Wednesday, January 18, 2017

Failing to Make Repairs and Stage Can Cost You

Staging done badly undermines the appeal of your house
Decorated, Not Staged 
A lot of of the houses I see on line these days either have no staging at all, or there's been an amateur effort by the real estate agent or seller who don't understand the difference between decorating and staging. The ineffective and sometimes harmful pictures that result put the house at a significant competitive disadvantage. Of course attempted staging usually is better than none at all, because failing to make repairs and paying no attention to cosmetic appeal can really cost you.

The Crucial First Few Seconds

Most people know that today's buyers begin their search for a home on line, and you have seconds at most to get their attention in a positive way and make them want to visit in person. It stands to reason that if the pictures of your house aren't attractive, buyers will quickly move on to the next listing and you've lost an opportunity. If prospects do come and your house doesn't impress them by being clean, inviting and well maintained, you've either lost the sale or inspired a lower offer than you might have gotten if you'd made certain it was in sound condition and professionally staged before listing.

Case Study - Failing to Repair and Stage

To emphasize this crucial point, here's an example of how failing to make repairs and stage (or doing it badly) can squander the equity you've worked years to build. 

Let's say that houses in your development have been selling for $250,000 - $285,000. 
  • Repairs and professional staging costs are estimated at $2,500, of which a generous $500 is allotted for staging. You decide not to spend the money. 
  • A comparable staged house down the street in showing condition is listed at $275,000.
  • You decide to list your house for $265,000, thinking that a lower price will attract buyers and more than compensate for not doing the work. You forfeit a significant amount of money at the outset, and that's just the beginning. Because your house doesn’t photograph well, there are only a few showings and no offers. Keep in mind that had your house been repaired and staged, it could have been listed at a higher price, helping to offset the cost of the work and it would have been much more appealing.
  • The staged house down the street sells quickly for $270,000. You get anxious and reduce the price $5,000 to $260,000. 
  • More time goes by without results. You reduce the price to $257,500. 
  • After a long wait, an offer finally comes in at $255,000, pending the buyer’s inspection. You're down $10,000 from the original (low) list price.
  • During the inspection damage is found. The buyer demands a price reduction of $5,000 to cover repairs. Your original estimate for the same work was $2,000. 
  • After going back and forth, you agree to sell for $252,000. 

Here's What You've Forfeited:

  • the difference between the potential and actual initial listing price
  • plus the difference between the listing price and the selling price
  • AND you've paid higher costs for repairs, the costs of continued upkeep and the costs of lost opportunities, like being unable to buy that perfect new house you wanted. 

    Let’s Add This Up: 

    YOUR HOUSE                                THE HOUSE DOWN THE STREET
     AS IS                                                AFTER REPAIRS AND STAGING
    $265,000 list price  $275,000 list price ($10,000 more)
    $252,000 sell price                           $269,900 sell price ($17,900 more)
                                                                       - $2,500 staging and repair costs                   
                                                                    $267,400  (+$15,400 more net)
    With repairs and professional staging, the seller in this example had $15,400 more profit and a faster sale. This is a conservative example since the average difference in selling price nationwide between staged and unstaged houses is usually about 17%. And remember, this happened because you didn't want to spend $2,500.

    Home Selling is a Competition 

    The main point to understand about selling your house is that regardless of market conditions, you're competing against every other house in your price range. Your competition includes properties in your development and properties outside your immediate area, many with highly motivated sellers who are determined to make their house stand out. That's a big pool for discerning buyers to choose from. 

    Don't put your house at a disadvantage. Be a smart seller and do the work so that your house is ready to be a strong competitor from the moment you list. 

Wednesday, January 4, 2017

Painting Estimates: Look Beyond the Number

I admit it: sometimes I get frustrated. We often do estimates for people who say they want the best possible job, so we thoroughly discuss what they want to be done and prepare our estimate on that basis, only to be told we weren't the low bid.  

I'm not surprised to hear it. Our professional standards and our personal definition of high quality work are likely very different from our competitors, but the homeowner doesn't know this and chooses the low bid on the assumption they were prepared on the same terms, and that price is the only point of comparison. Unfortunately for us, it's never true. To compare estimates accurately, you need to know how they're calculated. 

