Until recently, you’d stick a for sale sign on your front lawn and watch smugly while multiple offers rolled in. No longer. Today, home sellers are playing a different game. Read on to learn how to sell your house in a shifting market.
While the slow down isn’t the burst bubble some economists predicted, it still has home sellers anxious, especially those running from adjustable-rate mortgages whose low teaser rates have expired. Local real estate agents say there are seven to 10 months of inventory lingering on the market, and some houses are sitting for extended periods without attracting any serious offers.
We’re in transition, and that makes people nervous, says Leigh Rutledge, president of the Sacramento Association of Realtors. I think it’s a real settling-out, shaking-out kind of year.
In a market that economists at Global Insight/National City Corporation have described as overvalued by as much as 53 percent, a settling out is not all bad. Skyrocketing prices, after all, have kept homeownership out of the reach of thousands of local residents. Plus the frenzied environment of the past five years meant that buyers often had to make major investment decisions in less time than some people take to pick out a watermelon.
Still, whether we’re operating in a true buyer’s market depends on whom you talk to. In Rutledge’s view, how long a home has sat on the market determines who has the upper hand. If it’s been a while, those sellers are going to be willing to negotiate, she says.
Although the expectation is that prices are heading south, there is little hard evidence of that so far. In recent months, home prices remained steady in most of the region even as the market became saturated with sellers.
There are two different stories: what people have been asking and what they’ve actually been getting, explains Mike Lyon, CEO of Lyon Real Estate. Asking prices have been dropping&emdash;not selling prices.
The abundance of overpriced homes signals that many sellers are operating under an old paradigm, listing homes for prices they may have fetched a year or two ago, but not today. The difficult thing about a transition year&emdash;and that’s how I look at this year&emdash;is that it’s so hard for sellers to understand that the huge run-up is over, says Rutledge.
Still, experts caution against simplistic comparisons to the housing crash of the early 1990s. Back then, the region suffered from job losses and an economic recession. Today, the economy is mostly sunny, unemployment figures are low and mortgage interest rates, although higher than a couple of years ago, are hovering just below 7 percent&emdash;a reasonable rate compared to the dizzying 18 percent rates in the early 1980s.
If your home is priced right, Lyon sees no reason to panic. There is absolutely no shortage of buyers right now, he says.
Price It Right
As recently as last year, the trick to selling your home was no trick at all. You’d put it on the market, receive multiple offers and&emdash;presto!&emdash;it was sold to the highest bidder for a tidy profit. But for today’s sellers, pulling a rabbit out of a hat might seem like an easier feat. As home inventories swell and interest rates creep upward, it’s not a magic wand you need&emdash;it’s a competitive asking price.
Pricing your home is the most important thing you ever do, according to Rutledge, an agent with Dunnigan Sierra Oaks.
When the inventory triples, you have competition you didn’t have a year ago&emdash;three times the competition, says Rutledge of home sellers. So what are you going to do? You can improve the condition of the house, but the single biggest thing you can do is make the home a value to a buyer.
Pam Vanderford with Dunnigan’s Freeport Boulevard office concurs. Pricing right now in this market is key, she says. Sellers run the risk of a house lingering on the market if the price is too high. If you don’t price a home correctly, in the market we’re in now, you’re looking at it staying on the market up to six months.
If it’s priced right, it should sell within 60 days. Period, says Lyon.
Vanderford advises clients to drop the asking price if no offers come in within the first couple of weeks. Homes that sit on the market for extended periods can become stigmatized&emdash;a curse for sellers. There’s a mentality with a lot of people that if they see something that’s been on the market for a couple of months, they often feel there’s something wrong with the home. They wonder why no one else wanted to buy it, says Vanderford.
Unfortunately, there’s no precise formula for pricing a property. It’s not an exact science, says Rutledge. It’s especially difficult to price a home when comps, or the prices for which comparable homes in the neighborhood have sold, are all over the place.
Location and condition are the most important pricing factors, although square footage and local schools also figure in the equation. To arrive at an asking price, Vanderford reviews every feature of the home with clients to get a clear understanding of its condition and amenities. She also reviews comps carefully to ensure the home is priced realistically for the current market.
Still, it’s not uncommon for sellers to want to price the home higher. You really have to go step by step to show them how you have arrived at that price, says Vanderford. A lot of times they are not thrilled with that, and they can override your decision.
However, such sellers frequently end up reducing a home’s price in the long run, making overpricing a costly mistake. As Rutledge explains, If you price it very competitively, you’re going to generate more interest from a buyer and you’re going to sell it sooner&emdash;and the sooner you sell it, the more money you will make.
Alas, some sellers are playing by outdated rules, expecting top dollar even for lackluster properties.
