Kristen Kudlac - THE SECRET OF WEALTHY HOME SELLERS

THE SECRET OF WEALTHY HOME SELLERS

Kristen Kudlac

Table Of Contents

Introduction

First Steps To Home Selling

The 80/20 Rule

Creating Curb Appeal

Staging With Purpose

Upgrading With ROI In Mind

The Three D's

How To Market Your Home

Common Seller Mistakes

10. Learn From Others' Mistakes

11. Finding Buyers

12. Be A Power Negotiator

13. Dos And Don'ts Of Negotiations

14. Bargaining Chips

15. Why Hire An Agent?

CHAPTER 1 Introduction

The largest investment most people make is their home. That makes selling a home — whether a single-family residence, duplex, or condominium — the single largest, most complex transaction a person will ever undertake. It involves new terms and concepts, financial acumen, and larger figures than normally dealt with. It is also one in which emotions may come into play to the detriment of good judgment. Surely, the seller thinks, my home where I raised my children and made so many memories is worth more than the bricks and mortar it contains. Real estate transactions involve dozens of decisions and substantial investment in homeowners’ time, energy, and money, and emotions almost always lead to problems in a sales price negotiation. The home seller’s objective is to find that home shopper who cannot resist buying your house at the highest price. To do this, you need to offer potential buyers a striking home sales presentation that outshines other homes on the market. It requires making a fantastic first impression, creating for the buyers an instant feeling that they are travelling up the front walkway of their new home for the first time, not visiting someone else’s. It’s about falling in love at first sight, from the curb, in those initial seconds. Most sellers don’t venture alone into selling their home. They find it better to have an experienced real estate professional with whom they are comfortable. This book was written to provide some of that comfort without the direct sales stressors of person- 2

to-person contact.

I want the prospective or active home seller to independently achieve a better understanding of the home-selling process. I’ve also provided actionable insight into how best to market your home, avoid critical mistakes, and maintain a proper focus. Let this book be your go-to resource for information, strategies, and techniques that can be put to work to sell your home quickly at the best price. Take time looking through the chapters and master the secrets of successful home sellers. For example, discover why comparable homes sell for considerably different prices. Be ready to sell by knowing your home’s market value, best listing price, negotiation tactics, and improvements that offer the best Return on Investment (ROI). My sincere hope is that this book will help you make the most of your time and efforts to sell your home. In Part 1, the process and importance of preparing your house for sale is examined: how to present to get top offers, the “80/20 rule,” along with which upgrades will make the most difference in ROI. Part 2 delves into marketing your home with a look at costly mistakes, avoiding those mistakes, and finding qualified buyers. In Part 3, we examine the critical topic of negotiations — what to expect and how to conduct them — and finish with a look at what engaging a real estate professional brings to your real estate sale transaction. After you learn the process, requirements, and tips, you will see that an experienced, financially astute real estate professional can vastly cut the time and raise the economic value of your transaction. Reading this book is your first step to selling your home for the best price in the shortest time. After you read it, you might want

to talk with me. I stand by to assist you with a Comparative Market Analysis and a solid marketing plan to fit your budget and lifestyle.

CHAPTER 2 First Steps to Home Selling

Location! Location! Location! is the most crucial consideration in real estate and a major factor, if not the predominant one, in real estate pricing. Novice (and not-so-novice) home sellers alike must know the considerations that determine a home’s price. Setting the price at which to sell your home is not a simple formula, nor totally mathematical. Many elements factor into the decision. Throughout this book, you will read examples of similar and similarly situated houses that sold for very different prices, along with the reasons for the disparities. A calculated home value is not necessarily what you believe your home is worth. Recognizing this helps avoid overpricing, a major factor that leaves homes languishing or unsold. Familiarity with the real estate terms market value, appraisal value, and assessed value can save disappointment and frustration, and allow the home seller to meaningfully engage in setting a home’s listing price. The most used definition of market value is “the most probable price a property should bring in a competitive, open market, under conditions requisite to a fair sale.” Essentially, this is a pre- negotiation opinion of what a house should bring in its local market, i.e., its geographical area, generally an area such as a suburb or neighbourhood. Appraisal value is an evaluation of a property’s worth at a given point in time that is performed by a professional appraiser. Appraised value is a crucial factor in loan underwriting and determines how much money may be borrowed and under what 6

terms.

For example, the Loan-to Value (LTV) ratio is based on the appraised value. Buyers with a down payment of at least 5% of the purchase price but less than 20% must be backed by mortgage insurance. This protects the lender in the event that the home buyer defaults. These loans are known as “high LTV” or “high ratio” mortgages. In situations in which the buyer has 20% or more for a down payment, the lender or borrower could obtain “low-ratio” insurance that covers 100% of the loan in the event of a default. Mortgage insurance is backed by the Canadian government through the Canada Mortgage and Housing Corporation (CMHC). (Globe and Mail, 2016; updated 2017) Assessed value is the amount local or provincial government has designated for specific property, and frequently differs from market value or appraisal value. This assessed value is used as the basis of property tax and when a property tax is levied. The assessed value of real property is not necessarily equal to the property’s market value.

