Author note: this is a lengthy article which is 99% a reprint from a chapter in the book I co-authored with Ken Deshaies, “Get the Best Deal when Selling Your Home in Silicon Valley”. It has been updated as needed.
Your pre-sale preparation is key to your success not just in selling your Silicon Valley home, but in getting the best price with the least inconvenience. Most sellers will enlist the help of a real-estate-sales professional, and that is the best place to start. Find a good Realtor® early in the process and they will help you months in advance with decisions about inspections, repairs, staging, and so on. Take your time with this important task: interview, check references, do your homework, and then enlist their help in the preparation stage of selling your home.
Related reading on my SanJoseRealEstateLosGatosHomes blog:
Preparing Your Silicon Valley Home to Sell and Return on Investment
And also on the Live in Los Gatos Blog:
Strategies for Improving Your Home’s Sale Price
Pre-Sale Preparation for Home Sellers
Your Realtor® can help you make a list of needed improvements and repairs, but just as importantly, so can your good, pre-sale inspectors. (Inspectors are not all alike. Find good ones!)
Take care of the obvious things. Most buyers will want a termite or pest clearance and other basic repairs made (leak free roof, no plumbing leaks and safe electrical conditions, for instance) and one of our local contracts, the PRDS, demands it (the CAR contract does not). (See article on the differences between the 2 contracts here: http://sanjoserealestatelosgatoshomes.com/what-is-the-difference-between-the-car-and-prds-purchase-agreements-does-it-matter-which-contract-is-used/) There are many good reasons for a seller to do pre-sale inspections. One is that if the buyer goes into contract on a home knowing its condition, that buyer is far less likely to back out later.
When buyers do back out and a home sells again, it often sells for less than the amount it sold for the first time.
Another reason for pre-sale inspections is to avoid the experience of “writing a blank check” for repairs. One of our contracts requires that there are no leaks, that every system in the home is operational, that there are no pests and so on. If you sell and do not know the exact condition of your home, you may be promising repairs for which you don’t even know the cost! To make sure you don’t sell your home only to then find out how much you’ll have to pay for repairs, do your inspections first. Not only will it keep you from “writing a blank check” later, it will improve your bottom line most of the time. For instance, if your bathroom floor has dry rot from water splashing out of the tub or shower area, you can do the repair and then sell a more attractive home that boasts a new floor. If you waited until a buyer was in contract to learn that the repair was needed, you would have sold at a lower price and then had the unpleasant surprise of seeing your bottom line shrink while the buyer enjoyed a new floor at your expense.
So hire qualified inspectors to do whatever inspections are needed to know what the basic condition of your home is. For single-family homes, this usually includes a pest and a property inspection at a minimum. If you’re in a condo, it might simply be a property inspection. And if there are issues with various components of your property, you may need those inspected too: roofs, foundations, chimneys and pools for instance.
After selecting an agent and determining the condition of your property (fixing what you want and deciding to exclude other repairs or improvements once you do get an offer), you should be able to work with them to decide on a pricing strategy. The most common mistakes are made regarding pricing, and they are lethal mistakes to your bottom line! Know that you may have to revisit and refine the pricing strategy as you get close to going on the market. Remember that conditions such as the economy, competition or lack thereof, interest rates and so on can change.
Next you’ll want to get the large stack of disclosures you must fill out, and begin the job of completing them. California is a very disclosure–heavy state due to a lot of litigation. Your best strategy is to disclose, disclose, disclose. And to make sure you do a thorough job, do it before a buyer is waiting and you’re under a time crunch. Take your time and be thorough. Review it with your agent to make sure you are clear and have covered everything. Again, if a buyer can learn about the condition of the property before writing an offer, that buyer is far less likely to back out of the deal later. So make the condition known upfront!
Lastly, work with your agent on staging. We provide a lot of information on that later in the chapter because it is so important. Once your home is “dressed and ready for sale,” your Realtor® can arrange the photography and videography of the house so that when it goes on the market you can hit the ground running!
