Kiss of Death when Selling a House

you're about to discover the kiss of death when sign a house hi I'm Phil pusta offski with freedom mentor calm I'm a full time real estate investor I'm a real estate coach and mentor to some of the most productive and successful real estate investors in North America and in this video I want to share with you a very important part of the process of selling a house something that so many people make a mistake on it's extremely costly on one property on one one it could cost you tens of thousands of dollars and if you're a real estate investor and you do several deals it could cost you even more perhaps hundreds of thousands of dollars over the course of a career and you're also going to discover in this particular video I'm particularly biased opinionated and passionate because it's decisions like this that have made my financial future but it also could have broken it because my my livelihood is based on the idea that I am going to make money on my real estate transactions as well as now that I mentor and coach my apprentices when I split the profits with them those deals have to close so I literally you know I've had to in the real world experience this lesson to be able to share with you so I hope that this is going to save you money reduce headaches and heartaches when you sell a house whether you're just a homeowner or you're a real estate investor okay so that further adue what is this kiss of death what is it that can cost you tens of thousands of dollars that's too many people overlook it's this it's sitting a property on the market for extended period of time for an extended period of time that's it that is the kiss of death now in the vernacular of a real estate MLS listing it would be called days on market or the short version of that is d om okay so I'm going to take you inside this a little bit rather than just telling you what time it is I'm going to show you how to build a watch here and I think it's critical because this is such an important lesson and I would argue that many of you will get done watching this video you will think it's terrifically helpful you may even share with friends and family but then in the real world you may go out and still not apply this so I want to drive this home because it's so so important all right days on market by the way I'm going to assume for this video that you probably watch a few of my other videos such as how to sell any house quickly another one called the biggest house flipping mistake and so um this one here when I say on the market this refers to whether you're on the MLS or even if you're an investor trying to flip it to another investor and it never gets on the MLS the idea is that you have the property for sale or on the market alright here's what happens the more that this number goes up so it goes from seven days to twenty-one days to 60 days to 90 days the less desirable so I'm gonna call the desirability goes down it goes down now here's the psychological reason for that human beings are hard-wired for certain it's it's very interesting Robert sealed Dini he wrote the book the psychology of persuasion he identified a few of these one of them being social proof social proof have you looked at an article in seeing 1,400 comments you know a thousand Facebook Likes and in all sorts of other social shares and you thought to yourself hmm this must be an interesting article look how many people have read it look how many people are commenting on this article that's called social proof a simpler example is if you're walking through a city and someone goes like this and looks up at the sky and then some other people look up you can't help but look up see what's going on right social proof we are hardwired to follow the crowd so social proof can work in Reverse as it pertains to selling a house and that is as the days on market goes up what ends up happening is the question becomes to it to a prospective buyer is they're going to ask their buyers real estate agent how long has this been on the market if the agent says that's been on the market for a for 120 days what's that by our going to think to themselves what's going on social proof rumors are in Reverse isn't it why has nobody else bought this property what what's going on and this is another part of it too so it creates kind of a domino effect because not only does it look poorly upon the house that there's been a liar days on market but also people are predispositioned to do more to avoid pain than to gain pleasure we can thank Tony Robbins for discovering that and what that means is in the housing world when you're trying to sell one that they might be concerned that they're walking into a money pit or they're going to get screwed or in some way they're going to miss something so they're more scared of making a bad decision then making the good decision to move into that home which could be a wonderful home great backyard the two-car garage it may have everything they want but the days on market is up there and that's lingering in the back of their minds does like sense and if it doesn't make a lot of logical sense it makes sense in the real role look I've dealt with this I've been a part of over a thousand transactions in fact I've been using that statistic for a while so maybe it's up to 2000 this point I have recalculated in a while but this right here is something I am so sensitive to either in my own deals or also in the deals that I work on with my apprentices I mean I will ruminate on the decision of how I avoid this and that's one want to talk about here in a moment for sometimes up to