WHAT IS YOUR HOME WORTH?

The first step in selling your home is knowing the difference between value, worth, and price. Let’s examine the determining factors at work. Understanding those factors allows them to be leveraged. There are several ways a home’s value is derived.

ONLINE HOME VALUATION

Online tools will provide you with a very basic estimate of your home’s current value based on recent comparable home sales in your area using a comprehensive database. Note that the

assessment is based on available data with no guarantee of accuracy, and often uses an algorithm that simply averages comparable sales in the geographic area. These tools might be quick and easy, but they don’t take into consideration factors like location, current local trends, and the condition of the property. Be aware that the prices arrived upon might even be highly inaccurate.

PROFESSIONAL APPRAISAL

Nothing determines the sale price of a piece of real estate but the price at which it actually sells. Houses are not same-priced identical cans of tuna on the grocery store shelf or shares of stock valued and traded every day on the stock exchange. Real estate appraisal (“property valuation”) is the process of developing a perspective of value for real property. This is the market value — i.e., what a willing, reasonable buyer would pay for the property to a willing, reasonable seller. Real estate transactions generally require assessments because they happen infrequently, and every real property is unique in features and characteristics. An appraisal helps in various decision points. The seller can use the appraisal as a basis for pricing. The buyer can use it as a gauge on which to base an offer. Lenders use appraisals to know how much money to credit to their borrowers.

The important factors in a house appraisal are:

• Dwelling type (e.g., one-storey, two-storey, split-level, factory-built) • Features (including design) — materials used and the kind of structure present and how they were built • Improvements made

• Comparable sales • Location — type of neighbourhood, zoning areas, proximity to other establishments • Age of property • Size • Depreciation

Condition, of course, is a crucial factor in valuation. Location is also a factor; however, as property cannot change location, upgrades or improvements to a residential property often can enhance its value. A professional appraiser should be a qualified, disinterested specialist in real estate appraisals, with expertise in your region. His or her job is to determine an estimated value by inspecting the property, reviewing the initial purchase price, and weighing it against recent sales with the same purchase price.

COMPARATIVE MARKET ANALYSIS BY A REAL ESTATE PROFESSIONAL

This type of home valuation, the Comparative Market Analysis (CMA), is often free from some real estate professionals, and more detailed and helpful than automated online offerings. It provides detailed information on each house sold in your area over the last six months, along with the final sale price. It also includes the specifics of all the houses for sale in your area, including the asking price. These homes are your competition. The real estate professional will also answer any questions, and help you price your home realistically. Along with an understanding of how the worth of a home is determined, the current market must be considered. By utilizing a professional real estate agent, you can rely on proven expertise to market your home at the best listing price. I will be happy to

provide you with a CMA.

Please refer to the last page of this book if you would like more information on how to request a free home valuation.

THE SECOND STEP (SELLING YOUR HOME FOR MORE)

Prior discussion showed that there is no calculable certainty in setting the value of a home. There can be wide differences between the seller’s assessed price, the asking or listing price (market value), and the price at which the home sells (sale price). Let’s turn to what the homeowner/seller can do to elicit offers at, or even above, the listing price in a competitive market. The seller’s time, effort, and investment are the most important parts of the process. The seller’s willingness to adequately prepare the home for presentation — and willingness to live in that pristine state for the time it takes to sell the property — will greatly affect both the sale period as well as the price at which the home sells. A market in which homes normally sell in no more than six months of listing is considered balanced or neutral, which means a good number of homeowners are selling and buyers are purchasing; therefore, neither has an upper hand. In Canada, ever since the end of the short recession in 2008, this has generally been the case in most provinces. However, market shifts can—and do—happen. A variable, for instance, like a major company entering — or moving from— the area will tip the scale toward homeowners to make a swift market or toward buyers to make a slow market. The typical selling time in a swift market might be 30 days or less, while that of a slow market may be up to nine months. Typically, any number below six months is considered a “seller’s market.

EXAMPLE OF DIFFERING HOME VALUATIONS

A buyer is interested in a home listed at $525,000. The online valuation determines the house is worth $550,000. Based on that estimate, the buyer offers the asking price. When a professional appraisal comes in at $500,000, and the existing tax records assess the home at $400,000, the buyer wonders why the values are so different and whether he overpaid. The house was listed at $525,000 because at that price, the home would sell in a reasonable amount of time. Why would the appraised value not be whatever a buyer was willing to pay? The fact that they paid $525,000 does not mean that is the true value of the home. Certain factors may weigh in — undesirable businesses located near the property, for example. Online valuations can’t take into consideration the condition of the property or the qualities of the neighbourhood. Since an assessed home value is for taxing purposes only, it can be much more or much less than the market value. Ideally, they should be the same, but usually they are not; it is based on a percentage of the appraised value determined by a professional. From legal descriptions to onsite inspections to comparable home-selling prices, the assessor will take all these things into consideration when appraising a home. Location near industry, high traffic, or potential development will also affect the appraisal.

