If you are preparing your Silicon Valley to sell, you may have concerns about both time and money. You probably don’t want to spend a year getting ready, but you do want to make the appropriate changes which will bring a good return on investment. Some home owners don’t understand the connection between the home’s condition and ultimate sale price – their expectations may be a little off.
Sometimes when I meet prospective clients who are thinking of selling their home, I hear immediately, “we only want to sell As Is” and “we don’t want to have to re-carpet, re-paint, etc.”. In the next breath, they tell me, “and we want top dollar for our house”. Those two are often mutually exclusive desires – that is, getting one usually means you won’t get the other. But not always, and I’ll show you how to increase the odds of doing both.
To get top dollar, a Silicon Valley home for sale must appear to be the best value for the money and attract the most qualified buyers who step forward with a strong offer. Buyers will pay more IF they feel that your home is a better value.
There are a number of things which need to be done for that to occur, but one of the most important has to do with the condition and appearance of the property. Confident buyers write stronger offers than buyers who are concerned about the house or condominium and potentially unknown risks. (Buyers are thinking “risk, risk, risk” and “beware of hidden costs”!) Home buying is both a business decision as well as an emotional decision. To get top dollar, your home has to make sense and appeal to buyers on both levels, and we’ll discuss both in this post.
On a business level, buyers want to feel that there will not be surprise costs (“hidden risk” or “hidden costs”) which will only be discovered later, either after they’re in escrow and have paid for an appraisal and inspections, or worse, after they’ve moved in. It is not so hard to alleviate this buyer fear: simply provide pre-sale inspections so that the potential home buyer understands the true condition of the home.
If your home’s new owner can review the inspections, and even your disclosures, prior to writing an offer you’ll get a stronger contract to start with and will be far less likely to receive further negotiation attempts in escrow (which are usually the result of a surprise when a buyer has inspections). Remember, once you’re in contract to sell the home, any negotiation from that point on will be in the buyer’s favor – the sales price never goes up in the middle of escrow! So prevent surprises, remove the risk, and you’ll both get a stronger offer to begin with and likely prevent renegotiation later.
Inspections can cost up to a thousand dollars in most situations (condos will be less than large luxury homes of course) but having pre-sale inspections probably boosts the sales price a percent or two at least, so it’s money well spent, in my experience. What inspections should you get? I’ve written about it elsewhere, but in most cases you’ll want a pest report at a minimum and probably a home inspection too. In some cases you’ll want a chimney, roof, pool, or other component inspected as well.
Once you’ve had the inspections done, you may be surprised to learn that there are some issues with the property. This is normal in homes that are not new, of course, but buyers have a few major areas that they worry about more than others: foundation, roof, electrical, plumming, termites and other pests. The list of potential issues is long, but many are minor and they won’t be a big selling hurdle. Depending on what comes out of the inspection reports, you may selectively fix items you choose (and, I would suggest, that your real estate agent advises).
It is imperative is to do this before the home’s on the market, before a buyer is writing an offer. This way, you can take your time, get multiple bids, and perhaps do the work in a less costly fashion than if you’re in escrow and under pressure with some contractual restrictions and you have the advantage of presenting less risk to an interested buyer since the home’s condition is no longer a mystery. Often, if you inspect and pick key repairs and do them prior to marketing the home, you will be able to sell As Is once you do try to sell the property.
So to summarize the “business” angle, it’s important to learn the true condition of the home via professional inspections, possibly select key areas to address prior to selling the property and then making the inspections and repairs known to potential buyers upfront.
What about the “emotional” side of the equation?
This is just as important, because buyers have to like your property if they want to live in it (not true with investment buyers, of course – in that case the numbers just have to make sense). It’s almost like dating: there has to be a spark of attraction to get the buyer to commit. Creating that spark is what staging is all about. We want to make your townhome, condo or house appeal to the broadest range of potential buyers possible. It is time to make your home about them, about your audience, rather than about you.
Staging is the topic of a boatload of books and I won’t pretend to do it justice in this one small post, but I will touch on it because staging is key to your maximizing your home’s market value. I do not mean storing your furniture and renting new (however if your property is vacant, it may be a good idea to bring some furniture in). I’m talking about “lipstick and rouge”, not reconstructive surgery.
