Selling Your Home in Today’s Market – Preparation and Pricing

There are two key elements to selling your home and getting the highest possible price for it in today’s market.  We are no longer in the times of seller’s glory where houses sold in multiple offers regardless of how they looked or what problems they had.  The two key components to getting your home sold are preparation and pricing. 

First I’d like to discuss preparation.  Buyer’s today are putting more of their own money into the house up front in the form of the down payment.  With all their resources going into a down, they don’t often have a lot left over for doing huge repairs on a house.  So early in the game it’s important to get a reliable pest report on a house. 

I just had a buyer in contract on a house that on the surface looked really good. The pest company the sellers used had a $4,000 pest report that was done by an unreliable company. That company just deferred away all the big ticket items and did not give a bid for them.  During my buyers investigations it became clear that a more reliable pest report was needed.  That $4,000 pest report turned into a $50,000 pest report and as one might expect, the deal fell apart. The sellers are now stuck with a house that has a very limited audience in terms of people that could actually take on the work that is needed there.  They have very little choice but to take the home off the market for a few months to do the work.  This will leave them marketing the home in the middle of the winter and in the mean time they will be carrying two home payments.  This is not a situation you want to find yourself in as a seller.

 As an agent representing you as a seller, it is my job to assist you in making the right decisions that will help you get your house sold. That does not always mean telling you want you want to hear.  It is better to get the straight story about what it’s going to take to get your house sold at the highest possible price, than to have me just go along with a plan that is doomed to failure.  In our San Francisco East Bay Real Estate market, there are still a few houses that sell in multiple offer situations. Those homes are the ones that have very little in the way of big ticket items for a new buyer to deal with, that are staged and estedically appealing, and are priced just below where they are realistically going to sell.  The houses that do not start out with all these factors, end up in a situation of price reduction after price reduction until they eventually get sold for much less than they would have, had things been done right from the start.  Some houses just never sell at all.  There are a few houses in every price range that have been on the market for over a year with little activity on them for months.

So if you are a home owner who bought one of those homes with large pest reports and you haven’t yet done the work, be aware that you should start budgeting to put money away to take care of it.  You will not be able to pass those costs along to the next buyer as was done when you bought.  The longer you wait on doing this type of work, typically the higher the costs get due to inflation and to the problem getting larger.

So once we have addressed the house structurally, we next need to take a look at it from the point of view of what it’s going to take to make someone fall in love with this house.  I believe I can best illustrate the process of home preparation by talking about a recent house I listed and sold at 3087 California Street in the Laurel neighborhood of Oakland.  Sometimes our family gets bigger and we begin to outgrow a home.  We need more space.  That was the case when I first met with the sellers of this little home.  They were all squeezed in a 920 to 940 square foot home.  Had the sellers needed to stay in the home during the marketing period, we would have had a very different situation on our hands. It would have been impossible to present the home in the best possible light with even the barest of necessities for a family of 3 to live with.  Luckily they had already purchased their next home and had been doing major repairs and remodeling to it in the months prior to my meeting them. They were now ready to move and begin to prepare their current home for market. 

These sellers were good to their home the 15 years they had lived in it.  They had taken care of many big items along the way and the house was structurally in great shape.  The pest report was a few hundred dollars.  The sewer lateral had been replaced.  There were electrical upgrades done. The homes only issue was a roof that was getting to the end of its life.  Given that they had had so many people tell them that the home was sound structurally as far as the foundation was concerned, we decided to put our efforts toward getting a reliable bid for the roof work.  It was under $7,000 and we decided that since that was really the only thing going on we could probably leave that for a buyer to do, maybe give them a credit if that were a negotiating point down the road.  Esthetically the house was really lacking. 

Before Kitchen Picture

The exterior of the home looked great as the sellers had it painted a few years before. But the inside desperately needed a paint job.  The kitchen was the original kitchen with some extra shelving put in to meet the current owner’s needs. 

Before kitchen remodel

All those open shelves made the kitchen look too cluttered.

Breakfast Nook Before remodeling

The cute little breakfast nook had been turned into an office space and the table had been removed.  Fortunately they had saved it in the basement area.  The refrigerator was too big for the space and stuck out in the door way.  Some office type drawers had been added with butcher block counter top put on them.  The stove worked fine but also looked worn. The light fixtures were some 80’s lights that didn’t really go with the bungalow style of the 1925 home. 

The bathroom was our other challenging area due to the size. The current sink was a pedestal sink but was so large that it co-mingled with the commode.

