Maximizing Your Profit from a Home Sale
MAXIMIZING YOUR PROFIT
Most people know that increasing equity in their home is one of the easiest ways for an individual to build wealth. What most people do NOT know is how to maximize their profit when it comes time to sell their property. Selling a home is not something an individual does every day; most people only sell a few houses in their lifetime. So why expect that a Seller will know the true value of their home in the current market?
How to Maximize your Homes Desirability Factor
Let’s say, for discussion’s sake, that you have a Master’s degree in Statistics. You come up with a formula to rank, in order, every home for sale in your market area. Number 1 would be the most desirable home on the market in your neighborhood, and statistically speaking, it would be the next home to sell. You could call this formula the “desirability factor.” You plug in such things as neighborhood, lot size, square footage, finish-out, floor plan, decorating, amenities, and overall condition. Of the twenty homes for sale in your market area, you conclude that your home ranks Number 10 on the local desirability factor scale.
Since this chapter is about maximizing your profit, what can you do to get closer to that premier position and command a higher price per square foot? Having the most sought-after home on the market means increasing your home’s desirability quotient. How do you go about making that happen?
Find the weakest point in your home and fix it.
When a negative is left as-is, it can often eclipse and overshadow all the positives of your home. By taking the absolute weakest point of your property and making it into a strong point, you can increase your desirability factor exponentially. Good business people know that hiding a flaw is only a band-aid solution that a savvy Buyer will see right through. Taking that flaw and turning it into a selling point bolsters every other positive within and empowers your home to move up in position on the desirability factor scale. . . Maybe even accelerate it from Number 10 to Number 3.
For example, you invite me over with the intention of listing your home. And, with an unbiased and expert eye, I follow you as you show me around. After going through your entire home, you look to me for feedback. “It’s lovely,” is what I’ll say when I’m trying to get your listing. However, one of the first things potential Buyers will see as they begin the tour is the formal dining room directly off the entry. It’s carpeted—no big deal, I can sell around that—except there are noticeable stains from two Thanksgivings ago. Compounding the negative effect of the stained carpet, the room is wallpapered with tiny pink and yellow flowers. In my professional opinion, your dining room is the weakest room in the house.
To Update Your Home or Not
Now I know what you may be thinking: That decorating is subjective, and prospective Buyers will be able to see through your taste in décor if their personal tastes are different. Wrong! A professional Real Estate Agent looks at homes all day, every day, and knows what’s selling. While individuality has its place, mass appeal will net you more. If your Buyer foresees a need for updating or redecorating, they will expect an allowance for it, or simply offer less for your home.
As delicately as I can, I share with you my ideas. We remove the carpet and install a wood floor; 250 square feet at $8.00 per square foot amounts to $2,000. We will do a light skip trowel texture to the walls (a dining room is usually only three walls), and we paint the skip trowel with an updated color, costing another $1,200.
Total cost: $3,200. Elapsed time: eight days. It’s worth it! The finished look is beautiful; in fact, it’s so striking that your dining room is now the new focal point of the home.
If you can take the weakest point and make it the strongest, you will increase your home’s desirability factor exponentially!
Here are two real life situations I’ve encountered, both where a property was not living up to its market potential. The first one was an extreme case; the Seller was losing time as well as money, and selling was completely stalled. The second scenario was a more commonplace situation, where the owners had overlooked an obvious and easy fix that would have boosted their property’s value.
I was sitting an open house one late afternoon, and in walked my newest client-to-be. He explained to me that his home had been listed with another agent and had been on the market for almost a year. During that time, he reduced his asking price twice with no results. He was frustrated and tired and asked if I would be willing to take a look at the property and give him my input. Fearing the worst, I met him at his home later that evening. Wow! A big house, with 6,000 square feet and a very nice front elevation. This was definitely not the problem.
Finding the Hidden Problems
Through the double-leaded glass front doors and unbelievable “knock-my-socks-off” trim, I searched for a reason why this man’s house wasn’t selling. I mean, this traditional home had it all: triple-crown moldings, dental block, egg-and-dart accents, fluted columns, fluted arched art niches, two-story fireplace mantels, corbel-supported stair treads. All the door openings had pediment tops, and the floor-plan was very user-friendly. It had many desirable features and more. Granite counter tops, wood floors, marble bathrooms, and a theatre.
We walked to the back door. “It’s dark out, so will you flip on the flood lights so I can see the backyard?” It was just as I suspected, “Perfect.”
That’s a lake isn’t it? Ooohh and look! It has a lighted fountain. How much did you say your last asking price was? Rrright. . . oookay then. . . listen, I’m just going to run out to my car and get my check book – I’ll be right back.
What is Distracting Your Buyer?
What made this stunner of a home stay on the market so long? Merchandizing. What I didn’t mention was the furniture. It was from the eighties and looked it. Worn and dated, it took the luster off this jewel and detracted from its visual appeal. And remember the incredible trim I told you about? Nobody else knew it was there. The walls were white and the trim was also white, so it just didn’t pop.
Cooperation = Money
I told my newest client, “Please move out so I can have the walls painted an updated color, while I list the home back to its original asking price.” His willingness to cooperate was refreshing.
And fifty days later: SOLD! I like to think the extra $60,000 my client’s home sold for helped ease the pain of being asked to move out before his home sold.
For a less drastic and more common example, I showed up on a Saturday afternoon to list a charming cul-de-sac property. Armed with a current market analysis for the neighborhood, I greeted the client and we toured her home. The home was truly lovely, decorated and furnished exquisitely. The only weak point I could see was one that had troubled several other listings on the street.
I had shown properties on this street before and the comments were all the same. Small backyard. After further investigation, I realized that the backyard really wasn’t all that small. In fact, it was really quite large. The problem had just been overlooked on all of the other listings. Five Bradford Pear trees that had been planted eight years before as saplings had matured and taken over the entire yard. I recommended having one tree completely removed, and the other four trimmed down drastically. The owner complied, and the home sold for the highest price per square foot on the street.
Side note: This may sound sexist, but tough, it’s real estate reality. I want my name on that sold sign in your yard, so there’s no room for political correctness. Certain features have strong gender appeal.
Who Does Your Home Appeal To?
When couples are looking at homes, the first thing a woman wants to fall in love with is the kitchen, then the master bedroom and bath—this is common knowledge, and these are areas in your home that you probably already know need to have strong appeal.
Here is something that you may not know. . .
Men buy garages! If yours looks like a bomb went off inside, for less than two hundred bucks, you can have a roll-off dumpster delivered to your driveway on a Friday, spend the weekend filling it up with the wreckage, and have it picked up on Monday—boosting your home’s man-appeal several notches! Get the cobwebs off of the ceiling and sweep/hose the floor. How does the back door look that leads into the home? Is it black from five years of finger prints? Formula 409 is your friend. Organize your boxes and toys. . . and get rid of the college Corvette that you have been wrenching on. Give Mr. Buyer room to envision his cars, his power tools, his work bench, or whatever his heart desires in that garage.
Don’t Be Blinded By Emotions About Your Home
Owners can be blinded by their emotional attachment to their homes in the same way parents are sometimes oblivious to their children’s flaws. An objective, professional opinion can be eye-opening, and it is absolutely necessary in order to boost your home’s mass appeal. With maximum profit in mind, homeowners have all kinds of ideas about how to save money when selling their house. Cutting your Listing Agent’s commission down from six to five percent can be small potatoes compared to what experience and insight a professional can bring to the table.
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