a week because once that days on market starts to tick up that is a real problem and for those of you who may be thinking well how do I you know avoid this no I'm going to go through some important steps on how you do that real quickly though the way these MLS systems work especially is that even if you try to maybe take it off the market and put it back on to kind of reset this this ticker nowadays they have what's called a C do em combined days on market so a lot of MLS's are cracking down or what we used to do as if it didn't sell for a while we take it off and put it back on and now they're stopping us from doing that so there you go all right so how is this happening what causes this on the market for an extended period of time what causes this this days on market okay here we go the first one is priced too high priced too high if you see a property on the MLS for six months for four even let you know even 120 days I can assure you I can guarantee you the reason why it hasn't sold maybe it's because of the paint color maybe it's because of the garage maybe it's because of the driveways too steep you know what the answer is it's priced too high because if the prices drop low enough people will overlook those blemishes and if you don't believe me you can even see in places like Detroit they sell houses for a dollar I mean if you tried to sell your home tomorrow for a dollar would it sell yes it would so it's ultimately a price too high issue if it doesn't sell so what often times people do and I am going to beg that you don't do this so listen carefully they think to themselves the following logic I'll start hi see if anybody makes an offer and then I'll drop the price I'm here to tell you that this right here is a terrible strategy and if you've gotten away with it before that's even worse because now it's training you that you can do it again do not do that terrible idea here's one when you start high what that means is you ultimately run the risk of no one making an offer and if no one makes an offer the days on market I'm going to go back to this do am the do M goes up and the longer it goes up the more difficult it is for you to reverse the problem because even if you drop the price the problem is that's still there days on market it still shows 90 why hasn't anybody bought it if so this doesn't go away and here's the other problem and I want you to be very critical of this the first week or two is the most powerful part of the listing that's when you're trying to sell a property whether it's flipping it to other investors whether it's a retail home that you've lived in for twenty years when you're trying to sell that house that first two weeks that's the big zone right there it's because the house is the new kid on the block so there's no reason to think there's anything wrong with it because it haven't been on the market very long so this first two weeks is critical this is where the houses get sold the majority of properties that I sell or my apprentices sell that I'm a part of transactionally we sell them in the first two weeks why because we start low we start low you start the listing where it needs to go out at where you want to sell it at if you start high you run this risk if you start low you know what if you start at too low well guess what you'll get a multiple offer situation in the market we'll bring it back up in most cases so typically you can't start too low but you can definitely start too high some other things when you put a property in the MLS it's going to propagate to places like Trulia Zillow hot pads and all those other places on the web and people look at those places but there it's going to get it's going to get distributed at what you price that to begin with what did you begin that they offer yet well if you started high even if you drop the price it doesn't mean the MLS is going to update Zillow or Trulia it may not so you start at the price you need to start at so you can sell I'd like I said earlier I will spend a lot of time ruminating over this subject right here I will spend a lot of time trying to figure out what this thing should be listed at because it makes such a big difference now that's not something I can share in this video this is too complicated but you know you can take into account the appraisals you're going to take into account the closed comps gotta take into account the after there's so many different variables you're gonna study this stuff we have spent a lot of time with my apprentices and my coaches too just working with this particular piece because it's so important what does it need to be priced at you know where does it need to start out all right so I've got a ton of stories on this I just do a quick one here on this this I'm so someone I know put the property of per sale and they had it priced a little bit too high and the person actually had contacted me to ask me what I thought oh no not one of my students just somebody an acquaintance of mine and I told my said look you need to you need to drop the price and just get this thing sold he goes yeah but I don't want to give it away you know Phil I don't want to take a bath on this and I said you're not know that this is how real estate works you have to build in a little bit of a factor of margin for the fact that you have to give the buyer what the buyer feels as a deal I mean that's part of this I mean you mean I'm not changing the entire marketplace here I'm not asking you to sell you know 7,000 below-market but you know for your one house or your one house per month kind of numbers you know you sell it just a little bit