It’s a deep seller’s market in most of Silicon Valley, and that’s good news for you if you want to sell your Los Gatos home this year. However, don’t base your major decisions on the major headlines! Real estate is always local, even “hyper local”, so get the data related to your home’s market and go from there.
What are some of the major concepts you need to know before putting your home on the market?
(1) Selling As Is does not meeting doing nothing and expecting the highest sale price. The most successful sellers don’t just throw their property on the market without any thought or effort. Those who sell fast and for top dollar actually do a fair amount of prep work! They may not remodel and move out, furnish their house with rental furniture,and put all their belongings in storage, but they do clean, decutter, provide pre-sale inspections and price appropriately.
(2) Selling As Is means that you don’t have to provide a Section 1 pest clearance or fix every little thing that’s not perfect with the house or yard. However, you do want to find out what needs fixing and disclose it upfront so that there are no surprises later. (Later surprises often equal a renegotiation later.) As Holiday Inn used to say, “The best surprise is no surprise.”
(3) Many homes listed at one price sell for a higher price. So it can be tempting to look at the most recently closed sale and offer your house for sale at the closed price – or something really close to it. However, the way that sale got to that price is often by providing an attractively low list price. If a condo or townhouse just closed at $950,000 but was listed for $885,000, you don’t want to then list your similar condo at $950,000. Why not? First, one comp does not make market value! But second, if homes are often selling for $65,000 over list and you come in at the most recent value, many home buyers will be envisioning the ‘true sale price’ as $50,000 or more higher. In other words, suddenly your property appears unattractive and overpriced. if you want to be competitive and attractive, don’t focus on the sale price as much as on the LIST price – and know that if your home is in good shape, you will collect the multiple offers that will push the value up.
(4) To repeat with what we stated upfront, it’s important to understand your market within the bigger market. If you are in the 95032 zip code, it does matter also which school district your home is in and what pricing tier you’re in. It’s going to be very different, most of the time, if you’re in 95032 at the lowest price point (condo / townhouse or house that’s a tear down) as opposed to one worth $2 million or more. Further, some 95032 homes are in the Los Gatos Union School District, while others are in the Union School District or Campbell Union School District. IGNORE all the “zip code only” data – most likely, it’s not all that relevant to YOUR home.
Just like it takes work to sell your home for top dollar, it also takes work to do the pricing analysis well. That’s one area where it’s too important to just shoot from the hip. Everyone likes easy answers, but sometimes pricing analysis is not all that easy. Lately we have low inventory and low numbers of sales – so the pricing work can be a little harder to work out. Be sure to find an agent who will give this the appropriate effort and skill.
Want my assistance? Please call or email me for a confidential, no obligation appointment.
September 07, 2009
Shoud you buy or sell a home “as is”?
Most homes are neither fully original nor fully remodeled. Most homes are “somewhat updated” or “somewhat remodeled”. To get them into shape to pass inspections (there’s not really a pas-fail grade, it’s more “items of concern”, health and safety issues, or serious structural issues, and big cost items), most homes will require some work. And this is often a surprise to homeowners. Sellers don’t usually know that they have termites, for instance. They often don’t realize that the electrical system they’ve been living with isn’t entirely safe. They won’t know until and unless they get the home professionally inspected.
Silicon Valley real estate buyers strongly prefer a remodeled home that is not in need of any repairs. If a kitchen is 15 – 20 years of age or older, most home buyers will think it needs to be remodeled. Water heaters last about 10 years – so if yours is 9.5 years, they’ll want (expect) it to be replaced, too.
Treating pests, correcting issues with electrical, roof, updating countertops, appliances etc. can often run 1 – 3% of the purchase price. This is really in the range of normal.
Then the only question is this: who will pay that 1 – 3% to get the home into ideal condition?
When the sellers do the repairs, updating (and staging), often they recoup far more than that amount because buyers feel confident knowing that there are no major issues or concerns. When the buyers pay for the improvements to the home after closing, often they get a better deal on the house. It’s a risk – return ratio. Buyers will pay more when they feel sure that the home is in good shape (and it looks better too). They pay mcuh less when there’s the unknown of “how much will it cost to fix it?” and when they have to live through doing the work.
Let’s look at a couple of hypothetical examples using a million dollar property for the sake of easy numbers.
(1) A Los Gatos house has been updated and remodeled for the most part, but it needs about $20,000 worth of repairs (that were previously unknown to the seller), between a roof tuneup, pest work (Section 1 work on the termite & pest report), a couple of electrical issues, replacing some appliances that currently function but are really not at all close to new, etc. It could also use some fresh paint, carpet, and a little work on the landscaping to show at its best. Altogether, it’s about $30,000 worth of repairs, updating, and “freshening up” to sell.
In this hypothetical case, one seller will do the repairs and updating and one won’t.
The seller who doesn’t do the work expects that the home can sell for $970,000 since it should be worth about 1 million if the work’s done. The seller’s thinking goes like this, “I’ve been living here and it’s just fine. I might pick out a paint or carpet color that the buyer wouldn’t like.” Or “I’m not going to stage the home, or inspect it. What if it doesn’t sell? I’m going to sell As Is, but only if I get my price.” That home might eventually sell in the low 9’s, if it sells. Maybe at $920,000 to $940,000.