But those are bygone days in the Sacramento region. Right now, we have a ton of listings that are asking far more than the buyers are willing to pay, says Lyon, adding that savvy shoppers today are looking for value and quality. In other words, they know when a property is overpriced. It’s not like we’ve got a bunch of amateurs out there. The buyers are well-educated.
Setting the Stage for a Sale
Shakespeare was right. All the world’s a stage&emdash;especially when you’re selling a home. But whether your production has a happy ending or a tragic one depends on what buyers see when they walk in the door.
You may think your 50-piece collection of porcelain figurines is quaint, but to most buyers, well, it ain’t. Maybe you’ve never considered that your JumboTron of a television dominates the living room, and not in a good way. And the peeling paint above the shower? You’ve learned to live with it, but to a choosy buyer it’s the scariest bathroom scene since Psycho.
That’s where professional stagers can help. Stagers prepare your house for the performance of a lifetime: a quick sale at the highest possible price. They do it by evaluating your home with a trained eye, seeing the things you don’t&emdash;whether you’re blinded by habit, emotions or, heaven forbid, bad taste.
When we live with our things, we don’t see and we don’t respond to them the way a buyer is going to when they walk through the door, says Jennie Norris, owner of We Stage Sacramento and president of the Sacramento chapter of the International Association of Home Staging Professionals.
Norris has gently nudged clients to pack up troll collections that were warding off a sale. Sellers sometimes don’t understand that I want them to take things down because they could turn off a buyer, says Norris.
But even if trolls aren’t your problem, staging is still a worthwhile investment. I think it’s very critical in this market to one-up your competition, advises real estate agent David Heitz with RE/MAX Gold in Carmichael. It is money well-spent.
Norris estimates that 15 percent of homes in the Sacramento region are professionally staged versus 80 percent in the Bay Area, although the number here is climbing.
Making a house appeal to the masses is the goal. Probably the biggest misconception people have about staging is that we’re going to come out and decorate their house, says Norris. But decorating is personalizing; staging is depersonalizing.
The home needs to appeal to the greatest number of potential clients, so we kind of homogenize things a little bit, explains Rita Athanacio, who, along with her sister and business partner Teri Mangel, owns Refresh and Refine Room ReDesign in Folsom.
This often means removing personal items from display, including family photographs, religious icons and collector’s items. We want to make it look like anyone who walks in could envision themselves living there, explains Mangel.
For the seller, clearing the home of personal effects can stir up emotions. Sometimes we’re almost like a counselor, says Norris. We have to establish rapport, hear their stories, appreciate their things and then talk about a plan.
Usually that plan involves getting clutter under control, a pervasive problem whether the home is a modest bungalow or an expansive custom home. People have too much stuff, concludes Mangel.
Stagers begin tackling a job by running through an extensive checklist that takes them from the curb to the back fence, as Athanacio puts it. From there, they make recommendations on what to change and who will do what work.
Repainting a room&emdash;We don’t like white, admits Norris&emdash;or the entire house is a common recommendation. In occupied homes, stagers also may suggest boxing up books and clothing, bringing in new plants, adding or moving artwork, modifying the lighting and rearranging furniture.
For vacant homes, stagers rent and arrange furnishings and accessories to give the home a finished feel and the buyers a better sense of how their furnishings might look in the space. A home can be lightly, moderately or fully furnished, depending on your budget.
Sellers may try their own hand at staging, but results are often mixed. They’re not objective, and some don’t seem to have a sense of scale and balance, says Athanacio. If you’re serious about getting top dollar for your home, it’s probably best to let a pro handle the job.
Basic staging starts at $500 to $600 for an occupied house and $800 to $1,000 for a vacant house, Norris says. While that’s a small bundle to some, she insists that people can’t afford not to stage because staged homes sell faster and for more money.
Now that’s a performance worthy of, ahem, a standing ovation.
10 Questions Sellers Should Ask When Hiring an Agent
1. What experience do you have selling homes in my immediate area?
2. How long are homes in my neighborhood on the market before they sell?
3. What percentage of your company’s listings has sold in the past 12 months?
4. What is the average amount of time it takes your company to sell a home in my neighborhood?
5. What is the average sales price in my neighborhood?
6. What do you do to establish the asking price for my home?
7. What is your list-price-to-sale-price ratio?
8. What are you going to do to market my home?
9. Is there anything I will need to do to my home before putting it on the market?
10 How often will we be communicating with each other once my home is on the market?
Source: Lyon Real Estate
Selling in the Internet Age
Real estate agent Leigh Rutledge says the outlook for her profession was far from cheery in the early ’90s. I remember people saying we would be out of business in 10 to 15 years because of the Internet, she recalls.
Rutledge thought the doomsayers were crazy, and she was right. Today, the legions of real estate agents in California have swelled to where there is a licensed agent for every 52 adults in the state&emdash;hardly the apocalypse so-called experts once predicted.
