It’s true. We’ve downsized, and it happened fast.
Our house was listed last month, late on a Tuesday evening. Early Wednesday morning, while packing to be out of town for a week, we started getting phone calls. By the time we left for the airport after noon, a half-dozen showings were scheduled.
Late in the afternoon, after touching down on the first leg of our flight, there was a text message from Rob, our Realtor: we had a near full-price offer from a well-qualified buyer!
The following morning, on the other side of the country, we signed the Purchase and Sale Agreement, electronically. And we closed without incident about 6 weeks later. That was last week.
Ours was no show home. Though most people found it attractive, it was small and simple and wasn’t the kind of place where you’d expect to find buyers queuing up. And though our state was not one of the many train wrecks during the real estate downturn, we were told it was still a buyer’s market. Financing would be difficult for many, and the rest could afford to be choosy.
Nevertheless we sold our house extremely quickly, and at a fair price that produced a sizable gain over 16 years of ownership. How did we do it? No doubt, some of our experience was good fortune — the right timing plus the right buyer. But what had we done to create the conditions for that good fortune?
Well, the story begins over 16 years ago when we bought into one of the most desirable neighborhoods in our area — a small township with little land remaining to be developed. The town sits on the outskirts of a major city, and is built on the edge of plateau with sheer cliffs — literally — on most sides. In the other direction, you reach the county line after a few miles. So this was a geographically constrained area of land. With the big city growing steadily in all directions, there continued to be solid demand for the limited number of properties in our town. Add to that the long overdue construction of new elementary, middle, and high schools several years ago, and the ingredients were in place to keep demand and property values going up over the long haul.
The story resumes about 4 years ago, when our son left for college. We were faced, finally, with the proverbial “empty nest.” But it was a somewhat worn nest. There weren’t major issues, but we had allowed a number of maintenance projects to languish during the demanding years of full-time work and parenting. Our limited time and energy had gone into work and family first. But I had kept a growing list of house projects that would need attention some day….
Now it was time to get serious about catching up. My wife Caroline kicked things off by orchestrating a couple of significant projects that were beyond our own home repair skill set. We had the wood siding completely replaced on the most weathered side of the house by our experienced contractor friend Mark, and his crew. Then they used the good pieces remaining from that side to replace weathered pieces on the other 3 sides of the house. Finally they painted from the roof line down to the top of the first story, where we took over and finished the new paint job. In the end, we wound up with a like-new exterior, for a fraction of the cost of complete replacement.
Then Caroline moved on to our second most important project: renovating the kitchen. I’ll probably write more about our frugal approach to home renovation elsewhere. But suffice to say that for about $8K, instead of the usual tens of thousands of dollars, we got the essence of a completely updated, state-of-the-art kitchen, with granite countertops, stainless steel appliances, and beautiful tile floor.
The next summer my son was home from college and he worked through most of the rest of the items on my house to-do list, including painting a number of rooms, making updates to the bathrooms, and doing various repairs and projects outdoors to bring the rest of the property in line.
So now the house was in basically good repair and largely updated inside and out. It would have been a good buy at that point, but it probably wouldn’t have sold quickly. It still lacked some essential elements for buyer appeal and a quick sale. Fast forward a few more years to this past spring….
Choosing a Realtor
We knew this was the year to downsize. We were ready for a new location; Caroline would be retiring in the summer; my first book was done; the house was in good shape; and the real estate market was as strong as it had been in half a decade.
We felt if we didn’t get the house on the market by late spring, we’d be missing a golden opportunity. But we didn’t know how long it would take to sell. Having made the decision to downsize and possibly leave the area, we didn’t want to wait 6 months, 12 months, or worse before we could launch our new lifestyle. Our objective was to sell the house quickly, and at a fair price.
Ironically, even though I’m a do-it-yourselfer in most financial matters, I knew from the start that I’d want help with selling the house. The reasons were plentiful in my mind: I’m not an expert in real estate, I wasn’t particularly interested in it, and I had no desire to educate myself on the details of what would be an extremely rare transaction for us. Also, over the years, we’d seen any number of houses in our area start out for sale by owner then, after not selling, wind up in the hands of a Realtor anyway.
All I needed to do was put myself in the buyer’s shoes: why should a buyer go to the work and risk of pursuing the few homes being sold by owners, when they could get a Realtor to review hundreds of homes in the MLS and do all the legwork for free?
A Realtor is a sales and marketing professional. I’ve learned over my years in business how important those functions are. Unless you have a penchant for either, especially as they relate to real estate, you’re putting yourself at a disadvantage to go it alone in the housing marketplace.
Yes, Realtors do get a juicy commission, 6% plus or minus, depending on the area, and the rate you negotiate. Occasionally they might make that without putting a whole lot of work in on a deal. But so what? It was very hard for me to quantify how that money would be “saved” by selling the house ourselves — especially if we got less for it because of a reduced pool of buyers. We were ready to move on in life, and weren’t going to split hairs over a few percentage points. Our investment portfolio routinely fluctuates as much as a typical Realtor’s commission.
The fact that we had a trusted friend in the business, one we had worked with successfully in a number of capacities over the years, made the decision all the easier. Rob had already walked the house earlier in the spring to give us a number of selling tips. So the decision to list with him was not something we had to debate at any great length. When he brought the Listing Agreement by and explained how the process would work, we felt all the more confident that we had made the right decision.