LIVING IN A FISHBOWL

A house on the market requires keeping the home in a constant “show-ready” condition, and changes in day-to-day life are inherent in the process. Sellers get unexpected phone calls at all hours from unrepresented prospects and buyers’ agents to show the home, as well as frequent updates by phone, email, and text and show appointment scheduling messages from the listing

agent. They also will likely deal with repair and reconditioning appointments and inspections. The house may be photographed for online, periodical, or brochure presentations.

There are repeated showings when the home first hits the market. Keep your home in pristine showing condition for impromptu visitors — the perfect prospect might just drop in at dinnertime.

CHILDREN AND PETS SHOULD BE UNSEEN, UNHEARD

Children (and Pets) Should be Unseen, Unheard Children and pets are distractions for potential buyers, affecting their experience of your home. You should plan for your children to be elsewhere and your pets crated or leashed, and no toys lying about or dog hair on the sofa. The dishes should always be done and the kitchen sparkling. The pressure of showing to everyone even mildly interested in looking (not necessarily buying) may come from the idea that the more your home is seen, the more quickly and easily your home will sell. Many real estate agents provide their clients with dozens of homes to consider without a clear picture of what the buyer wants. Low-interest traffic can be heavy and a burden on the seller’s time, energy, and resources. Since a showing can take an hour or even hours out of your day, finding an interested buyer is what matters most. The home will be shown to many more uninterested buyers than interested buyers. How many times will you have to show your home? In an ideal world, your property would be shown to serious buyers only. However, many “Sunday afternoon window shoppers” exist in the real estate business.

That said, you shouldn’t waste your time trying to appeal to

uninterested buyers. This is where planning, organizing, and the professional help of a qualified real estate agent enables you to handle even the most intimidating tasks without wasting efforts.

CHAPTER 3 The 80/20 Rule

“Eighty percent of results will come from just twenty percent of the action.” This is the Pareto principle, attributed to Italian economist and philosopher Vilfredo Pareto, who, in 1906, observed an intriguing correlation. He began work on the “80/ 20 rule” with the observation that 20% of the pea plants in his garden generated 80% of the healthy pea pods. This observation caused him to explore more examples of uneven distribution. He discovered that 80% of the land in Italy was owned by just 20% of the population. He investigated different industries and found that 80% of production typically came from just 20% of the companies. His findings led to the concept that 80% of results will come from 20% of the action. While it does not always come to be an exact 80/20 ratio, this imbalance is often seen in various business cases: • 20% of sales reps generate 80% of total sales • 20% of customers account for 80% of total profits • 20% of the most reported software bugs cause 80% of software crashes

RELATING THE 80/20 RULE TO SELLING

Understanding the 80/20 rule concept can save you time in selling your home. Applying the 80/20 rule, you stop trying to sell people on the entire home. Applying the rule, you can highlight the 20% of your home’s features that make it special. The remaining 80% of your home still affects the buyer’s decision, so

don’t neglect it, but in photographs, and showings, feature the elements that make your home special. Keep in mind, your selling point won’t be the common features your home shares with the other properties on the market. Instead, use your home’s unique features to grab the attention of buyers who are interested in those distinctive attributes.

BUYER’S STORY

When Vince and Sue were shopping for a new home, Vince wanted an ocean view of the Pacific. They looked at many desirable properties, on Vancouver Island but didn’t find any that were right for them. Some were overpriced; others had obstructed views. The search went on for almost a year until they found an older home a short walk from the ocean. The neglected exterior and dated interior were not encouraging, but when Vince stepped onto the third-floor balcony off the master suite, he was sold. Any shortcomings in wall color or fixtures faded away when he took in the view. He could now see the sunrise from his bedroom window every morning. What 20% of the home caught the eyes of Vince and Sue? The magnificent third-floor view of the ocean!

SELLER’S STORY

When Cam and Kate listed their home, they needed a buyer who wasn’t concerned that the house was on an unpaved road. Though the home was over 10 years old, the interior was updated with fresh, neutral wall colors and carpeting to look brand new. The towering trees and established yard gave the home a welcoming appeal.

The buyer had also looked at a home within just a few kilometres

of Cam and Kate’s that had towering trees, as well as a koi pond and patio. This home was comparable in interior and exterior, but it was on a busy street. What 20% of the home caught the buyers’ eye and prompted them to choose Cam and Kate’s home? The buyer loved the secluded country feel of the home. The 1.8-acre property was surrounded by pastures, with grand oaks dotting the landscape.

LOCATION MATTERS

A buyer paid extra for a townhouse because of its location in the complex overlooking woods instead of the parking area. Another seller took advantage of the fact that most of the surrounding homes didn’t have yards; only a few shared a half-acre grassy area. An owner whose townhouse bordered this yard area sold his home for a higher price than other townhouses in the complex because his had a characteristic shared by fewer than 10% of others — in fact, he had the only available listing offering that feature. He pointed to that feature in marketing the townhouse. With this attractive point of difference, the house sold for a higher price. Another townhouse seller in the same complex found a different unique feature. Although she did not have a yard, she was still able to use location to advantage. Her property backed up to a lake and fountain. This unique feature helped her to sell the townhouse quickly and for a better-than-average sales price.

