Introducing our newest member, Kurt Killingsworth to the Langston Plummer Group!

Our beautiful Springfield is growing and so are we!

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The real estate market is ever changing. Much like the chaos of the sea, it experiences waves of highs and lows. No matter which direction it may turn, the key goal as the captains of this ship is to keep you and your investment afloat. Buying or selling your home is one of the largest transaction most experience in their life. Rarely do people trust an investment of this size to someone without careful consideration and thoughtful due diligence. At the Langston Plummer Group, we have sailed the sea’s of change, adapted to the ever-changing world of marketing and technology, and found ourselves with a proven strategy to ensure your most trusted assets are in the hands of a team who will deliver as promised.

How have we done this?

Attention to detail. For us to effectively service every client we interact with and give them the time and attention they deserve, we’ve added to our number and became three. We believe every client, whether investing large or small, should spend the time needed with their Realtor to make a wise choice. At the Langston Plummer Group, when you hire one of us, you’ve hired all of us.

Though one may be overpowered,
two can defend themselves.
A cord of three strands is not quickly broken.
— Ecclesiastes 4:12
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KURT KILLINGSWORTH, REALTOR

I am a proud Springfieldian, raised in a little town to the northwest called Walnut Grove. I practically have cashew chicken and Andy's frozen custard running through my veins!

I come from a deep-rooted family, rich in tradition and core beliefs. I was raised to see the value in hard work and to always treat people with integrity.

My number one goal when representing my clients is to see their goals achieved above all else. I bring with me over 10 years of sales and negotiation experience that I put to work on behalf of all my clients. If you or anyone you know is in the market to buy or sell a property, I would be honored to meet with you!

A New Adventure

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We here at the Langston Keil Group have some massive changes! We’ve been truly blessed and have some wonderful achievements to celebrate! Within the past couple of months, our amazing brokers at Murney - in recognition of our growth - have provided an office for us! So, we’ve moved out of the main Murney building to another location nearby. We’ve worked really hard, and have our amazing clients, friends, and family to thank for utilizing our Real Estate services, and for all of your love and support!

In the midst of all of these exciting changes, there is one even greater change that is certainly to be celebrated, but is tempered with a bittersweet departure. Langston Keil Group Partner, Joseph Keil is moving on from Real Estate to the next chapter of his life - he has decided to enlist in the United States Army. We’re incredibly proud, yet, obviously, sorry to see him go. Here’s a letter from Joe explaining his exciting new adventure.

 

To my dear clients, colleagues, friends, and family,

It is with a mix of joy, sorrow, and excitement that I announce I will no longer be active as a real estate agent. First, I would like to thank all of you for your love, support, and faith in me as I struggled to build a business and make a living in an ultra-competitive field. I owe a special debt of gratitude to Dustin Langston for partnering with me in forming the Langston Keil Group. Dustin, we’ve done well for ourselves, and we’ve had a heck of a lot of fun doing it. Proud of you buddy.

When I entered real estate, I was told it was a cutthroat industry, and that I ought to watch my back. I came to realize that, yes, it is an incredibly difficult and competitive business, but those people who warned me of the ruthlessness of the business were simply looking to blame others for their inability to take ownership of their shortcomings. The reality is that the Realtor community is made up of some of the most generous, kind, and hard-working people I’ve ever met. Especially my colleagues at Murney - what an incredible brokerage! Real estate sales is unique in that it is one of the few businesses in which your output is a direct, unfiltered result of your input. Work hard and the reward is great. Be lazy, and before you know it, you’re living on credit cards and late on your mortgage (unfortunately, I speak from experience). But it’s in those moments when you hit rock bottom, and claw your way back up that you truly learn about yourself, and what you’re capable of. I once had a conversation with a fellow agent about the potential of listing a high-dollar property, and he told me to always ask myself this question: “Why not me?” And so I have continued to ask that question of myself. It’s not an arrogant assumption that if someone else can do it, I can. It’s a prompt to honestly evaluate what the obstacles are between me and my goal, and to figure out what I need to do to overcome or smash through those obstacles. It is with that mindset that I’ve achieved a level of success in real estate that I’m very proud of. Anytime I encounter a challenge I don’t feel like I’m up to, asking myself “Why not me?” removes the emotion - the fear - and breaks it down into an analysis of my capabilities, and prompts me to find a way of obtaining that which I’m lacking to achieve my goals.

