LISTING PRESENTATION PACKAGE

Transcription

1 5 CHAPTER FIVE LISTING PRESENTATION PACKAGE key terms adjusted selling price buyer listings comparable properties competitive market analysis estimated seller s proceeds for sale by owner listing presentation manual learning objectives This chapter provides you with the basic knowledge to prepare effective tools for obtaining listings. These tools should be prepared for both seller and buyer listings. By possessing these tools and learning how to use them, you will be able to make effective listing presentations that will result in greater success. In this chapter, you learn the importance of and preparation of the following listing tools: Competitive market analysis Attachments to the competitive market analysis Estimated seller proceeds Listing presentation manual for sale listing: Why list? Why us? 181

2 182 California Real Estate Practice Buyer listing material: Why use a buyer s agent? Why us? preparation Getting to the point of a face-to-face presentation takes a great deal of effort. An attempt to wing it and come in unprepared is more likely to result in failure than success. You should have the material to justify the offering price of the property, to be able to convince the owners that agency representation is in their best interests, and to promote yourself as a professional who understands their needs and is able to meet them. If your appointment was based on an offer of a competitive market analysis (CMA), then we recommend you start at this point. However, if the owners have indicated an interest in listing their property, you might want to start with the listing presentation material. competitive market analysis The CMA is really a comparison analysis used by real estate agents to aid in determining a proper list price for a property. Often owners believe their home is worth far more than the CMA would indicate as a fair market value. Your comparables must be presented in an honest, logical and convincing manner so that the owner realizes that if the property is to sell it must be priced based on the market. The CMA provides information on comparable properties that have been placed in the marketplace, so that they can be compared with the property that is to be evaluated to determine an offering price. (Comparables are often referred to as comps.) The CMA is not an appraisal. Only a certified and/or licensed appraiser can appraise property. The CMA should be used for single-family residences and for multifamily residential properties of up to four units. In some cases, the CMA can be used for lots. However, it is not an effective tool for larger residential income properties or for commercial or industrial properties. When relevant property data are selected, the CMA reflects the realities of the marketplace. It should include the following three separate areas: 1. On market now 2. Reported sold prior six months 3. Reported expired prior six months

3 Chapter 5 Listing Presentation Package 183 It is important to have information about all sales in the immediate area over approximately the past six months. If there have been relatively few sales, you might have to go back to the prior year and/or expand the analysis to include similarly desirable areas. Similarly, if there were a great many similar sales, the time period could be shortened and/or the sales area compressed. An agent could conceivably be liable for damages if a CMA negligently omitted recent similar sales and used comparables that resulted in the owner selling a property for less than fair market value. If a court determines that a CMA was prepared to intentionally mislead an owner as to value, then a court might award the owner punitive damages in addition to compensatory damages. For lender-owned properties, you should label them lender owned and indicate they are offered as is. Short sales and foreclosure sales should also be indicated as such. The on-market-now list (current listings) merely indicates to an owner the prices that competitors (other owners) are asking for their products (homes). Other owners are competitors because they are seeking to attract the same buyers. The on-market-now list shows an owner what a prospective buyer will see and how the owner s pricing will compare with that of the competition. It does not indicate what an owner can expect to receive from a sale. By using comparable properties, the competitive market analysis reflects the reality of the marketplace. Adjustments + Add for inferior Subtract for superior The reported-sold-prior-six-months list is more valuable than the list of current properties on the market because it shows actual sales prices. In a market undergoing change, the older the data, the less reliable they are. Prices paid six months ago could be significantly higher than a seller might expect to receive today if the market is falling. On the other hand, prices paid six months ago could be lower than might be anticipated today if the market is rising. Therefore, strive to obtain data covering a period of about the past three months. Use older data only when more current data are not available; even then, older data should be adjusted for market changes. No two properties are identical. Properties differ by size, age, condition, design, area, view, orientation, as well as by amenities. Adjustments to comparable properties should be made based upon the property that is the subject of the CMA. For example, if the comparable property had a better view than the subject property, then the sale price of the comparable would be reduced. If the comparable had two baths and the subject property had 2½ baths, the adjustment would be a higher price for the comparable. The adjusted price is known as the adjusted selling price.

4 184 California Real Estate Practice Subject Property Comparable Property Adjustment to Comparable 2-car garage 3-car garage 2½ baths 2 baths + 9,000 sq. ft. lot 12,000 sq. ft. lot Excellent condition Needs work + There may be sales prices that seem unusual. These too-high or too-low prices are often the result of market imperfections, as covered in Chapter 1. We are also seeing short sales, auctions, and lender as is sales that could require adjustments. It is also possible that the price paid reflects particular problems or benefits of a property that are not evident from the listing data provided. While prices of sold comparables can be expected to vary within a 10 percent range of what you consider the value to be (mean point), a variation of 20 percent, not reflected by the property itself, might be an aberration and not reflect a true market picture. Before you use figures, pull out the old listings and make certain you are not comparing apples and oranges. Information about a property that is significantly different in terms of utility and desirability will give an owner a false sense of value. The expired listings (reported-expired-prior-six-months) group is the list of losers. These properties are losers because they failed to sell. Like properties that sold, the more current the expiration of a listing, the more valuable it is for comparison purposes. Often, a property fails to sell because it is overpriced in relation to its competition. From your data, you will likely find that the average list price of homes that failed to sell will be higher than the average list price of homes that sold. Listing prices might be significantly higher than the actual selling prices of the homes that sold. This information can inform an owner in a powerful manner that you will not be doing him or her a favor if you overprice the property. In fact, you could be doing the owner a disservice because the likelihood of selling the property will be decreased. Even when an owner merely hopes for a higher price but will take less, overpricing will keep buyers away. The reported-expired-priorsix-months group also should reinforce your own knowledge that an overpriced listing is not an asset. Instead, it is a liability because it will steal the time and money you spend promoting it with little likelihood of success. Obtaining Comparables Comparables are easy to come by. After becoming a member of the local association of REALTORS, you can log onto the multiple listing service and pull comps from the computer, input the area desired, the square footage, and other amenities to give you a list of comparable homes that have sold recently in the area. You can also perform a radius search. The advantage is speed the computer produces comps within seconds. You can use the computer to check the current listings as well as the expired listings in the area. There are also services that will prepare comparables for you.