THE 80/20 RULE IN ACTION: BUYERS ARE SEARCHING FOR UNIQUE FEATURES

Decide upon, improve, and spotlight the unique features of your home in marketing copy, photographs, and showings. Don’t bother spending too much time explaining how the storage room can be converted to another full bath; instead, lead the dog-

owning prospect to the fenced-off dog run in the unusually large backyard. If the home has a certain feature a buyer is specifically looking for, highlighting this aspect in marketing efforts will attract interested buyers willing to pay the asking price. Each house will have its unique features. Here are some suggestions if you aren’t sure of yours:

• Hilltop views or high vantage point, offering a spectacular view of the surrounding area • Open fields frequented by wildlife • Unobstructed views of sunrise and sunset

• Patios, decks, dog runs, garden areas, and gazebos — highlight items neighbouring houses don’t have, or differences in size or quality; that one vital feature could help you sell your home • Location can set a property apart, even in the same area, adding value to a home on a cul-de-sac or corner lot • A private location or lot partially concealed by trees • A unique, shady, or larger backyard; a fenced backyard is a big selling point (If your yard can be fenced but is not, consider making that improvement.) • Finished basement, large attic or garage, swimming pool, or anything else that makes your home stand out Following the 80/20 rule can lessen time showing to people who aren’t interested. Instead, you will be showing your home to buyers who are motivated to make a purchase. You won’t have to show as frequently. You also won’t have to sift through lowball offers from casual shoppers. Keeping this in mind, you must take the time to uncover your home’s most attractive and unique features and improve them to their highest

potential. Compare your house with others in the neighbourhood to see what makes yours stand out. Work with that.

HOW THE 80/20 RULE APPLIES TO HOME SALES

An out-of-town home shopper with no specific requirements contacted a real estate agent to look at available homes for sale. The agent drove him from house to house. In each case, the buyer suggested offers 10% to 20% below the asking price without budging. As the day progressed, the agent’s chances of finding a suitable home for the buyer were dwindling. They stopped at one last house as the sun set. The exterior of the house was dated and the yard untended. This agent and her client had spent the entire day looking at houses that shared 80% of the same features. Nevertheless, once the buyer walked into this home, he wanted to offer the full asking price. What set this house apart from the others? He wasn’t too interested in the kitchen, bathrooms, and bedrooms. A bedroom was a bedroom, as far as he was concerned. He fell in love with the one remarkable feature of this otherwise uninspiring house. The house sat on a hill with a beautiful view out a large window. As they entered the great room, the sun was setting below the distant tree line. That view sold the buyer. The remaining parts of the home could be improved. The home buyer based his decision to buy on the window view from the hillside. The 20% of the home’s features motivated him to offer full price on the spot. Such is the power of the 80/20 rule. In some cases, the 80/20 rule may help people make a sale without even conducting a showing. The house in the following example had languished on the market for months. Unlike the

previous home, this one was attractive.

It was a brand-new, custom-built home, yet it sat on the market for over seven months without a single offer. The builder hired a real estate agent who knew the importance of finding that one special feature. He drove out to give the house a thorough investigation. He discovered what the property had that the competition did not. The house had a five-acre yard. Other houses being sold in the area had one- to two-acre lots. Not only was the yard bigger, it was also more private than the other properties. The real estate agent marketed the property by highlighting the five acres. Because the house was no longer the main selling point, interest in the property increased.

CHAPTER 4 Creating Curb Appeal

CHAPTER 5 Staging with Purpose

Staging is the act of sprucing up and setting up a home's interior to make it as visually appealing as possible to a prospective buyer. Creating an appealing home — one that potential buyers can envision themselves living in — is the best investment in the sales effort. Sellers often fail to take full advantage in this regard, as it takes considerable time and work. However, the payoff is proven. Staging is considered one of the most effective marketing strategies to increase the value of your home. This strategy is effective in any market, in any type of home property being listed. It applies equally to single-family houses, apartments, townhouses, and condos. This approach works! Agents and sellers using this tactic have a greater chance of selling the property for more money.

Staging the home will:

• Distinguish it from the competition • Attract top dollar from homebuyers • Provide a visual edge over the competition

STAGED VS. NON-STAGED CASE STUDY & REPORT

Dear Reader,

I wanted to give you the most convincing proof possible. Many

people find it hard to believe that the simple act of staging helps one home sell for more than another similar home. In my research, I looked for examples of similar houses being sold for differing amounts of money, where only one of the two houses was staged. The clearest example I could find was in the case of these two listings.

This development has 200 equivalent townhouses.

Every single townhouse in the neighbourhood is three storeys, with three bedrooms and three bathrooms. Every unit has the same floor plan.