Even so, sites like zillow.com and MetroList on sacbee.com have profoundly influenced the way that people buy and sell houses. With a few clicks and keystrokes, you can find the estimated value of your home (and your neighbor’s, if you’re nosy), take virtual tours of every four-bedroom house with a fireplace but without a pool in a chosen ZIP code, and gawk surreptitiously at the stately properties galaxies away from your price range.
So why hasn’t the Internet rendered agents obsolete? Because experience and judgment matter, say industry veterans, and you can’t get those online. For starters, agents tour properties in person and have access to the most accurate sales data, which gives them insight into how comparable homes should be priced&emdash;the key to success in today’s market. Plus, online pictures don’t tell the whole story. Shoddy workmanship isn’t obvious online; neither is the neighbor’s menacing dog nor the distance to the nearest grocery store.
People are definitely more informed thanks to the web, concedes Rutledge, but it’s no substitute for a seasoned agent. It’s a good tool, she says, but that’s exactly what it is&emdash;a tool.
Three Problems, Three Solutions
Selling a house isn’t always smooth sailing. Experienced real estate agents look at three challenging seller scenarios and offer advice on how to navigate the real estate waters swimmingly.
Dilemma: The suburban dream turns nightmarish when the home you’re selling must compete with identical floor plans down the block or&emdash;worse yet&emdash;picture-perfect model homes.
Solution: Find a way to stand out&emdash;without spending a fortune. I always like to see a price performance with any upgrades, says Elk Grove/Laguna Coldwell Banker agent Jan Detrick.
She recommends brightening the entryway by painting or replacing the front door, upgrading the door hardware and putting out a fresh new doormat. Inside, extras such as crown molding and new light fixtures and faucets are winners. Splurge on fluffy bath towels and keep the house smelling nice with fragrant candles. Bigger tasks like painting and replacing worn carpeting incur very minimal costs compared to what your return will be, says Detrick.
This Old House
Dilemma: Your home is your castle, but its outdated interior, quirky floor plan and dinosaur of a dishwasher are hardly a buyer’s idea of the royal treatment.
Solution: If you lack the time or finances to make costly repairs or upgrades, Pam Vanderford of Dunnigan Realtors advises two things: Get things in the best condition possible and price it correctly.
While a new kitchen may be out of the question, painting is a must. A fresh coat of paint makes such a huge difference, says Vanderford, and it isn’t costly. If the carpeting is old, pull it up to expose any hardwood underneath, even if you can’t refinish the floors. Finally, give the place a thorough cleaning, hiring professional cleaners if necessary.
The $1 Million Problem
Dilemma: Owning a luxury home is hardly a quandary in most people’s eyes, but selling your million-dollar baby in a slowing market can test your patience because of the small pool of eligible buyers.
Solution: Marketing, marketing, marketing. You need to get the word out because your clientele is limited, says Gail Hargis of Keller Williams Realty in Roseville. As a specialist in high-end homes, Hargis capitalizes on the influx of transplants by marketing her clients’ dwellings to potential buyers in the Bay Area.
Hargis also emphasizes a home’s bling factors. The $1 million-plus buyer is really sophisticated and is more interested in details like appliances and hardware than square footage, she says.
Should You Remodel?
We are a nation obsessed with makeovers. Before-and-after photos feed our addiction. Don’t believe it? Just try to tear yourself away before the jaw-dropping results are revealed at the end of any home improvement TV show.
But is a full-blown remodel the right approach to selling a home? Probably not. Most experienced agents agree that you won’t earn back your investment on substantial jobs like installing a new kitchen or adding a bathroom, especially if you exceed the norm for your neighborhood.
Would I remodel a kitchen to sell it? Probably not, says agent Leigh Rutledge. Even if buyers love it, they’re not going to pay you dollar for dollar for what you did.
Don’t overimprove, warns Mike Lyon, CEO of Lyon Real Estate, adding that even if buyers love what you’ve done with the place, their lenders might not be so enchanted. Even if you find someone who’s willing to pay for your solid-gold pool, the lender’s not willing to play, and the appraisers are not going to appraise it for more.
Modest improvements, however&emdash;things like upgrading fixtures and hardware, replacing or refinishing flooring, adding new window treatments and molding&emdash;can reap big rewards come sale time.
The biggest bang for your buck? Painting. There’s an expression I learned 20 years ago in this business: Paint’s worth $10 in the can and $1,000 on the wall, says Rutledge. Most of the time, a good fresh coat of paint is so worth it.
For Sale by Owner
It can save you money&emdash;but it’s not for everyone.
