Over the weekend, Kellie and I made a 'listing presentation' for a (hopefully) new listing here in our hometown of Mount Vernon, WA.
For those new to Real Estate, the 'listing presentation' is where Real Estate agent(s) go to meet with a house seller, and explain how they intend to market the house, how they're different as compared to other Realtors, commission rates, and etc.
Weeelllll... this particular house is up on the 'hill' in Mount Vernon, in a very nice neighborhood. A very large house, with 3400+ sq ft, 3-car garage, big lot, and a number of (older) upgrades. All told, after careful analysis by Kellie, this particular house fit into the Toughest Market in Mount Vernon - or all of Skagit County for that matter.
Why? Well, the average detached home price in our county falls in the $225K - $325K price range (Southern California readers - you can sit back down now). This particular house will fall into the $450K to $575K price range. A big span for a price range? You bet. And it's all because this house falls prey to what I call the "Toughest Market Syndrome" or "TMS."
About TMS
Houses that are prime candidates for TMS have the following common characteristics:
- They have large square footage - bigger than an average family can clean and maintain without a housekeeper or cleaning service.
- Due to their expansive size, they're 2-story, or split-level houses. Climbing stairs is tough on the older, retired folks who might otherwise best afford such a house.
- They are custom-designed or custom-built homes... but built some time ago (perhaps a decade or more). Custom features from a past era look decidedly dated when compared to newer homes, even if they were wildly expensive and very well executed at the time.
- The yards are Adult-oriented. No lawn or a small lawn, large gazeebos, hot tubs, rock or brick paths, waterfalls, bird feeders, intricate and difficult to maintain landscaping... all features that appeal to older, retired folks who want a smaller house - NOT a larger one. For the square footage, the house might appeal to a large and growing family, but the yard does not.
- Price point: 1.5x to 2x the price of an "average detached house" for a particular county. This makes it tough for a Realtor to market, because it's not a true "custom luxury home" (for which there are advertising opportunities). It also makes it tough because there's competition among Realtors to get such listings - and a Seller can easily find a Realtor who will take such a listing at a cut-rate commission.
- Competition from New Construction. Wow. Builders love to craft "upscale" homes at this price point. Granite counter tops, stainless appliances, tile or slate entries, real marble fixtures, hardwood floors, custom cabinetry and millwork... you get the idea. Current, contemporary, and beautiful. And brand new, with a builder's warranty.
- New Construction with a View. Builders are not fools: they carefully choose construction lots with the idea of neighborhood prestige. A view is frequently the primary consideration. In our area, new construction at the TMS price point are either on a hill with a fabulous view, or are golf course lots. Sometimes waterfront or riverfront. But never just an ordinary lot in a nice neighborhood.
TMS. Yep - our potential listing falls into the TMS category for not one, but ALL of the above reasons.
What's a Seller to do with a TMS house?
Well there are a few things - and I'll share them here as I would with any Seller who is serious about selling a TMS property:
- Analyze the market, and make the price attractive. Go beyond the square footage and features. Look at what's on the market, and HOW LONG it's been on the market. Look at what's sold, and how long it took to sell. As a seller, are you really ready to carry the mortgage for 200+ days? (that's our average 'time on market' for a TMS house). For such a house, 200 days on market can be $20K to $50K in mortgage payments. Be aggressive, and lower the asking price by that amount at the start.
- Consider minor kitchen and bathroom remodel projects. $10K spent on kitchen granite counters and stainless appliances can make the difference between selling the house, and never selling it at all. And there's always an attraction to new appliances, that have a warranty. Likewise with custom bathroom stuff.
- Commission for Realtors. Houses that fall prey to TMS have a lot of competition. Don't be stingy with commission for your Realtors - either on the buyer or seller's sides. In our area, new-construction houses that fall in the TMS price range pay a FULL 4% COMMISSION TO A BUYER'S AGENT. You can't compete against that with a budget-conscious, cut-rate commission. Realize too that buyers for a TMS house are likely to be from out of your area. Realtors showing and selling your home will have to drive from out of the area to show the home, and coordinate showing times with out-of-area buyers. They will want to be PAID for that.
- Internet Marketing. If you're trying to sell a TMS house, pick a Realtor with a strong Internet presence. According to the NAR (National Association of Realtors), 79% of new home buyers BEGIN their house search on the Internet. That number is even higher for a TMS house. These buyers want a really nice, big house in a nice area. The Realtor you choose should have a Killer website, that explains the neighborhood, and is capable of explaining the value of your house with pictures, Virtual Tours, and more.
Whew! I've rambled a bit, but all of this is important information. Kellie and I have worked hard to create a website that can best flatter and market a TMS-category house/listing. But it still takes a thorough understanding on the part of the Seller to make it all work.
Comments(1)