This is the second in the series of lessons on how to sell houses. Refer to last weeks issue if you missed it.
Problem #7- Salesperson’s lack of knowledge of funding and prescreening.
The first step to success in buying and selling is locating prospects. Without potential buyers it’s very hard to sell houses. Frankly, an ad online should be enough to attract plenty of prospects if you know how to write the ad and where to put it. I can’t turn this into an ad-writing course, but any ad that gets prospects to call is a good one. Any ad that doesn’t is a bad one, or it’s in the wrong publication. Make sure your ad gives the prospect a reason to call. Try to include a USP (Unique Selling Proposition): What can you offer that everyone else isn’t?
- Lease Purchase
- No Qualifying Owner Financing
- No Bank Qualification
- No Money Needed
- Easy Terms
- Owner Will Help
- Will Accept Anything On Trade
- You Get A Car With The House, etc.
Some students use flyers distributed in newspapers and don’t run ads. Others use a lot of signs, referrals, mail outs, and electronic voice broadcast.
We’ll cover all these in the Quick Start Real Estate School, but the key is to make sure you keep a good flow of leads coming in until the house is sold. Where most people fail is how they handle these leads once they come in.
That, my friend, will receive a lot of attention at the boot camp. It’s by far the weakest link in the chain. Leads must be prescreened properly and the good ones worked daily. Out of any batch of leads will usually come some qualified ones. Maybe not with credit, but qualified if you’re flexible as we discussed in the last issue. What I look for most, are people who love the house and are excited about owning it. Give me that and a little something to work with and I’ll get them in it.
Problem #8- No follow up system in place
Why do some folks insist on doing the same job several times when it can be done once? If you’re not building a buyer’s list of some kind you must love punishment. It’s simple. If you have more buyers than houses, you don’t run ads, send flyers, mail letters or any of that other stuff. You pick up the phone and call the prospects you’ve prescreened from the last time and tell them about your new house or simply send an email.
Why is that so hard? It looks to me like it’s easier to suffer the pain of creating a buyer’s list once, rather than talking to dozens of prospects from ads every time you get ready to sell. You don’t have to be an organizational wizard to enact a little follow up. Hey, a pile of prescreened buyers on the corner of your desk with no separation or filing system is better than nothing. Sounds like my system. No, that’s not true. At least I put them in a file folder. Then I misplace the folder, but I always know it’s close by (somewhere).
Problem #9- Functional obsolescence
This one is a house problem, not a people problem. You usually can’t fix this and shouldn’t buy if it’s present. That way you won’t have trouble selling.
Here are some things that come to mind:
- Extremely small rooms
- Bathroom off the kitchen
- Walk through bedroom to get to the only bath
- Low ceilings (under seven feet)
- House added-on unprofessionally
- Strange layout that can’t be fixed
- Adjacent to odors, commercial property, school or anything else that makes it undesirable
- Bad or no foundation
That’s just a few of the things I can think of now. Note: Sometimes you can correct this and sometimes you can’t. If you don’t see a way, simply pass.
Problem #10- House is very small
I guess this is also functional obsolescence, but it’s very common. Any time a house has less than 1,000 square feet I get cautious. I’ve learned that houses under 900 square foot are usually hard to sell and there’s not much you can do but keep looking for a small family of 1 or 2 people. I’m not saying they won’t sell. I’m just saying they’re harder. I’ve probably done 200 houses below 1,000 square feet.
I think I own 3 or 4 now. I guess that verifies there is a buyer for every house. If I can buy them cheap enough, I’ll still do some today. But I know going in they may take a little longer to sell.
Problem #11- Salesperson loses control of the loan process
You must remain in control from the moment you buy the house until you get a check. That includes the loan process. You decide who does the loan, who appraises the house, who gets the survey and termite report and who closes. You are also in charge of speeding up the loan.
Yep! You, not your lender. You should check in every few days, push for results and round up missing paperwork. If you don’t, the close will drag on forever. Would you allow your boss to hold your paycheck for 2 to 3 weeks until he decides to pay you? That’s exactly what you’re doing when you let a loan processor jerk your chain. So, the next time you lose a buyer because he didn’t close quick enough, go to your bathroom mirror and cuss out the person responsible.
The last time I lost a buyer two days before closing, it was because God told them not to buy. If I’d been two days earlier, maybe I wouldn’t have been competing with God. Oh well. Six weeks later I sold the house for $3,000 more than the first buyer. Maybe I wasn’t competing with God after all.
Problem #12- House is located too far away from the city
That’s an easy one. Don’t buy it. Unless you want to create a lot of driving time so you can listen to more of my tapes. Frankly, I don’t buy anything I intend to retail that’s more than 15 minutes from my office. Of course I know for some of you in big cities that’s about three blocks away. Hey, you can always move.
Problem #13- House is in high price range where few buyers can afford
Actually, sometimes that has no bearing and the high value is not an excuse for a slow sale. The problem is elsewhere on this list. But in smaller cities where a $500,000 house is the mansion, you can certainly expect it to take much longer.
All that just makes a case for you to not guarantee monthly payments on big loans. Unless you’re a sadist and looking for pain you shouldn’t try to outguess the market. Don’t count on a high priced house selling quickly just because you like it. Remove the risk, give yourself time and you’ll discover the big ones sell just like the little ones, but hopefully with a lot more profit.
You’d better make sure you have a large spread on those big babies. Buyers of $500,000 and up homes are more sophisticated and more apt to ask for a price reduction.
The good news is these folks can usually qualify for a loan, and the majority of the sales are all cash. Owner financing and lease purchase just doesn’t have the sizzle it does on the lower end. That doesn’t mean it’s not used, only not as often.
Problem #14- Only one bath
I’ve sold hundreds with only one bath but it’s not my preference. Cheap houses, not a problem. Houses above $80,000 – $100,000, it’s very difficult. For houses much above $100,000 it’s almost impossible. People who can pay more, want more. If you can’t add a bath you may wish to consider not buying if you feel it’s important to the sale.
I have never added a room on the house to add a bath. The only time I have added a bath I’ve used the existing structure. That should cost you no more than $3,000. Trying to sell a 4-bed/1-bath house ain’t easy. Selling a 3-bed/1 bath is okay as long as the house is small. Selling a 2-bed/1 bath is the norm and buyers will expect it.
Well, that’s about it. I won’t guarantee that every problem you’ll run into is on this list, but chances are, the next time you’re having trouble selling a house, if you’ll take a good look at this list, I bet the problem is in it. If you do run into something out of the ordinary that I’ve not discussed here, drop me a line.
In the meantime, remember that there are no real problems, just solutions. And, very often, when you do run across a problem property, there’s hidden profit there for someone who knows the answers and can create a solution.