The 2019 market is around the corner. In August, the median sales price decreased for the first time in 4 years. This is how to squeeze out every last penny of the final year of this ludicrous seller's market.
Here's the thing: of course your house will sell. It's still a seller's market. But can you squeeze out $1,000 more from a keyword-tested description? Will your house sell for $8,000 higher if you boost curb appeal as opposed to the kitchen counters? Will paying $300 for professional pictures return $400 in the sale of the house? Most importantly, which Realtor will get as many eyeballs as possible on your listing?
It's definitely not about doing a favor for the family-friend Realtor who does 1 transaction a year and doesn't even live in the San Fernando Valley. It's not about picking the buyers that are a cute family even though they're offering $10,000 less than the investors. This isn't a charity. This is your house - likely your largest investment and the funding for your retirements, your kid's college funds, and your next purchase.
Under this perspective, we break down how each of the following factors build up to the maximum payout in this seller's market. If you're like most folks, you're only selling a house a few times your entire life. Every penny matters.
Let's get this one out of the way first. Most sellers overthink price. In reality, it's only one part of the overall marketing machine. Price is not about what goes into your pocket.
It is imperative that sellers see price as a marketing tool. In the age of the Internet, buyers see a hundred homes a day. The apps - Zillow, Redfin, Realtor - are like social media feeds. Buyers scroll and make an impression on your house within 1 second.
The reality is that you get the best offer by opening up your house to as many buyers as possible. It's a numbers game. The perfect buyers exist out there - we just need to show them your listing.
Don't overprice your house. It'll sit on the market for an average of 45 more days. In the meantime, you're making useless mortgage and utilities payments. Secondly, once a house is on the market for long enough, it gets seen as cold product. Soon, the low-ballers start stalking in.
On the other hand, ignore the agents that force you to take a bidding war. Studies demonstrate that the bidding war still ends up with nearly a whole percent less on market value than a properly-priced home. On a $650,000 house, that's a $6,500 loss.
Grace Bucchianeri of the Wharton School of the University of Pennsylvania and Julia Minson, a lecturer at the University of Pennsylvania, remark on a behavioral trait known as “anchoring.” This trait assumes that, as rational decision-makers, we rely on the first piece of information offered (known as the anchor) when making decisions. Once buyers have an anchor, they’ll examine and interpret all other information in relation to the anchor.
In other words, price your home low, and it looks like a cheap home. The agent who underprices it is just lazy. In a couple months, he'll be bragging about how he sold your house "$30,000 over asking price". In actuality, it was just underpriced from the start.
2. Quantity Marketing
As previously stated, the right buyers exist out there. These are the ones that are approved for a mortgage loan, in the buying window, and looking for criteria that fit your house.
Lets say the Smith's, Singh's, and Lee's are looking for a house with 5 bedrooms, a pool, and zoned for Granada Hills Charter High School. Their budget is $700,000. If they see your house, they would offer on it. But if they don't, then you get no offers. If only one of them sees, it you get one offer. You need all three in order to spark a bidding war.
It's a simple concept, but very powerful. Your house is a product, and there are several perfect buyers out there. We just need to find each one. This is why even small changes in marketing firepower, when multiplied out over millions of buyers, make a huge difference. For example, there are 4 million people in Los Angeles. Reaching 70% of them as opposed to 75% of them is a 5% difference, or 200,000 people.
If you're really good, you also put it on the platforms where overseas investors from places like China and Russia are shopping.
If none of the three families see the listing, you don't have a buyer. You could expose it 3 million people, but if none of them are searching for your house, then there is no progress.
Quantity Marketing is achieved by opening it up to as many people as possible:
Flyers in popular areas
Facebook, Instagram, and YouTube marketing
Optimized Zillow & listings
Insertion on to overseas real estate websites
3. Quality Marketing
Great, let's say you hire a rockstar agent and all 7.6 billion people in the world see your listing. Now, it better make a darn good impression. The pictures, description, and price have to elicit as many offers as possible. Let's say you market to 4 million people. That's great! The next problem is you might lose out on buyers that are too busy to realize how great your listing is, or simply forget.
Therefore, the impact on each of these buyers must be profound.
Although this may sound obsessive, when the advantages of these details are multiplied over millions of viewers, the effects add up. It can be the difference between selling your house for $20,000 more than if the marketing was mediocre.