5 Chapter 5 Listing Presentation Package 185 Personalized CMA If you treat the CMA you have prepared as a valuable document, it will increase the owners feeling of value. When you give owners a CMA, you want them to feel that you did some hard work on their behalf. A feeling of indebtedness or obligation goes a long way toward the signing of a listing agreement. Many offices bind a CMA with a plastic ring binder and prepare a nice cover, using their computer printer. The cover indicates that the CMA was prepared for the named owners by the agent and also indicates the basis of the information enclosed. The personalized CMA starts with a sheet on the owners property. It shows owners that you appreciate their home. Be certain that the narrative includes features that owners particularly pointed out to you when they showed you their home. Owners must feel that you have carefully evaluated the property. Include a picture of their home as well as pictures of other comparables. You should be able to download them from MLS information on the Internet. If you don t have a good photo but the comparable has good eye appeal, take the time to get a photograph. A photograph of a house that looks as nice as or better than the home you are attempting to list for sale, coupled with a list price or sale price less than owners have indicated they desire, can go a long way toward putting owners in a realistic frame of mind. It s trite but it s true: A picture is worth a thousand words. If a comparable has features that the home you want to list lacks, take a yellow highlighting pen and mark those features or print out these features in bold type. It emphasizes the strength of the competition. Your CMA data always should be as accurate and as current as possible. It should lead to the last page, your estimate of the price range in which the owners home could be sold. This estimate should consider the owners property, comparable sales, and market changes. A range is more realistic than a single price because it allows for minor variations in the marketplace. Be scrupulous in preparing your CMA. Again, using only the comparables that support your own position can be considered fraudulent. Although an owner might want to list at a price toward the top edge of the range, by using the range, you have prepared the owner to consider any offer within the range as being a reasonable reflection of value. In a sellers market, with many buyers and few sellers, the range is likely to be far narrower than it would be in a buyers market, with many more prospective properties available than there are buyers. So, although you show the range, you might want to recommend a listing at the midpoint or even near the low limit of the range, depending on market conditions. The reasoning for your recommendation should be made clear by the attachments to the CMA.

6 186 California Real Estate Practice CMA Software Programs There are a number of software programs that will make CMA preparation relatively easy and provide a professional-appearing document. These programs use photographs and property details to help you arrive at a recommended list price. We have included CMA material from ToolkitCMA, a Web-based software program of Realty Tools, Inc. ( as Figure 5.1A through Figure 5.1H. Computer people use the term GIGO, which stands for garbage in, garbage out. If your comps were not realistic, you would have a hard time developing a trend. A sale far outside your anticipated range is an aberration, but it should be considered in determining averages. (See Figures 5.1A and Figures 5.3 through 5.6I.) This material can be a help not only in listing at the price indicated by your CMA but also in listing below the price your CMA recommends as a list price when the seller is strongly motivated to sell. Often a sale at a below-market price is in an owner s best interest, when compared with the alternative of not procuring a buyer during the listing period or even facing foreclosure. Let Owners See the Competition Often owners want a price that cannot be justified by market conditions as revealed by your CMA. They need a harsh dose of reality. Some agents will conduct a short excursion with the owners to several comparable properties on the market. The agent asks the owners to compare the features of their home and the homes viewed. The owners are then requested to guess the price asked of the various properties. When the agent tells the owners what the list price is, it can serve as an aid to helping owners understand the reality of the current market. For comparables, use vacant properties. You do not want to intrude on owners when the benefit is other than a sale of that property. It is an unethical and unfair practice to take an overpriced listing with the secret intent of then trying to influence the owner to reduce the price or to take the listing to sell other properties. Some agents will show an overpriced property to make another property appear to be bargain priced. Owners who insist on a price above what you consider to be a fair market value range should realize the following: 1. The higher the price, the longer it will take to sell the property 2. The higher the price, the lower the chance of sales success 3. Even if the sale is successful, it is likely to fall in the fair-market range or less