Real Real Estate Problems
There may be some real problems with your house that need to be repaired before you sell it. Except in a tight seller’s market, major “as-is” fixer-uppers are hard to sell. (And even in a raging seller’s market, you will get more offers and sell for a better price if the home buyers feel confident in the condition of your property – so often it pays to make repairs to provide that sense of security.) In fact, you should never spend money on cosmetic repairs unless you know that your home is structurally sound. If there are genuine problems with your home, you should either spend the money to address them, or understand that you will have to sell it as a fixer-upper for a reduced price.
A few years ago, one of Ken’s clients, Tim, listed a rather old Queen Anne–style home that had been in his family for generations. He had recently inherited the home and wasn’t particularly interested in fixing it up or living in it, so he decided to put it on the market. He informed his original Realtor®, whom we’ll call Joe, that he didn’t know much about the condition of the house, but that he did remember that the bathroom on the second floor had flooded a few years before, leaking through the roof and eventually damaging two of the downstairs bedrooms. Because the carpet had been replaced and the walls repainted, there was no visible sign of the incident.
Joe advised Tim not to say anything to avoid scaring away potential buyers. Taking Joe’s advice, he accepted a full-price offer and never made any mention of the water damage.
During the inspection, the water damage was discovered and the buyers not only backed out, but they threatened both Tim and Joe with lawsuits for failing to disclose known damage to the property.
As it turned out, Tim came to Ken’s office. He not only helped Tim with the mess that Joe had created, but he put his family home back on the market with full disclosure of the water damage, and listed it for only $10,000 less than the original asking price. Although it took a few months to sell, he finally sold the home to a handyman and his wife, because they knew that they could make the necessary repairs for under $3,000 and were happy to have saved some money! There is always a buyer for every home; the important thing is finding the right buyer.
A visual inspection will help you pinpoint potentially serious issues so that you can have them assessed by a specialist. You should also be aware that once you know about defects, you are legally obligated to disclose them to potential buyers. You and your agent must disclose any known material defects in your property. Although if you are selling your house “as is” and the buyer accepts any conditions as part of the sale, they still must be fully disclosed.
Dressed and Ready for Sale
Buying a home can be one of the most emotional purchases a person or family makes. A buyer may see that perfect bay window with the window seat they’ve always dreamed of and know that your home has to be theirs. So in order to have the most successful experience in selling your home, you must appeal to the emotions of potential buyers.
The reality is that what your home looks like matters, a lot! Deep down most buyers want a perfect new house, regardless of what they can really afford. No matter the age of your house, your job is to make it appear as new as possible without wasting money. Obviously, if your house was perfect you probably wouldn’t want to move, but the point is to make it as appealing as possible.
We always recommend to our sellers that a good place to start is with a thorough inspection. Take a pad and paper and walk from room to room, writing down what you see. Don’t just focus on problem areas, look for what you should highlight. Are there wonderful French doors hidden by worn curtains? Is the fireplace blocked from view by too much old furniture? You should not only tour every room, but inspect the entire property. Look at the house as if you were going to make an offer. What would you want to see? Maybe even enlist the help of an honest and impartial friend or family member to help you be more objective. If a buyer has a choice between two comparable properties that are similarly priced, they will choose the one in the best condition.
Home Selling Dos and Don’ts
There are some very simple and inexpensive things that you can do, or that you should avoid, when you are selling your home. By following these 10 simple tips, you can not only increase the sale price of your home, but hopefully ensure a quick sale.
Remember you have a very valuable item to sell. So like a sophisticated salesperson, you should make sure that the product you are offering is useful and appealing.
Tip 1: A little-known secret of the trade is to make sure that you don’t leave your car in the driveway. When a buyer pulls up they should see the home, not your cars. Let them feel like the driveway is theirs, and maybe even visualize themselves coming home. If you can’t park your car in the garage because of clutter, read Tip 2. (This is doubly true for getting the photos taken – the car should be gone!)