The best return on your dollar for pre-sale preparation, after inspections, are cosmetic rather than structural changes. It’s nearly impossible to say what one item would “return” by itself, but as a package, you may see a 3 to 1 return on investment for minor changes. Depending on your real estate, these could include:
- freshening up the front landscaping, including putting color near the front door (annuals, possibly in pots)
- cleaning the home, inside and out, including fixtures, windows, etc. (ask a friend to walk through and look for spider webs, dirty cabinets, and so on)
- removing odors (pets, cooking, insense, smoking)
- fresh paint, inside and out (as needed – often is needed!)
- new floor coverings (usually needed)
- declutter your home, including the inside of closets, cabinets, storage areas (consider renting a storage pod if needed)
- depersonalize (remove your unique “stamp” on the home so that buyers can envision themselves moving in)
I have gone through a two day staging course and do help my clients with all of the above, but can also recommend people who are professional stagers who will not only advise, but also assist, you in organizing all of the above.
A home that’s clean, de-cluttered, and fresh looking will make home buyers feel happy to be within your four walls. When buyers feel comfortable and happy, both emotionally and financially, they write better offers.
What about big ticket items, like remodeling the kitchen? Usually those won’t pay you back the full cost of the improvement, but “touching up” the kitchen will. For instance, let’s say you have a 30 or 40 year old kitchen. Should you tear it out and remodel it to sell? No, but you’d probably get your money back by updating it a little so that it feels new: put in new appliances, a new countertop, and paint the cabinets (example only! this is not advice for homes I haven’t seen!)
It is very important to make your home attractive in the front so that buyers want to come into the home, and it’s just as key to make the inside feel spacious and clean. If a home is structurally solid but filthy, most buyers will be very concerned about what they cannot see and any offers you get will be lower than the property’s potential.
In summary, to get top dollar when you sell your home and to increase the odds that you can sell it As Is, you need to do a fair amount of work upfront, before a buyer ever crosses the threshold or a for sale sign graces your front yard. Get the home inspected professionally, take care of some key issues and then prepare your home aesthetically so that buyers want to come in, linger, and eventually write a great offer on your property.
How much should all of this cost? Typically, preparing a home to sell for its maximum worth on the market will cost about 1-2% of the home’s value (rule of thumb), including inspections, repairs, and staging. For cash-strapped sellers, some of these can be billed to escrow but there will be a price for it. Inspections are usually billed at two rates: upfront payments will provide a substantial discount. There are real estate affiliates which install carpet or other floorcoverings and will bill to escrow, or at a minimum wait 60 days to be paid, but as with the inspectors, these vendors will usually charge less if you can pay them upfront.
As mentioned above, it’s hard to say what any one component done by itself will net you in terms of return. If you improve the interior of the home but don’t make the front yard attractive and welcoming, you may not get the traffic to bring you the desired return. Or if you make cosmetic changes but don’t do inspections, the buyers will have concerns that your 40 year old house is full of issues with the electrical, plumming, or roof. So it’s not possible to say, “if I spend $1000 on carpeting I’ll get $3000 back in the sales price” because that’s looking at each element individually – it has to be a package deal to work. It’s important to address both sides of the equation as to how buyers will feel about financial risk and attractiveness. If done correctly, the right pre-sale work can bring you two to three or more times back the cost in a boosted sales price plus fewer renegotiations once you are in contract. With my clients, I will not ask them to have work done unless they’ll get back more than they put into it. In one case in Santa Clara, I had the sellers spend $7000 in pre-sale inspections and work, and our return on investment was about $21,000 more in sales price (this was on a $500,000 home, so the “investment” was almost 1.5% and the return was about a 4% higher sales price). So they were very happy!
For more information on this topic, please see my book, “Get The Best Deal When Selling Your Home In Silicon Valley“, which is available at many local libraries, bookstores, on Amazon or from me should you interview me to possibly represent you in the sale of your home (my book is my gift to potential clients).
About the author of this post: I am Mary Pope-Handy, a Silicon Valley Realtor (second generation), working full time and successfully selling Santa Clara County real estate since 1993. Specializing in west valley homes (Almaden Valley, Cambrian Park, Los Gatos, Monte Sereno, Saratoga, Campbell and nearby), but work all of the southern San Francisco Bay Area. I have an extensive educational background & experience and am the holder of numerous realty awards and designations. Additionally, I’m a featured speaker at real estate events and am well known in the realty community. To learn more, please see my profile online.
To learn more about selling your home for top dollar, please continue reading more about what it takes on my popehandy.com website “Sale Success” article.