below everybody else you'll sell it faster so I'll tell him this and he's like yeah how do we want to do this long story short this was right at the top of the market the market collapsed as we know this is several years ago he he made empty house payments on that house for five years on a four hundred thousand dollar loan five years of empty house payments on a four hundred thousand dollar loan the market eventually came back nice open being much money he lost he actually had to sell for less of that five years later you know that is so common I can't tell you how often people start high then they drop the price and then they still don't sell and then meanwhile there they have the holding cost the utilities the monthly payments could be the headaches and heartaches because maybe you have to move or something and so you've got to price it right right out of the gate so if you have a real estate agent telling you you know hey we've got plenty of time let's start high and we'll get low that is kiss of death sitting that thing on the market is a terrible idea so that person did eventually sell their house but unfortunately they probably haven't calculated I don't know maybe they lost fifty thousand dollars it was huge number so they didn't want to do a short sale that's why they didn't they didn't just you know turn it loose and give the keys back to the bank cuz they wanted to keep their credit good so um you start low or you start at least at the price you want to get rid of the property yet that makes sense okay great all right so um now what I'm about to share with you I'm also just so passionate about and I can't wait to share it with you because I think it's going to be a game-changer especially if you're a real estate investor alright so assuming you have it priced correctly it is certainly possible that somebody's going to come along make an offer and it's going to be lower than even the low price you had it listed at okay this is something I want you to write down on your put on your office wall I want you to have this everywhere right on the tablet of your heart so you never forget what I'm about to share with you okay here it is your first offer or offer is the person who makes the offer is usually your best your first offer is usually your best I don't know completely why this is the case but I can prove to you over years and years and years of doing this that are almost always almost without exception is the rule the only big exception to this rule is going to be what I share with you in that video biggest house flipping mistake which is where I talk about if you don't get non-refundable earnest money if you don't verify the person can get a loan so again assuming the offer has the ability to buy the property they financially can do it they're usually your best best one to work with now I did notice I didn't say offer I didn't say the first offer they make I said the first person that makes an offer because you may have to do a little bit of countering back and forth maybe the price has to go up a little bit because usually the first offer they make is usually a little bit lower than what they're willing to go with or maybe you need to adjust the terms such as getting non-refundable earnest money if you're doing a flip maybe you want them to close with your title company so there's certain things you may want to massage with the offer but you want to work with the first offer all right so many stories on this foot so an acquaintance of mine again um they they had bought this property when the market was was actually booming and what they did was they they bought it from a builder who just need to get it off his inventory because he had gotten like it I think was like an eighty thousand dollar deposit to buy fur to build a custom home the custom home got built and then the buyers backed out and lost their eighty thousand so the Builder was willing to kind of get rid of it on him on a dime sell a lot cheaper so so that's my quaintest for it was like 205 plus closing cost call it 210 all right now when they looked at the comparable sales and they did other statistics and they got an appraisal they thought it could definitely sell for 280 so they get it on the market their first offer comes by with an offer all cash two-fifty what do you do this came in within one day I'll tell you what they did they thought to themselves she eat we got an all-cash offer of 250 on the first day boy if we leave this out here quite a while wait it out and probably get a lot more some of you have made that decision in your mind before haven't you long story short they turned this offer or down because he would not go above 250 he was a legitimate bona fide buyer because he's paying all cash so they turned him away they sold the home for 180 in the end true story and I know these people they're very good people they made a big big mistake don't make that mistake I have a filler example where someone that I know had put a property on the market for 200 because that he thought the comps supported that he didn't do his comps research as well as he probably should have but either way put on the market for 2 200 and he dropped it to 180 pretty quickly and he got an offer at 154 and he thought that's way too low well as of the video being shot he has it listed at 150 right now and doesn't have an offer again your first offer is usually your best why well I think again I don't have all the reasons but I'll say this number one there you have to remember that there are some people that are waiting for a certain property to come on the market so they have like a little