Joseph Lam, MBA - Home Advantage My Secret Wealth Of Information For Homeowners

HOME ADVANTAGE MY SECRET WEALTH OF INFORMATION FOR HOMEOWNERS

Joseph Lam, MBA

Table Of Contents

Introduction

Top 10 Homeowner Money Secrets

The Benefits of Owning An ADU

First Steps To Home Selling

Pareto's Principle

Creating Curb Appeal

Staging With Purpose

Upgrading With ROI In Mind

The Three D's

10. How To Market Your Home

11. Finding Buyers

12. Common Seller Mistakes

13. Learn From Other's Mistakes

14. Be A Power Negotiator

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15. The Dos And Don'ts Of Negotiating

16. Bargaining Chips

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17. Why Hire An Agent?

Foreword When I first ventured into the real estate industry years ago, I did so with the hopes of helping sellers like you avoid the headaches often associated with the home-selling process. In my years of experience, not only have I helped alleviate the stress of selling for numerous clients, but I’ve also accumulated years of knowledge to help them get more money for their homes in the least amount of time. I decided to share all of my expertise in one place with potential clients. And that’s why you’re receiving this book. I want to help you have the best possible home-selling experience. And by that, I mean I want you to 1. Get the most money possible for your home, 2. Sell in the least amount of time, and 3. Avoid the headaches most commonly associated with the home-selling process. Think of this book as my gift to you. It contains insider advice on the home-selling process to help you achieve your ultimate real estate goals, including: • Secret strategies to sell your home for more money • Marketing techniques employed by top agents • Advice on how to appeal to today’s buyers • And much, much more If, after reading through it, you want to hire me to help you sell your home, I’d be more than happy to meet with you to discuss a specific plan to sell your home. Happy reading!

About Joseph Lam

Joseph Lam 林志明 , CRS, MBA is a business owner for over 30 years. He has background as a business analyst, database specialist, loan officer, tax preparer, real estate consultant, instructor, mentor and author. Joseph is an International Best Selling Co-Author of ‘Creating Your Legacy’, Best Selling Co-Author of GameChangers & Co-Author of Short Sale 911 Manual. He is also the author of the forth

coming book ‘Hidden Money For Homeowners’. He helps clients using real estate and modern day asset class to generate current income and create long-term sustainable wealth. His business philosophy is helping people, having fun and making money. Perhaps he can help you too! Joseph holds a BS from Oregon State University, and a MS Computer Science & MBA from Binghamton University (SUNY). He is a CRS—Certified Residential Specialist, a SRES—Seniors Real Estate Specialist, an ADU—Accessary Dwelling Unit Specialist. Mr. Lam maintains his Real Estate Broker License DRE #01077762, and his Health, Life Insurance & Annuity License, CDI #0M76850. NMLS #2316396. He enjoys reading, travel, cooking and good foods, swimming and a game of Chinese ‘mahjong.’ He married his college sweetheart and just celebrated their 42nd anniversary; their son graduated from Berkeley School of Law & Berkeley Goldman School of Public Policy, JD/MPP Class 2021—and passed The (UBE) BAR. He speaks Chinese (Cantonese & Mandarin), English. Go to visit my website to down load my FREE list of top 10 homeowner money secrets Guide and My Real Estate ROI-Return On Investment Calculator

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CHAPTER 1 Introduction

The largest investment most people make is their home. That makes selling a home — whether it’s 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. There are also many emotions at play that can affect good judgment. Many sellers think, Surely, 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 traveling 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 do not 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- to-person contact. 1