7 Chapter 5 Listing Presentation Package 187 figures 5.1A 5.1h CMA Material from ToolkitCMA Determining the Value of Your Home The Importance of Intelligent Pricing A Comparative Market Analysis (CMA) is essential to determine the value of residential property. Location and characteristics of the property are the key elements in determining value. Therefore, the basis for valuation is similar properties in your area. The market analysis takes into account the amount received from recent sales of comparable properties and the quantity and quality of comparable properties currently on the market. The desired end result is to find a price that will attract a willing and able buyer in a reasonable time. Once the value of your home has been determined, you can decide on an offering price that will achieve your goals. Generally, the price should not exceed the value by more than 5% or potential buyers may not even make offers. Naturally, if you want to sell quickly your asking price should be very near the value. The following are a few things to keep in mind about pricing: Realistic pricing will achieve maximum price in a reasonable time. Your cost or profit desire is irrelevant; the market determines the price. The cost of improvements are almost always more than the added value. Houses that remain on the market for a long time do not get shown. A house that is priced right from the beginning achieves the highest proceeds. Determining the best asking price for a home can be one of the most challenging aspects of selling a home. It is also one of the most important. If your home is listed at a price that is above market value, you will miss out on prospective buyers who would otherwise be prime candidates to purchase your home. If you list at a price that is below market value, you will ultimately sell for a price that is not the optimum value for your home. As Figure 1 illustrates, more buyers purchase their properties at market value than above market value. The percentage increases as the price falls even further below market value. Therefore, by pricing your property at market value, you expose it to a much greater percentage of prospective buyers. This increases your chances for a sale while ensuring a final sale price that properly reflects the market value of your home. Another critical factor to keep in mind when pricing your home is timing. A property attracts the most attention, excitement and interest from the real estate community and potential buyers when it is first listed on the market (see Figure 2). Improper pricing at the initial listing misses out on this peak interest period and may result in your property languishing on the market. This may lead to a below market value sale price (see Figure 3), or, even worse, no sale at all. Therefore, your home has the highest chances for a fruitful sale when it is new on the market and the price is reasonably established. We can give you up-to-date information on what is happening in the marketplace and the price, financing, terms, and condition of competing properties. These are key factors in getting your property sold at the best price, quickly and with minimum hassle. Figure 1 - Percentage of Buyers by Asking Price Figure 2 - Activity versus Timing Figure 3 - The Effect of Overpricing A. Angela McKendrick, Realtor B. Angela McKendrick, CRS, GRI Subject Property Profile for 7 Deep Run Court Comparable Properties Currently On The Market 2 Symphony Cir List Price: $789,000 Yr Blt: 2008 Lot Size: 1.14 Acres Area: Laurelford Fin Sqft: 5484 Style: Modern Elem Sch: Hunt Valley Bedrooms: 4 Levels: 3 Middle Sch: Ridgely Bathrooms: 3/1 Const: Cedar Siding High Sch: Dulaney Heating: Heat Pump Const: Stone Amenities: Walk-In Closet Fuel: Electric Parking: 2-Car Garage Amenities: Wet Bar Cooling: Central Air Garage Spaces: 2 Other Rms: Family Room Water: Well Basement: Finished Other Rms: Game Room Remarks: Gorgeous Home Available For Move In Immediately! Inground Pool In BackOf House, Fabulous Master Bedroom, Spacious Rooms." The following features have been identified to aid in the search for properties that are comparable to yours. This will help in determining proper pricing for your home. Currently On The Market Cleghorn Road List Price: $814,900 Yr Blt: 1986 Lot Size: 1 Acre Area: Laurelford Fin Sqft: 3862 Style: Modern Elem Sch: Pot Springs Bedrooms: 4 Levels: 3 Middle Sch: Cockeysville Bathrooms: 2/2 Const: Brick High Sch: Dulaney Heating: Heat Pump Const: Stone Amenities: Wet Bar Fuel: Electric Parking: Driveway Amenities: Game Room Cooling: Ceiling Fan Garage Spaces: 3 Other Rms: Study/Library Water: Conditioner Basement: Full Other Rms: Finished Attic Remarks: Park-Like Grounds. Master Bedroom With Balcony. Stained Glass Suite Windows& Large Family Room, Wet Bar And Atrium Door To Side Porch. Living Room With Atrium Door To Patio. Lots Of Windows. Floors Have Been Refinished. Very Charming Home With Elite Amenities." City: Hunt Valley Fin SqFt: 2160 Style: Colonial Bathrooms: 2/1 Basement: Fully Finished Fuel: Electric Garage Spaces: 2 Sewer: Septic Amenities: Built-In Bookcases Other Rms: Family Room Neighborhood: Orchard Valley Lot Desc: Backs To Trees Levels: 3 Const: Cedar Siding Basement: Walkout Level Cool: Central A/C Exter Feat: Deck # Fireplaces: 2 Amenities: Mba/Sep Shwr Year Built: 1988 Lot Size: 1.04 Bedrooms: 3 Roofing: Cedar/Shake Heat: Heat Pump Parking: Garage Water: Well Amenities: Auto Gar Dr Opn Other Rms: Den/Stdy/Lib Currently On The Market Beaver Dam Rd List Price: $849,900 Yr Blt: 1984 Lot Size: 1.89 Acres Area: Ivy Hill Fin Sqft: 4090 Style: Classic Elem Sch: Hunt Valley Bedrooms: 4 Levels: 3 Middle Sch: Ridgely Bathrooms: 3/2 Const: Cedar Siding High Sch: Dulaney Heating: Forced Air Const: Wood Amenities: Wet Bar/Bar Fuel: Bottled Pr Parking: Driveway Amenities: Wood Floors Cooling: Central A/C Garage Spaces: 3 Other Rms: Family Room Water: Well Basement: Unfinished Other Rms: Wine Cellar Remarks: Handcrafted Oak Foyer And Staircase. The Attention To Architectural DetailIs Outstanding. Amenities Such As Hardwoods, Marble, Ceramic And Brass Add The Finishing Touches!" C. Angela McKendrick, CRS, GRI D. Angela McKendrick, Realtor Used with permission of Realty Tools, Inc.

