How to Maximize Your Home Sale Price
I have put together this document to point out some of the possible pitfalls in the home selling process up-front rather than having you be surprised later. As an agent, I see my role as a bit of a chef. I know the results I want and how to achieve them. In order to get predictable results, chefs, just like real estate agents, need to follow a precise recipe. If the recipe is not followed the results will vary.
After many years of home selling experience I know the recipe for selling your home for the highest possible price and with multiple offers. If we work together and follow my tested recipe closely, I can assure you fantastic results will ensue. The following are a few common mistakes which can have a negative impact on the selling process: uncertainty, cluttered home, lack of buyer/agent access to the home, poor curb appeal and improper pricing strategy. Below I will explore each of these factors in greater detail.
Uncertainty – Buyers do not like uncertainty! Buyers will insist on paying less for something when they are unsure of its quality. This holds true for stocks, real estate, automobiles and just about anything else which is for sale.
Here are a few common sources of buyer uncertainty as they pertain to real estate:
- Non-existent or incomplete inspection reports & disclosures – If we have done our job well, all necessary documentation will be well-prepared ahead of time and available via the web for buyers to download. These documents should address any and all questions a buyer might reasonably be expected to ask. These documents include: seller disclosures, advisories, questionnaires, preliminary title report, all inspection reports (general property, termite, roof, pool), building permits (if applicable), environmental hazards report, homeowner insurance claims history report as well as many other tertiary documents. The agent representing the buyer of your home will be looking through your documentation looking for red flags. Incomplete documentation will at least generate a question mark and possibly a red flag which can ultimately lead to a lower sales price.
- Items called out in the inspection reports – Once an inspector calls out items in need of repair, it is very important to get these things fixed and point out these repairs to buyers. I place remarks directly on the inspection report PDF detailing the status of each item called out by the inspector. These remarks include: the date of the repair, who made the repair and what work was done. Many attempts to save money in the preparation and presentation of your home will cost you much more in the form of a lower final sales price. I will review all inspection reports with you and offer my suggestions as to which repairs you should get done beforehand and which repairs you should only get bids for. Regarding bids, it’s always good to get two bids for everything. This helps give buyers a solid understanding of the future costs associated with repairing the property. Our goal is to make it simple for buyers to understand EXACTLY what they are getting into when they buy your home.
- Personal property blocking access or preventing inspection to parts of the garage or attic – When an inspector states in his report that he cannot inspect the garage or attic due to personal belongings being in the way he will always state in his report “Reinspection Recommended.” This creates a small amount of uncertainty in the mind of a buyer. While this minor item is not a deal killer, it definitely gives the buyer a cause for pause and gets the buyer thinking he may need to get his own inspection. This can slow down the buying process and removes some of the urgency and emotion from the buying process. Our goal is to create a positive emotional reaction that spurs the buyer to action. The more question marks and uncertainties we present to buyers the more we deviate from my recipe for selling success.
Keys To Selling Your Home For The Best Price!
Vacant and staged – it is a statistical fact that a home sells faster and for more money when it is vacant and staged. Personal belongings of any kind make it more difficult for buyers to envision your home as theirs. Additionally, if the you are at home when buyers visit you can be certain the buyers will not spend as much time previewing your home as they would if no one were home. These two facts can have a huge negative impact on the selling process. If the seller is still living in the home it is imperative they remove as many of their personal belongings as possible. I have a saying “remove everything you possibly can then remove some more.” This pertains to all areas of the home including the garage and attic. While not being vacant and staged are not deal killers, they are certainly a deviation from my recipe and will yield a less than optimum sales price.
Buyer/Agent Access to the Home – in order to get the most traffic through your home it needs to have a lockbox available all day every day. Logically, the more your home is available to other agents, the more it will get shown. Agents prefer to show homes which don’t require a lot of effort to access. If there is no lockbox out and available or if you place restrictions on lockbox hours you decrease the chances of a showing. Agents are like everyone else. Lazy if they can be. Some sellers are against lockboxes altogether. Not having a lockbox on your home will certainly drag out the sales process and likely yield a lower sales price. Anything less than perfect availability will yield less than perfect results.
Potential solution: As a second-best solution, the lockbox should be out and available until a specific time of day, preferably in the evening. After this time agents must call to request the lockbox be placed outside. Many buyers only have time to view homes after work so it is imperative agents have easy access in the evenings. I receive weekly reports on lockbox activity and very few showings occur during business hours on the weekdays. Most showings happen at night and on weekends. A surprising amount of weekend showing activity occurs after open house hours as many buyers prefer to view the home for as long as they wish without interference from other buyers or the agent hosting the open house.
Curb Appeal – Curb appeal is critical. Buyers establish their preliminary opinion of a home in the first few moments. It is therefore imperative your home looks its best all the time.
Pricing Strategy – Pricing is an important aspect of the overall strategy to sell your home for the best possible price and receive multiple offers. There is a direct correlation between how low you price the home and the number of offers you receive. Yes, some of these offers will be undesirably low, but you never know if one of them might be willing to come up enough in price to be the winning bidder. These low offers present a very minor amount of additional processing work on our part but they can really make a difference in the negotiation process by enabling us to tell other agents how many offers are coming in. Remember, many agents use the 1% – 2% rule of thumb: the final selling price will be 1%-2% over asking for every offer that is received (in a multiple offer situation).
“Days on Market” and why you should be concerned – I firmly believe there is only one reason a home doesn’t sell quickly in a strong market – price. There are far too many buyers out there for a property to be “overlooked” or “misunderstood.” Once a home has been on the market long enough to properly expose it to a majority of the buying public, yet it receives no offers, it is safe to assume the home is overpriced. This begs the question what exactly does “long enough” mean. The answer to that is a bit different for each city. At one end of the spectrum you have Los Altos Hills far west of highway 280 where homes typically sit on the market for many months and sometimes years before selling. At the other end of the spectrum you have Palo Alto where homes commonly sell within 10 days with multiple offers well above asking.
Buyers often think if they keep the home on the market long enough someone will eventually come along and pay their price. Statistics prove this to be untrue. It is uncommon for a home to sell at the asking price once it has been listed at that price for more than a few weeks. This can be clearly seen by pulling up recent sales in your area and price range and putting them into a spreadsheet and reviewing the difference between asking price and sale price. It is important to pay close attention to the number of days on market as this data will invariably show that homes typically sell at or above the list price only within the first 14 days of the listing. I run this type of analysis for every listing I take on.
Once a home has been on the market for two weeks buyers and their agents know a multiple offer situation is not likely so they offer less than the asking price. After this two week mark it becomes extremely difficult to extract multiple offers from the marketplace. Additionally, the longer a home sits on the market without a price reduction the more aggressive buyers become with lower and lower offers.
Clearly the number of days on market is a very important piece of information for buyers and sellers. Carefully analyzing the “days on market” number for similar home sales in your area can help us devise a pricing strategy to maximize your sale price. The goal is to have the home on the market long enough to give it proper exposure but not so long that buyers assume it is overpriced.
In closing, the goal is to get perfect money for your home. To do this we need nothing less than a perfect strategy and presentation to the buying public. Anything less will yield less than perfect results. The path to perfect results is clear so we must stick to the path. I am not saying the results will be disastrous if we don’t follow the path, just a less than optimum sales price and selling experience.