Over time, you get a really good understanding for what makes a home that will sell, especially in the Phoenix area real estate market where competition is fierce among foreclosure and short sale properties. Given that current inventory sits around 54,800 homes, having as close to the “Complete Package” when marketing your homes is critically important.
There really is what I will call a ’sub-market’ within the overall real estate market in the Phoenix area. This sub-market is where the successful sellers and prospective buyers are. This is about 7,300 properties (matches the current number of homes under-contract). So, in a market of 54,800 available properties, only about 7,300 really are subject to being under contract at any time. This number will likely increase again when we move out of the holiday season. Put another way, only 7,300 sellers are going to match up with 7,300 buyers in the market. However, it’s important to note that having the “Complete Package” can and is trumped by the very low pricing that foreclosures and short sales often offer.
Now, the sub-market I mentioned used to be composed of typical homeowners who were “committed” to selling. In the past year, the sub-market is heavily composed of foreclosed properties. Unfortunately, sellers will likely not see the full fruits of their efforts in creating a home that shows pride of ownership and care. In some sense, the differential price between two identical houses where Home A is immaculate, well upgraded and taken care of, and Home B is so-so, is not that large anymore. Buyers are looking past some of the upgrades and features to the bottom line on pricing and expecting there to not be a significant gap between them. So, until we get a more normal market outlook, sellers will need to keep this in mind.
Nonetheless, working to make your home shine on the market is still very important and does make a difference toward your success.
So, what elements contribute to a home seller’s success?
- Curb appeal - Clean, well-trimmed and flowered front and backyard appeal. This doesn’t have to be elaborate, but the house should have a nice balance of grass, plants, and trees and be well taken care of. Lack of plants or trees, weeds, broken curbing, uncut grass, and other signs of a poorly managed yard will ruin curb appeal. Make sure the patio is clean and there is nothing about the house that looks wrong. For instance, if it’s pretty clear that the home is in desperate need a new coat of paint on the outside, seriously considering repainting and using colors that will up-level the home at the same time.
- Ready to move in - It looks and feel like all the buyer has to do is move their stuff in and start enjoying their home. This means that walls look good and don’t need repainting, and that there don’t appear to be any immediate “I have to fix that” items that would be readily visible by the buyer or their home inspector.
- The right balance of upgrades and design touches - The more expensive the home, the more buyers will expect certain upgrades and characteristics of the home. This is true in any market but with so much inventory, it becomes acute. Buyers want to see cherry, maple, and other higher end woods for the cabinetry with nice paints that complement. Nice fixtures throughout the house can make a difference as well. Given the current economy, we can expect to see buyers who are even more focused on finding strong value than they already have been.
- No Buyer Resistance Items – Some of the examples here include living right next to a major road, near power lines or power substations, the pool takes up the entire yard or is too close to the patio to allow for a pool fence and easy walking path, the yard is not landscaped, the house has a cigarette or other odor, etc. Because of so much competition, these items have to be addressed in order to sell. Some can be resolved by the home owner by making changes to the home. Others can’t. Since you can’t move the house or the road behind the house, adjust pricing as needed to overcome the resistance and sell.
- Pricing - Pricing has to be competitive and reasonable. It’s okay for a top-notch home to ask for more than its competition. However, there has to be real value that a buyer can see in the home for paying more than the other properties. If the buyer can’t really sense a clear value for paying a little more, the home owner will not be successful. As mentioned above, don’t expect a huge premium compared to other homes given the presence of foreclosures and how buyers are moving in this market currently.
- Strategy adapted to your local city conditions - The Valley real estate market is very diverse. Understanding if a market is more insulated or less insulated from market forces, is experiencing good activity versus poor activity, and other factors is key to positioning. You need to know the local market climate. For instance, selling a home in Scottsdale right now has to take into consideration the nature of the specific area the home sets in as well as the overall Scottsdale reality that only 6% of available properties are under contract. Balancing local market dynamics is very important.
- Flexibility – This is an added element that takes into consideration the nature of the market. A homeowner has to remain flexible and open-minded as to the market. This is not to say that the homeowner gives in to all buyer demands. In fact, probing to find the compromise is the right approach. A homeowner just needs to be flexible to the bobs and weaves that may come up to successfully get to close of escrow.
- Move with the Market – Timely, periodic reviews of the property’s activity and resulting adjustments to positioning are critical. The market continues to evolve. Your home’s positioning does as well. This review should happen every three to four weeks in the current marketplace.
These represent the overall elements that make up a home that is successfully positioned to sell. Each of these has more elements that fall within them, but this should give homeowners who are considering selling an idea as to what they should strive for.
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