Although the asking price may need slight modifications, regardless of the real estate market, a good Realtor® will be able to help you sell your Silicon Valley home. This may be important to the many sellers out there who cannot wait for a market turnaround. The reality is, if the house is priced fairly and your house is in a condition that appeals to the average buyer and is given good exposure, you should be able to sell your home regardless of the market.
Besides the “asking” price, there are many things that can affect how quickly you sell your home, but we will start with price.
For obvious reasons, the asking price is the most important factor in determining how fast your home sells. Despite the desire to make sure that you price your home high enough to make a profit, as well as leaving negotiating room, you should be aware that overpricing your home is the most common and dangerous mistake that you can make as a seller.
A home may be overpriced for many reasons. Some sellers consider their first asking price to be a “trial balloon,” where they just want to see if they can attract a better-than-normal offer. Others simply insist that their home is worth more than any objective market analysis would indicate. For example, sellers who have been trying to sell their house themselves for months may now want to raise the price since they are paying a Realtor® for representation; the sellers still want their net price, so they try to add sales commissions to the listed price. Homes like this usually stay on the market the longest and end up being sold for less than market value. One of the primary reasons so many FSBOs fail is because the seller is personally biased. It is easy to convince yourself that something you own is worth more than its real value. It’s also why so many Realtors®, when selling their home, actually list with other Realtors®, or at least rely on the advice of others. Objectivity is paramount.
Many sellers know of a home that sold for a high price in their neighborhood, and want to know why their home should not be similarly priced. But they may be unfamiliar with the particular differences between that house and their own that would justify the difference in value.
The bottom line is, don’t overprice your home. Professionals know that the longer a house stays on the market, the lower the selling price will be in comparison to the original asking price. More often than not, your first offer will be your best. So if you overprice your home by 5 percent, you could end up losing 10 percent or more, and wait months to sell your home.
This leaves us with the question of how to modify the price of your home, in either an up or down market, to avoid overpricing. This is where a Realtor®’s advice can be invaluable. Unlike a typical seller, who is only familiar with the markets that effect either the sale or purchase of their own homes, an experienced Realtor® will have the knowledge of many years of market changes and fluctuations. They will also have a database of important sales statistics which they can use to expand their knowledge base. This can turn a guessing game into an educated pricing decision.
Depending on the circumstances, you may also want to consider underpricing your home. This option can be appealing when you need to sell fast, possibly because you are moving out of the area for work or to close on a replacement property. In the recent past, Mary has sold four properties where the buyer was the first and only party to see the property. These were cases where the buyers had difficulty finding the right property, the new listings were underpriced and they fit the buyer’s needs perfectly. Even with full-priced offers, they got bargains. Good Realtors® check for new listings every day, and when a good deal comes up, they call the buyer immediately to see the property. Underpricing can sell homes quickly!
It is also important to know that there are buyers in every price range in your market just waiting for the next property listing. They’ve already seen everything that fits their criteria without finding the “right” home. If yours is priced right, and it fits, you could have a quick sale. However, if it is overpriced, the buyer may not see your home at all or won’t make an offer. Overpricing can cause you to lose that buyer forever.
If for some reason your house has been on the market for longer than the normal range in your area, it’s important to revisit the price, marketing plan, staging and traffic coming through your home. If you’ve hired an agent, this is a good reason for a meeting and a review of the above as well as of the feedback from showings. Some agents will say that the right price can fix any defect, and while that’s true, it may not always be the cheapest remedy! Sometimes other changes will be as effective but ultimately cost less to your bottom line. What do we mean?
For example, if your home is not on the Multiple Listing Service, it’s not being seen by most buyers and without the traffic you simply will not get the best price, if you get offers at all. If your property is only available by appointment and with 24 or 48 hours notice, you are probably discouraging showings and thus, limiting traffic and any potential offers. That’s a huge mistake! If your home is overcrowded (clutter), or if there are odors (smoking, food, incense, pets), it is probably cheaper to change the environment than to lower your price. If you have hostile tenants or pets, these too can create an atmosphere that isn’t conducive to buyers wanting to linger, let alone picture themselves living there. Vacant, completely empty homes can feel sterile and uninviting too. A little staging can go a long way in changing the way a house feels. If all these issues are addressed properly and your home still isn’t selling, then the issue probably is price.
If you have had people looking at your home, but you still have not had any reasonable offers, you should find out what specifically is discouraging buyers. There are several ways to do so. First, your Realtor® should be getting feedback from both the buyers who saw your home and from the Realtors® who showed it. Not all Realtors® will respond, but the feedback can be invaluable.
A word of caution. It is easy to get defensive when buyer feedback indicates “the home is overpriced” or “the floor plan doesn’t work.” We have had sellers say, “Well, if they don’t like the price, tell them to make an offer and we’ll see what we can do.” The fact is that most buyers, while willing to make an offer under the asking price, do not feel comfortable “lowballing” an offer. They simply feel that negotiation would be futile.
A good Realtor® will seek brute honesty in feedback and will convey that to you undiluted. And while an occasional buyer may respond too personally (e.g., “what a horrid floor plan”), it’s important to look at all the feed-back with your Realtor® to determine the next steps to take.
If your home has languished on the market for several months, it may be a good time to take another look at your competition. Your Realtor® can set showings for you on competing properties, and this could serve as a reliable reality check.