I looked for two sales there, and found these:

• Townhome A sold on June 21. • Townhome B, a few doors down, sold a month earlier for $25,000 less. I visited this neighbourhood, and I am familiar with these properties. You could not find a better example of two identical properties that sold for different prices. The lots the units sit on are identical, as far as the desirableness of the location. Both units had the same kitchen plan, with the same cabinets and a tile floor.

Both units had nice hardwood floors in the living room and

carpeted bedrooms.

Every important detail of these townhouses was identical. I studied every aspect of these sales to find what made the difference. There are two reasons one home sold for $25,000 more than the other: • Townhome A was professionally staged, giving it a more appealing appearance. • The agent selling this home took higher-quality, more attractive photos of the home. Those two seemingly small actions made the $25,000 difference! The buyers of Townhome A made a higher offer because the agent presented the home in a more appealing, attractive way.

THE POWER OF STAGING WHEN SELLING A HOME

Consider these potential case studies and reports, based on real stories, regarding the power of staging (vs. not staging) your home when selling it: In general, you will find that staged homes sell for more money and more quickly than non-staged homes. According to the International Association of Home Staging Professionals (IAHSP) — which serves and educates home stagers and Realtors in North America and beyond — staged homes sell for an average of 17% higher than the asking price. For higher-priced homes in cities like Vancouver (B.C.), Toronto (Ontario), Calgary (Alberta), and Montreal (Quebec), this could amount to a significant chunk of change.

The IAHSP also reports that staged homes sell within an average of 11 days, spending almost 75% less time on the market than their non-staged counterparts.

WHAT DO BUYERS WANT TO SEE?

Most home shoppers are envisioning a fresh start. If they can picture themselves living in the home, the home will be easier to sell. This is known as “interior curb appeal,” where the eyes are drawn to inviting spaces and light, as well as to unique features. Each room needs a purpose or suggested use. The home must feel new to reflect ease of upkeep. The goal is to create a clean, simple, and contemporary feel. Painting, updating fixtures, and eliminating stained carpets and popcorn ceilings can affect the saleability of the home by 75%!

NEUTRALIZE FOR VISUAL APPEAL

The idea is to neutralize the home regarding personal taste or decoration, so buyers can easily envision the home as it would be outfitted in their taste or with their possessions, without the distractions of the seller’s taste and possessions. In staging, distractions are removed so the home shopper can imagine living in each space of the house. An effective way to achieve this is to paint all rooms in a neutral color. A wide range of neutrals is available, from soft grays to warm beiges. Painting the interior gives newness and freshness and can make the home appear more spacious. Using the same color in visibly adjacent rooms gives the house a seamless look and uninterrupted flow. Changing your window coverings to match the walls can also create an illusion of more space. Dark or bold wall colors can dampen interest in a home if used in large spaces; however, they can occasionally be used effectively as accent colors.

FOCUS ON FURNITURE: LESS IS MORE

In staging, a visibly inviting space is created so that the home shopper can envision or imagine life in that space. Minimization is the key. If the seller’s personal taste and style are showcased while the home is on the market, it may be a sale distraction. Preparing for moving is part and parcel of selling a home; it might as well be done at this stage of the process, to enhance the property’s saleability. Shortly, we will examine depersonalizing the home, a key step. First, however, we must examine the concept of creating space by minimizing furniture. Buyers are attracted to homes flooded with light and roominess. They are equally put off by cramped homes filled with unnavigable spaces. Home shoppers want to walk through a house without obstacles in the way. Space and storage are high on the list of buyers’ desires, so every area of the home should feel spacious. Remove all unnecessary furniture from living spaces. Store it while the home is marketed. Closets, pantries, and storage rooms must be free of clutter and look organized. Pruning back unnecessary items can create interest by showcasing space and storage in areas such as closets, attics or basements. Furniture placement is an easy way to highlight unique house features. A grouping of chairs in front of a fireplace will draw attention to it. Avoid pushing furniture close to the walls. Reposition easy chairs into floating group spaces. Every room must be staged to show function. An empty room used for overflow of boxes, possessions, or unwanted items should be transformed into a usable, desirable space. Clean it out

and create an office space with a desk and chair, or a reading room with a lamp and recliner. Exercise equipment might be arranged to feature it as a workout room. Every room should have a purpose and be user-friendly. Make your home’s traffic flow smoothly, so buyers can browse each room without effort.

EMOTIONAL CUES

Once every room has a purpose, creating atmosphere is crucial to make the home desirable. Decorative touches of greenery, flowers, and coffee table books give life to a room. Wall art creatively hung frames rooms. A bedroom that has one bed with one pillow and blanket may make the room seem bare and lonely. By adding a table with a lamp and a rocking chair draped with a lap robe, you heighten its appeal. Be sure to add elements of the same color, shape, or texture to unify the room. Any splashes of color should appear in wall art or any place you want to draw attention. Learn to strike a balance between staging and living in your home. You can even seasonally decorate your home without dashing its appeal. The main goal is to keep your home clean and free of clutter that distracts would-be buyers. Even simple things can make a big impact on the final sale price of a home. You have two options for staging a home: do it yourself, or hire a professional home stager. If you are considering hiring someone, I can provide recommendations.