Tip 2: Get rid of any and all clutter. Piles of books and magazines, snow-globe collections and bags of recycling can be such a negative distraction that potential buyers might walk right out before passing the entry hall. The goal is to make your house spotless. The less clutter there is, the more open and spacious your home will appear. Too much furniture and knick-knacks always make a room look smaller than it is. And don’t forget the closets and the garage. Storage space is an important concern of many buyers, so the less cluttered these spaces are, the more space buyers think they are getting. Don’t wait until you pack to throw out those unneeded items— now is the time to do it. These things cost nothing more than time, but in the scope of a sale can be invaluable. There’s no need to make major changes, as most homeowners want to decorate themselves. You want to give buyers a spacious and clean blank canvas. If you can’t part with these items forever, at least put them in storage for now. There are companies that will bring you storage units, you then load them with possessions that are not needed in the near future, and the storage company picks them up and takes them away. Once you have moved, the unit is returned to you at your new home!
Tip 3: If you have furniture in less than the best condition, it may be worthwhile to remove it (either by storing or donating it) before showing your home. Unattractive furnishings can distract potential buyers. It is usually better to have more open space than to fill it with marginal items.
Tip 4: You should avoid potentially offensive items. We real estate agents usually preview houses before they show, or at least ask home sellers to have a neutral person walk through their home to see if they have any items that might be thought offensive to some potential buyers. (Strict vegetarians – there are many in the San Jose area – will not be amused to find a large animal head mounted on your wall. Think about your buyers when staging your home to sell!)
Tip 5: Avoid air fresheners. To prospective buyers, air fresheners seem like cover ups or a “red flag“. You are better off making sure that your home has been well aired out, particularly if you are a smoker. In fact, if you are a smoker and have smoked inside regularly, you will probably do best to replace your carpeting, launder or replace your curtains and only smoke outside until after you have moved. Also, avoid using incense or heavy cooking smells; these odors, like smoke, could cost you 5-10 percent of the value of your home in a reduced purchase price! Likewise, indoor animals can tremendously hurt the salability of a home if there are lingering odors. This is especially true with cats, older dogs, bunnies, rodents and so on. Our pets are very much a part of our families but be aware that some buyers are allergic and many are concerned about the odor not leaving when you do. Try using strategic fresh flowers to add a touch of ambience as well as a fresh scent, or bake fresh cookies or bread.
Tip 6: Make sure that your home is as inviting as possible. This means turning off the television and any other distracting electronic devices. Instead, try using soft music to set the tone. You also want inviting lighting. Make sure you have high-watt bulbs in dark rooms and soft lighting in areas where you want to detract attention.
Tip 7: Another important suggestion is to make sure that pets and children are not around when your house is being shown to prospective buyers. It is best to assume that buyers don’t have pets or children and let them ask questions about how a home can accommodate their needs if necessary. The bottom line is that if a buyer is allergic to cats or dogs, your beloved pet may drive them out before giving your home a chance. (Once while showing a condo to my buyers, the entire seller family was there. A small child ran up to me and shoved a baby snake in my face – apparently to check out my reaction. That kind of thing isn’t endearing!)
Tip 8: If you have wood floors in good condition you should be sure to show them off. Conversely, cover any old or worn floors with clean and tidy rugs (but be sure to disclose that the floors are worn or stained in your disclosure forms!) Additionally, if you have carpeting, make sure that you have it properly cleaned. In fact, stained or dirty carpet is such a huge turnoff to buyers, that depending on the condition, it may be worthwhile to replace it with inexpensive neutral carpeting, or to just pull it up if it covers hard wood flooring.
Tip 9: You should also make sure that any important papers, prescription drugs and valuables are put away in a safe place. The reality is that buyers are strangers that you are letting into your home. Although a Realtor® will always be there to show your home, it is best not to take chances with your private and valuable items. It is not unheard of for drug addicts to occasionally visit open houses just to steal prescription drugs for resale or personal use. Toddlers left to their own devices may also momentarily grab something without their parent’s knowledge. It’s best to keep money, jewelry, medicines and all valuables out of sight.
