Developing a Strategic Inventory Management Program

Panel:Gil Carlson, UniriscCindy Mulhall, EncanaJulie O’Halloran, Canadian National RailwaysBarb Kalydy, TheMIGroupGail Reinhart, TheMIGroup

Strategies to Keep Home Out of Inventory

• Inspections• Repairs• Home warranty• Marketing the property

Strategies for Marketing an Inventory Property

• Re-evaluation of the property (e.g., repairs/improvements)• Maintenance• Marketing plan (including staging and Home Warranty)• Pricing Strategies (including incentives)

Inspections

• General home inspection at a minimum; additional inspections required for certain areas, e.g., pest, septic, radon

• Full disclosure in the US, not necessarily in Canada (Buyer Beware)

• May be used by Realtor to market property • Ensures corporate client does not acquire a home with

issues that must be fixed prior to resale

Recommended Repairs

• Recommended or required repairs:• Potential insurance and lender issues such as roof/furnace

beyond life expectancy

• Safety & Health issues (e.g. mold, radon, electrical)

• Water penetration

• Structural• Latent defects; a defect not discoverable upon reasonable

inspection of the property, e.g., inadequate wiring behind walls, asbestos, Chinese dry wall

• Transferee should provide any warranties or service contracts for major systems

Home Warranty

• Covers deficiencies found after purchase is completed on major systems, e.g., central heating, interior plumbing, roof

• Valuable selling tool that helps protect the buyer from the unexpected costs of major system and appliance failure during first year of home ownership

Canada• Home inspection is NOT required but items must be in working

condition at time of closing• Coverage begins on inspection date and continues for 90 days • Not yet typical in Canadian mobility policies• Typical cost – $300 - $400 CAD• Recent study shows that homes with warranties sold in 16% less time

and for a better price

Home Warranty (cont’d)

United States• Typical closing cost requested by purchaser in most home sale

transaction• Normally a concession by the seller and not an entitlement within

the mobility policy• Typical cost - $350 - $500 USD

Benefits• For the Seller:

Home ‘stands out’ to perspective buyers Eliminates ‘call backs’ when problems arise after closing

• For the Buyer: Peace of mind from unexpected repair costs of major systems or

appliances

Marketing the Property

• Careful review of appraisals; ensure appraisers have taken market conditions, location, etc. under consideration

• Broker’s Market Analysis; two if possible

• Marketing restrictions

• Impact of severing acreages to meet program criteria

• Property should be in good condition, neat and tidy

Your House As Seen By

Yourself

Your Buyer

Your Appraiser

Your Lender

Your Tax Assessor

Strategies for Managing Inventory Property

• Re-evaluation of the property

• Maintenance

• Marketing plan

• Pricing Strategies

Assessing the Property for Resale

• New appraisals

• Change in real estate agent

• New Broker’s Market Analysis

• Review factors impacting property such as location, condition, price

Set expectations!

Assessing the Property for Resale

Location• Is there something unique about the location?• How was the location marketed and to whom?

Condition• How does it compare to the competition?• Is the interior in neutral colours?• Is the exterior inviting or does the property look abandoned?• What were the original agent’s recommendation when the property

was first listed?

Price• What is the current agent’s recommendation?• How many showings; any second showings? Any offers? • Were there any incentives offered during the listing period?

Repairs and/or Improvements

• Depends on the requirements for repairs within the corporate mobility policy

• Full disclosure in the US gives the prospective purchaser all the information regarding required repairs

• If only structural and safety repairs required, some minor repairs may be left to negotiation with the prospective purchaser:

deferred maintenance/cosmetic issues broken window seals loose toilets, leaky faucets replacement of deteriorated wood trim damaged siding, eaves, etc.

Ongoing Property Maintenance

• Vacant property insurance • Landscaping/snow removal • Utilities • Property taxes • Mortgage payments• Ongoing management by Realtor

Marketing Plan

• Review with current Realtor• Staging • Buyer Incentives• Realtor bonuses

Price Reduction Strategies

• Review pricing strategy every 30 – 45 days• New BMA/BPO every 60 – 90 days• Depends on:

Time of year Current sales activity Realtor/buyer feedback

• Based on client culture – price slashing vs other strategies

Thank You!!