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

CHAPTER 2

Own Your Own Home “Owning a home is a keystone of wealth…both financial affluence and emotional security.” -Suze Orman We all dream of owning our own home; a property we can call our own; a place where we can live according to our choice or according to our preference. A private space that provides us freedom, space, and independence and the advantages of earning some money as well. Homeownership is a big investment in time, energy and money, but those who already have it are extremely lucky since they can enjoy many benefits from owning a home. The point is to understand and utilize it properly to take full advantage of owning your own home, you have equity is worth money. Here are the top 10 list of saving or making money out from the home that you already own: Top 10 Way to Get Money Out From Your Home: 1. HELOC—Home Equity Line Of Credit. Obtain an equity line of credit using your home as collateral. I am not suggesting that you apply an equity-line and take the money out and go to Vegas—or waste the money for any non-productive means… You can use the home equity line of credit as your emergency funds, such as fixing your roof, major home repairs, for example, air & heating system etc. as well as any household unexpected expenses; while using the rest of your available cash for other investment purposes instead of let your cash sitting idle in a saving account for a rainy day. (Therefore, maximize your investment dollars.) 2. Cash-out refinance—Take some money out from your equity (30/30—30 year fixed, 15 year fixed, 40 years fixed or 10/1—10 years fixed with one year adjustable! Consult with Top 10 Homeowner Money Secrets

your loan consultant on best loan type for your own specific situation. By the way, one of the simplest methods of payoff your mortgage early is to pay one extra payment a year for your mortgage. For example, on a 30 year fixed mortgage, if you pay, say an extra payment every Christmas (a lot of you may get Christmas bonus), that alone can cut your mortgage from 30 years to around 22 years—a saving for 8 years of payment… 3. Home Improvement—sweat equity, high on the list of high value return improvements are: kitchen remodeling, additional bedrooms or bathrooms etc. Expanding your current home may be cheaper for you to purchase a bigger home, if you need the extra space for your growing family. Or adding a new room or a garage conversion to rent it out for income… (See more about adding JADU and ADU later…) 4. Second or Third Mortgages—get some cash out on the equity of your home. Sometime it is more beneficial to get a second or third mortgage for a short term cash infusion, and you can pay back in the near future without paying the total cost of a complete re-finance (reduce the need to re-cast your 30 year mortgage, particularly you’ve been paying your first mortgage for a while—especially if your mortgage has a good interest rate.) 5. Equity Share Loan—Special lenders, no monthly payment, you share the profit when you sell the property. When you have equity in your house, but you do not have the financial capacity to obtain a new loan or the ability or desire to pay for the additional payment. This will unlock the equity in your house. 6. Reverse Mortgage—If you are 62 years or older, you can apply for a reverse mortgage, take some money out and use it for any purpose. You may consider the no ‘required payment’ option to reduce your required monthly obligation. (Most reverse mortgages are federally insured, no job or mortgage payment is required, only need to be able to pay property taxes and insurance & HOA, if any. In some cases, you might

even able to set aside the money in an impound account to supplement lack of current income to pay for the property taxes and insurance & HOA—check with your ‘Reverse Mortgage Loan Officer’ for current rules and requirements.) You can use a ‘Reverse Purchase’ strategy, to cash out on your current home, while buying your next home—using reverse mortgage and taking advantage of the no payment option. (In some cases, you can take half of your net sale to buy your next home—without making any mortgage payment, while keeping the other half of net sale for other purpose, such as buying another rental for income, take a vacation or supplement your current income and expenses etc. Check with qualify professionals for this advanced strategy. 7. Downsizing—Trade in your larger home to a smaller home (and pocket the difference.) As you aged, your children are grown and away and you no longer need a large home or have the energy or the extra expense to maintain a large home. Trade in for a smaller house and pocket the difference in cash. 8. Rental income—rent your house or a portion of the house for additional income. (Room-mate, Airbnb, add a 2nd or 3rd unit to your home, (convert your garage to an ADU, add an ADU—Accessary Dwelling Unit to your house— Best strategy, see next chapter on the benefits of owning an ADU.) ADUs (Accessory Dwelling Units) are simply adding a second unit or units to your existing house. ADUs are an innovative, affordable, effective option for adding much-needed housing and provide rental income to your home. (As you know, the most expensive part of a house is on the land, since you already own the land, you only need to come up the construction cost of the ADU—therefore ADU is the best return on your investment.) 9. Green home—Make your home a green home, for example, install better insulation, install solar panels to generate electricity, it reduces energy cost (electricity & water usage etc.) Possibility on home improvement rebate, tax credit and/or