Tip 10: Connected to Tip 9 is the rule that you should always have an agent present when you are showing your home. This is not only a safety issue, but how else can you ensure that prospective buyers have all the information they need to make an offer on your home? Buyers are savvy; they expect their questions to be answered by a knowledgeable representative. If a buyer shows up on your doorstep, refer them to your agent but do not let them in if they don’t have an agent who has called ahead of time and accompanies them. In addition, the agent should always give you a business card.
Making the Home Buyer Comfortable
Potential buyers may be entering their future home, and can’t help but emotionally connect with the surroundings. You can take advantage of this. You can make coffee or bake cookies. This is not only a kind gesture, but adds pleasing, comfortable aromas.
Another useful tool is to give a list of your favorite features to your agent. This way your Realtor® can draw buyers to the best parts of your home. What made you want to buy your home is likely a selling point for prospective buyers. The more your Realtor® points out to potential buyers, the more comfortable they will feel, and the less time they will need to spend learning about the home for themselves.
One area over which you may have little control is your neighborhood. Regardless, we all know how important a factor this is in buying a home. But don’t fret; there are some small things that you can do that can make a big difference. You can help clean up graffiti in the neighborhood; you can clean up garbage in the street; you can have the city tow away inoperative or abandoned cars. In the larger scheme, you can team up with neighbors to form a neighborhood cleanup group or a Neighborhood Watch program. Prospective buyers may be relieved to know that even though you are leaving, they are moving into a neighborhood that cares.
Another thing that most buyers are looking for is a relatively modern home. As we discussed earlier, buyers want a home to appear new. Things that substantially date your house, like popcorn ceilings, metal banisters and wood paneling, can make a sale more difficult. It’s worthwhile to look into the cost of replacing, painting or removing these items. It may very well be a great investment.
Today’s homebuyer is looking for “character.” Just as popcorn ceilings are out, molding and natural woods are in. Adding molding can be a relatively inexpensive do-it-yourself project with substantial returns.
If you are going to spend money on your home, aside from fresh paint and clean or possibly new carpeting, there are two places where your investment will have the greatest payback: the kitchen and the bathroom. Replacing kitchen counters and floors alone can brighten up a dated kitchen. Likewise, bathroom remodels can be moderately priced and can substantially update your home. You don’t need to take any of these steps to sell your home, but be aware of what buyers will be looking for, and how you can best meet their needs. Just making your home sparkling clean can make a huge difference. Sellers must consider these factors and decide for themselves how much time and money they can invest in the final sale price of their home.
First impressions are important, and the first thing that prospective buyers will see is the outside of your home. The exterior not only speaks for itself, but it tells potential buyers what they can expect to find inside. The reality is that if the exterior of your home is in a bad state, many buyers will just keep on driving. If you drove up to a house with peeling paint, dead plants and falling rain gutters, you wouldn’t expect the inside to be taken care of, would you? For some small things you can do to make sure that the outside of your home is as well-dressed as the inside, see our checklist at the end of the chapter.
The most common problem we see after a closing is that the seller takes an item from the property that the buyer assumed was part of the sale. This goes back to an important point that we discussed earlier: Make sure that items you want to keep are removed from the house before you show it to prospective buyers. The bottom line is that there are some items that will automatically become part of the property once title is passed to the buyer, regardless of whether you assumed it was yours to keep. This is referred to as the law of fixtures.
The law of fixtures basically says that fixtures are part of the property and cannot be removed. Fixtures are anything that is permanently attached to the property by attachments such as bolts or screws. Some items are easy to understand as fixtures, such as counters, sinks, or flooring. But some areas are more complicated. For example, a built-in dishwasher is a fixture, since it can’t just be unplugged and removed, while a refrigerator is not, if you can simply unplug and remove it. Similarly, window treatments are only considered fixtures if they are screwed or bolted in.