8 188 California Real Estate Practice figures 5.1A 5.1H (continued) CMA Material from ToolkitCMA Comparative Market Analysis Graphed by Status Currently On The Market Comparative Market Analysis Summary Currently On The Market Address Neighborhood Style Yr Blt Beds Bath Sold Price List Price 2 Symphony Cir Laurelford Modern /1 $789, Cleghorn Road Laurelford Modern /2 $814, Beaver Dam Rd Ivy Hill Classic /2 $849, Warren Rd Hillsyde Colonial /1 $885, Laurelford Ct Laurelford Colonial /1 $892,000 9 Jules Brentony Shawan Colonial /1 $898, West Padonia Rd Springhill Farm Modern /1 $899,500 Average of 7 Properties: $861,314 Min: $789,000 Max: $899,500 Median: $885,000 Under Contract Under Contract Address Neighborhood Style Yr Blt Beds Bath Sold Price List Price Cuba Rd Hillsyde Cape Cod /1 $839,000 9 Ivy Reach Court Ivy Reach Colonial /1 $842,925 3 Indian Spring Court Sherwood Colonial /1 $850, David Luther Ct Laurelford/Ivy Colonial /1 $899, Foxtrot Ct Laurelford/Ivy Colonial /1 $899,000 Average of 5 Properties: $865,985 Min: $839,000 Max: $899,000 Median: $850,000 Recently Sold Recently Sold Address Neighborhood Style Yr Blt Beds Bath Sold Price List Price 19 Chris Eliot Ct Ivy Hill Colonial /1 $725,000 $849, Old Padonia Rd Laurelford Modern /1 $755,000 $789,000 4 Chamaral Ct Ivy Hill Colonial /1 $775,000 $799, Boxer Hill Rd Sherwood Colonial /1 $790,000 $850, Jerome Jay Dr Laurelford/Ivy Colonial /1 $830,000 $899, Springhill Farm Ct Springhill Farm Cottage /1 $850,000 $899, Shawan Rd Hillsyde Classic /2 $855,600 $885, Warren Rd Laurelford/Ivy Colonial /1 $885,000 $899,000 Average of 8 Properties: $808,200 Min: $725,000 Max: $885,000 Median: $810,000 Off The Market Off The Market Address Neighborhood Style Yr Blt Beds Bath Sold Price List Price 10 Loveton Cir Hillsyde Classic /1 $885, Boxwood Lane Laurelford Colonial /1 $892,000 9 Westcroft Ct Shawan Colonial /1 $898, Chilcoat Rd Springhill Farm Cottage /1 $899,900 E. Angela McKendrick, Realtor F. Angela McKendrick, Realtor Comparative Market Analysis Statistics Pricing Your Property to Sell Graphic Analysis of Recently Sold Properties Pricing your property correctly is crucial. You want to sell your property in a timely manner at the highest price possible. Current market conditions determine the value. Pricing too high or too low can cost you time and money. Realistic pricing will achieve a maximum sale price in a reasonable amount of time. Summary Statistics of 8 Properties: Average Price: $808,200 High Price: $885,000 Low Price: $725,000 Median Price: $810,000 Average $ per SqFt: $ Average Year Built: 1996 Average Sale to List Ratio: Average Days On Market: 230 Analysis of the comparable properties suggests a list price range of: $783,954 to $832,446 G. Angela McKendrick, Realtor H. Angela McKendrick, Realtor

9 Chapter 5 Listing Presentation Package 189 estimated seller s proceeds The estimated seller s proceeds (also referred to as the net sheet), what an owner actually receives in cash and/or paper from a sale, are of vital importance to owners. Owners who receive less than what they anticipated are going to be disappointed. They are going to be unhappy with you and your firm. When owners are unhappy, the chances that problems will arise during escrow tend to escalate. From the standpoints of good business, agency duty, and basic fairness, you want the owners to understand what they will net from a sale if sold at list price. The owners should know what costs they will incur. The estimated seller s proceeds should show what the seller would net, based on a particular sale price. While there are computer programs that will give you printouts of seller costs based on data you supply to the computer, the completeness of the form increases the likelihood that actual figures will vary only slightly from the estimate. Make sure that you will know the amounts that the seller will likely incur. For example, all counties in California charge a documentary transfer tax, but some cities charge an additional tax. The seller should be made aware of these small but important charges. Many agents like to estimate seller costs just a little on the high side, so any surprises are more likely to be pleasant ones. You would prepare a new Estimated Seller s Proceeds form if the price were adjusted or if an offer were received at a price other than the one set forth in the listing. the listing presentation manual The listing presentation manual is a valuable visible tool for obtaining listings. It can be presented in a ring binder or as a display on your laptop computer. It is a visual tool that works hand in hand with the agent s dialogue to make a structured and effective presentation. The listing presentation manual sells the owner on benefits the benefit of using an exclusive agent and the benefit of your firm as that agent. It should not be used in place of the verbal presentation. Basically, as the agent turns the pages or changes the images, the visual message reinforces the agent s verbal message. Separate listing presentation manuals should be prepared for sale listings and buyer listings, although some of the pages will be identical. If a paper presentation is to be made, we recommend using a three-ring binder for the presentation manual with three-hole plastic protector sheets used for each page. These are readily available at any stationery store. For a professional appearance, a laser printer coupled with one of the desktop publishing programs can result in excellent quality rather than an amateur-appearing presentation. Listing presentation manuals should be divided into two areas: 1. Why list? 2. Why us? (Your firm and you)

10 190 California Real Estate Practice figure 5.2 Estimated Seller s Proceeds ESTIMATED SELLER'S PROCEEDS Based on purchase price shown below and proration date of Prepared by License # Date Office Phone Prepared for Property Address PURCHASE PRICE $ APPROXIMATE INDEBTEDNESS: First Loan Second Loan Other Liens LESS: Total Approximate Indebtedness $ GROSS EQUITY: $ ESTIMATED COSTS: Appraisal Fee Brokerage Commissions City Inspection Report of Residential Building Record Drawing Documents Escrow Fee Forwarding Fee Home Protection Contract Fee Inspection Fees Interest (from due date last loan payment to proration date).... Legal Fees Loan Fees (VA/FHA) Notary Fee Pest Control Inspection Fee Pest Control Work Prorated Rents Prorated Taxes (if not paid to proration date) Reconveyance Fee Recording Fee Repairs and Fixing-up Costs Security Deposits and Prepaid Rents Title Insurance Transfer Tax Wire Fee Other Other ESTIMATED CREDITS LESS: Total Estimated Costs $ SUBTOTAL $ Prorated Taxes (if paid beyond proration date) Trust Fund or Impound Account Balance Other Other PLUS: Total Estimated Credits $ ESTIMATED SELLER'S PROCEEDS: $ LESS: Loan Carried by Seller $ LESS: Federal/State Tax Withholding $ ESTIMATED CASH PROCEEDS: $ The real estate licensee preparing the above estimate and his or her employing broker do not warrant the accuracy of the above calculations and assume no responsibility for any errors or omissions. CAUTION: The copyright laws of the United States forbid the unauthorized reproduction of this form by any means including scanning or computerized formats. FORM 126 ( ) COPYRIGHT BY PROFESSIONAL PUBLISHING, LLC NOVATO, CA STEVEN M. WOSTENBERG - Printed: Thursday, September 06, :25 Reprinted with permission, Professional Publications. Endorsement not implied.