The seller who does the work and prices it aggressively (a little on the low side, under a million and maybe as low as $975k) gets multiple offers, driving the price up over one million dollars. Depending on the number of offers, it might sell at $1,020,000. That would be a pretty good return for $30,000.
(2) Now let’s consider the 100% original home vs the fully remodeled one.
If a fully fixed up home sells for $1,000,000 and the same floorplan in the same neighborhood is clean but original and it would take about $100,000 to bring it up to the level of the remodeled home (it needs a new kitchen, new baths, new furnace, water heater, pipes, etc.), a buyer will NOT pay $900,000 for it. No, the buyer will want an additional discount for the unknown, for having to arrange the work, for having to live with the construction etc. That home will probably sell for more like $850,000, perhaps $830,000. You may not think it’s a “fixer upper”, but the buyers will. It’s what most of us would call a “cosmetic fixer”. The home’s not falling down, but it needs a lot of work.
If you’re the seller, you may not have the time, energy and money to do the remodeling – but realize that you can’t sell for what it is worth per se. You will have to discount it more because of the risk and hassle.
Buyers, sellers often don’t think they should have to take as big of a discount as you want. Sellers won’t part with that “could be a million dollars” home in the 700s. But the good news is this: if you do the work, you should, in most cases, have great instant equity. You won’t have as much competition. (In both examples, of course, assuming that prices are flat or better, not declining.)
Also factor in the real estate market conditions:
When the market is flat such that prices are either not changing or appreciating, it is usually better for sellers, if they want to net more money, to do the repairs and staging. Homeowners, even if you have periodically updated your home and you think it’s in perfect shape, please understand that there will probably be repairs and improvements to make in order to maximize your return on the home sale. Mentally budget up to 3% of your home’s value, though most likely if you haven’t deferred work, it should be closer to 1 – 1.5%.
Often sellers don’t want to do the work, and in many cases they don’t have either the energy or finances to do it. However, when they do have the work done, it is usually greatly to their benefit. I once had a Santa Clara listing and the seller agreed to do $7000 worth of minor staging and repairs and that brought a sales price of $20,000 more – about three times the “investment” returned just a couple of months later.
If the market is depreciating and prices are falling, it is often better to get the home on the market quickly since the time spent on improvements will often cause a loss that is greater than the value of making the imrovements would bring.
If you are interested in improving your net from a home sale or in paying less for a property, please contact me and we can discuss your plans and strategy. If you are thinking of becoming a Los Gatos, Saratoga or San Jose area home seller, please also see
Get the Best Deal When Selling Your Home in Silicon Valley, my book. If we meet, I’ll be happy to give you a copy of it with my compliments.
March 01, 2008
We all like easy answers, preferably with a short list. That’s why titles like “Five Easy Ways to Make Millions” seem to sell so well. With that in mind, let me provide a few very simple rules of thumb for staging your Silicon Valley home to sell in any real estate market. But let me warn you: I’m going to be painfully, brutally blunt.
The first rule for “staging your home to sell” is the topic of today’s post and it involves landscaping and curb appeal. The front of the house needs to look great. Seriously. If the front doesn’t look wonderful (or at least really good), the buyer will never go inside to see how great your home is. Especially now, when the majority of homes are not selling.
Here’s Mary Pope-Handy’s “Simple Rules for Landscaping to Sell Your Home”:
- Get rid of juniper. I’m not kidding. And ivy too, while you are at it. These two plants are hated by most buyers and tend to give them the sense of “if they’ve lived with that, what else have they lived with?” There are front yards which consist of nothing but ivy and juniper. Tear it out.
- Make sure the door(s) and windows are fully viewable and not at all obstructed from the street. This is dual purpose. First, it allows the buyer to see the home as uncrowded from the outside, and it lets a maximum of light get inside. If your bushes are growing over any part of the window, beat it back. I mean, trim it back. Mature landscaping is good. Overgrown is bad.
- Have a healthy lawn in front. Fresh sod is nice, but a nearly weed-free, inviting patch of green will do. (In ground sprinklers required. Timers and auto drip a plus to buyers.)
- Plant colorful flowers near the walk way and near the front door.
- If you have a porch, make it appealing with good furniture – but not overcrowded. Think uncluttered. If it’s a tiny porch, use tiny bistro-like furniture.
- Keep garden hoses rolled up and tidy, keep walkways clear of debris, keep all the living things healthy (unless you’ve got moss – get rid of that living thing!).
- Clean your windows, door, porch, exterior. A power washer is a good friend – it’ll help you clear cobwebs. Make sure the door opens easily and the hardware is clean.
- How’s your mailbox? If it’s tired, replace it. Ditto that for the front mat.
- When selling, make sure to keep your garage door closed (and that it operates properly). If the driveway, walkway or sidewalk is badly cracked or damaged, consider repairing or replacing it. This is particularly true if there is any tripping hazard. (Imagine a buyer getting hurt while viewing your property – you want to eliminate this possibility.)
That’s it for the exterior. Not too painful, was it? (Well, not if you didn’t start with a heavy load of juniper and ivy.) If you can make your front yard approachable and welcoming (no walls of ivy, no overgrowth), it will do wonders at beckoning people to see the inside of your home too.