Well, the time has come for me to face another great challenge and to fulfill a dream I’ve had for quite some time. Prior to my career in real estate, I worked as a civilian contractor in Iraq and Afghanistan, supporting the Operation Iraqi Freedom and Operation Enduring Freedom mission for about 4 years. During my time spent on military installations in the Middle East, I had the pleasure to work for and with the finest men and women America has to offer - the Soldiers, Airmen, Sailors, and Marines of the United States Military. I always admired our nations warriors, and have had a strong desire to join their ranks and serve the Nation that I love and that has given so much to me. I recall a conversation with an Army Ranger at a small base outside of Kabul, Afghanistan - I asked him if he enjoyed his job. He told me it was the best decision he had ever made and that he loved it. “You’ve gotta do it. You’ll regret it the rest of your life if you don’t.” His words have stuck with me, and I know them to be true - if I don’t do this, I will surely regret it for the rest of my life. So, after much thought, prayer, and preparation, it is with great pride that I announce that I am heeding that Ranger’s advice. I have enlisted in the United States Army. I’m humbled and honored to serve my country. I’m excited for the many challenges that await me, and as daunting as they may be, many have gone before, so, why not me?

Finally, for all who have any need of real estate services, I strongly encourage you to utilize my friend and business partner, Dustin. Nearly every day over the past year and a half, I’ve worked with Dustin and I can personally attest to his abilities as a Real Estate Agent, and more importantly, his qualities as a man. You will be hard pressed to find a more hard-working, knowledgeable, professional Realtor to represent you in not only the largest transaction you’ll likely make, but the most personal and emotional transaction - the purchase or sale of your home. Dustin is competent, experienced, personable, and displays unwavering integrity. Bottom line, in Springfield and the surrounding area, when it comes to your Real Estate transaction, Dustin Langston is the best choice!

I’m sincerely grateful for all of you.

God bless you, and best regards,

JosephKeil

Joseph Keil



5 Ways To Get More Money From Buyers

Selling season is upon us in the Ozarks! Traditionally, springtime is when sellers are readying their homes for sale. With the warmer weather and the school season coming to an end in a few months, buyers who have been poking around the market over the winter are getting serious about buying. 

In readying your home to list, there can be a lot of anxiety over what you should and should not do to maximize the sales price. Much of it comes down to marketing and pricing strategy, as well as negotiating skill on the part of your real estate agent, but there are things that you as a homeowner can do to get the most money from buyers.

Will a full renovation of your home get you more money? If done well, without a doubt. The more important question is of course, “Is it worth it?” In most cases, probably not. Unless you bought your home as a distressed property at a deep discount, the numbers probably won’t work in your favor - at least not in our market. Real Estate reality television would have you believe otherwise, but keep in mind, the locations most of those shows are filmed in have much larger margins than what we’re working with in Midwest America, with construction costs more or less the same.

So, what can you do? Lots, actually! Here are 5 inexpensive things every seller should do to increase their home value!

 

Sweat the Small Stuff

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While they may not affect the structural integrity or functionality of the house or any of its systems, to buyers who already have to deal with the stress of a move, minor repairs means more work for them to do and raises the question, "If the sellers didn't repair the small items, what bigger problems did they not address?"

If your house has missing trim, small holes in the wall, doors off their hinges, loose toilets, missing cover plates on electric outlets, torn weather stripping, or any other small deficiencies, buyers will start to see your house as a fixer-upper, and will offer you fixer-upper prices. Most of these things can be done yourself, with a basic toolkit, some inexpensive materials, and some know how (YouTube can be a great resource)!

Inspect your house and write down everything you find that needs repair, and tackle what you can. If you a repair is beyond your ability, you don't have the time, or it's potentially dangerous, ask your Realtor for recommendations on a handyman. If your home is in need of major repairs, talk honestly about those issues with your Realtor to figure out the best course of action.

 

Make it sparkle!

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It's impossible to understate the importance of a clean house for showings. A dirty, cluttered house makes buyers uncomfortable, is not an environment that they want to spend much time in, and indicates to them a lack of care for the home.

First rule of a clean house - declutter! Having too much stuff in your house will make it feel smaller, and make it harder for buyers to envision themselves living in the house. Packed closets indicate the house is short on storage. Sell what you can, and pack the rest in boxes and put them in the garage. People understand that you are moving, and will be ok with some (well-organized) boxes in your garage. 