Cost Elements of a Painting Estimate

Labor, materials, supplies, equipment, and overhead (office expenses, vehicle expenses, insurance, taxes, licenses, web site, dues, and memberships, etc. etc.) are the main cost elements of a painting estimate. The biggest factor is the time needed to do the quality of work specified because of the cost of labor. It takes longer for a professional to prepare a surface for painting the right way, which can involve several steps, and then apply the paint correctly, than it does for an amateur working at a low wage to do little or no preparation, or incorrect preparation, then slap on a coat of paint. Which do you think yields attractive, long-lasting results? And which approach do you think costs you less over time? You can either save money today and get poor or at best mediocre results, or you can have work that looks great, adds to the beauty, enjoyment, and value of your home - and will last. 

If you hire an individual who doesn't operate as a business with associated overhead you might pay less, but you take a much greater risk because they've chosen not to be visible and accountable. 

If you want to compare painting estimates more accurately, here's how:

How to Get Comparable Estimates        

First you need to decide what you want to accomplish. If you've just moved in and plan to stay, doing things correctly is smart, even if it means you do the work a little bit at a time. On the other hand, if you're doing a quick clean up to get your house ready to list, your goal might be low cost rather than high quality. Be sure to discuss your goals with the bidders who might have valuable suggestions. Make certain that everyone knows the final strategy so that the estimates are comparable. Require detailed written estimates.

We always provide written estimates, as much for our benefit as for yours, and we specify exactly what we're going to do and the materials we're going to use so that you know what you'll get for your investment in hiring us. I have yet to see a competitor's estimate that takes such a detailed approach, so how do you compare them with us?

Questions to Ask Each Bidder

  • Who will do the work and what are their qualifications? Unskilled or temporary workers may keep costs down, but you could pay a high price for their shortcomings.
  • Does the company carry workers' compensation insurance? If not, you could be held financially responsible if someone is injured on your property. 
  • What steps will be taken to prepare the surface?  Get every detail in writing so you can make comparisons.
  • What materials will be used?  Paint manufacturers offer several grades, and you will get what you pay for. If you want the best, specify it by manufacturer and product name.
  • How many finish coats will be applied in addition to a primer, if needed? Some painters will slide by with primer tinted to the finish color (it's cheaper) and one finish coat after stating they bid it for two finish coats. 
If our number is higher, it's usually because we were going to do more work and use better materials, or the competitor planned to take shortcuts, or didn't understand the job and underbid. It's that simple. 

Comparing the Estimates

Once you have the estimates, it's time to make a systematic evaluation. 
  • Compare the scope of work and the steps to be taken. If you weren't given enough information, you can't rely on that estimate to be accurate.
  • Review the qualifications of the workers if you care about clean work habits and want to have paint applied to professional standards, such as crisp lines and no paint where it shouldn't go, like your wood floors, cabinets, driveway, patio, plants or windows. Sometimes paint can't be removed without doing damage. 
  • Confirm the exact materials each bidder is using and tell them you will verify the materials if they're hired. 
  • Confirm the number of finish coats in the estimate. 
  • Your impression of the professionalism and integrity of the company. Are you comfortable at the prospect of having them at your home? Do they have references or a web site where you can learn more about them? Are they established in your community? How long have they been in business? 
  • Professional color consulting services. We believe that using well-chosen colors is essential to a successful outcome, so Sandy LeRoy provides a free color and detailing consultation to every painting client. Sandy is a Certified Color Strategist who uses color science and the latest technology and methods. If you need help with colors, this service is invaluable. Do any of the other bidders offer something comparable? 
  • Price.

Set up a grid and enter the information from each estimate. Notice that the price is the last basis of comparison because it depends on the preceding items. If you're not comparing apples with apples, you're in the dark about the estimate that represents the best value.

Beware of the Low Bid

Beware of an unusually low bid because it normally means the bidder:
  • didn't understand the scope of work
  • intended to take shortcuts, usually in the preparation phase
  • uses unskilled or temporary labor and pays them cash
  • plans to use lower grade materials
  • isn't operating as a reliable, accountable business

In Conclusion...

Painting done correctly can have many significant, positive effects on your house, far beyond what the work costs, so it's well worth hiring the right people who are going to do things the way they should be done. It's the best value for your money in the long run. 

If you require professionalism, high standards, integrity and work that looks great and lasts, please call me at 828-692-4355. We'll talk about your project and I'll schedule an estimate with Roger. On the other hand, if the most important thing is to find the lowest bid, we're probably not the best choice.