TO STAY OR NOT TO STAY?

Home sellers often ask whether they should stay in their home while it is on the market, or move out. There are pros and cons to both and factors that can tip the scale to one side.

Pros of Moving Out

If the seller has engaged a real estate agent, the burden of showing a vacant home is virtually eliminated. The agent will field all calls, set appointments, and show the home. Buyers’ real estate agents are also more likely to want to show vacant homes. If agents have 20 home options and 15 are occupied, they may well show the vacant homes out of convenience. They don’t have to call and make an appointment and can simply go over and use the lockbox. Further, the continual pressure to keep daily life from affecting the home’s pristine staging presentation is eliminated. The seller is not under constant pressure to keep the home in immaculate showing condition. If you’re someone who might struggle to keep your home in turnkey condition for showing purposes — for example, if you have young children — consider vacating before putting the home on the market.

Cons of Moving Out

A vacant home can signal that the homeowner is a “motivated seller” who needs to sell quickly. Consider this example found on an online real estate forum. A buyer saw that a home was vacant and offered $30,000 less than the asking price. The buyer was sold on the home anyway and would have paid more, but “haggling” began well below asking price because the buyer assumed the owner was desperate to sell.

CHAPTER 6 Upgrading with ROI in Mind

Making upgrades can be as easy as replacing the handset on your front door and freshening up the paint job, or as daunting as remodeling an entire kitchen or master bath. The question always is, what home improvements give the best return on the remodelling dollar? Return on Investment (ROI) is generally less than 100% in real estate, so the rule of thumb is “less is more.” It is frequently advised in this area that it’s better to update/remodel your home while living in it and not solely at the time it comes to sell. That way, there is more enjoyment in the improvement and less cost and time in preparing for sale. Some desirable upgrades or home improvements will not return their cost in the sale price, so it’s better for the owners to enjoy them all along. If your home is worth $375,000, and you spend $25,000 to revamp the kitchen, don’t make the mistake of assuming that the investment will increase the value, dollar for dollar. The remodel may add value to the home, but the return in dollars spent will be around 50%. Smaller upgrades, like replacing outdated fixtures in the kitchen and bath, are certainly worthwhile, but major remodelling of those rooms isn’t wise, just to sell your home. That’s not to say you can ignore necessary repairs that a home inspector would red-flag or bank would demand before issuing a loan to a buyer. If major problems, like a leaking roof or outdated electrical wiring, exist, you may want to repair those before putting your home on the market, or expect to give certain concessions to the buyer.

STARTING WITH THE BASICS

Every listed home should meet the basic expectations of any buyer. It should have a sound roof, functioning gutters and downspouts, foundation without cracks, functioning heating and/or air- conditioning system, solid subflooring, and safe and secure electrical wiring. With finance-mandated home inspections, any shortcomings may be required to be remedied to get buyer financing approval. It is important to understand that the market value of a home is determined by the prices of comparable homes recently sold in the area. Extensive remodelling to sell the home or to increase the value may not pay off. The property needs to be up to the standards of neighbouring homes, so while the kitchen has to be comparable to others, spending $25,000 to remodel a kitchen in an area where comparable homes recently sold for $375,000 will not increase the house’s value to $400,000. While it may be a helpful selling feature, it won’t return dollar-for-dollar value.

MECHANICAL MAINTENANCE IS A MUST

It is easy to get wrapped up in the more eye-pleasing aspects of preparing a home to sell. However, the upkeep of all the more mundane aspects of the home cannot be overlooked.

These mechanical features require consideration:

• Electrical boxes and wiring • Natural gas lines • Plumbing • Central heating and air-conditioning

If these components are old, outdated, or not working correctly, the home’s appeal is lowered, as is the eventual sale price.

For example, most home shoppers look for—and often even expect—a fully functional HVAC system in a home. This is considered one of the most important mechanical features of a home for buyers. People want to purchase a home that reflects their aesthetic tastes and lifestyles, but also one that is safe and sound. Faulty electrical systems do not provide a feeling of safety. Leaky plumbing arouses concerns of mold infestation and sewage problems. These areas can require extensive work and they are extremely important. Overlook them in the preparation stage, and you run the risk of trouble later with inspections and appraisals. It aids the sale if professionals certify or remediate any deficiencies in the mechanical systems. Having a professional inspection for buyers to review is a big plus in marketing. • Have a certified plumber inspect the entire water system for leaks. Check the well and septic field, if applicable. • Hire an electrician to check the wiring. • Call an HVAC company and have technicians perform a thorough service checkup. • Contact the natural gas supplier and have them double- check the mechanics of your tank and lines. If you’re looking for an alternative to calling and arranging all the different inspections, certified home inspectors usually cover all items related to mechanical issues (and more). They will be able to identify possible trouble spots. Many buyers hire an inspector, so you may be saving them a major step in the sale process. If you have mechanical issues and decide to sell your home “as is,” it may be necessary to negotiate with the buyer.