If your home has carpet, consider having it cleaned by a professional. You'd be amazed how much dirt and staining has accumulated over the years so gradually that you haven't noticed. If the carpet is in really bad shape, or harbors pet odors, you may be better off having it replaced.

Next, scrub EVERYTHING. Walls can get dingy, hard surface floors (especially tiled floors with grout) can accumulate dirt and grime and will look amazing once properly cleaned. Remove mineral build-up from shower doors, and make sure toilets, windows, mirrors, countertops, cabinets, furniture, and decor are all spotless. Be honest with yourself - your idea of "clean" may be below the standards of picky buyers. If you need to hire a professional house cleaner, do it. It's important and worth the money.

 

Paint it Bright!

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If your walls are dark colors, bold colors, have patches, scratches, or scuffs, a fresh coat of bright neutral paint will dramatically change the room for the better! Painting can be an inexpensive way to transform a space. Bright, neutral tones carried throughout the house are ideal for making a home brighter, cleaner, more inviting, and can even make it feel more spacious.

Consistency is important. It's not necessarily a good idea to have a different color in each room, nor are bold accent walls a good idea. Obviously, color choice is going to depend on the overall style of the home, the trim color, cabinet colors, flooring, etc. But generally speaking, whites, light greys, and beiges are great choices for freshening up the house, and creating a somewhat blank canvas for the potential buyer to envision their decor and furniture in the home. 

While a "painting party" where you pay your friends in pizza may seem like a fun, inexpensive way to get your house painted, remember, quality is important. If you and your friends can't get crisp lines and avoid runs and accidental brush strokes on the ceiling, hire a professional. 

 

To stage or not to stage?

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Buyers have a hard time seeing past the furniture and decor in a house. A well staged house will sell faster and for more money than one with mismatched or broken furniture and decor. While it may not be feasible to hire a professional company to stage your home, you can make the most of what you've got.

Remember, less is more when it comes to staging. Remove any broken or dilapidated furniture. Depersonalize - remove family photos and any decor that is specific to you that might make it difficult for a buyer to picture themselves living there. Arrange remaining furniture in a way that highlights the space and functionality of the rooms. Avoid blocking any natural walkways.

Having some furniture will give potential buyers some perspective on what can fit in the house. Be sure the furniture is appropriate for the room size. Don't put a king sized bed in a small room. It's better to have no bed in that room. Having a home properly staged with nice furniture and decor will show buyers the full potential of the house, and will make them fall in love!

 

First Impressions Are Important!

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From the moment a buyer first lays eyes on your home, you want it to impress them and cause them to want to come inside and see more of the house! And that moment occurs when the buyer first pulls up and sees it from the curb.

To increase your home's curb appeal, start with decluttering. Remove junk, children's toys, and overgrown plants from your front yard. Make sure the grass is healthy and the lawn neatly maintained. If the siding is dirty or has fungal growth, power wash the house. Hire a professional for this, as siding can be damaged with high pressure washing if done improperly.  

Less is more with landscaping. Tall bushes can obscure the charm of the architectural features of the house. Too much landscaping may turn off buyers who feel it will be a big chore to maintain. Evenly-spaced, well-pruned plants and fresh mulch will make the house look amazing! 


If you'd like specific guidance on what you should or should not do to your home prior to listing it for sale, give us a call! We'd be happy to consult you absolutely free of charge!

If you'd like to know what your home is worth in the current market, all you have to do is visit our Home Value page and fill out a simple form. We'll provide a CMA (Comparative Market Analysis) for you free of charge!

Once your home is fixed up, clean, and show-ready, we've got a plan that gets our clients the most money for their homes, quickly! Download our Real Estate Services Proposal and read about our marketing plan and our pricing strategy!

On Lincoln, Axes, Vampires, and Home Buying.

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By Joseph Keil

Recently, I read an excellent book called "Essentialism" by Greg McKeown (which I highly recommend). The premise of the book is that we can accomplish more and better things by focusing our efforts on the "essential few" things that propel us toward our goals, and ignore the "trivial many" things that pull us in a million different directions. In the book, McKeown quotes Abraham Lincoln as saying "Give me six hours to chop down a tree and I will spend the first four sharpening the axe." I instantly ask myself, how does this idea of careful preparation to maximize efficacy apply to what I do? And I recognize that an area where we already apply this is in our buyer process.