special discount on EEM/EIM—Energy Efficient Mortgage. You might even able to produce excess electricity and sell it back to your Utility Company—from your ‘solar panels’. 10. Get some money back from the IRS—Reduce Tax Liabilities using home office deduction. Become self-employed and take a home office tax deduction. Check with your tax advisor for details regarding self-employed and home office deduction. (One of the simplest ways is to become an affiliate marketer—you find a product/service you like, promote it or simply refer to a friend, when they buy, you earn a commission. You do not need to carry any inventory, no store front overhead, usually on your own time, and no quota requirement, and usually zero or minimum entry fee to start the business. For more info on affiliate business, contact my office for suggestion about ‘affiliate businesses’. Check this one out: www.BirthdayAutomation.com, you can learn and implement this ‘affiliate businesses with minimum cost. For around $50 a month, you can have a business up and running, a system that uses AI—artificial intelligent, to help business owners and professionals to nurture past customers and generate leads— new customers. As an affiliate, you refer business owners for the service and you get paid—continuously, with passive residual income!)

CHAPTER 3 The Benefits of Owning An ADU “ The way we see it, real wealth means having the money and the freedom to live life on your own terms.” Rich Fettke, Co-Founder and Co-CEO of Real Wealth The majority of the population dreams of owning their own home; a property they can call their own; a property where they can live according to their choice, a private space that provides us freedom, space, and independence and the advantages of earning extra money. Some of us understand the importance of having our own house better than others because of our circumstances. It is hard to earn these days. Even if it’s a family of six, everyone has to earn independently to make ends meet. It takes a lifetime to build your own home, but those who already have it are extremely lucky since they can enjoy many benefits from it. The point is to understand the importance of owning a property and utilize it properly so it can benefit you. Owning a house gives us emotional balance and frees our minds from the mental stress of renting. That way, you can earn and save for yourself. Also saving money can improve your living conditions as well. We often don’t try to have our own house because the amount of money we earn does not give us the liberty to think forward. We are so busy making ends meet that we stop chasing our dreams. Maybe we have limited earnings with a lot of bills to pay, so naturally, we don’t think about the importance of having our own house. In this chapter, I would like to talk about the importance of owning your own home and the importance of building an ADU

(Accessory Dwelling Unit) in your home. We will start with the basics first. We all know that there is a nationwide shortage of available housing, particularly in major cities like New York, Los Angeles, Washington DC, Portland, San Jose, San Francisco, and many others. We all know that these cities are costly to live in because demand is higher than supply. Sometimes, rents in these places are too unaffordable for most people. So it is safe to say that we need more living units in these areas. It is crucial to find the quickest way to have more housing. If there are available space in your backyard, or garage, consider building an ADU in your backyard or get a garage conversion. For all those who already own a house adding an ADU or JADU (Junior ADU) is the most convenient way to provide additional housing. That way, we can help others who don’t have a space to live in, and it could be beneficial to us as well. Here I would like to discuss the importance of having an ADU in your own home. There are four crucial benefits that an ADU can provide us with. First, I would like to discuss the baby boomer situation. 1) Baby Boomer: Baby boomer situation can also be characterized as a special needs situation, or you can also call it a need for special situations. I also call it the sandwich generation. At this age, a lot of us have our parents, and some of us are parents ourselves. A lot of us want to take care of our elders who are living far away from us. But the kind of era that we live in and the sort of jobs we have to make it hard for us to take care of them properly. And we are too busy to visit them often. It gets more complex every day for us to help them with their needs. I can relate to this situation since I have been in the same state of affairs. I remember I needed to take care of my mom. She lived a half-hour drive away from my house, I couldn’t visit her every day. And in this particular case, an accident happened to her. My mom hit her head and