REPLACING APPLIANCES

New appliances undoubtedly make an impact on buyers. Many studies and surveys have shown that home buyers are very interested in purchasing a home that had new appliances, with a preference for energy efficiency and stainless steel, and would be willing to pay more for them. Potential buyers want appliances included and will pay more for them, especially if they are new or in excellent condition. Energy efficiency is also a high priority for many home buyers in Canada—particually younger buyers and first-time buyers. New appliances might be what sets a house apart from the home for sale across the street. If new appliances are out of reach, offer immaculately clean and fully functioning existing ones.

UPDATING HARDWARE

Carefully inspect your bathroom and kitchen hardware. If it is unsightly or worn, it’s best to replace it. Put yourself in a buyer’s shoes. Your home will potentially be their new home. Old, worn- out fixtures are not going to speak to them the way nice, new shiny hardware will. Unless your knobs, pulls, handles, or hinges are broken, you need not replace them. Get that fresh look simply by thoroughly washing, sanding, and painting them with spray paint made specifically for kitchen and bath hardware, making it cost- effective.

Check these hardware items closely and replace, as needed:

• Towel bars • Toilet paper holder

• Door handles • Dated light fixtures

The goal is to touch up your home nicely without excessive spending. The internet has a wealth of do-it-yourself videos that can help you update your bath and kitchen if your budget is limited. If you have broken or worn- out hardware, it’s best to replace the entire set. If you can find matching pieces, you can paint the old and new to match.

LET THERE BE LIGHT

Whether natural or artificial, bringing in light is one of the most effective ways to show off your home. Using light to enhance your home’s appeal can make a difference. Harsh light is unflattering, even to the best furnishings and features. Dim lighting gives everything in the house a dingy feel. Assessing the lighting in each area of your home will give you a quick idea where to bring in more light. Rooms with abundant windows greatly benefit from natural light, as your home will be seen during the day. Supplemental light is necessary for rooms with smaller windows or little natural light coming in. Increase the wattage of light bulbs in your lamps to improve artificial light. As a rule of thumb, there should be 100 watts for each 50 square feet of space. There are three kinds of lighting. General lighting or overhead is typically ambient. The pendant light is good for tasks like food preparation or reading. Accent lights are usually on tables or mounted on walls. You can use all three to bring out the best your home has to offer.

Key areas, such as foyers, can set the stage by impressing buyers with a dramatic light source. If you do not have an abundance of natural light coming in, a chandelier-type light works if your ceilings are high. Otherwise, wall sconces are impressive in smaller spaces. Don’t assume you need to buy new fixtures if you can update existing ones. The goal is to make sure each area of the home is effectively lit. Kitchen and bathrooms are pivotal rooms. These two areas can make or break a sale. The combination of ambient, natural, and pendant light can bring out the best in your kitchen space. Mounting track lighting underneath cabinets gives the counters a chance to shine aesthetically and functionally. Make sure the light over the sink area is sufficient and working properly. If you have a hood over the stove, install clear bulbs to ensure the brightest light. Lighting in the bathroom needs to be intense without being harsh. Soft lighting enhances any part of the house you want to highlight. Avoid harsh lighting in the bedrooms, as well. Lamps strategically placed will give the bedrooms a peaceful, restful feel. The closet light should be bright, though. One last tip: Lightly painted rooms still need sufficient light so that the room does not appear drab.

FLOORING PLAN

Although you want to avoid home shoppers looking down on your home, they will be looking down at what is under their feet. Your home’s value can be downgraded by the buyer if your floors are in bad shape. On the flip side, if your home’s flooring is well done and in excellent condition, buyers will be more willing to pay more for it.

Maximizing profit without compromising investment dollars is the goal, but if flooring and carpeting are not in salable shape, you need to take inventory. There is no point in spending money unnecessarily if the improvements do not add significant value or help the home sell quickly; however, there are options that don’t break the budget. Repairing and thoroughly cleaning the floors are the least expensive ways, so start with those. Take stock by examining all floors. Move furniture out of the way and make notes regarding condition, stains, or blemishes. Write down what needs to be replaced, cleaned, or repaired. Carpets can be steam cleaned to eliminate stains and odors. If the carpets are path-worn and dull, you can replace them easily with other kinds of flooring with a reasonable ROI, although carpeting does make a room feel cozy. Laminate floors can be cosmetically fixed with repair kits found at home improvement stores. Hardwood flooring can be easily refinished if the wood is worn or water-damaged. Seek the advice of a flooring professional because real wood floors add a level of quality to a home that laminate floors cannot match.

TIPS FOR KITCHEN AND BATH

When making upgrades to kitchen and bath, be aware of what constitutes a substantial investment. The key is to consider the mass appeal for the sake of resale value. Let's say one homeowner decided to add a backsplash and more cabinet space in the kitchen and then updated the appliances and refinished the oak flooring. Total cost was $3,000. The seller kept the price comparable to sales in the area and ended up selling for $17,000 more than the asking price because interested buyers started a bidding war!