Dustin and I have a process for working with homebuyers that (in an ideal world) starts with a sit down meeting. We do this for three reasons: 

1) We want to get to know the people we will be working with and establish rapport.

2) We want to make sure they understand the home buying process.

3) We want to get clear on what it is they are looking for in a home, and why.

Now, this is not a hard and fast policy, because we recognize that in the current market, homes sell within hours of coming on the market, so sometimes we have to skip this step if our clients are convinced that they've found the one - we'll do our best to show them the property without delay. BUT, ideally, we would much prefer to have our sit down meeting, because the best way to ensure a smooth home finding process is to start with a clear goal. 

Remember video rental stores? If you've ever gone to a video rental store already knowing what movie you want to watch, you just go in, grab it, check out, and shortly thereafter, you're home, stuffing your face with slightly burnt microwave popcorn getting lost in Ryan Gosling's eyes. But, if you go in with no clear selection in mind, chances are, you're going to be overwhelmed by the options, wandering aimlessly in a fluorescent haze, and in a moment of panic, hastily selecting a teenage vampire drama. 

While our time is precious and should never be spent on the Twilight series, how much more important is it to get a clear definition of what you want and need in the largest purchase you'll make in your life (your home)?

There are many people who believe they need to look at several homes of all kinds until they find the one that just "feels right". Now, I don't discount the very important role that "feel" plays in the decision making process, but I've seen people sacrifice features and locations that were very important to them because of a feeling, which given some time, can wear off. If you are not clear on what your priorities are in a real estate purchase, you are not ready to start looking. 

When we sit down with our clients, we help them get clear on what they're looking for by asking questions and trying to understand what is important to them. We like to start by establishing hard boundaries based on needs. Within those boundaries, we try to find places that match the wants of our clients. Price is usually the first boundary you'll set (if you don't know how much you can afford, a lender can help you set that parameter). From there, figure out what your priorities are - is there a specific school district you want your children to be in? Do you need a short commute to work? How many bedrooms do you need? Is this going to be an investment or a home to live in, or both? While you are defining what you need and want, also understand that in a seller's market what you want may not be within your price range. You'll need to consider not just what you want, but what you can do without. You may not have the luxury of being too choosy on cosmetics like paint color. 

By "sharpening" at the beginning - taking time to define and prioritize needs - you can spend less time and effort "chopping" - touring countless homes until exhaustion sets in and bad decisions are made. Also, by knowing what you're looking for, you don't have to hesitate when you find a great property that fits your needs, because in this market, hesitation can cause you to miss out on the right house.

New Year, New Stats!

New Year, New Stats!

If, like me, you're a math nerd, pencil pusher, or number cruncher, chances are, you like a good statistical report. Or maybe you're not, but you just want to know what the market is doing in your area. Well, merry belated Christmas! I give to you the pure, unadulterated, free-from-bias, cold, hard facts on real estate in the Springfield Area (Springfield, Nixa, Ozark, Rogersville, Republic, Willard, Battlefield). I've compiled the data for 2016 and 2017, so we can see how the market has changed in the last couple years.

So without further ado, here are the numbers:

Zillow's Zestimate - Take with a HUGE Grain of Salt.

Joseph Keil

Photo by shironosov/iStock / Getty Images
Photo by shironosov/iStock / Getty Images

Zillow is far and away the most popular website/app for consumers who are not only shopping for homes, but for potential home sellers as well, due in large part to Zillow's Zestimate - a computer generated home valuation. As a real estate professional, I'm very familiar with the local market, I have extensive knowledge based on years of experience and touring thousands of homes in nearly every neighborhood in my market. I have a pretty good intuitive idea of a home's value as soon as I walk in the door, however, I always rely on cold, hard data when it comes to pricing a home. Appraisers work in the same way. The key factor in finding a home's value is sold data

When real estate agents and appraisers are valuing a home, we look for similar homes that have sold recently. That is always the starting point. We also consider market conditions and market trends. When finding comps (comparable properties), we look at it several different ways - square footage, number of bedrooms, number of bathrooms, garage spaces, location, school districts, floorplan, amenities, condition, finishes, overall appeal, age of roof, HVAC, construction material, etc. 

Zillow uses similar data points to come up with its Zestimate. According to the website: "We use proprietary automated valuation models that apply advanced algorithms to analyze our data to identify relationships within a specific geographic area, between this home-related data and actual sales prices." There's one big problem though. Missouri is a "real estate sales data nondisclosure state" - in other words, Zillow has no idea the price at which homes actually sold for in Missouri. 

