A Home Inspector’s Weblog by Frank Schulte-Ladbeck

exploring homes and the lives in them around Houston

Decisions (Part 3)- The Business of Marketing

Congratulations! You have gone into business. You have placed a product onto the market to compete with other models. How will your new product fair? What? You did not know you were in business? Did you not just put your home up for sale? Maybe this is not the best way to consider having your home on the market, but it is a reality.

I have that more home sellers are knowledgeable about how to prepare their homes for sale. A small part of my business has been doing inspections for sellers. They want everything ready for a smooth sale. I know of one inspector who has made sellers his primary focus. With news reports highlighting problems for sellers, I have been receiving more calls from sellers, and I noticed that my posts on homestaging have been my most viewed. I have pointed out before that buying a home is emotional, so the idea of being in business is not totally apt. I started with this phrasing, because marketing plays a major part in the consumer finding and choosing your home.

Part of what a Realtor does for you when selling a home is marketing. She will be handling quite a few things to promote your home. Realtors wear many hats when working with you, and marketing is a major part of their job, in my opinion. Realtors will use the internet, newspapers, magazines, signs, open houses, and the multiple listing service (MLS). There has been some debate about the MLS in the past year, so here is a description of what it is. A Realtor will create a profile of your home that can contain all of the information that they obtain from you. This is an internal document for their firm. Since firms have realized that sharing this information with each other is a benefit to their agents, they created a service where all of these documents are gathered. If you go to Realtor A from firm X to buy a home in a certain neighborhood, Realtor A will go through the MLS to see what is available to find a listing from Realtor B with firm Y. The MLS is usually administered by the local Realtor Association. Why the debate? Some people feel that this information from an internal document should be made public. I do not want to weigh in on the debate in this post, but I do feel that private company information may not always be appropriate for the entire public’s view. The Houston Association of Relators has found a good middle ground I think. A consumer can go through a basic version of the MLS, obtaining a great deal of information for their needs. Other pieces of data are only viewable by other Realtors. In all, the MLS becomes the most powerful marketing tool a Realtor has. The internet has not become a major force in home sales, but it is starting to make in-roads. Blogs and websites dedicated to a certain property now exist. Realtors and firms now list properties on their sites. However, most people still look for homes by driving around an area. Newspapers have been a traditional location, but this is second to the driving around method. Magazines focused on home sales appear to market a Realtor more than a home. These are found in grocery stores in the free publication rack. Many people call Realtors after seeing their name on a For Sale sign, leading a Realtor to work with them on finding a home. The open house has been a traditional part of marketing homes, and it has been a proven means of pulling buyers into your house.

Comparing these marketing tools to those in the possession of a homeowner going it alone, you will find that many of the marketing strategies can be undertaken by seller. The most important tool is the business to business marketing that the MLS provides Realtors, and this method is not open to individual sellers. Lets look at the two homes that are attempting to be sold without a Realtor (the home using the Realtor has used all of the above- I checked). Finding the product is a first step in marketing.

The homeowner using an assistance agency has had better luck than the seller not using an agency. I found both homes on walks, but they are both located on fairly busy streets in their neighborhoods. Other homes being sold by owners have to rely on a buyer coming onto their street. The sign from the assistance agency catches my eye more than the little sign used by the other owner. When it comes to the internet, ForSaleByOwner.com does list their homes for sale in a manner that reminds me of a sheet from the MLS. I guess that if I am a motivated buyer who wants to avoid a Realtor, I would look at this site. From surveying some acquantices, I find that only those with some computer savvy will check out these sites. ForSaleByOwner.com uses a magazine to help market houses. Here is some math: the smallest ad at the best rate is around $500 for an placement in the magazine until the house is sold. The typical ad size in the magazine goes for around $800 till the unit is sold. A package to give you access to all the marketing materials that you will need is around $1500. (All price estimates are based on what is posted in the magazine for Houston). This top package does involve listing your property on the MLS for six months. In fact, all of the basic packages listing till sold can be upgraded to have your home listed on the MLS for six months for an additional $200. Since this magazine is for the Houston market, lets take the time spent on market for a home in Houston as a guide to having your house marketed by this agency to determine the cost of your marketing. The average time spent is currently seven months, so the six months in their package is pretty good, but I cannot find an offer to extend the MLS listing. You would have to buy another package it seems. The cheapest for another six months on the MLS would be around $600. This means marketing costs could be around $2100. Comparing this to the commission on a $140,000 home, which is just about average in Houston, a Realtor could expect around $4200 at best. By using ForSaleByOwner.com you have lowered your costs dramatically.

To quickly mention the home where the seller is not using an assistance agency, I searched the various advertising venues for his house, and I could not find it listed anywhere. Maybe at one time it was, but my impression is that the owner lacks guidance, so the house will stay on the market for some time. He has recently picked up the yard for a better presentation, which is part of marketing.

If your goal is simply to save money, the assistance agency has a good deal for you. I looked at some other homes where the owners are going it totally alone, and I found mixed results. You may be able to accomplish many marketing aspects on your own, but it takes work. If you are not using a Realtor or an assistance agency, be prepared to make selling your home a second job. As for going between a Realtor and the assistance agency, I am on the fence. A Realtor offers more than marketing, and a good Realtor can save you time, which you can use for other activities, and assistance with other details. You do have to pay for their service, and they can provide a lot of services. If you truly want to save money, and you are willing to do some work and research, using an assistance agency can be for you. No matter your means of selling your home, you do need to be involved, so the decision is partly based on how much are you willing to do to sell your home. I do not have a statistic on this fact, but I do not see sellers becoming involved enough on a consistent basis to use an assistance agency effectively. After seven or ten months, will you keep up your marketing? This is where the real value of the Realtor comes into play.

On the home using ForSaleByOwner.com, the seller has done an open house as well as the complete marketing package, so it is listed on the MLS. To judge well, I will have to see how the house fairs in the market over several months. At this point I am leaning towards a Realtor for most sellers, but I can see the value in an agency which assists you in a sale. In the next post, I will write about what is offered by these assist to sell agencies. I would like to attend one of their meetings to analyze the advice, so maybe the next post on this topic will be some time in coming. To complete this evaluation, we will have to wait and see when these homes sell, and that might not be till next year.

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