Introduction to the SCIENCE of selling Real Estate.
People purchase Real Estate for very specific reasons. Safety, cash flow, appreciation, tax shelter, leverage, involvement, pride of ownership or even just because someone told them that they should. Buying into Real Estate is a discussion for another time but it is imperative that we understand that acquiring Real Estate is really the reason most people eventually sell it. True, it is a foregone conclusion that you need to have it to sell it, but that is not always the case.
Obviously I am not suggesting that someone try to sell something that they have no rights to, that is illegal and immoral, but it does happen. For an insight into Real Estate scams search the internet for how many times the Eiffel Tower or other major landmarks have been sold. This is one reason it is important to protect yourself from fraud when making major purchases, and it makes a good case for working with true Real Estate professionals.
For instance, a person may inherit Real Estate or they may be a beneficiary of a trust and have control of holdings. It is possible to purchase or negotiate an option on Real Estate that allows the option holder to “sell” the property to another investor. This is not a dissertation on the many ways Real Estate can be transacted, it is instead stating that if someone is legally selling a piece of property they will have some claim to it. But the meaning of owning Real Estate goes deeper than that. Owning suggests that in the past someone earned the right to control and therefore benefit from the ownership of the property, if it has been correctly managed.
You may wonder why we are going to such lengths to explain this. The answer is simple, owning a property does not mean that you have the right to financial gain.
Real Estate may be an asset or it may be a liability. How well the property is managed is usually a major determining factor of whether it is an asset or liability. Meaning- if someone has mismanaged a property the asset may be worthless. For someone to think that because they or someone else paid a specific amount for the property and so it should be worth at least X amount is a mistake. In short, if you own an asset it must be properly cared for to remain valuable.
Now that we have established that, on to selling Real Estate.
Let us assume that you own or control a well managed Real Estate asset. It has served the purpose it was acquired for and now you want to trade it in (that is essentially what you are doing) and utilize the value for another purpose. Oh, how many questions there are:
Should you dress it up (like on all those television shows) or sell it as is?
How much should you sell it for?
How much more could you sell it for if you dressed it up?
What will you do with the money that you make?
How is the market?
Will you be able to sell this property and buy what you want? You know, the new neighbors just spent way more then we paid.
Can we get that much for our place? Holy Cow! If this property is worth that much how much is a better place gonna cost me?
Should I look into buying a foreclosure or a fixer upper?
Would remodeling the kitchen and the bathroom make me a lot more money?
And the list goes on…
Whoa there! Slow down. Why don’t we take a minute and look at this from a SCIENTIFIC point of view. Are you familiar with the scientific method? OK, let me give you an informal refresher on a very basic level of how a person can utilize the scientific method:
- Make an observation
- Ask a question
- Form a hypothesis
- Conduct an experiment
- Analyze the data to see if the hypothesis was correct. Then you either make a conclusion or go back and try again.
So let us utilize the scientific method in relation to selling Real Estate. Being good students, we obviously want to start at the beginning, so we go to the first step.
Step #1- Make an observation.
Utilizing this step first will save you loads of problems later on. What do we mean by that? DO NOT start by asking the question (step #2) first. Oh don’t get me wrong, We Realtors LOVE it when you start asking if you should sell. After all, that is how we get paid so if you want to sell, let us help you! If, however, you want to follow the scientific method, make the observation first. Figure out why you would want to sell before you ask if you should. Why is this so important? Because if you jump on our website, www.MartyLoveday.com or walk into one of our offices and already know what your end goal is, we can help you make the process much less complicated. More on this later.
Step #2- Ask a question.
Having made the observation already, you have eliminated most of the questions that we looked at earlier in the post because those questions are no longer factors in the decision making process. So now when you sit down and ask us how much we think your property is worth and can we sell it, our honest answers will help you go straight to the next step.
Step #3- Form a hypothesis.
You know what you want and you know what you have, now how can you make it work? This is where your utilization of a professional system makes a huge impact. Your interaction with a Tax Advisor, Financial Professional and Realtor will clarify what options you have available. The key here is that if you utilize these professionals their input will greatly reduce your risk moving forward to step #4.
Step #4- Conduct an experiment.
This can range anywhere from testing a selling price to completing several transactions. It all depends on what your step #1 is. This is where marketing plans, networks, experience and expertise all come together. This is why you took the time to figure out what you wanted first and then utilized a team of professionals to help you. This is how you become successful by creating a system that works, again and again and keeps working for you.
Step #5- Analyze the data to see if the hypothesis was correct.
Did it work? Was it worth it? Would you do it again? Well, now you either need to make a conclusion or another hypothesis. What did you learn? What would you try next time? What will you do different in the future? How will you proceed in the future? That takes you back to step #1 and the system begins again.
Voila! That is it!
Or is it?