Ok, so what about states that are not nondisclosure states? How about Washington, where Zillow's CEO Jeff Raskin sold his home in February of this year? Well...Raskin's home sold for $1.05 million. And the Zestimate for his home? $1.75 million. Ouch. That's 40% LESS than the Zestimate. 

Honestly, this is not an attack on Zillow. They readily admit that their Zestimate is NOT an appraisal nor is it a CMA (comparative market analysis). Here's how Zillow says consumers should handle the Zestimate: "We encourage buyers, sellers, and homeowners to supplement Zillow's information by doing other research such as: Getting a comparative market analysis (CMA) from a real estate agent. Getting an appraisal from a professional appraiser. Visiting the house (whenever possible)."

So, the problem is that in our tech savvy, instant gratification world, we want the info right away, and we expect that the tech company providing the info has taken the time to ensure that info is correct and that we, as the consumers, are protected. However, we're in such a rush, we take no time at all to read the disclaimers and caveats. 

As real estate professionals, usually, if the value of a seller's house (based upon our expertise and analysis of the data) is greater than the Zestimate, it's not much of a problem. However, if the reality is that their property is less valuable than the Zestimate, that becomes a massive hurdle for us to surmount. Sellers often tend to overvalue their house due to emotional attachment, and when the world's most used real estate website seems to corroborate their inflated value, that can be a costly scenario. The momentum and excitement of a hot new listing is immediately undercut by a price that savvy buyers know is too high. By the time sellers agree to course correct to a lower price, the buyer pool has moved on to the latest listing, and the homeowner may have to sell for less than what they could've gotten, had they priced the home correctly from the beginning. 

So, please, don't take my word for it - take Zillow's: "[The Zestimate] is a computer-generated estimate of the worth of a house today, given the available data. Zillow does not offer the Zestimate as the basis of any specific real-estate-related financial transaction. Our data sources may be incomplete or incorrect; also, we have not physically inspected a specific home. Remember, the Zestimate is a starting point and does not consider all the market intricacies that can determine the actual price a house will sell for."

If you would like an accurate analysis of your property's value, all you have to do is click here, fill out a little bit of information, and we'll be in touch with you very shortly to prepare a CMA for your property!

Referenced in this article:

https://www.zillow.com/zestimate/#what

https://www.inman.com/2016/05/18/zillow-ceo-spencer-rascoff-sold-home-for-much-less-than-zestimate/

Flipping Awesome!

Joseph Keil

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(Article originally published July 14, 2016)

Real estate themed reality television shows are ubiquitous these days. Real estate is a fast-paced, competitive world, chock full of drama and emotional intensity - it's exciting, which is why I love my job! But far and away, my favorite "realty reality" programs are “flipping” shows. To watch a tired, disheveled mess of a house become transformed over the course of half an hour into a fresh, vibrant, gorgeous space is immensely satisfying and inspiring. The idea of something old made new resonates with me, and with most people I think. We all love a good comeback story.

The great thing about these shows is that they’re inspiring people to go out and do likewise - seeking out rough homes which, with vision and some hard work, are made beautiful again. Whole neighborhoods are being revitalized. I think this is flipping awesome.

I’ve worked with several real estate investors who “flip” homes for a living. When we say “flip”, we’re talking about purchasing a property that's in disrepair, fixing any defects, remodeling the home, and putting it back on the market as soon as possible, with the goal of maximizing profit. People who do this for a living are vastly different than a homeowner who decides to take on a project house with the intent of making it their home and a long-term investment.

For the flipping newb, I have a few pieces of advice - wisdom gained from mistakes made having “flipped” a few properties myself, and from my experiences working with clients who flip homes.

Establish clear goals.

Start by answering this question: is your goal to make a profit, or is it to create a great home for you and your family? Most of the buyers I work with want a little of both - to have a nice place to live and a solid investment for the time that they stay in the home. If you’re all about making money – and there’s nothing wrong with that – that’s a vastly different approach. If you’re going to be living there for a while, you’ll likely be less flexible on certain elements: school districts, neighborhoods, floorplans, etc. If you’re strictly looking to fix it, and turn around and sell it in a short time frame, you’re primarily interested in getting a great dealon a house with profit potential. Either way, no one wants to purchase a house, spend heaps of money making repairs, only to lose money when it’s time to sell.