Another common area of confusion is lighting. If light fixtures are bolted to the wall or ceiling, they are part of the sale, even including expensive chandeliers and antiques. The only way to avoid this problem is by removing these items (and replacing them with inexpensive fixtures) before showing your home. This is much more serious than removing items that a buyer may dislike, because if you show them, they become part of the transaction. Unlike nonfixtures (refrigerators, washers and dryers), a buyer does not even have to request these items in the contract.
If your home has a dated refrigerator and you plan to buy a new one for your next home, it may be worthwhile to buy it before you show your home. This runs slightly counter to the rule that you shouldn’t show items that you intend to keep, but here there is a good reason. Think of your kitchen as a showroom. Unlike lighting fixtures, buyers generally know that these appliances are not necessarily included in the sale. Nice appliances can show prospective buyers how contemporary and updated your kitchen can look. Dated appliances really make a kitchen look old. Even if your buyers insist on keeping the appliances, if you make sure that you are compensated, it may still ensure a quicker sale at a better overall price.
Begin with the Exterior
- Keep the lawn mowed. A well-manicured lawn, neatly trimmed shrubs and cleanly swept sidewalks create a good first impression.
- Be sure to fertilize your grass to make it look lush and green.
- Trim or cut back overgrown shrubs. Doors and windows should be firmly visible and not obstructed in the least.
- Paint the house if necessary. (If you do decide to paint your house, drive through new neighborhoods and choose a contemporary, neutral color. Don’t paint your house the same old color it was in 1970.)
- Clean stains and oil from sidewalks and driveways. A badly stained driveway suggests that the house may not have been well maintained.
- Replace cracked or broken windows and torn screens.
- Hose down the entrance of your house to get rid of annoying cobwebs and dead bugs.
- Make sure the entry light and doorbell are in good working order.
- Inspect the roof and gutters. Make repairs and paint as necessary.
- Repaint the front door. A new coat of paint suggests a well-cared-for home.
- Put a fresh coat of paint on your mailbox.
- Be sure driveways and sidewalks are free of ice and snow (if you live in the Santa Cruz Mountains) in the winter.
- Place bright, fresh flowers by the front door or along the walk. Have a new or fresh looking doormat in a solid color at your front door.
Now Let’s Look at the Interior
- Begin with a full housecleaning from top to bottom. Clean out closets and throw away unused items. Make sure that clothes are hung neatly and shoes are tidily arranged. Eliminating clutter makes your home look more spacious.
- Make sure the walls are clean and free of smudges and fingerprints. Give them a fresh coat of paint if washing doesn’t do the trick. If your colors are very bold and dark, repaint to something lighter and more neutral. Dark reds and purples, for instance, tend to make rooms look smaller than they are and they can be overwhelming to many buyers.
- Arrange furniture to make your rooms appear more spacious. Get rid of badly worn furniture or place it in storage.
- Wash the windows, inside and out! Include the tracks! Make sure the curtains clear the window entirely when open to allow the maximum amount of light in.
- Wash or replace the curtains or blinds.
- If the carpets are badly worn or soiled, replace them with new carpeting in a neutral color.
- Repair any sticking doors.
- Fix leaky faucets and clean the water stains from the sinks, toilets and shower doors.
- Replace burned-out light bulbs and make sure that all light fixtures are in good working order.
- The kitchen is the most important room in your house. Make it bright and inviting. Wash the walls and cabinets or give them a new coat of paint if necessary. Clean the vent hood and make all the appliances gleaming. If the floor is badly worn, consider replacing it.
- Make the bathrooms sparkle! Repair old caulk in showers and tubs. Place fresh towels and soaps in the bathrooms and add flowers or a candle (not burning) if there is room.
- Clean the bedrooms and replace faded curtains and bedspreads.
- Clean the basement, if you are among the few to be lucky enough to have one, and the garage. Get rid of items you no longer use or put them in storage. Make sure there is plenty of light, even in these rooms.
- Make sure your house smells fresh and clean. Nothing is a bigger turnoff to a buyer than cigarette smoke, cooking odors, incense, a smelly dog bed or dirty litter box.
- If there is a fireplace, have the chimney cleaned. Soot has an odor!