If this sounds like it seems too technical, do not stop reading yet. Many good, honest, hard working people will read the first section of this article and dismiss it as too much to bother with. Oh, I beg you, If this is how you are thinking, please read on. We can make you feel confident and comfortable about selling your property and we do this by utilizing a simple and powerful decision making paradigm.
After making way too many mistakes in my life, it became evident that building a decision making process was needed. This process was developed as a very simple to follow formula and will work in a multitude of applications. So, when decisions need to be made you may want to follow this course:
- Know the rules- this is the Complicated part because it takes research and lots of brain work up front.
- Follow the rules- this is the Character part because it takes oodles of self restraint and determination.
- Read the signs- this is the Clarity part because if you pay attention there will be signs to guide you even though you cannot see why yet.
To give you a picture of how this works let us look at a baseball or softball player. Take the example of a player which is already on base, they need to know before the ball is hit what they are going to do next. This knowledge came from past experience, coaching, research, etcetera; that is knowing the rules (and hopefully the Baserunner continues to learn daily). When a Batter hits the ball, the Baserunner takes the correct path to the next base touching it before advancing; this is following the rules. Let us say that the Runner is standing on second base and when the ball is hit fairly they run to third. As the Baserunner approaches third their eyes are on the third base coach. Why? Because the Coach can see the field and will give the runner signs to hold up, slide or wave them on to home. All the runner has to do is read the signs.
We can help you know the rules by getting what you want defined up front. We have systems that will help you follow the rules by keeping you on track and we can help by coaching you and helping you see the signs.
If we refer back to the scientific method above, Look at step #1; but instead of saying make an observation. Let us replace that with, Tell me what your needs are and why? If you will remember, earlier we said that completing this step first and knowing what your end goal is will make the process much easier.
Why is that? At this writing there are 1,291 Active Residential properties for sale on one of our MLS providers, that does not include commercial, lots and land, multi family, and so on, and that number is lower than normal. Do you have any idea how many transaction possibilities there are! So if we can find out what you need and why, it will make finding what you are looking for much quicker because it cuts out so much of the unnecessary work and wasted time. If you want to be successful you need to be organized and efficient. We have created systems that can help but those systems cannot overcome miscommunication and indecision.
On top of this, many people do not understand what a Realtor actually is, how to utilize them and they do not understand how to choose the correct one for their needs (because they do not know what their needs are!) If you see your Realtor as a commodity, someone with no discernible difference from another; they are simply a service provider to fill out paperwork. Then you should hire a secretary, they are much cheaper! You are INVESTING thousands of dollars, you need professional insight, guidance and experience. (for more on this topic read the article we have on What Is A Realtor Good For.)
Back to the point.
What are your needs and why? They need to be CLEARLY stated in written form that way we can refer back to them. This is a major part of knowing what your rules are. If your goal is to sell your home quickly, we will approach the transaction differently than if you are selling a commercial or investment property purely for gain. This is where we can really help you hash out what your needs are. We have a Needs List that we can help you fill out so that you can understand and evaluate where you stand and what is most important to you. Set up a consultation today to start working on being successful in Real Estate!
Following our line of thinking to simplify and consolidate our above mentioned Scientific Method; Really once you have written down and clearly stated what your needs are and why, all that is left is to follow the decision making paradigm. You already know the rules because you have them written down, now you just follow them and read the signs!
Yes, it really can be that simple.
My suggestion, If you want to play to win, find some great Coaches that can teach you the rules, be strict in the enforcement of those rules and then you can trust them when they help you with reading the signs. So, if you need to sell your property, We suggest that you find some great Coaches to help you… and we know where some are.
Contact us today!
John D. Suttles, Owner of Cardinal Custom Lawn Property Maintenance
Marty Loveday and Associates Realtors, 130 Maryville Hwy. Seymour, TN- John@martyloveday.com Cell: 865-724-8402 Office: 865-573-9444
If you are reading this article you may be interested in help with Operation, Management or Maintenance of your properties. For more information download the free 10 page book, The Top Ten Drawbacks to Cabin Ownership and How to Deal With Them, from www.TheCabinOwnersManual.com or purchase the Manual for the current low price of only $10!
About the Author:
John operates Cardinal Custom Lawn Property Maintenance, www.CardinalCustomLawn.com, which maintains Mountain properties inside and out. He serves as a Realtor with Marty Loveday and Associates, www.MartyLoveday.com/John-Suttles/ where he uses his knowledge to assist those in the Cabin Industry (He is constantly looking for qualified listings to take to market) and he authored, The Smoky Mtn. Cabin Owner’s Manual, www.TheCabinOwnersManual.com where he offers his experience in Cabin rentals, maintenance and market to those who want to be successful in the Cabin Industry.
John is a recognized and highly respected author, educator, and businessman with a reputation for helping individuals and organizations create helpful and sustainable results.