There is only one chance to make a first impression. Here is a breakdown of quality marketing:
Pictures. If nothing, you need professional pictures. In the age of the Internet, your listing is one amongst a million. Buyers scroll aggressively - you have less than 1 second to make an impression. The drastic difference between professional and amateur photography can be seen here:
Keyword-tested description. Did you know that words such as window panes, tile, modern, and impeccable all boost sale prices? If you've got it then show it off. Depending on your price range, double-check with your Realtor to run a correlation analysis between days-on-market and keyword frequency.
Brochures and other Marketing Materials. Whoever comes in contact with your listing needs to be dazzled. No set of eyeballs must be wasted. Even if they don't like your listing, they likely know someone who does. You'll see some listings have black-and-white flyers. Ugly marketing is for ugly houses.
4. The Realtor
There are so many agents in the San Fernando Valley - around 10,000, to be exact. You can drive down any commercial street and be pelted with bus bench ads. When you get home, there's five more postcards in the mail. Your son's friends have parents that are Realtors. Don't forget Jeremy, your second cousin thrice removed, does a transaction every decade. He'd be disappointed if you didn't list with him.
They're all going to charge around 2.5% to list your house. You might bargain down on their commission a few thousand dollars. Just make sure you're not losing that on the bigger picture of the sale. A lazy agent will cost you tens of thousands of dollars.
As the market shifts back from the ludicrous seller's market of the past two years, you'll need every ounce of effort to squeeze the juice out of the market.
Ultimately, Realtors will either sell your house reactively or proactively. The reactive ones simply take pictures, list it on the market, and wait for the buyers to come. Is that worth $15,000 of commission to you?
The proactive ones go out and hunt down the buyers. If your house is in Northridge, you bet they're passing out flyers at Dave & Buster's. They'll be soliciting parents at Granada Hills Charter High School. Hopefully they're hosting open houses Saturday and Sunday -- WITH hor d'oeuvres. They should have an email list of their own database and a large social media following.
These are just the basics. Heck, if you're paying 3% commission, why not consider a hot-air balloon?
Again, these small advantages add up to a huge price difference. Most agents take pictures, put it up on the MLS, and sit back and wait for calls. $15,000 of commission later, they're on to the next victim. Don't be fooled by experience or the family-friend referral. The actual paperwork of the home sale is cookie-cutter. It's the easy part.
The marketing is where agents distinguish themselves.
Summary of Agent Duties
Keep a log of every agent that shows it, every open house attendee, and every buyer that might be interested. Follow up consistently.
Aggressively prospect for buyers. A small sample of our personal recipe is:
300 doors knocked a week.
3 open houses a week, minimum of 30 open house signs.
Save yourself the time. First impressions are everything. Don't go crazy on renovating a house. My mother always said, "why would I renovate my house for the new buyers when I didn't do it for myself?"
Revamp the curb appeal. Put grass, cheap/bright flowers, some lawn furniture, and if necessary, a new coat of paint. Yes, you only need to paint the front of the house. It's all curb appeal.
A kitchen remodel gets you an 80% return. If you spend $50,000, you get $40,000 back. Yes, it'll sell faster, but you just lost $10,000. Bathroom remodels get you 70%. Don't even think about adding a swimming pool.
The only things that add value are:
Yes, deep clean your house. Organize the clutter. The rule of thumb is "IKEA-ready". Yes, leave some things out. Make the house look lived-in.
That’s all you need to do. Of course, deep clean the place. Make sure the corners of your shower are nice. But realistically, it’s all curb appeal. Go on any website, like Zillow, and what is the first picture? It’s the front of the house.
If you have extra money sitting around, what’s the second renovation? Countertops and cabinets. You won’t get 100% of your money back, but it WILL sell faster!
Just stage the living room. The market is shifting, and light staging is going to become necessary. For the last two years, houses flew off the market no matter how poorly marketed. Now, things aren't the same. Here are some before-and-after photos:
With the market leveling out, sellers need to find more competitive advantages. Don't spend more than $1,000 - and just do the living room. If you have a leftover budget, do the kitchen too.
If you're like most sellers, you still live in your house. As mentioned before, just make good use of your furniture. Pick up an IKEA catalog and mimic it as best as you can.
Remember to declutter and denaturalize. Take down family pictures, religious symbols, and clean it up as much as possible. The house should be empty except for furniture and other decor that adds to the house. Everything else needs to be stuffed under the stairs, in the garage, or in the closets.
Everything adds up. When your market is as large as Los Angeles, every single details multiples out powerfully over such a large population. Conversely, if the real estate market was a small town in Ohio, it might not as matter as much.
If you could squeeze out $6,000 more, wouldn't you? That's a lot of money.