11 Chapter 5 Listing Presentation Package 191 You must convince the owner or buyer about the concept of a listing as your first step and then show that you should have the listing. sale listings Owners feel that a listing will cost them money. They are likely to initially view the idea of a listing as negative rather than look at the benefits you can offer. Therefore, you must overcome the negative thoughts and help owners realize the benefits offered. Why List? When you deal with a for sale by owner (FSBO), realize that a significant reason the owners want to sell the home themselves is to save the commission. They feel if they can sell their property without an agent, the agent s fee will be additional money for them. Therefore, begin your presentation with a discussion of who actually saves when an agent is not involved. Even when you are not dealing with an FSBO, you could be in competition with the owners as well as with other agents for a listing. While not stated or even denied, the owners could be considering selling without an agent as one of their options. Therefore, we believe that all listing presentation material should begin with a discussion of false savings of FSBO offerings. Consider starting your presentation with the following visual question and answer: The primary reason owners want to sell without an agent is to avoid paying a commission. Question: Who saves when an owner sells without an agent? Answer: The buyer Note: This question-and-answer technique is very effective and is easy to prepare. Put only one question and answer on a page or screen. For a book, pages should be read on the right side of your book. We show suggested verbal presentations following each question and answer. You can use appropriate ideas to tailor your own presentation materials to your needs. I understand why you would want to sell [might consider selling] your home without an agent. You would like to save the agent s fee. Owners who do succeed in selling without an agent and there aren t that many of them find that they re not the ones who save. If there are any savings to be had, the buyer enjoys them. Buyers who approach owners who advertise their homes for sale or put signs in their front yards will want to reduce any offer they might make by at least

12 192 California Real Estate Practice the amount of the agent s fee, even though the price might have been set to reflect all or part of this savings. Buyers will not even settle for half because they realize it is buyers, not sellers, who really pay the commission. The price the buyer pays includes a commission, and although the seller may pay it, it is paid for with dollars that come from the buyer s savings and not the seller s pockets. When an owner sells direct, losing the commission is just for starters. Buyers often view for-saleby-owner situations as an opportunity to make a profit for themselves. They believe that for sale by owner indicates a distress sale, and that belief explains some of the ridiculous offers owners receive. Question: Why are most for-sale-by-owner signs replaced by agent signs? Answer: Because owners are seldom successful in selling their homes. Approximately 90 percent of owners who try to sell without an agent end up listing their property with a licensed agent. Few buyers seek out for-sale-by-owner ads and signs, and when they do give an offer it is usually at a price the owner will not consider. Many times, a buyer who is considering making an offer on a for-sale-by-owner property will make an opening offer of at least 5 percent less than they would otherwise offer because they figure that the seller is not paying a commission. Many buyers use this as a negotiating tool. Question: Who does this sign attract? Answer: Bargain hunters Lookie Lous Unqualified buyers With a for-sale-by-owner sign on your front lawn, you will attract bargain hunters of all types. Your home will be on the Sunday entertainment tour of Lookie Lous who might be interested only in how you have decorated your home or are simply using you as a way to fill an otherwise vacant day. Your for-sale-by-owner ads and signs will attract people who might truly love your home but don t have a prayer of getting necessary financing. These people can waste a great deal of your time. Even if they give you an offer, the sale will never be closed.

13 Chapter 5 Listing Presentation Package 193 A For Sale sign says Come on in to the whole world. When you show people your home and belongings, you are really allowing strangers in. You let them see into closets and places that your best friend will never see, and you have no idea why they are there. While talking to one prospective buyer, another could be going through your jewelry box or medicine cabinet. I wish it wasn t a problem, but safety is a problem today. People put in expensive alarm systems and then invite strangers into their homes to see who lives there and what is there. Is this wise? Question: What does this sign mean? Answer: Wasted time Wasted effort Likelihood of legal problems Failure/discouragement For Sale by Owner Owners who try to sell without an agent are prisoners in their own homes, waiting for a phone call on the ad or a passerby to ring their doorbell. When they accept an offer, they might find that the other party views the agreement differently from what the owners thought was agreed to. The likelihood of a lawsuit is increased many times when an agent is not part of the transaction. Actually, a lawsuit is seldom a problem, because most owners who try to sell without an agent never even get an offer. Question: Why do most serious buyers employ real estate agents? Answer: Because agents have the inventory, understand the market, know how to qualify buyers, and can negotiate a sale with all the paperwork. [Mr. and Mrs. ], when you were looking for a home to purchase, I bet you visited real estate agents, am I right? The reason you went to at least one agent is because agents knew what was on the market and were able to quickly locate properties that met your needs. Without agents, buyers would have to contact dozens of individual property owners to check out properties, even though inspection might reveal that a property did not come close to meeting their needs. Buyers today are no different than you were when you purchased this home. Buyers who are serious about buying contact agents. Buyers dealing with agents understand they will have to pay a price dictated by the market and that they are not going to get anything for nothing.

14 194 California Real Estate Practice We suggest you take a positive approach regarding the benefits of agency representation. Owners who understand the benefits of professional representation are less likely to resist paying a reasonable fee for these services. Note: The word fee denotes a professional charge for benefits, whereas commission has a negative connotation to some people. The word commission has a negative connotation, but fee is positive in that it is a charge for benefits received. Question: What do you get for your fee? Answer: These important benefits: Help and advice on making your home more salable Promotion and advertising (paid by the agent) Exposure on seven Web sites Multiple-listing benefits Qualifying of all prospects Freedom to enjoy your time Advice on offers and counteroffers Problem solving during escrow We work with you to make your house salable at the highest possible price. We promote your home with advertising and open houses. We prepare advertising flyers on your home for other agents, for responses to inquiries, and for those visiting your home. We also feature your home on our own Web site as well as seven other Web sites. Of course, we bear all of these costs. Information on your home is made available through our multiple listing service to [137] offices and more than [1,814] agents and through the Web site that has [more than 3,000] hits per day. This is the kind of exposure that is possible for your home. An effective visual tool is to have a computer print-out listing every agent who is a member of your MLS service. The size of the printout helps impress upon the owners the number of people who will be able to work to sell their home. We properly qualify anyone we bring to your home. We know who they are, where they live and work, and who can afford to buy your home before they cross your threshold. You receive our advice on all offers received. We will work with you and the buyer in turning an unacceptable offer into an advantageous sale. We work with buyers in obtaining financing to ensure that the purchase will close.

