A little over a year ago, I sold a house and learned a few critical lessons in the process. This is my second blog on the financial aspects of that home sale. Today I'm going to discuss what I learned about getting the best possible price while investing as little money as possible in the process.
I should explain upfront that my daughter and I were handling the sale. It was the first house either of us had ever sold. If I had to name the three most important factors in selling a house, it would be 1) Market research 2) Hire the right broker 3) Clean, repair, paint.
- Market Research
We had to look at our house with cold, objective honesty if we were going to assess what it was worth compared to other homes that were up for sale. Our house was old, but there were no structural issues. Cosmetically though, it required a lot of attention.
Here's the the roof of the house before we began our fix-up.
We looked at listings, in our community and in neighboring communities. Weekends we would attend open houses. This was especially important if a house was put up for sale in our small neighborhood. We'd look at property size, the number of rooms, number of bathrooms, landscaping, vintage of bathroom and kitchen decor.
It didn't take long for us to recognize those houses that were being 'flipped'. That is, a realtor had purchased a house in poor repair, brought in a crew to quickly renovate, and then 'flipped' the house (sold it) for a profit. As we shopped for our new home we did not want to buy a flipped house because there was no way to know if there were hidden structural issues.
When the time came to put up our house for sale, we determined what we could ideally ask. But would we be lucky enough to find a buyer willing to pay that? My daughter had a sum in mind (which I found exorbitant) and she aimed for that sum.
- The Broker
We consulted three brokers. These were chosen very carefully, after I had researched their sales history, especially their experience in selling homes in my community. Talking to the brokers was a revelation. We didn't call them until we had done all the updating work we thought we could do.
The price differential between the highest suggested sales estimate and lowest was astonishing. The lowest was 34% less than the highest. Ultimately, that bid, the highest, matched the sum my daughter had in her head, and it was the amount the house sold for.
I think the broker with the lowest bid was not honest. She was the second broker we called. I think she planned to 'flip' the house. She said she could promise that sum and she wouldn't charge us commission. She likely saw two inexperienced women who didn't feel confident, and thought she could exploit that perceived weakness.
Talking to her was depressing, but not a waste. She had some good suggestions. One was to paint over the paneling that had been on the walls in the den and the hall for 40 years. Here is what the paneling looked like in the den, before we painted it. (The cat was not for sale). The paneling in the hall was black. Painting over those surfaces, and those dark colors, was a challenge.
I remember how empathetic this broker was. We sat around the kitchen table and she told us all about herself. She told us how much she liked us and wanted to help us. We never called her again. I did enjoy dwelling on what she must have thought when she saw the price the house actually went for.
The first broker we called had suggested a price that was 91% of my daughter's ideal number. But she suggested that, realistically, we could only hope for 86% of that number.
When I called the third broker I told her I had talked to two brokers already. One of the three, I told her, was going to get the house. This woman knew I was a serious seller. She came with a prospectus. She showed her market evaluation of other properties in the neighborhood and compared them to ours. She showed us her sales history in the neighborhood, and in the general area. Finally, she said she would go for the asking price my daughter targeted, and we could hope to approach within 95% of that price.
My daughter wanted to hire that broker, not surprisingly.
- Location, Location, Location
Before we considered what to ask for our home, we had to understand the value of our community. We lived in a nationally renowned school district. Homes in the district were very expensive...except for in our neighborhood. We had a different zip code from most of the district. We were definitely a middle class neighborhood.
The key to selling in our neighborhood was to find a family that wanted to live in a top school district but didn't have the money to pay for the premium houses. Our broker needed to understand this dynamic, and needed to be able to reach the right buyers.
One thing we had going for the house, within the neighborhood, was that it was strategically situated on a corner. It potentially had great curb appeal because of the generous front yard. Most of the houses in our community had attached garages. We had a separate garage. And there was a small playground for young children almost directly behind the house.
- Fixing it up
Two years passed before we called the first broker. If you refer to the picture at the top of this blog, you'll see some of the changes we made. My daughter did all the following by herself:
Washed the roof
Painted shingles
Nailed down shingles
These were some of the easier things she did. There was so much more. The backyard needed a lot of work. She took a sledge hammer to the patio, removed the cracked concrete and replaced it with decorative rocks. She tore up trees and created a garden area behind the garage. These are the trees she tore up.
I can't give an exhaustive list of everything she tackled, but ceiling tiles, spackle, window trim, light covers, fascia--all within her purview.
What did I do? I was the cleaning and purging crew. I was the painter. The only thing I didn't paint was high ceilings. My family wouldn't allow me to climb on a ladder.
Here is a picture of one of my rooms, before I was finished. This room was 25 feet long. I did the ceiling (which was low), and floor also.
To be honest, my daughter often touched up areas I had painted. I was the grunt worker. She was the skilled artisan.
- The Sale
When we signed the contract with our broker she allowed us to put a provision in: If the house didn't sell in two months, we could cancel the contract. We figured we had crossed all our T's and dotted our I's as we got ready for the first showing. Before that showing, the broker brought in a professional photographer, whom she paid out of her anticipated commission (2%, which is fairly standard in my area).
Soon our house was listed, along with the other houses we had been watching for months. We all broke out laughing when we saw the listing. The photographer had done quite a job. As my granddaughter said, he made the house look like a mansion. There was a video, with inspiring music. The description of the house included a 'craft room', which was a finished room in the basement that was in OK repair.
The house was described as having 10 rooms, which I guess was true if you included the two finished rooms in the basement, and you counted separately the bedroom alcove. I always thought we had an eight room house. What a revelation the showing was :))
The open house was on a Sunday, Labor Day weekend, which is not good because a lot of people go away for those three days. I parked down the block so I could watch people coming and going. Not many came. Then, at the last minute, a man sped by. He drove around the block and then went into the house. He looked in the garage window. He sped away.
That man offered 97% of the asking price. We were thinking it over when the broker called and said he agreed to full asking price. We were stunned. One showing. One buyer. It was over.
Now all we had to do was find someplace to live.