Buy low.

The basic law of investing is to buy low and sell high. I’ve got a few different strategies for you here to find the best deal possible on a home purchase:

Look for distressed properties.

Well, maybe not  that  distressed..

Well, maybe not that distressed..

A “distressed” property is one that is a foreclosure (when the homeowner fails to pay his/her mortgage payments, or taxes, and the lender or government takes possession of the house and lists it for sale), or short sale (when the loan exceeds the value of a home and the lender has agreed to take a loss on the home). In my experience, these homes are almost always in rough condition. If the homeowner can’t afford to make their payments, they usually don’t have the money to maintain their home properly. Mold, pet odors, holes in drywall, rotted floors, plumbing leaks, and general sanitation issues are common in these homes. The good news is that these are generally outside the scope of what a typical homebuyer is willing to take on in terms of repairs. (But you're not typical are you? No, you're beyond typical *wink*). The buyer pool for distressed properties is much smaller, and since the banks often have already written these properties off as a loss and are in a hurry to get the property off their books, they typically sell for far below market value.

Look for “stale” properties.

In Springfield, MO, where I sell real estate, the median days on market for properties is 32 days*. If a home has been on the market for over 120 days, chances are, the seller is getting antsy. They’re starting to get exhausted with keeping the house show ready at all times, they’re continuing to pay interest on a house that they no longer want, they may be paying for lawn services or other maintenance, and they’re just starting to lose hope that their home will ever sell. Almost always, the reason the home has been on the market for that long is that they priced it too high from the beginning. If they’re desperate, you as a buyer are negotiating from a position of strength, and are likely to settle on a price that is below market value.

*as of June 2016, data taken from GSBOR

If possible, buy in a low market.

I was fortunate enough to be able to purchase my house in 2010. America was in a recession, it was a tough time for a lot of people, but if you were fortunate enough to be able to purchase real estate at that time, chances are, your investment has appreciated considerably. Now, I’m not suggesting you wait until the next recession hits until you buy a home, but what I am suggesting is that there are certain market conditions that lead to a dip in the market. This occurs when supply outpaces demand. When housing inventory is high, and the buyer pool is small, this is the time to buy. Real estate really is seasonal. Generally, buyers flood the market in the summer months, as many buyers have families and don’t want to move while their children are in school. As the holidays approach, the real estate market slows considerably. Most sellers list their homes in late spring, as school is letting out for the summer, and most listing agents will take a 6 month listing. So, if the house doesn’t sell, by the time November and December come around, and the buyer pool has shrunk, both the seller and the listing agent may be desperate to sell that home. For those reasons, October - December is the best time to buy if you’re looking for a good deal.

 

Do your homework.

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If you’re going to take on a flip project, you not only need to get the best deal possible on a home, but you need to have an idea of what that home would sell for once it has been completely restored. You should also do some research as to how much certain repairs, updates, and upgrades cost in your area. Know the cost of paint, hardwood flooring, carpet, drywall, subfloor, tile, concrete, roofing, and the associated labor costs. Some of this will vary depending on the specific project, but having a general idea will help you decide if it makes sense to purchase a specific home.

 

Do your home work. (see what I did there?)

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In order to ensure you don’t lose money on a project, and to maximize profit, do as much work yourself as you can. Labor is expensive and the more of that cost you can eliminate, the better. However, never take on a task if it’s dangerous, or beyond your scope of ability. While tasks like painting, flooring, basic carpentry, demolition work, drywall, and landscaping may be within your skillset, electrical, plumbing, and HVAC work is usually best left to the professionals. Ensure that you take time to do the work well, and hire competent contractors. Be wary of the cheapest bid. Poor quality shows and will cost you money when it’s time to sell.

Sell high.

Maximizing the sales price will obviously put more money in your pocket. Here’s how to do that.

Create a beautiful, but blank canvas.

So lovely, so blank.

So lovely, so blank.

What I mean by "create a blank canvas" is that you should leave room for the potential buyer to personalize the home. When you’re envisioning what your house will look like once it’s completely remodeled and fixed up, try to take yourself and your tastes out of the equation as much as possible. What I mean by that is that your goal should be mass appeal. Don’t tailor the house for a specific buyer, make sure it appeals to what the majority of buyers are looking for. Being too bold with the design or the colors of the home will turn off many buyers. By appealing to as many buyers as possible, you are driving up the demand for the home, which will drive up the price you will ultimately get for the home. This doesn’t mean the house has to be bland, in fact, bland is almost as bad as being too bold. It needs to be a happy medium - contemporary, but not avant garde. Eye-catching, but not off-putting.