15 Chapter 5 Listing Presentation Package 195 figure 5.3 Why Use a REALTOR? Why use a REALTOR? When selling your home, your REALTOR can give you up-to-date information on what is happening in the marketplace including price, financing and terms of competing properties. These are key factors in a successful sale of your property at the best price in the least amount of time. Only real estate licensees who are members of the NATIONAL ASSOCIATION OF REALTORS are properly called REALTORS. REALTORS subscribe to a strict code of ethics and are expected to maintain a higher level of knowledge of the process of buying and selling real estate. They are committed to treat all parties to a transaction honestly. REALTOR business practices are monitored at local board levels. Arbitration and disciplinary systems are in place to address complaints from the public or other board members. Your REALTOR can help you objectively evaluate every buyer's proposal and then help write an appropriate legally binding sale agreement. Between the initial sales agreement and settlement, questions may arise. For example, unexpected repairs may be required to obtain financing or a problem with the title is discovered. Your REALTOR is the best person to help you resolve those issues and move the transaction to settlement. Angela McKendrick, Realtor Used with permission of Realty Tools, Inc. figure 5.4 Services You Will Receive Services You Will Receive We will help you determine the best selling price for your home. We will suggest what you can do to get your home in top selling condition. We will develop a strategy to show your home. We will enter your home in the Multiple Listing System. We will implement the enclosed marketing plan. We will talk with you to review progress periodically. We will advise you of changes in the market climate. We will present all offers to you promptly and assist in evaluating them. We will monitor progress toward closing when a contract is accepted. We will monitor the appraisal and buyers loan approval. We will immediately advise you of events that may threaten closing. We will coordinate and monitor the settlement process. Angela McKendrick, CRS, GRI Used with permission of Realty Tools, Inc.

16 196 California Real Estate Practice We monitor escrow to make certain there are no hang-ups. If a problem arises, we inform you and work to overcome it so the sale can progress. This question-and-answer approach is just one of many approaches that can be used for your listing presentation material. Whatever material you use should flow toward the desired goal of overcoming any resistance by the owners to signing an agency agreement. You must be comfortable with the approach you use. If you are not comfortable with the material, chances are your effort will reflect your attitude, which will translate into few successful listings. Figures 5.3 and 5.4 were provided by Realty Tools, Inc. ( and show the benefits of listing having agency representation. Why Us? To obtain a listing, you have to convince owners that you and your firm deserve their trust. This is particularly important when owners are hesitant about listing their property because of a previous unsatisfactory experience with another agent. You must build rapport with property owners. The owners must not only want to list their property, they must want to list with you because they feel you are a capable person representing a capable firm. In addition, they must trust you as a person. Sell yourself to the owners as a caring person who understands their problems and wants to help produce solutions. If you are unsuccessful, you could end up doing all the groundwork for an easy listing by another agent who has been able to develop greater empathy with the owners. Listen to what the owners say during and after your presentation. Address them by their last names (Mr. Owner, Mrs. Seller). Answer questions slowly and fully. Ask questions to determine if you are communicating fully with the owners. Don t tell the owners, ask them. Don t talk down to them or dismiss questions with flippant remarks. Don t use technical terms or acronyms. They may not understand what this girl Fannie Mae has to do with their property. In the initial phase of the presentation, keep in mind that the product you are selling is really yourself. You must sell yourself as worthy of an owner s trust. The Why Us? portion of your listing material should cover you personally as well as cover your firm. You might want to start with a one-page résumé entitled Want to Know about [Lester Jones]? Keep your résumé simple. You should have extra copies of this résumé so you can give the owners a copy. You are asking them to entrust you with the sale of their home, so they deserve to know something about you. When you give the owners your résumé, take no more than one minute to tell them about yourself. You should emphasize knowledge of the community, success in sales, special training, professional designations, and so forth.

17 Chapter 5 Listing Presentation Package 197 A photo of your office or, if more than one office, a collage of photos can be effective. If your office has been in business a long time, a caption such as Servicing [Midvale] since [1953] is appropriate. If you are with a large firm or franchise, the caption could read [8] offices and [146] professionals ready to serve you. If you have a large office, a group photo of your sales force with the name of your firm is effective. Your narrative could simply be: We offer the advantage of 8 offices and 146 salespeople. Isn t this the kind of sales force you want for success? For a franchise, consider: [Franchise Name] [Logo] [1,823] Offices [36,000] Salespeople Our Name Means: Instant Recognition National Referrals Your possible narrative could be: The name [VIP Realty] means instant recognition even to those who are new to our community. Because we are a [VIP] office, you can benefit from our national referral system. You must sell the benefits that your firm has to offer. If your firm is small, use a photo of your office and turn your small size into a positive with a narrative such as: Because we specialize in a small number of select properties, our owners receive maximum service. Your home will not be competing with 400 other office listings. We can provide the individual attention your home deserves in order to have a successful sale. As an alternative, you might show your small firm as part of a large organization with a caption: [Loring Realty] is part of a multiple listing service offering you [237] offices and more than [2,000] salespeople, all working for your success. Your narrative might be With [Loring Realty] representing you, you can take advantage of this huge sales force working together for your success.

