by Michell Nuñez
Considering how personal our homes are to us, it’s no surprise that many home owners let their emotions get in the way of the cold, hard facts involved in selling a home. The ultimate cold hard fact is that if you want to sell your home, it is worth what buyers are willing to pay for it. That said, by understanding what is driving your local market and how to best position your home for sale, you are most likely to get the best offer possible.
Overpricing your home helps your neighbors, not you. Potential buyers want to get the most bang for their buck. If they are looking at your home, they are looking at your neighbors’ homes too. If your home is priced too high, buyers that can afford your home will never see it since it won’t come up in their home search. Instead, your home will be competing with homes in a higher price range. Those buyers may see your home in a search, but won’t visit the home or make an offer because it will be up against larger homes with more features. Who wants to pay more for less? In the alternative, if you’re priced on the low side compared with other homes in your area with similar features, buyers will be falling all over themselves to be the first in line to see it. It may even garner a great preemptive offer. At the very least, it’ll likely have multiple offers causing the much-coveted bidding war.
You need to know what’s moving your real estate market. What makes buyers pay more for the same home? Location. Distance from work, transportation, schools, nature, nightlife, restaurants, shops—whatever is important to them. Being on top of any significant changes in your area, whether it’s school districting lines, changes to transportation or development, is vital when marketing your property. I had a listing in West Oakland a few years back that required a cash buyer. I knew that my seller bought at the top of the market so it was going to be tough for him to come out ahead, but I also knew that a big tech company was in talks to buy an office building a short BART ride away. Our listing coincided with the public announcement that the deal had closed, and we had an all cash offer at asking a few days later. One of the biggest projects in Oakland right now is Oak Knoll Community Development. If you’re near the 94605 area code and you don’t know about it, you need an agent that does.
Unemotionally evaluating a property is key to pricing it right. Pricing right means taking into consideration the condition and features of your home as well as the market. Corner homes generally sell for more. Most buyers want to be close to a freeway, but not on a freeway. The more stairs there are, the fewer buyers you’re going to appeal to. Yes, you and your neighbor have identical lots and floorplans, but he just spent 50k on remodeling his kitchen and bathrooms. If you base your pricing on his sale without taking that into consideration you will be doing your neighbors a favor.
Return on investment for the right upgrades can be way more than 2 to 1. Why did your neighbor’s home sell for 150k more if he only spent 50k? Many buyers are going all in when they purchase a home. They’ve used every last penny on the down payment and closing costs and know that they won’t have the funds to make any changes for a long time. Other buyers might have the money, but don’t have the time. In either case, the monthly mortgage increase for a turnkey property is a fraction of the immediate outlay for upgrades. Add that to the cost of having the property vacant while under construction or inconvenience of living in a construction zone and it’s no wonder buyers that can are willing to pay a premium for a home with the features they are looking for. Buyers that can’t, are looking for a bargain.
The more buyers you appeal to the more your house will sell for. There isn’t much you can do about the size of your lot or the layout of your house, but there’s a lot you can do to help the most potential buyers picture themselves in your home. Using neutral colors and staging helps buyers imagine how they would use the space. Think of your home as a beautiful frame where buyers can put a picture of their family. Since you don’t know what the picture is going to look like, you need a frame that goes with everybody.
Online presence drives traffic. Over 90% of buyers begin their search online. Beautiful photos and video make a huge difference in attracting potential buyers. A lack of photos or unattractive photos will drive traffic away from your home.
Repairs left undone will cost way more than the repair itself. This is true in two ways. First, it will always be cheaper to have your contractor make a repair than the estimate from an overpriced contractor that the buyer will get. Second, once buyers see that repairs need to be made, they want you to pay for the cost of the repair PLUS their peace of mind. Buyers start thinking…what if I get stuck paying for repairs I don’t know about yet? In the alternative, buyers will pay more for a well-maintained home and the peace of mind that comes with it.
Buyers expect to negotiate after inspections. Inspections pay for themselves and then some. If there are any surprises, you can make repairs yourself—usually for much less than the buyers’ estimates. If you decide not to make the repairs, you get to choose which company to get an estimate from and include it in the disclosures. The buyer makes the offer with that knowledge so any negotiating takes place before you’re in contract when you’re in the driver’s seat (hopefully with multiple offers) as opposed to once you’re in escrow and they have you over a barrel with the threat of going back on the market. If you decide not to do inspections, make sure you have a skilled negotiator in your corner.
It can take months to prepare for listing. If you’re aiming to list in May, you should begin the process in March. Meeting with a listing agent early on can save valuable time. Agents know how long it will take to hire a painter, repairman, stager—many of whom will be booked weeks, if not months, in advance. A good agent can provide a detailed to-do list and timeline specific to your property within a day or two. Having this to guide you through the prep process will help you focus on the important issues early on.
Get OUT! Sellers should make themselves scarce when buyers are viewing their home for more reasons than I can list here. Buyers are notorious for grilling sellers about the property and then picking apart disclosures. Sellers may accidentally let it slip that they need to sell which leaves their agent negotiating with one hand tied. When buyers view a home they should feel free to open closets and cabinets and walk around the house like they own it. Most buyers are too self conscious and apologetic to do this while the sellers are having dinner or watching the game.
The terms of an offer are just as important as the price. A good offer is accurate and complete, contains the fewest contingencies, addresses all possible timeframes, and includes documentation indicating the buyers’ strong ability to secure a mortgage as well as proof of funds to cover down payment and closing costs. Sellers must understand the terms of the offer BEFORE they sign or they face the unfortunate predicament of being stuck in a bad contract while the market passes them by.
Once buyers lose the sense of urgency that comes with a new listing, it’s hard to get it back. As soon as listings are uploaded, buyers and agents get alerts with a link to the “New” property listing. Listings that fail to grab buyers’ attention during this critical time sit on the market. Homes that sit on the market make buyers wonder—what’s wrong with it? The longer a property sits on the market, the less it will net and the more likely it is to sell at a discount. For sellers that are paying for a vacant property and staging or planning on purchasing another home, months on the market means less equity to accomplish their goals.
The time of year you sell your home matters. Buyers with school age kids are EXTREMELY motivated to have the changes in their living arrangements coincide with the school year. These buyers drive up property prices from February to July for everyone. The closer you get to the end of year holidays, the less buyers you see house hunting. Some years, I’ve seen the lack of demand balanced by the lack of inventory, but I wouldn’t count on it.
Selling real estate is a complicated legal endeavor. Aside from preparing the property for sale, pricing, marketing, negotiating and supporting sellers in strategically reviewing offers, real estate professionals assist sellers in meeting legal disclosure requirements. In California, a seller of residential real estate has a responsibility to disclose all known material defects. Material defects can be defined as issues that might affect the value or desirability of the property being sold. A seller that fails to fully reveal or attempts to hide the extent of a property’s defects may be found liable for fraud, misrepresentation, or deceit. Most of the disclosures I review total over 400 pages. Even owners that are attempting to do a for sale by owner should consult with an attorney or real estate professional regarding California disclosure requirements for property sellers.