requires surgery. Although the surgery went fine, sadly she never recovered from the accident; she passed away a few weeks later. This tragedy, in particular, led me to develop a strong view about having an ADU in our backyard. If my mom had lived close to me in my backyard, it would have been easier for me to look after her. It would be convenient for both of us to meet if we lived nearby, but it did not happen in my mom’s case because I did not have that option. I know, and I understand entirely, that many parents, grandparents are facing the same situation. Building an ADU in your backyard makes it easier for you to look after the people you love and care about the most. And it also provides them sufficient privacy, compared to living together under the same roof. You can keep an eye on them and be at peace with yourself when you see that they are safe. 2) Young Adults With Families: It is not easy to buy a property in a major metro area. Some adult children are still living with their parents since they cannot afford to buy a property on their own. That’s where the benefits of having an ADU come in. Sometimes when the family is young and don’t really earn enough to have their own private space, the ADU will best serve their needs. Naturally, it is not convenient to live with your parents when you have a family of your own as it disturbs the privacy of both parties. This is what makes it desirable to build an ADU at the backyard or attached to the house as a JADU or even a garage conversion. That way you can provide young adults with a proper starter home. Through ADU, you can live separately, privately, and independently. You can live close by without disruptions and enjoy your own space. Apart from this, the ADU concept also applies to those who are single, married, divorced, or widows. This way everybody can live independently and also affordably.

3) Retirement: Now another aspect that I would like to discuss here is retirement. ADU is of prime importance when you are about to retire or if you are already retired. Some of us don’t want to move away but live in the exact place where we have been living for years. When we live in the same neighborhood for a long time, build friendships and bonds that last a lifetime, and so naturally, we do not want to move away. I would like to share my example here when I tried to move away after my retirement. After six months of moving to a neighborhood 60 miles away, my wife told me, ‘This is too boring because all our friends are not here.’ When you have stayed in the same neighborhood for a long time, you are so used to it that you would find it difficult to adjust to another place suddenly. This is very true. Not everyone can accept such a huge change in life that fast. I don’t blame people for not wanting to leave their previous place. Because believe it or not; it is hard to adjust to a new place after living in one for years. You get used to the environment. You get used to the people around you, or the grocery stores near you. Above all, you have many memories of the place, making it harder for you to leave. Your children are gone and you do not need such a big house any more. In such a situation, you can build an ADU in your backyard. You can just downsize and live in the ADU, and you can rent the front house out to supplement your retirement income. 4) Turning an ADU into A Rental Property: Another way to earn some passive income is to build an ADU in your backyard and turn it into a rental property. Over the years, I have been coaching people to invest in rental properties, because it is one of the easiest and most stable ways to generate passive income.

Building an ADU for rental purposes has the best return for your investment, comparing to buy a rental unit. This is because you already own the land—as part of your house. And you only need to come up the construction cost of the ADU, which is quite affordable. We all know the most expensive part of a property is not the house but the land. And since you already own the land, therefore building an ADU in your backyard is the most cost effective way to add a living unit. And once you have it you can generate income from the ADU. By the way, once you utilize your ADU as a rental, you also have the benefits of taking tax deduction related to the business of rental property. You will generate rental income for yourself, and at the same time, provide additional rental space for others. That is a win-win situation.

CHAPTER 4

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 neighborhood. 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 14 15

terms. For example, the Loan to Value (LTV) ratio is based on the appraised value. Where LTV is greater than 80%, the lender generally will require the borrower to buy mortgage insurance. Assessed value is the amount local or state 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. Approximately 60% of U.S. properties are assessed higher than their current 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.