18 198 California Real Estate Practice Perhaps you want a separate sheet providing information on your multiple listing service. Your possible narrative might be: By appointing [Loring Realty] as your agent, [in less than one hour] the information on your home will be available to these [237] offices and more than [2,000] salespeople. This sales force can be working for you. An alternative narrative for a multiple listing service would be: Assume every agent in our multiple listing service is working with just two buyers for a home in your home s general price range. Now that may seem to be a very low figure, but consider that tomorrow morning your home can be exposed to those two buyers by [2,000] agents. That s [4,000] potential buyers for your home. If you are a REALTOR, consider a sheet with just the REALTOR trademark. Your narrative could be: Every broker is not a REALTOR. Only REALTORS can use this symbol. [Loring Realty] is a member of the California Association of REALTORS and the National Association of REALTORS. As REALTORS we are pledged to a Code of Professional Conduct. If your firm is a member of the National Association of Real Estate Brokers, a similar approach could be used. A collage of press releases can be effective. Your narrative would be: The fact that [Loring Realty] has played a dominant role in [community activities] and [development] brings us instant name recognition as a professional leader. Tell owners how your firm advertises to attract potential buyers. For a larger firm, you could have a sheet stating: Your narrative could be: 2013 [$2 Million] + Advertising Budget Our advertising budget of [$ ] means [$ ] per week spent to bring in buyers. This budget has given us name recognition and dominance in the marketplace. Our dominance is reflected in our sales record.

19 Chapter 5 Listing Presentation Package 199 figures 5.5A-5.5E Presentation Samples Determining the Value of Your Home A Comparative Market Analysis (CMA) is essential to determine the value of residential property. Location and characteristics of the property are the key elements in determining value. Therefore, the basis for valuation is similar properties in your area. The market analysis takes into account the amount received from recent sales of comparable properties and the quantity and quality of comparable properties currently on the market. The desired end result is to find a price that will attract a willing and able buyer in a reasonable time. Once the value of your home has been determined, you can decide on an offering price that will achieve your goals. Generally, the price should not exceed the value by more than 5% or potential buyers may not even make offers. Naturally, if you want to sell quickly your asking price should be very near the value. The following are a few things to keep in mind about pricing: Realistic pricing will achieve maximum price in a reasonable time. In Conclusion When you choose Angela McKendrick you will receive: Excellent service and support. A market analysis of your home. A winning marketing plan. Every effort to sell your home promptly. The resources of Standard 5 Demo. List Your Home Now with Angela McKendrick! Your cost or profit desire is irrelevant; the market determines the price. The cost of improvements are almost always more than the added value. Houses that remain on the market for a long time do not get shown. A house that is priced right from the beginning achieves the highest proceeds. A. Angela McKendrick, Realtor B. Angela McKendrick, Realtor Sellers... Customer References RESUME Angela McKendrick Fred & Susan Fredericks 23 Elm Street Joe & Lisa Johnson 1400 N. Timonium Road Ron & Dawn Larkin 2311 E. Roundtop Circle Debra Jones 433 Forest Drive Don & Julia Smith 32 E. Running Road Len & Hanna Leonard 443 Forest Drive Buyers... Mark & Joan Dawson 2300 S. Timonium Road Suzanne Swift 22 Forrest Avenue Ron & Joan Burns 55 W. Running Road Joe & Ann Reese 321 Pine Forest Lane Robert Johnson nd Terrace Jay & Sarah Volker 75 Winding Way Experience: 1998-Present: Real Estate Agent specializing in single family, multi-family, condominiums, and land sales : Marketing Director for McCormick Company. Affiliations: Greater Baltimore Board of Realtors. Maryland Association of Realtors. National Association of Realtors. Residential Sales Council. Education: Columbia University North Carroll High School Professional Courses sponsored by the National Association of Realtors. Community: Former American Cancer Society Person of the Year. Hunt Valley Community Association. Greater Baltimore Association. Scoutmaster Troup 211. Personal: Married to Jason McKendrick. Children: David (31) and Anna (26). Hobbies: Golf and Tennis. C. Angela McKendrick, CRS, GRI D. Used with permission of Realty Tools, Inc.

20 200 California Real Estate Practice figures 5.5A-5.5E (continued) Presentation Samples Marketing Plan of Action First Week on the Market - Enter listing into MLS system. - Put up "For Sale" sign. - Install lock box. - Take property photos. - Prepare property flyer/brochure. - Submit property listing with photos to select real estate websites. Second Week on the Market - Schedule Virtual Tour. - Invite local Realtors to tour home. - Prepare and place advertisements with select print and online media outlets. Third Week on the Market - Submit Open House announcement to MLS & Office Sales meeting. - Prepare and distribute special Open House flyer. - Hold Sunday Open House. On-going - Handle incoming calls and schedule showing appointments. - Update owner on showings. - Pre-qualify buyers. - Present all offers and recommend counter-offer strategies. - Review price based on agent input & market conditions. ASAP - Obtain an acceptable contract on your property! E. Angela McKendrick, CRS, GRI For a small firm, consider a collage of your ads. You could say: You can see we publicize our listings. If your office advertises in a foreign paper or has relationships with brokerage offices in other countries, this should be emphasized. Many owners feel that foreign buyers pay top price, so that access to them is important. The Only Office in [Sacramento] Advertising in Nihon Keizai Shimbun Japan s Largest Business Daily Newspaper We market our properties to the largest possible market. We go to the buyers. Besides our area advertising, our international advertising has built up a referral network of agents who work with us to locate buyers.

