was a moron on the call you'll probably recognize his/her voice.
5. Every Single Time You Talk to a Buyer You Must Sound…
Friendly, Flexible and Excited
If you can't, get someone else to sell your houses, which is a whole other subject I'll cover next month.
Inflexibility of seller
That means most sellers can only see one way to sell a house and if that isn't happening the house will sit and sit until that perfect buyer comes along. Finding an A credit buyer to cash you out isn't the only answer. This is especially true for the low-income houses where A+ buyers are scarce.
The more you know about different exits, the easier it will become for you to get flexible. If you don't have your money in the deal and you can live another week without the cash from the sale, it frees you up to get creative and look at other alternatives.
Here's a news flash for you . . .
It's your job to find a buyer who loves your house . . . then make it work!
That means sometimes you must be flexible. It's not a perfect world. Bend a little. Here's a short list of selling methods.
A. Sell to a qualified buyer and cash out now.
B. Lease option and cash out later.
C. Sell with owner financing and help buyer get refinanced later.
D. Sell with owner financing and sell the note at closing for 93% of its face value. We spend a whole day on this in the Paper Power Boot Camp.
E. Get the buyer an 80% – 90% loan with a secondary loan at a higher rate and take back a second for the difference.
I bet you didn't know you could be that flexible did you? Sorry, I can't go into these in detail here but I think you get the message. There's always another way.
6. Salesperson's Lack of Knowledge About Financing Programs Available
No, this is not the same thing I just said. If you're going to master your craft of selling houses you must learn a lot about financing programs.
What will kill loans? What programs require little or no down payment? What credit can be fixed and what can't? What will the lender want fixed before closing? Who will let me take back a second and who won't? And 40 or 50 other questions you'll get the answers to as you go.
You don't have to know all there is about financing to sell a house, but the quicker you learn, the easier it gets. Make an appointment with 3 or 4 mortgage lenders and pick their brain. Let them help with what will work and what won't. Then when you get an interested prospect it's simply a matter of getting the buyer's information to the lender of your choice and letting them tell you what will work.
That's the best way I know to learn the ropes about financing. But you know what? A lot of veterans won't even take time to do this. I guess they feel they're too good or too smart to humble themselves and actually ask for help. My friend, what you knew about financing a year ago is not what you should know today. It changes monthly. You must stay on top to be the best.
In the next issue, I'll finish my list of reasons why houses sometimes won't sell. In the meantime, read over these pointers I've given you and start developing your own selling strategies.
Here's hoping all your houses sell faster than you can buy them.
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