The lesson here? You don’t need to bust your budget to sell your home, but you do want to have mass appeal. Kitchens are pivotal in home appeal. Here are some suggestions of what you can do to your kitchen and bath to impress buyers without losing ROI: • Paint neutral colors. • Add a new backsplash in the kitchen. • Install new countertops if they’re dated or if you need to bring the home up to current area standards. • Add new, multifunctional kitchen faucets. • Add cabinet space or increase storage in the pantry. • Replace dated bathroom vanities. Pedestal sinks or trendy cabinet sinks have mass appeal. • Replace toilet seats — or the entire toilet, if necessary.

TWO ENERGY-SAVING UPGRADES TO LOWER UTILITY BILLS

More and more buyers are looking for homes that reduce consumption and save them money on utility expenses. Here are two options that can make your home more energy efficient. • Install an energy-saving smart thermostat (less than $300, sometimes just $200 for a good-quality one; check Nest brand thermostats) that saves on utility bills. • Install solar vents ($500-$1,000) in the attic space that help expel hot air during summer months.

MAKING A CASE FOR SPACE

When people accumulate an abundance of possessions, they 37

need space to store it. They also want a way to clear the clutter. According to the Canadian Real Estate Association® (CREA), most home buyers would have preferred improved and greater closet space, as well as other storage options. Consider these statistics showing what buyers are looking for in a home:

• 93% wanted a laundry room • 90% wanted a bathroom linen closet • 86% wanted garage storage • 85% wanted a walk-in kitchen pantry

STORAGE IS A PLUS

Give buyers great storage, and you’ve won their hearts. If you can add new closets to your home easily, do so. Building a simple closet isn’t difficult if you are moderately handy. If you’re selling an older home, where closet space is typically minimal, this will help! If your rooms are already small, you might not want to take any square footage away from them. Existing closets can be updated to maximize the space at hand. If you don’t have the skills, or the funds to hire someone to build new space, consider investing in closet organizers to make the most of what space you have. For instance: • You can easily design your custom closet kit online with a storage solution company like ClosetMaid (you can easily find these at Canadian Tire, Lowe’s Canada, and Rona). • Your standard home superstore or hardware store often has exactly what you need in an inexpensive, prefabricated form. • Organizers won’t enlarge your closets, but maximizing

vertical and horizontal space is a suitable alternative.

And don’t stop there — after all, storage isn’t restricted to closets. Storage improvement opportunities apply to all cabinets, clothes closets, linen closets, and attic and basement spaces. Make sure you organize your cabinets. The same retailers that provide closet organizers can help with this. Take a good look at your laundry room and linen closet. Adding extra shelving in these places can make a big impact. Look for any place you can provide attractive and inexpensive storage space. Make sure your improvements are tasteful, and you will benefit from increased storage solutions. Updating your home with ROI in mind is the best approach when preparing your home for sale. Look over this recent list of what buyers want in a home. Compare it to what you have in yours, and upgrade accordingly, without surpassing the price line for comparable homes in your area.

FEATURES MOST HOMEBUYERS WANT

According to a market survey conducted by the Canadian Home Builders Association (CHBA) of 12,000 home buyers across Canada, these are the top 10 assess that buyers value and look for when house hunting:

1. Walk-in closets 2. Energy-efficient appliances 3. General energy efficiency of the dwelling 4. 4. Energy-efficient windows 5. Kitchen island 6. Large linen closets

7. Open-concept kitchen 8. Large windows 9. Two-car garage 10. Walk-in pantry

Keep in mind these features are not guaranteed to be effective or profitable upgrades.

FEATURES FEWER BUYERS WANT

On the flip side, this same study by CHBA revealed the features that fewer buyers want, which include:

1. Open garage or carport 2. Laminated countertops 3. Swimming pool 4. Vinyl siding 5. Homes with a workshop 6. Game room or hobby room 7. Whirlpool bathtub 8. Exterior stucco siding 9. Outdoor hot tub 10. Outdoor fireplace

CHAPTER 7 The Three D's

DEPERSONALIZE

Staging is readying the home to show to potential buyers; you must encourage them to visualize living in the home itself, not in your home. Depersonalizing the home involves removing your personal items, such as photos, trophies, and collectibles. Knickknacks and wall decor are also personal taste items that may distract buyers from seeing the home as theirs. It’s not personal, but not many people will appreciate your beer can collection, antique kitchen accessories, overstuffed closets, VHS/ CD/DVD/records collection, and general clutter, except you. Simplify and neutralize your home as if it were a model home because that’s exactly what it is while it’s on the market. Pack and store your treasured items out of sight. Consider monthly rented storage units until your home sells. Make your home a clean, welcoming, blank canvas, upon which any buyer can visually paint their own dreams. It should not feel like your home while you show the home. DECLUTTER AND DISCARD It is understandably inconvenient to live in your home without your “stuff ” — it’s like living in a hotel. However, it’s a necessary component of getting top dollar for your house. Extra furniture and items like books, magazines, CD collections, and hobby supplies add weight and visual distraction in a room. 42

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