mechanism set up with their real estate agent that when something hits their parameters they get an email of it so often like the house I just sold about just a few weeks ago they were waiting for a home in that subdivision as soon as it came up boom they made the offer what did I do I said yes I didn't wait I said yes you know and so some people are just sitting there waiting for a property hit the market that fits the parameters that when you're trying to sell so that's one of the reasons why your first offer is your best one and the other reason is as the days on market go up it becomes less and less desirable that's that kiss of death we're talking about so your first offer is usually your best one if you stick to this rule you will be so much wealthier as a real estate investor and as a homeowner you will be able to move on does it mean you may walk away from some profits it sure does that is absolutely possible but your bigger risk is a higher days on market than it is that somehow your first offer was such a lowball offer and again it that could be the case too and so this goes into the again going back to that video your biggest house flipping mistake you have to verify that this offer is for real I mean some people will make an all-cash offer because it's all the money they got so then you can decide do you want to do like a maybe a first mortgage seller held you know piece of the puzzle so maybe they bring 250 cash and then you carry back 30,000 the buyer may not agree to that but the point is work with your first offer treat them like they are royalty this may be the only offer you get so many times I've seen this happen it is so common so stick with this underline this write this down your office do what you got to do not to forget this but like I said earlier in the video it is entirely possible that you can hear what I'm saying shake your head and say you know feel while this is fantastic I'm so glad you shared this with me and then you go out in the real world and then you fall prey to this it means that you can't be greedy you've got to remove greed from the equation okay when you get that first offer work with them assuming they're bona fide you know what if they make a lowball offer ask them to support it ask them to tell you why the but the number was what it was they may teach you something you may have not evaluated the property as well as you should have you may not know the rest of the market as well as they do because they've been looking so they see everybody goes on the market you may have missed some things it also means you need to spend a lot of time ruminating over what your opening price needs to be and if you're not a licensed real estate agent or you don't have access to the MLS through a licensed real estate agent that puts you in a huge disadvantage so if you're a homeowner watching this I do have great video called MLS access for investors maybe one check that out to figure out how you can get access to the real deal comps so you can do your own analysis look I'm not going to say anything negative about all the real estate agents out there they're working hard to help their clients but I will say this they have a different motivation somewhat than you do so a listing agent is going to get 3% and if it sells in the first week or not they're going to be ok so if it takes three months in the days on market go up and you have to drop the price consider be lower than you should have to create the desirability then they don't lose all that much because 3% of of a hundred thousand is three thousand three percent of ninety thousand it looks a little bit less but not a whole lot less and again I'm not saying negative out real estate agents I'm just telling you human psychology you as the real estate owner you have to help make a very informed decision here and that also means and I'm going to start with the agents here many agents understand this rule and so sometimes they try to convince their clients say yes say yes and the client goes well you don't care you're just an agent you know it's me that's losing the thirty thousand dollars as opposed to selling it for 280 I'm trying to sell this thing for 250 but the agent might be telling you absolute wisdom your first offer is usually your best if it's a little bit low you can try to you know counteroffer with them you can also ask them to prove but these these lessons right here I really hope this is going to make a huge impact on your bottom line and if you want to learn more about what we are and what we do you can go to freedom mentor comm you can check out more videos here on this YouTube channel you could actually grab my book how to be a real estate investor you may want to apply for my apprentice program and and for those of you who just loved this video and maybe you're a homeowner not really an investor share with some friends and family I mean this is the kind of wisdom we all need to have and now this benefits everybody because the buyer gets a good deal everybody wins here and nobody gets this dread kiss of death of too many days on market are long Phil avianna thank you so much for watching this video and if you have any comments questions concerns about what I shared here just in general on real estate feel free to make comments below I try to carve out some time my schedule they answer those all right thanks watch and I'll see on the next video

Channel: Phil Pustejovsky

Views: 251,420

Keywords: Selling a House, Sell House, Phil Pustejovsky, Freedom Mentor, Sell House Fast

Id: c5Lk0FNKRg8

Length: 23min 27sec (1407 seconds)

Published: Fri Aug 15 2014