Last weekend, the Chronicle posed a titillating question, “Is selling a vacant or occupied house best?”
In my opinion, the question is not really whether selling a vacant or occupied home is best. The real question is what will it take to sell your home for top dollar in today’s market?
The San Francisco real estate market is different than it used to be. Sellers need to come to terms with the realities of the current real estate market. Yesteryear’s hot seller’s market may not return for a long, long time.
Yet, our market is not terrible, not in the least! Actually, many areas of San Francisco have held up extremely well. While the value of a house is likely to be flat or down from the peak, it is also very likely to be way up from say 5 years ago or more. I’d call it more of a balanced or level playing field. Normal market conditions have returned to most neighborhoods in San Francisco.
Click for an enlarged, easier to read version of the report on Median Home prices in San Francisco October 2008 v. October 2006. This report includes all SF MLS districts except 3 and 10 & includes statistics for all single family homes, condos, TICs, coops & lofts. Amazingly, the median price is almost exactly the same as it was 2 years ago! (Down from the highest point, of course.)
Side note: Yes, some areas have been devastated by the sub-prime lending meltdown. These areas are the ones where sub-prime borrowers were buying….entry-level lofts and less expensive outer-lying residential areas. No, it’s not fair and yes, I could go on and on about the inequities of the capitalist system, urban planning and so forth. I did go to Wesleyan after all! 🙂
Nonetheless, now I am a Realtor so I’ll allow my more lefty comrades to pontificate on these important topics. My job is to help San Francisco home buyers and sellers make good choices and achieve their goals by providing my clients with excellent real estate consulting, negotiating and project management. Shameless Plug Alert!
This is not a post about statistics or market value. It is about what rules apply today. How can you sell your home quickly and net the most money possible? Notice how I use the term net as opposed to gross profit. The reason I prefer to talk about your net profit (or loss) is because that is the figure that should be most important to you.
Sometimes, sellers are inclined to lose perspective and look at the individual costs rather than the big picture.
For example, a real estate agent who will discount their commission below the industry standard may save you money in the commission, but they may actually cost you more money than you saved by short-changing you on marketing and negotiation.
Another area where sellers sometimes become “penny-wise and pound-foolish” is in the presentation of their home. Staging costs money whether you do it yourself or hire a professional.
It may be hard to see how spending some dollars to spruce your place up will pay off in the end. But again, you gotta look at your net. If staging your home means that you’ll sell it even a month sooner and for a couple of thousand dollars more, it’ll is likely to have paid for itself. The reality is that a well-presented home WILL sell quicker and for MORE money. The benefits of staging will almost always net your more money.
If you are selling your home, look at the big picture. Talk to your accountant to see what fees are tax-deductible. Most selling costs (commission, etc) will raise your basis and thus, lower your tax bill. If you do capital improvements, you’ll want to add those in too.
Choose an agent who excels at:
1. property preparation (i.e. has a great team assembled to help you prepare your home: stager, handyman, painter…),
2. consulting (i.e. has the ability and interest in figuring out what is best for your particular situation and crafts a specific, strategic plan for you personally),
3. marketing (i.e. knows how to target market your property to the right agents and buyers…other agents will be the ones who actually sell your house so make sure your agent and their company has a good reputation), and
4. negotiating (i.e. has the “soft sales skills” to get a buyer to make the highest possible offer AND has prepared them and your house for no surprises and thus, no requests for price reductions and/or credits from the seller to the buyer during escrow; again, it’s about the net.
If you go into contract for $1,000,000 but the buyer then successfully negotiates a $10,000 credit for closing costs, your actual sales price is $990,000. Plus you’ll pay transfer tax and commission on the $1,000,000, not the $990,000.
TIP: It’s usually better for the seller to agree up-front to a lower sales price with zero permissible credit requests to come weeks into the escrow.)
It’s not rocket-science. What it takes to sell your home in today’s market is a competitive list price, a well-presented home, and an agent who can handle the sales process and negotiations.
So, what did we learn, kids? Here are Danielle’s rules for selling your home to net the most money in today’s market”
- Price to attract a crowd. Price below your home’s competition. Get as many buyers as possible to your first open house. The first 2 weeks are crucial. Price will get them in the door.
- Stage to get offers. If price will get them in the door, presentation will get them to pull the trigger. You don’t need to hire the fanciest home decorator in town and you can do it yourself if you have the skills and the time. Unless your house is truly high-end, you don’t need to win any design awards or make it into Sunset Magazine! You do need to clean up, make repairs, paint, de-clutter and decorate enough. I work with reasonable stagers. The homes look great so buyers can imagine themselves living there.
- Work with a skilled real estate agent and listen to their advice on items 1 and 2! There’s no sense in hiring the best if you aren’t going to take their advice. We sell houses full-time. We have a broader, more objective perspective than you ever could about your own house. Just don’t ask me about my own house as I’m as bad as anyone else! I mean, of course, my house is different, nicer than my neighbors, immune to the recession, etc etc! Right? Just do yourself a favor and hire someone who is skilled, experienced, and easy to work with. You don’t need to seek out the agent with the flashiest ads or who calls themselves #1 all over the place. There may be a reason they need to spend that kind of money on advertising… You do need someone who will take the time to understand your situation and work with you to achieve the best results possible in today’s market.