These days, it takes more than a yard sign and an open house to sell your home. Buyers are armed with more data, are viewing almost every property online first and with prices at all time highs quite frankly they want a "deal". Additioanllu you can expect any defects in a home will be exploited by savvy agents to drive the price down.
On the flip side, no pun intended, deep pocket investors have entered the market and are purchasing homes with deferred maintenance or needing rehab that they then turn around and sell as turn key properties. But they won't pay top dollar or anything close.
The good news is that desirable homes that show well and are priced right are selling quickly, often with multiple offers. The methodology described actually works. You can scroll down on this page to view example sold properties.
Let's get started.
Everyone likes to start with "the comps" as in "how much is my home worth?" and that seems logical enough.
Most people turn to authority websites offering automated valuation models (AVMs) such as the one on this site (CMA tab) to get an estimate. But since these tools are working on algorithms of recently sold homes to come up with the value or price they are just as likely to be correct as not.
For example the AVM does not know if your house has a new roof, new wood floors or an updated kitchen and your neighbors does not. Or if your house is on a quiet street and the one being used for comparison is on a busy street. The AVM is only comparing age, Sq Ft, lot size etc not the finer points that make pricing homes an art more than a science.
When deciding to list your home for sale, often your Realtor may present a CMA also known as a Comparative Market Analysis. The problem with many CMAs is that if the wrong comps are used the wrong conclusion can be drawn. But, in general, it does make sense to take a look at properties for sale, properties currently under contract and recently sold listings. That is the information in our Market Report.
The next most common question sellers ask is "how long will it take to sell?" and that's fair enough.
Days on Market (DOM) is really a function of a few factors.
First are you in a Buyer's or Seller's market right now. (We've been in a Seller's market throughout 2019 and as we enter 2020 expect it to continue.) The determination is based on whether there are more or less than 90 days of inventory available. The absorption rate can be calculated based on either closed sales during the previous month or properties under contract.
The second factor is your pricing strategy and yes, it is a strategy. For the last few years the gold standard has been to price homes just a little bit below the market in order to get multiple offers over the asking price. And quite often the properties sold for way over the asking price. That is often referred to as "event" pricing. There is a lot of empirical data proving that this strategy is more effective than pricing homes higher and leaving room to negotiate (aspirational pricing). Often these homes sit on the market longer and have to be reduced to sell. So while it is counterintuitive to think that initially listing a home for a lower price will get a higher final sales price, truthfully it often does.
Many sellers ask if "commissions are negotiable" and yes, they are. Real Estate commissions are not set by law and different agents and Brokerages have different commission models.
The commission will be split between the listing agent (the agent representing the seller) and the selling agent (the agent representing the buyer). While usually the split is 50/50 it does not have to be so. In no instance should the buyer's agent be offered less than 2.5% of the selling price. If there is a discount it most often happens on the listing side.
After the price, time, and commission is addressed, many Sellers want to understand what they can do to improve their home's value. Ironically, some of the best moves can be the least expensive.
The first is to "de-clutter" meaning get rid of the stuff we all have scattered around our homes. To start with the professional high resolution photos your agent has taken to show the listing off will simply look better. And it will show better both at Broker's Open Houses and public viewings.
After that you might want to consider painting any rooms that are currently a "highly personalized" color. There's a few reasons. First, many buyers today, particularly first time buyers, are looking for "turn key" homes meaning they can move in without doing anything. Second, it will show better if it is a neutral.
As for updating kitchens, bathrooms etc, it is not advisable to spend a lot of money because even if you have impeccable taste or a great designer, it may not be your buyer's taste. The only exception might be very worn and dirty carpet.
As a general rule of thumb, you should not spend more than 1% of the home's expected sales price on any updates and if you can keep it to a half a percent even better. For any expenditure over 1%, such as a new roof, you have to evaluate what your return on that investment will be. Hopefully at it is recouped.
Here's a few more tips that can increase the selling price.
Get a home inspection before the house is on the market and do the minor repairs. This is a common practice in other parts of the country.
Have your home partially or completely staged. Most top Realtors work with stagers and some include this as a service for their clients. Additionally, it is important to make sure that the listing used the following:
This is still the “Gold Standard” in terms of getting your listing in front of the maximum number of potential buyers because properties placed in the Multiple Listing Service (MLS) are syndicated to 1000’s of websites including the largest portals such as Zillow and Realtor.com as well as every individually owned broker or agent site that uses IDX (which is basically all of them).
If you would like to avoid the inconvenience of Open Houses, showings, making repairs, and uncertainty of a deal closing I can get you a quick cash offer from one of my iBuyers clients who acquire homes for resale. You pay no commissions with this option and can have a long or short escrow.
There are circumstances when it is either not practical to notify the world that your home is for sale or it is not possible to let the general public into your home. Examples might be if you are involved in a divorce or if you are a celebrity.or a public figure. Or maybe you unfortunately have an ill family member.
In those circumstances you may want to do an “off market” sale. You will still be signing a listing agreement and all the standard marketing materials will be prepared. But, instead of the listing going into the MLS, it will be held back and marketed directly to the top agents in the area (20% sell 80% of the properties) and to my personal database of buyers.
In order to "list" your property with a Real Estate Broker, you will have to sign a listing agreement. There is really no such thing in CA as a verbal agreement to sell Real Estate. The agreement or contract must be in writing. The agreement will cover the listing price, the beginning and ending dates, whether there will be a lock box, a yard sign, the commission, whether the property can be placed in the MLS, and other terms such as what is included in the sale (refrigerator, washer dryer) and what is not. (Items attached to the home such as the oven and fixtures are deemed to be included.) Part of the listing agreement is the Seller Advisory which informs sellers as to various items to be aware of.
Often sellers ask whether they can cancel the listing agreement without any penalty. Although most reputable real estate brokerages will allow clients to cancel under certain circumstances if they change their mind, it is nest to get that in writing. Otherwise, you may have a disgruntled new agent or desperate broker trying to receive compensation if you choose to cancel.
As part of the listing process, sellers will also be asked to sign an Agency Disclosure. The AD states that a broker may represent a buyer, a seller, or both. When you receive an offer from a buyer, the agent representing the buyer will also present their own AD from.
That's it. Your Realtor can now put your home "up for sale".
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Based on information from California Regional Multiple Listing Service, Inc. as of . This information is for your personal, non-commercial use and may not be used for any purpose other than to identify prospective properties you may be interested in purchasing. Display of MLS data is usually deemed reliable but is NOT guaranteed accurate by the MLS. Buyers are responsible for verifying the accuracy of all information and should investigate the data themselves or retain appropriate professionals. Information from sources other than the Listing Agent may have been included in the MLS data. Unless otherwise specified in writing, Broker/Agent has not and will not verify any information obtained from other sources. The Broker/Agent providing the information contained herein may or may not have been the Listing and/or Selling Agent.