Are real estate agents necessary in the Internet age? No, say sellers like Gregory Fong. He’s selling his three-bedroom, two-bath investment property in Carmichael on his own. In real estate parlance, it’s known as a fizzbo&emdash;for sale by owner&emdash;and it’s not for the timid.
Fong is motivated to save money that otherwise would go toward an agent’s commission. In exchange, he’s responsible for marketing the house, fielding calls from prospective buyers and navigating the sea of legal contracts. I figured I had enough knowledge to do it on my own, says Fong, who listed his property on forsalebyowner.com.
He may be right, but most sellers working without an agent eventually throw in the towel. Eighty-five percent of for sale by owners end up listing with a Realtor, says Lyon Real Estate CEO Mike Lyon.
People get overwhelmed in a very short period of time when they’re being deluged with people wanting to go through the house, a lot of legal questions, disclosures, making sure a buyer is qualified, says Dunnigan agent Pam Vanderford.
For those who want to go it alone but desire a safety net, fee-for-service brokers like Help-U-Sell may be a good alternative. You take on the duties you can manage and pay an agent to do the rest. The arrangement can save you money, but it takes a motivated and knowledgeable seller to make it work.
From the Sellers’ Mouths
Take it from someone who’s been there: Selling a house is tough work. Three recent sellers offer their sage advice on the dos and don’ts of making the sale.
â€¢ The seller: Cathy Chapman
The house: A two-bedroom, one-bath house in East Sacramento
The sale: After lowering the asking price and sprucing up the place, she got within a few thousand dollars of her target.
Her advice: Don’t automatically go for the agent who promises you the highest amount for your home, advises Chapman, who moved on to a second agent and lowered her asking price after her home got no bites under the first agent. Beware of agents who just tell you what you want to hear.
â€¢ The sellers: Bill and LaVonne VanGundy
The house: A four-bedroom, three-bath house in College Greens
The sale: After they lowered the price slightly, the home sold quickly.
Their advice: Look at your house as a buyer would, says Bill VanGundy. Look for the flaws. Also, attractive advertising matters. The couple used a professional photographer for their web listing, a smart move that helped move the house, he says.
â€¢ The sellers: Alex MacBain and Tiffany Aldrich MacBain
The house: A three-bedroom, one-bath house in Arden Arcade
The sale: They accepted an offer for slightly under the asking price after just two weeks on the market.
Their advice: Price it right. Our Realtor told us that all buyers want a steal and all sellers want a big profit, says Tiffany. She advised us to find a happy medium between the two, and we think we did. Also, don’t overlook the yard. We realized that our large, landscaped lot could be a big selling point, says Alex, adding that they enhanced the yard’s best features before putting the house on the market.
Prepping Your Yard
Forget what your mother taught you about not judging a book by its cover. Looks do matter, and an uninviting exterior is the surest way to prevent potential buyers from ever stepping foot inside your home.
Landscape designer Anthony McClendon, owner of WorldOne Land Design in Elk Grove, is a believer in the power of curb appeal. There is no doubt that good landscaping makes it easier to sell a home, says McClendon.
While you can’t make a 50-foot heritage tree appear in your yard overnight, you can make small but dramatic improvements. McClendon, who specializes in quick landscaping makeovers for home sellers, offers these simple tips for sprucing up your yard:
TAKE INVENTORY. Walk around the entire house and make a thorough assessment of what should be removed, what can be enhanced and where you need to fill in with new plants. If it’s dead or unhealthy, get rid of it, advises McClendon.
GRAB YOUR SHEARS. Prune shrubs and trees that are overgrown or misshapen. But be judicious&emdash;you can’t make up for years of neglect in one weekend. Take a cut, stand back and reassess, suggests McClendon. The idea is to frame your house and shape plants in an eye-pleasing way. If an overgrown shrub appears as though it’s devouring the home (remember Little Shop of Horrors?), consider removing it.
MAKE A WELCOMING STATEMENT. Create an enticing entryway. Topiaries or annuals in attractive pots are winners&emdash;but beware of water needs, especially if you’re no longer occupying the house. Pots must be watered daily, or whatever you put in there is going to die, warns McClendon.
EMBRACE COLOR. Once your backdrop of shrubs and perennials is in place, fill in with annuals to add color. Plant them en masse for maximum effect. And stick to a consistent color palette. You don’t want to get too outlandish, advises McClendon.
MAKE IT SPARKLE. The power washer is your friend. Use it to give a fresh look to sidewalks, driveways and patios. Weed flower beds and keep your lawn trimmed and tidy. And add mulch to give everything a finished look. Mulch can hide a lot of mistakes, McClendon notes.
WALK A MILE. Put yourself in the buyer’s shoes. When they first see the house, says McClendon, the prospective homeowner should be saying, â€˜This is home,’ not â€˜I have a lot of work to do.’