“How long will it take to sell my home?” This is a perennial question among home sellers in Silicon Valley. Real estate professionals can look at the statistics and, when experienced and active in your local market, tell you what they believe will happen based on the absorption rate and days on market numbers.
We know that the national average is that for approximately every ten showings, a home should get an offer. It may or may not be an offer that results in a sale. Today’s market in much of the San Jose area is a little more sluggish than usual, but homes are still selling in many areas within a month if all is right when it’s offered for sale. One thing is for certain, though, and that’s that sellers have to see offers to be able to sell a home, and there are no offers if there’s no qualified traffic.
What kind of traffic is good enough? Three showings a week is decent after the initial flurry of a new listing. There will be more visitors to your property in the first week or two, both in regular showings and in open house visitors who are serious about buying. If you are not getting three showings a week (and it’s not a major holiday, a heat wave, pouring rain, or something along those lines), you have a problem. There are three most likely culprits to the problem: price, condition, and marketing.
The feedback from showings and open house visitors is of key importance and will help you and your agent to understand the public’s reaction to your price and condition. Agents can ask (without being pushy) questions about how the buyers think or feel about the home. Or ask their agents. (I use a system called HomeFeedback.com that requests feedback by email with a very short 5 question survey. Normally I get about a 65% response rate from agents.) When most of the consumers or agents tell us “the home is dated” or “it needs too much work”, we know it’s an issue. Or perhaps the home is turnkey, but is priced 10% too high. Sometimes the condition issue is fixable but sometimes the only way to address it is in lower, more attractive pricing (when huge renovations appear to be necessary or there’s a time or money issue for the seller).
A very clear indicator of a problem, besides lack of showings, is when there are drive bys with no stopping – not even to get a flyer out of the box. A lot of those indicate an issue with either condition or price or both. A good place to begin addressing this is curb appeal, in that case. If the home isn’t sharp looking from the street, those buyers may never go in at all!
To uncover marketing issues, use your computer, not the newspaper (print ads have a very very low rate of actually helping to sell a property). Start with the multiple listing, because it is the MOST IMPORTANT. What does the MLS printout look like? What do the comments say? Is the buyer’s agent offered a competitive commission? (I once saw $1 – one dollar – offered.) Are there plenty of high quality photos? How about a virtual tour or video?
Beyond the MLS, where is your home being advertised online? What happens if you Google your home’s address? Right now I have a listing in Los Gatos which is a pending sale. When I go to Google and type into the search bar “120 Magneson Terrace”, I see that there are 120 results. One of the best things about this listing of mine is that it’s a short distance to schools and shops. Again at Google, if I type in “Los Gatos close to schools” (but no quotation marks), 3 of the results on page 1 of Google are for this listing of mine (I have several sites).
If your home is being aggressively marketed and the condition is great, there’s only one thing left to blame for a home not selling, and that’s price. Every location and market is a little different from each other. Silicon Valley is composed of many micro-markets. Even within San Jose’s beautiful Almaden Valley, there are smaller markets. The Oak Canyon neighborhood may be performing very differently from the Graystone community, and they are likely to be extremely different than the rural and sometimes remote communities closer to Mt Umunhum. So when analyzing price, be sure to look at recent, local data of homes most similar to yours. Looking at sales from more than 3 months ago will not be helpful now – the market in Santa Clara County has changed since then.
What if prices are dropping? In places where values are falling, which is most of Silicon Valley, it is important to get ahead of the curve if you’re trying to sell your home now. Let’s say you have a home worth $700,000 and in your exact part of San Jose, prices are falling at the rate of 2% per month, more or less. In areas where this is happening, there are many more sellers than buyers. Perhaps only 8% of all homes are going to sell at all (this is just a fictitious example). How do you get your home into that 8%? First of all, you have to be priced in the bottom tier of available inventory. You have to be priced lower than most of your competition. If only 8% are selling, it would be wise to price your home in the bottom 5, 10, or 20% (depending on your home’s condition and other factors that cannot be generalized here). To price your home in the top half of the market is very likely not a good idea.
So back to our example of the $700,000 San Jose house. If it stays on the market for 6 months, at the end of that time, assuming that prices continue falling at 2% per month, where would the value be? It would be about $620,000. Obviously that would be a very expensive mistake to make, allowing the home to take 6 months to sell. But if you get ahead of the curve and market your home for 30 or more days from now’s price – put it at 2-4% less than today’s perceived value – you are more likely to sell now and not be part of the 92% of all homes that aren’t selling but simply continue to decline in value. It’s a matter of “cutting your losses” as it were.
In summary, if your home will go on the market soon and you are concerned that it won’t sell OR if your home is on the market and is not selling, there are a few key things to consider. Here are some questions to use in studying your situation.
(1) First, how is your home’s local market? – that is, what is happening in your neighborhood, your price point, your type of home? The luxury homes in Monte Sereno, Los Gatos, Almaden or Saratoga will not really be the same “market” as a condo in those areas, so it’s more than just geography. A modest but remodeled ranch style home that’s a few blocks from schools may be an entirely different “market” than the very unique home in the same pricepoint. If you have a view home high on a hill with acreage, don’t use recent sales activity in the flatlands as any kind of comparison, even if the home’s square footage and price point are similar.
Are there really no “comps” for your type of home? Hire an appraiser, especially if you have a luxury home or something which makes your home very unique, whether in terms of architecture, location, history, or amenities.
(2) What kind of traffic are you getting or seeing in similar homes? Where is it coming from? It is important to understand what buyers are considering your home so that you can learn if there’s a need to work that segment more or if perhaps there are groups that are just not aware of your home, but should be. How can your home appeal to a wider pool of potential buyers?
Some sellers of townhomes or condos are paying for a year’s worth of HOA dues to make it financially easier for the buyers to get their foot in the door. Some sellers are doing “carrybacks” with the financing – perhaps letting the buyers pay back 5% or 10% over a period of years to the seller rather than getting all of their financing through a lender.
(3) What is the feedback from the agents and the consumers about your property’s condition and pricing? In a sellers’ market, you can “tell” the agents and the buyers what price you want. But in today’s market, sellers need to listen. The home is only worth what the buyer will pay for it. If the agents think your home needs work or is overpriced, you’re going to need to “sell” your home to them first. Saavy buyers do not buy homes when the agents suggest otherwise.
If your home is vacant and stark, professional staging with furniture can help. Even adding colorful or attractive curtains to bare windows can be a huge help. Sometimes small tweaks can make a huge difference. Is your home priced at $1,025,000 and not moving? Perhaps getting it just under the price point, setting it at $998,000, will do the trick. Getting drive bys? Maybe your home needs fresh landscaping and a new driveway, or perhaps a new roof. A home that’s gorgeous inside will never be seen if the outside puts the buyers off. Ask for the feedback, and act on it.
The last alternative, of course, is to just wait out the market, if you are a seller and you don’t really need to sell now. The market is always changing and eventually it will be a sellers market again. No matter when you sell your home, though, real estate homebuyers will always look critically at your property’s condition and pricing, and the traffic to your home will still be impacted by marketing, so these three crucial areas will be important to you no matter when you sell or how the real estate market is performing. And this is true whether you are in Silicon Valley or anywhere in California or the U.S.