In general terms, there are two primary approaches to negotiating a deal when price alone is the major consideration. One is to start low and know you will probably reach an agreed-upon price somewhere close to the asking price. In fact, one of the jobs of your Realtor® is to try to determine your bottom line. The second approach is to make a “take it or leave it” offer. If you only want to sell at the price that you and your Realtor® have determined is fair, then this is a realistic approach to take. Then buyers will only be able to negotiate on “cosmetic” items like the closing date or what is included in the sale. Believe it or not, we had a number of deals accepted on that basis, but usually when the house was listed for slightly under the market value.
The vast majority of Silicon Valley real estate deals, when both sides are represented, should come down to what is fair. It should end up being a win/win situation, where everyone feels satisfied with the deal. We have all dealt with buyers who “want a deal” and who are unwilling to pay fair market value for any property. They want to steal it, to stick a knife in the seller’s back and then twist it. They are only looking for someone who is vulnerable and has to sell at any price. We usually send away this kind of buyer.
Now, it is true some deals are made this way. We have found properties that must be sold quickly to avoid bankruptcy, or that are on the verge of foreclosure. We have not hesitated to get one of our buyers into such a deal. But your Realtor® is there to protect you from buyers who take the attitude that you can only be happy if you have “screwed” the seller. This attitude is really just corruptive of the whole process of real estate sales. This goes both ways too. There are always those on both sides of a transaction, buyers and sellers, who want to “screw” the other party. Again, the best deals that are made are the ones in which everyone ends up satisfied.
So, if you haven’t already, you and your Realtor® should now prepare for negotiation by formulating a game plan. You should both be clear about what is vital to the deal and what you can give up. Most bottom lines should include some unnecessary items you can give up without feeling deprived, while giving the buyers the sense they won some concessions. It is also important to understand that there are many more things to negotiate besides price. In fact, there are occasions when price, although important in reeling a buyer in, is the least important negotiating objective.
For example, you may need a really quick close—you will lose a home you are trying to purchase and you need the sale proceeds immediately. If the buyers are renters, you may not have a problem; but if they also have a house they need to sell, it may mean convincing them to own two homes for a period of time, and you may have to concede to the offering price in order to get what you need. On the other hand, you may have just put in a brand-new lighting fixture that you would love to keep, but if it means getting your asking price, it may be worth parting with. In fact, we always recommend that you remove any items that you definitely want to keep before putting your house on the market, so that you don’t have to say “no” and potentially waste negotiating power on trivial items. The bottom line is that it is important to know, and to clearly communicate to your agent, those things that are important to you and those that are not.
Always try to negotiate from a position of strength. You can contribute to a stronger negotiating position by not overpricing your home. It will also help if you have taken the steps described in the next chapter to do a lot of the preparation work before a buyer ever sees your home, from pre-sale inspections and having completed disclosures upfront, to staging and remedying any issues in your home so that it appeals to as wide an audience as possible. And, if you are looking to buy another home, it will be to your advantage to wait until you are under contract with a buyer before you make an offer of your own.
Your Realtor® will also try to find out what might motivate the buyers. While it is not always possible to determine their motivations up front, it is usually worth trying. For example, if you find out that the buyers are moving from out of state and need extra moving time, you can give them the time they need in exchange for taking the appliances. If you are not in a hurry to move, and you can make a closing date or possession date agreeable to the buyers, don’t you think they might be willing to negotiate on price?
If you find out that the buyers are being transferred and need to move quickly, or are getting divorced, or are facing a termination of their rental lease, you will have accumulated information that is important to your negotiating process. Once you know as much as you can about the buyers’ position, and you and your Realtor® have a clear picture of your negotiating position, you are one step closer to selling your home.
Another useful strategy to sell your home is giving the buyer a break. If negotiations are stalled, you might offer to throw in the patio furniture, or offer to clean the carpets after you have vacated. Small gestures can be very valuable. If a buyer is on the fence, a seller who appears willing to do something extra may have the right stuff to seal a deal. And at the end of the day, that $250 porch swing may have saved you an extra month’s wait in selling your home.
You may not have control over the real estate market or your neighborhood’s sales prices, but there is one area where you can personally make a huge impact: the condition of your home. Although this will be discussed in much more detail in the following chapter, making sure that your home is in the best possible condition will greatly enhance your odds of selling your home quickly and at a good price.
Ken works with a Realtor® known in the real estate industry as “Lox and Bagel.” The nickname comes from the fact that he often “dresses” his listings for open houses, including setting the kitchen table with a lovely brunch including synthetic bagels topped with lox! Realtors® call this “staging” a home.
As silly as this sounds, his houses sell, and not just because of the synthetic food. On Sunday mornings, when most of his open houses are held, he provides his guests with an idea of what it would be like to wake up and have a beautiful brunch in this very home, which he hopes will soon be theirs. He even draws baths, complete with candles, champagne and strawberries. The bottom line is that when you view his homes, you know exactly how wonderful it could be to live there. Just as in magazine or television advertising, subtleties can make a huge difference.
It is important to realize that when a potential buyer views your home, you have your one and only chance to make the right impression. You may know that the dishes are usually washed and the lawn raked, but a potential homeowner only knows what they see on that first viewing. So before you cost yourself time and money, make sure your house is “dressed and ready” for sale!