Staging the Show
I’ll confess my spirits dimmed a bit as I read through Rob’s extensive Home Selling Guide — a dozen pages on the mechanics of properly preparing our house for sale. It addressed repairs, cleaning, “neutralizing,” space management, atmosphere, staging, exterior, yard, driveway, front entry, living area, dining room, kitchen, laundry room, stairways, bedrooms, bathrooms, garage, and showing….
When I finally reached the last page, overwhelmed, I pitched a small, private fit. This felt like rearranging chairs on the deck of the Titanic. Sure, it would be nice to have a picture-perfect property with great curb appeal, but it just hadn’t been worth the trouble or expense to us in our everyday life. So why do it now? It was so much work, for such a short period of time. Why did we need to do all that just to sell a nice house that was already in functional repair and had served us perfectly well for 16 years? Why not just lower the price a bit and tell buyers to “take it or leave it.” Bah humbug this staging stuff!
Once I’d vented, I began thinking like a buyer. We would soon enough be “buyers” again too — even if we were only renting — so it wasn’t very hard to understand their point of view. Real estate is not the seller’s market it once was. And buying a house is the largest financial transaction most people make — a multi-year commitment that affects everything about their physical and emotional quality of life.
What do you look for when making a major purchase? I bet you want value. I sure do. I want something that feels like it was meant for me, personally. It should meet all my requirements, exude that extra feeling of quality, and do all of that for a great price. I want the seller to go over the top for me. And I realized that every potential buyer coming in our front door to view the house would feel precisely the same way!
If we were serious about selling our house quickly for a fair price, then we were just going to have to get serious about this staging business, and demonstrate to buyers beyond any shadow of doubt that they would be getting a quality home perfect for them at a reasonable price.
And we did. To the best of our ability, we ticked off virtually every single item in the Selling Guide. We held a yard sale and rented a storage unit, reducing our household contents by about half. We diligently worked through each room, reducing clutter and packing away personal items. Given our time constraints, we had to bypass some of our usual frugality standards and pay for help to accomplish in weeks things that would have taken us months, alone. But we set our sights on the goal and got it all done.
We had one prominent room painted and then touched up throughout the house. We had the roof, siding, and trim cleaned so the house sparkled like new. (Using diluted bleach, not destructive pressure washing.) We resuscitated our decks with a beautiful honey-toned stain, recommended by our contractor friend, Mark. We resurfaced the front sidewalk and did some modest landscaping all around the house: adding mulch, a few shrubs, and several dozen annuals. Lastly we coaxed new grass up in the front and side yards.
Altogether we spent a little over $4,000. Other than some overpriced landscaping labor, owing to making a verbal agreement in a hurry, we got our money’s worth. The house was transformed from a functional property in good repair, to a “Honey, stop the car,” drop-dead gorgeous, curb appealing show-stopper. We were proud of the results and confident not only that the house would attract buyers, but that the right one would be getting a great deal and would be happy living there.
Listing and Pricing
Now came the last step, perfunctory for us, given all we had done to prepare, but critical to get right: listing the house. Many real estate listings are embarrassingly amateurish, with sketchy information and unappealing photos that do more harm than good. Sabotaging your one chance at making a good first impression is a huge mistake, especially for a transaction as large and critical as selling a house.
To create our listing, Rob came by on a sunny morning and spent several hours shooting photos. He took hundreds of shots inside and out using ladders and difficult positions high in the corners of rooms to get the most attractive possible presentation for the house and yard. He hiked down into the park across the street and got shots there. A deer wandered through, and he got that on camera too.
He then spent the rest of the day cherry-picking the best shots and writing and re-writing our listing. Taking the buyer’s perspective again, he highlighted many great features of the house that would appeal to various intended uses, some of which I had long since taken for granted. The dining room had a great view of the back yard. The sunroom was perfect for indoor picnics. You could hear the creek across the street from our master bedroom. The front porch was perfect for an occasional dinner. As a long-time resident of our neighborhood himself, he knew all the best features of the area and could portray it accurately and enticingly as no outsider possibly could.
When he was done with our listing, it was so good that we were having second thoughts about leaving! As far as I was concerned, he earned his commission that day.
The final question was how to price the house. There appear to be two extreme approaches to this delicate issue. Some buyers ask for all they dream of getting and more, pricing the house at what they “feel” it’s worth to themselves on an emotional level. But, in today’s world, that’s foolish. Even if you are lucky enough to find an ignorant or eager buyer at that high price, the deal is likely to be shot down by the bank’s appraiser. My understanding is that it’s very difficult to get any sort of deal done these days if it involves financing over the appraised value. At the other extreme, buyers defer to the Realtor, who picks a number loosely based on comparables or gut feeling, then moves on to the next listing without further thought.
We did it differently. As stated, our goal was to sell the house quickly, and at a fair price. Being financially independent, having long ago paid off our mortgage, we had no financial constraints or preconceived notions about what our house “should” be worth. We just wanted the market value, minus transaction costs.
Rob’s thinking was perfectly aligned with ours, and he suggested we have a private appraisal performed by the most respected and careful appraiser in our city. This we promptly did. It was well worth the few hundred dollars to know with some precision, from an independent third party, what price our house should actually sell for.
Our private appraisal came in at $240K. We priced the house a few percent higher, at a natural price point of $249K. This would show up in searches for $250K or below, and would allow some room for bargaining and contingencies.
The buyer knew we were asking a fair price and jumped on it with their quick and gracious offer of $245K. We accepted promptly, and the rest is history!