Bathroom before remodeling

This would be especially problematic for a male buyer.  The bedrooms also had shelving put up all around. We decided to begin by having my color consultant and designer, Angelisse Karol, spend a couple of hours with us giving some direction.  She gave us some invaluable suggestions and picked out the color pallet to repaint the interior of the home. 

 The sellers moved out of the house and I immediately had my painting expert, Rob Lewis and his crew, begin painting the interior.  We removed all the shelving that was attached up high around the bedrooms, bathroom, and kitchen as it detracted from the period detailing.  We decided to work with the original kitchen cabinets and sink.  We also decided to keep the office type drawers as they added needed counter-top space and storage in this older kitchen.  The painter repainted the fronts of them along with the older cabinets. 

The kitchen transformed after the remodel

 I then found period style handles for the cabinets including the drawers which made them look as though they belonged there.   I also shopped all the lighting stores to find some schoolhouse light fixtures that were reasonably priced that worked perfectly in the kitchen and breakfast nook area.  As you can see from the photos, the changes created an amazing transformation.

Other side of Kitchen after remodel

We replaced the stove and refrigerator.  We found appliances that matched the space and the older style.  And we replaced the kitchen floor with a black and white tiled vinyl floor. Does this sound like one of those shows on TV where they remodel a house on a budget? Welcome to my world.  This is one of the bonuses of working with an agent with some design skills.  The sellers saved a huge amount of money in the time that I put in to directing the work being done, shopping for appliances, cabinet knobs, and light fixtures. 

Breakfast Nook after remodel

A designer or a stager would have charged for that time.  I see it as part of my job in helping prepare a house for sale and it’s kind of fun.  The kitchen in this home, which was initially a big area of concern, actually became the area that many people gave positive comments on during the open houses.  They fell in love with the changes made and we didn’t have to completely gut and remodel the kitchen.

The bathroom was our other troublesome area.  Someone had at one time decided to seal in the old claw foot tub and tile around it. It looked very unappealing. 

Bathroom after remodel

The toilet and sink were the wrong shapes and sizes for the space. The floor and wall tiles were attractive however.  We had Yvonne Kettles from SHE Custom Building take responsibility for the bathroom area and the kitchen floor. She removed the old tub, put in a new one, found tile to match and custom tiled the new tub in to match the older tile. She found a fabulous sink that was perfect for the space and a commode that stuck out in the room less than the previous one.  The bathroom looked like new.  I picked out new lighting and towel racks. The little bathroom now worked for both men and women.  It was a success. 

After the sellers moved out of the house we realized that the hardwood floors, that we originally thought we could live with, were just not up to getting the top price for the house. We decided to have those redone as well.  A refinished hardwood floor, like painting, gives the seller the most return on their dollar. People love to see nice original wood floors. 

Living room before remodel

Living room after remodel

 

 

 

 

 

 

 

If you are thinking about covering up those hardwood floors with Pergo because you think it’s cheaper – PLEASE STOP NOW.  DON’T DO IT!!!!  You will immediately lower the value of your home.  Most buyers who are willing to pay the most do not like laminate floors.  They just do not feel good to walk on. 

Finally, once all the work was done on the house, we were ready to have it staged.  Many times I hear sellers say they are not willing to stage a house.  They grumble about the cost.  They say they don’t like the staging they see most of the time, that it is too Pottery Barnish.  It is vital in today’s market more than any other, to have the home staged.  We are now in a time when buyers are doing their home shopping online before coming to any open homes. Gas is expensive and time is short.  People are not wasting time or money if they do not see pictures that draw them.  We use professional photographers for all our listings at Pacific Union.  But even the best of photographers (which by the way I have), cannot bring perspective into the shots with just 4 walls in a room.  75% of buyers do not have imagination.  They can’t picture themselves in the home without seeing what the house could look like if decorated nicely. Staging is crucial.

Bedroom after painting, refinishing the hardwood floors, and staging

In this house we used Cordelia DeVere with New Moon Designs who is a unique stager.  I knew when I first visited this home that she was the one who would do the best job with it. She tends to put more things in the home than the average stager and doesn’t leave the place feeling bare and unlived in. She also uses original art and puts up nice curtain rods with beautiful curtains. Her textiles are really nice including had woven rugs, decorative pillows, and expensive looking bed linen.