21 Chapter 5 Listing Presentation Package 201 figures 5.6A-5.6I Presentation Samples Real Estate Services Proposal Prepared Especially for: Tom & Mary White 7 Deep Run Court Hunt Valley, MD For marketing the property located at: 7 Deep Run Court Prepared by: Angela McKendrick, Realtor Agent Standard 123 Main Street Hunt Valley, MD Date: July 17, 2012 May 26, 2013 Tom & Mary White 7 Deep Run Court Hunt Valley, MD Dear Tom & Mary: I know you are trying to sell your home yourself. If you should decide to choose a REALTOR instead, I would like you to consider the services I can offer you. I have put together the enclosed materials for your review. It contains information about my experience and my company and how we propose to market your property. I will contact you to see if my firm and I can be of assistance to you in marketing your home. Selling your home in as short a time as possible, for the maximum price possible is our goal! Sincerely, Angela McKendrick, CRS, GRI Agent, REALTOR A. B. Why use a REALTOR? Marketing Plan of Action When selling your home, your REALTOR can give you up-to-date information on what is happening in the marketplace including price, financing and terms of competing properties. These are key factors in a successful sale of your property at the best price in the least amount of time. Only real estate licensees who are members of the NATIONAL ASSOCIATION OF REALTORS are properly called REALTORS. REALTORS subscribe to a strict code of ethics and are expected to maintain a higher level of knowledge of the process of buying and selling real estate. They are committed to treat all parties to a transaction honestly. REALTOR business practices are monitored at local board levels. Arbitration and disciplinary systems are in place to address complaints from the public or other board members. Your REALTOR can help you objectively evaluate every buyer's proposal and then help write an appropriate legally binding sale agreement. Between the initial sales agreement and settlement, questions may arise. For example, unexpected repairs may be required to obtain financing or a problem with the title is discovered. Your REALTOR is the best person to help you resolve those issues and move the transaction to settlement. First Week on the Market - Enter listing into MLS system. - Put up "For Sale" sign. - Install lock box. - Take property photos. - Prepare property flyer/brochure. - Submit property listing with photos to select real estate websites. Second Week on the Market - Schedule Virtual Tour. - Invite local Realtors to tour home. - Prepare and place advertisements with select print and online media outlets. Third Week on the Market - Submit Open House announcement to MLS & Office Sales meeting. - Prepare and distribute special Open House flyer. - Hold Sunday Open House. On-going - Handle incoming calls and schedule showing appointments. - Update owner on showings. - Pre-qualify buyers. - Present all offers and recommend counter-offer strategies. - Review price based on agent input & market conditions. ASAP - Obtain an acceptable contract on your property! C. Angela McKendrick, Realtor D. Angela McKendrick, CRS, GRI Used with permission of Realty Tools, Inc.

22 202 California Real Estate Practice figures 5.6A-5.6I (continued) Presentation Samples Home Finders Profile for Tom & Mary White You have identified the following criteria to aid us in the search for your new home. Please review this information and notify Angela McKendrick immediately if there are any changes. Services You Will Receive We will help you determine the best selling price for your home. We will suggest what you can do to get your home in top selling condition. We will develop a strategy to show your home. City: Hunt Valley Year Built: 1988 Lot Desc: Backs To Trees Style: Colonial Bedrooms: 4 Const: Cedar Siding Basement: Fully Finished Heat: Heat Pump Cool: Central A/C Garage Spaces: 2 Water: Well # Fireplaces: 2 Amenities: Built-In Bookcases Other Rms: Den/Stdy/Lib Neighborhood: Laurelford Fin SqFt: 5384 Lot Size: 1.04 Levels: 3 Bathrooms: 3/1 Roofing: Cedar/Shake Basement: Walkout Level Fuel: Electric Parking: Garage Exter Feat: Deck Sewer: Septic Amenities: Auto Gar Dr Opn Amenities: Mba/Sep Shwr Other Rms: Family Room We will enter your home in the Multiple Listing System. We will implement the enclosed marketing plan. We will talk with you to review progress periodically. We will advise you of changes in the market climate. We will present all offers to you promptly and assist in evaluating them. We will monitor progress toward closing when a contract is accepted. We will monitor the appraisal and buyers loan approval. We will immediately advise you of events that may threaten closing. We will coordinate and monitor the settlement process. E. Angela McKendrick, CRS, GRI F. Angela McKendrick, Realtor RESUME Angela McKendrick Sellers... Customer References Fred & Susan Fredericks 23 Elm Street Joe & Lisa Johnson 1400 N. Timonium Road Experience: 1998-Present: Real Estate Agent specializing in single family, multi-family, condominiums, and land sales : Marketing Director for McCormick Company. Affiliations: Greater Baltimore Board of Realtors. Maryland Association of Realtors. National Association of Realtors. Residential Sales Council. Education: Columbia University North Carroll High School Professional Courses sponsored by the National Association of Realtors. Community: Former American Cancer Society Person of the Year. Hunt Valley Community Association. Greater Baltimore Association. Scoutmaster Troup 211. Ron & Dawn Larkin 2311 E. Roundtop Circle Debra Jones 433 Forest Drive Don & Julia Smith 32 E. Running Road Len & Hanna Leonard 443 Forest Drive Buyers... Mark & Joan Dawson 2300 S. Timonium Road Suzanne Swift 22 Forrest Avenue Ron & Joan Burns 55 W. Running Road Joe & Ann Reese 321 Pine Forest Lane Robert Johnson nd Terrace Jay & Sarah Volker 75 Winding Way Personal: Married to Jason McKendrick. Children: David (31) and Anna (26). Hobbies: Golf and Tennis. G. H. Angela McKendrick, CRS, GRI

23 Chapter 5 Listing Presentation Package 203 figures 5.6A-5.6I (continued) Presentation Samples In Conclusion When you choose Angela McKendrick you will receive: Excellent service and support. A market analysis of your home. A winning marketing plan. Every effort to sell your home promptly. The resources of Standard 5 Demo. List Your Home Now with Angela McKendrick! I. Angela McKendrick, Realtor If your office has a home protection plan: [Loring Realty] Offers Buyers Home Protection Plan That Makes Your Home More Desirable to Buyers Our home protection plan protects buyers against structural problems and system breakdowns for [one] year after purchase. This protection has given us a word-of-mouth reputation to the extent that many buyers would not consider using another agent to purchase a home. If your office belongs to a national referral network but is not a franchise office, consider a sheet or computer screen that reads Member [Home Relocators] A National Relocation Referral Service [1,838] Cooperating Member Firms in 50 States