In 2006, 4 guys got together to create a micro blogging service that let users post messages 140 characters long.
In 2013, they (and the people who supported them) will earn the value it took 7 years to make once Twitter’s initial public offering hits the market.
When they were thinking about selling shares in the 2nd most popular social network on Earth, they personally didn’t have a clue how to
- find its market
- determine its value … or
- have the know-how and relationships to sell it
Hiring a team that understood what they were selling was their second biggest decision to make since it could make their decision to sell either brilliantly timed or an epic disaster.
Listing your home for sale has just as much at stake after you’ve decided its time to sell.
Here’s what you want your team to know before bringing your home to market.
Find the market to sell your home in
Just because millions of people use twitter daily didn’t mean there were people ready to buy what Bill, Evan, Noah and Biz were selling.
The same holds true for your home.
Just because it’s located in a highly sought after neighborhood doesn’t mean it will sell.
There’s a reason buyer interest in any property for sale boils down to location, location, location.
Researching sales trends with a focus on how buyers are purchasing can reveal a lot about the kind of property sale occurring in your neighborhood.
Unfortunately, most brokers limit their research only to recent sales and what properties are on the market due to the kind of training and supervision they get from the agency they’re associated with.
You want to be confident that any agent you hire should know the market for your property.
By re-labelling that whole “Location-Location-Location” real estate mantra to “Neighborhood-Block-House”, you’ll be able to assess whether she has real market knowledge or just faking it.
Determine your home’s market value
Those 140 character guys may have initially thought that because of its popularity around the world, it had to be worth a lot of money.
It’s a good thing their team helped them drop that line of thinking from the start because sign ups, users and number of tweets a day wasn’t where its value would ultimately come from.
Astute brokers are aware of this when they meet homeowners that point to upgrades and remodeling as sources of increased value and take the time to explain what drives property value in their neighborhood.
Unfortunately, these same homeowners will meet a broker who will give a listing presentation that consists of 80% agency marketing fluff, 10% agent bio and 10% about their property’s value.
Somewhere in all those colorful pages of graphs and charts is their opinion of what your home is worth.
If you already met that broker then you’ve figured out she isn’t as knowledgeable about the market for your home as you thought.
She’s only interested in listing your property for sale THEN figuring out what the market will pay for it later.
But if you haven’t met that broker yet, they’re the ones who offer to do a Free Market Valuation.
Free market valuations, or Comparative Market Analysis as there referred to in the real estate business, use recent sales and properties on the market like yours to to determine a suggested list price.
While what sold and what’s for sale is important, whose buying and how they’re financing their purchases are equally if not more important.
For example, if five homes that sold near your property went for an average $336 per square foot, would that be enough for you to know your home’s potential market value?
If that was all you had to rely on, you’d have nothing else to base your decision on who to hire other than all those pages containing those colorful charts and graphs.
But what if you had the following to consider;
- 2 purchases were without a mortgage
- 2 were 70% financed with a mortgage
- 1 was 50% financed with a mortgage
and all of the above sales closed within the 60 days of each other, would that affect the present value of your property?
Having the know-how and relationships to sell it
The guys who built twitter into what it is today could easily have gone out and sold shares in it themselves.
But if their goal is to get the highest possible market value, why would they waste time learning something they would need to do once right?
They knew that if there was a broker who thought there was value in what they were ready to put on the market, they could negotiate a commission that gave them all the incentive needed to earn the results they wanted.
It’s not different in real estate. You’ll take the same approach as they did because there’s no value in learning something you won’t use again. Your time SHOULD be more valuable than that.
Your home’s value isn’t static, either.
Just as it took time to earn the equity you have, there’s no promise that tomorrow’s market conditions will hold long enough until you’re ready to sell it on your own.
And even if it made sense to list your home yourself, you’ll still lack the know-how and relationships needed to effectively broker the transaction you want.
Know-how in the real estate business are the tools, resources and processes used to advertise and promote your property to the right home buyers interested in your property’s location, and manage its sale to closing.
Great real estate agents spend a lot of time developing relationships with buyers and an agent’s relationships often complement their selling efforts.
Well established working relationships with attorneys, title agencies, mortgage loan officers and other real estate brokers are how property sale gets done.
In short, selling anything worth a lot of money will need a coordinated effort by a lot of people, all contributing to a single transaction’s outcome.
Just ask Bill, Evan, Noah and Biz.
In conclusion …
Listing your home for sale has a lot in common with a company’s initial public offering … when done right.
Way too many brokers offering Free Market Valuations and CMA’s in listing presentations fail to research Home Buyer Demand beyond recent sales and properties now on the market. More can be learned to know what kind of market exits.
And hiring the agent who can show she has real market knowledge, know-how and the right relationships is where your focus should be.
Now to you …
What experience would indicate a broker has all the capabilities described in this article to bring your home to market?
Let’s discuss it in the comments below or if you have a question after reading this article, click the box in the sidebar and send it to me.
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