In the end, these sellers spent $21,000 on getting their home ready for market.  This included all the work discussed above plus some outdoor work painting the garage, touching up the house where a cat outdoor fenced area had been,  putting on new railing to an outdoor deck, and removing a metal door from the front of the house.  Some landscaping was done mostly in cleaning up the back yard and re-doing the front landscaping to open up the house  to the street and create CURB APPEAL – my favorite thing.  But what did this translate into in terms of gain?

Home before front landscaping

Curb Appeal Achieved after a little bit of Landscaping

 

 

 

 

 

 

 

We originally priced the house at $449,000.  Where did we come up with this price?  I brought all the current comparable sales to the sellers.  These included homes that were currently on the market, ones that were pending (i.e. had gone into contract in the last 30 days or so), and those that had sold in the last couple of months.  It doesn’t make sense to go back any further than that in this market where prices have been coming down.  We needed to see what had been happening right now.  It was also important to look at the square footage of the home as buyers are doing that these days. Smaller houses are harder to sell. This is because buyers are looking at needing to stay in a home longer than they did before. Buyers realize they might outgrow it more quickly than the market may appreciate so they will pass on the smaller home. Finally we looked at the houses that were currently on the market.  We looked at the number of days they had been on the market and how many price reductions they had done.

When we began the process we didn’t really know how or what we were going to do to the house to prepare it. I told the sellers that we would re-evaluate the price prior to bringing the home on the market once it was all ready.  I also agreed to have several agents from my office give pricing suggestions to assist us in coming up with the right price.  After the home was ready I believed that the best asking price to get the highest price was $479,000.  I had several agents come out and that price was confirmed.  My sellers were not sure of this. They wanted to price it at $489,000.  I believed that $489,000 felt like more of a stretch for the buyer in the $450,000 range.  If we got the home priced within their reach we may end up with more than one buyer coming to the table which could mean a higher outcome for my sellers.   If we priced it high to start with, we could end up with getting less than we would otherwise.  Buyers tend to jump on something they see that is priced right to begin with.  When they think it is overpriced, even a little bit, they decide to play the waiting game to see if the price will come down.  As a seller, that is the worse game to be involved in.  My sellers had moved into their new house, they wanted immediate results, and they wanted to get their debt level reduced as quickly as possible.  The great thing about the sellers is they listened to their expert. They asked lots of questions and looked at all the data given them and decided the price made sense. 

We came on the market at $479,000. Before the first open house there were lots of agent showings.  Several agents asked for disclosure packets.

I want to diverge one last time to point out the importance of seller disclosures. I spent a whole evening assisting my sellers in filling out the “Seller’s Transfer Disclosure Statement” and “Seller’s Questionnaire”. My sellers were very thorough.  They had lived in the house a long time so there was a lot to tell about the things they did along the way. When buyers read these disclosures, I’m sure they relaxed because they felt the sellers were doing their due diligence and reporting everything they knew about the house.  Completely filling out those disclosures and telling all the things you know to be wrong with your house is vital to protecting you from lawsuits down the road.  In addition, it is another thing that helps your house to get sold because it answers questions and illuminates uncertainty. 

After the first open house it became clear that there were 4 parties that wanted to place offers on the house.  We decided not to wait for the second open house and took offers at the end of the week following the first open.  All 4 offers were over asking.  The winning offer was for $503,000. My sellers were very happy and relieved.  The buyer’s inspection went smoothly.  We closed escrow in twenty-one days after going into contract.

I firmly believe that had we done nothing to the house to prepare it, we would have had a hard time selling it at the original list price of $449,000.  It would have taken much longer, that is for sure.  So by spending $21,000 my sellers got a sales price $54,000 more, a gain for them of $33,000.  We did exactly the right amount of home preparation to gain a quick sale for the highest possible price.

I just want to point out that there are several other properties that are now for sale on that street with other agents.  One of them just went pending after a price reduction of $43,700 and 23 days on the market.  I heard it had multiple offers after the price reduction.  The other house that is very similar to the one I just sold is still on the market after 27 days.  It has an extra space on the back and is a very attractive little house.  It has a big pest report with a portion of the foundation needing to be replaced. Again, buyers get daunted by all this and don’t act.  This house is also priced at $499,000. 

The moral of the story is pick an expert to work with that takes an active part in the preparation phase and will tell you the truth, not what you want to hear, and then listen to them.  Good results can still be had for sellers.  You have to realize prices have come down and the playing field looks very different than it did two years ago.  Prepare and price your home right and most of the time you will have successful results.

Written and Edited by Dan Joy