Say little as possible when anyone but your agent is present.

Yesterday’s Chicago Tribune had one of the best real estate articles for both home buyers and home sellers. Titled, “Loose lips might sink deals“, the article gave examples of how talking too much can cost you when it comes time to negotiate a real estate purchase or sale.

The Tribune article also pointed out how easy it is to end up sharing information that the other side will use to their negotiating advantage. Think you’re too business savvy to make such a mistake? I’ve had business owners and corporate presidents as buyer clients who didn’t have loose lips, but they didn’t have to say that they loved a home. Their non-verbals said it all and right in front of the listing agents!

You don’t just have to be careful when the other agent is present. While vacating the home for the showing the seller could be visiting a neighbor next door and able to hear what you say in the back yard or out on a balcony. The cab driver taking you to your next showing could be friends with the door staff in the building you just visited and happy to share your comments in the cab with the door staff who will be more than happy to pass them on to the seller. Some of my clients had lunch one day in a restaurant next to a new development I had shown them. They heard other buyers loudly blabbing away about their purchase in the same building.

Years ago buyers viewed one of my listings with their buyer agent. I wasn’t present, but the owner’s cousin was. She overheard the buyers talking with their agent about how much they liked the home. So when the initial offer arrived I advised my client not to budge on the price. She held firm and got full price.

This past week I’ve been busy with sellers. The critical topic is always pricing. In this competitive market, no amount of marketing or home staging will sell a home, if it’s overpriced.

Chicago Average Home Sale Prices as a % of Original List Prices - No Price Cuts vs. 1 or More Price Cuts

Above is a chart showing monthly average home sale prices as a percent of original list price for both homes that didn’t need a price cut (dark blue) and those that had 1 or more price cuts (light blue). The data is for all listed homes sold in Chicago including houses, condos, townhouses and co-ops.

On average over the past year, those homes that didn’t need a price cut to sell sold for 95.9% of original list price. The homes that had 1 or more price cuts sold for only 83.8% of original list price.

Lisa Lynch

Michael M. wrote me last week, “I was just wondering, is it possible to over stage a place, or go too far with the decluttering?” Yes and maybe.

According to Stager Invasion’s Lisa Lynch, a home can be over staged when there’s something in every space. Check out her video on over staging. What Lisa refers to as over staging is in my opinion an example of over decorating.

Another example of over staging via over decorating is decorating a home for sale in a style that is inappropriate for the home. An example would be decorating a bungalow as if it were a mansion. It’s not what buyers are expecting and would distract them from the home itself.

Over staging via over decluttering is another matter. The ultimate example of over decluttering would be vacating a home for sale. I don’t think that this is always bad. A vacant home may appear less homey, but it may be easier for buyers to visualize it as theirs or visualize changes they might like to make. I think it depends on the home. An example of going too far with decluttering that I think hurts a home’s appeal is emptying some rooms, but not others. It creates confusion as to whether someone is living there or not and disrupts the flow of the home as buyers walk through it.

Advertising for FHA Approved Condos

The purchase of a Rogers Park condo advertised as FHA Approved (not the condos shown left) by my buyer, Art, hit a bit of a snag last week. His mortgage banker, Michael Poland with Baird & Warner Financial Services, discovered that the condo development where Art was buying hadn’t been recertified for FHA approval. Michael immediately offered to help the condo association with the recertification to keep the sale together.

It will probably all work out, but unfortunately there’s been added stress for Art who still doesn’t know for sure that he’ll get financing to purchase his first home. It’s also been a lesson for me not to assume that condos advertised as FHA Approved are indeed currently FHA Approved.

It used to be that once a condo was FHA Approved it remained FHA Approved. That recently changed and now condo associations must be recertified every 2 years.

FHA spot approvals for individual condos have also gone away, but I still see them in condo listings. Some condo owners selling for sale by owner aren’t aware of the FHA rule changes.

For more details on FHA condo approval requirements read the Chicago Tribune’s, “The ABC’s of FHA condo requirements“.

Last week a seller wanted to talk with me about taking over the listing for her 5 bedroom house in Irving Park. It’s been on the market a while and she’s looking for a Realtor to do better marketing. It’s a beautiful house and I could see numerous ways of improving the marketing, but I politely declined to meet with her. Her current asking price is well above what buyers will pay and banks will finance in her neighborhood. No amount of marketing can sell a home that is significantly overpriced.

Shown below is the price distribution of Irving Park houses with 5 bedrooms or more currently on market (red) vs. those that sold in the past year (green). There are 27 such houses for sale while only 24 sold in all of the past year. This is not a market where sellers can push their luck.

Price distribution of Irving Park houses with 5+ bedrooms that sold in the past year (green) vs. are currently for sale (red)

I showed several houses in Naperville on Tuesday evening. My buyers quickly ruled out the first home which as shown left clearly wasn’t ready for market. Not only did it not show well, the drying paint fumes were horrible!

Can you imagine car dealers selling cars that smell like exhaust fumes inside?

A fresh coat of paint is great, but don’t make buyers endure the odor while it’s drying!

Home sellers in the starter home price range are enjoying a brief sellers market as first time home buyers who waited until the last minute to make offers on homes now find themselves bidding against other first time home buyers who also waited thinking home prices would continue to decline.

First time home buyers must close their home purchases by November 30th to qualify for the $8K first time home buyer tax credit.

The week before last one of my listings received 4 offers. Even after the contract was signed, yet another buyer insisted on seeing the home so he could make a backup offer in case the sale didn’t go through. Yesterday another listing received 2 offers. In both cases my sellers asked the buyers to present their highest and best offers which dramatically increased the offers. One woman increased her initial “firm” offer by $30K on a home priced less than $200K!