Sell at the top of the market.

As I stated earlier, most sellers will list their homes in late spring/early summer. They know that this is the time of year that the buyer pool is largest. However, a lot of buyers really start looking in early spring after the weather warms. The buyer pool may not be as large at this time of year as late spring, but inventory is low. This is something you can use to your advantage. The buyers are there, but the homes are not. If you beat the rush of listings, yours will stand out, and you’ll maximize your profits. March and April tend to have the highest sales price to list price ratios.

The process of flipping a home may look easy on the 30 minute television episode, and it may appear lucrative, but the reality is that flipping a home is a very difficult process, and many times, the profit margin is slim, or non-existent. You shouldn't be afraid of taking on a project home, but do be prepared and seek counsel from those who have experience remodeling homes. If you're in the Springfield, MO area, I'd love to talk to you more about it! Just click here, and send me a quick message!

Making Sense of Absorption Rate

Joseph Keil

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What is absorption rate?

(Article originally published November 18, 2016)

Absorption Rate is a parameter I like to use when I talk about the market. Why? Because it makes me sound more intelligent? Absolutely. But also, because it's the best answer for the question I get all the time - "How's the real estate market doing?"

Every month I put out a simple market update (subscribe to my monthly newsletter in the bar at the top of the page to recieve my market update) with median sales price, average days on market, how many homes sold, and other information that most people are familiar with, but one of the key pieces of information is one that few people truly understand: Absorption Rate. 

Simply put, absorption rate is a measure of how fast homes are selling. It can be expressed as a percentage, but I prefer to express the absorption rate in months of inventory. The most recent market update indicated that we had 3.72 months of inventory. What that means is that at the current rate homes are selling, it would take 3.72 months to completely sell out of all of the homes that are actively on the market, if no new homes were added.

So, it's neat that we know how many months of inventory we have, but what does that tell us about the market? Well, I'm glad I asked. A balanced market has about 6 months of inventory - at 3.72 months, we're low on inventory. This tells me that demand is outpacing supply, or in more practical terms, there are more buyers than there are homes for sale. Conversely, if we had a 12 month supply of homes, this would indicate that supply is very high, but there's not a whole lot of demand. So in times like now, when demand is high and supply is low, prices tend to move up. We remember this concept called "the Law of Supply and Demand" from high school economics, but in the real world, why does low supply/high demand result in price increases? Two words: Bidding War. Right now, it's not unusual for a home to receive multiple offers on the first day it's listed. When there are multiple offers, the listing agent will notify the buyers' agents that there are multiple offers and to bring their "highest and best" offer. This often results in the house selling at full price, or, in some instances, above the list price.

How is Absorption Rate calculated?

The calculation for absorption rate is fairly simple. We need three pieces of information.

  1. Time Period 
  2. How many homes sold during that time period
  3. How many homes are available for sale at the end of the time period

So for October of 2015, we know there are 31 days in the month, we know that 520 homes sold in those 31 days, and that at the end of the month, 1871 homes were available for sale. Now, we simply plug in the numbers:

31 days / 520 homes = 0.05962 (one home sold every .05962 days)

Now, we apply the rate of 0.05962 to the number of homes available 

0.05962 x 1871 = 111.54 (how long it would take to sell all 1871 homes expressed in days)

111.54 / 30 days = 3.72 months

How do we use the Absorption Rate?

Real estate agents (the good ones), appraisers, and builders all use absorption rate. Real estate agents and appraisers use absorption rate to price homes. If the absorption rate is telling us that there is great demand and minimal supply, then real estate agents know they can afford to price homes a little higher. Likewise, when appraisers are assigning value to a home, they must consider the market conditions, so they factor absorption rate into their valuation.

Builders need to be aware of absorption rate as well. If the absorption rate indicates demand is outpacing supply, then they know that it's time to ramp up their production and "make hay while the sun's shining". If supply is high and demand is low, they know that building a whole bunch of spec homes could be a very costly mistake. 

Absorption rate is an incredibly useful metric, and if your current real estate agent gives you a blank stare when you ask about it, go ahead and give me a call.