PROFESSIONAL APPRAISAL

Nothing determines the sale price of a piece of real estate but the price at which it 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 6 16

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-story, two-story, 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 neighborhood, 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 MARKE TIVE MARKET ANALYSIS BY A REAL ESTATE PROFESSIONAL

This type of home valuation is free from real estate professionals and more helpful than automated online offerings. It provides detailed information on each house sold in your area over the

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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 Comparative Market Analysis. 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. A variable, for 8 18

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, while that of a slow market may be up to nine months. Typically, any number below six months is considered a seller’s market.

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 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 9 19

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 5

Pareto's Principle “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 • 20% of patients account for 80% of healthcare spending

RELATING THE 80/20 R G THE 80/20 RULE TO HOME 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 11 21

remaining 80% of your home still affects the buyer’s decision, so do not 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. They looked at many desirable properties 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.

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The buyer had also looked at a home within miles 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 buyer’s eye and prompted him 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 he 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 townhome. 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. Do not spend much time explaining how the storage room can be 13 23

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 neighboring 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 low-ball offers from casual shoppers. Keeping this in mind, you must take the time to uncover your home’s most

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attractive and unique features and improve them to their highest potential. Compare your house with others in the neighborhood to see what makes yours stand out. Work with that.

HOW THE 80/20 RULE APPLIES TO HOME SALES ME 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 15 25

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 6

Creating Curb Appeal Someone once said, “a stunning first impression is not the same thing as love at first sight. But surely it is an invitation to consider the matter.” This could not be truer than in selling a home. First impressions matter. Sometimes they are everything. Nothing sets the tone of a relationship or encourages a transaction more than first impressions. So, always consider what a potential homebuyer may think as he or she drives up to your property for the very first time. Think of “curb appeal” as the home seller’s shop window. Like picking a lunch place on a busy avenue in a tourist spot, it’s either the outside presentation, or, as we saw in the 80/20 rule discussion, some particular feature that brings in the customers. For most lunch seekers, it is the way the place looks (“curb appeal”), and to others, the soups and sandwiches they serve (specific desired feature). You do not have a lot of time to establish a curb appeal relationship with a prospective homebuyer. Whether cruising the web to view online photos from across the country, or cruising by your home in the family SUV on a Sunday afternoon outing, home shoppers will decide at a glance whether they want to see more. “We buy ugly houses” is a sign often seen nailed to electric poles. Rehabbers look for ugly houses so that they can pay the least amount possible; homebuyers looking for a deal — not a “basement bargain” — do not want an unattractive home.

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Creating curb appeal is essential to attracting interest in your home. How your home looks from the road is so persuasive that a well-prepared house may catch the attention of buyers who did not find the written description particularly compelling. Likewise, a neglected house can cause a buyer previously excited by the description to cruise right on by. Try this. Go out into your street and look — I mean really look — at your home, and see if you can spot any imperfections. Is it appealing, pristine, and well-kept, or are there necessary repairs that you have been putting off? After you’ve lived in a home for a long while, you’re not likely to examine it objectively. Listen to suggestions from real estate experts, your friends and/ or potential home buyers about how you can make your house show better. Then, take a drive around your neighborhood and surrounding area and see which homes for sale appeal to you and note why. Well-tended houses with trimmed bushes, groomed lawns, attractive landscaping, and a “grand entrance” (discussed shortly) will be more impressive than homes with an unkempt walkway, uncut grass, and a paint-peeling front door. The outside appearance of a property needs to be an invitation to come inside. Potential homebuyers are drawn to welcoming entries and uncluttered yards. They are unlikely to be attracted to a home with dead shrubbery and a weather-worn exterior. It is no stretch to think a buyer will believe the home is neglected on the inside as well. Look at your home as a prospect would. Drive up to the curb and take inventory of everything that needs attention. Low-cost investments like power washing the house and concrete, repainting trim, and adding landscaping give your house more curb appeal. Simple improvements like weeding, trimming, and window washing can improve the appearance of a home with 18 28

little to no expense. Repairs and repainting are costlier, but the payoff is often reflected in the sale price. The goal here is to get more money for your home. Homebuyers generally aren’t interested in a home that needs work, unless you want to sell below market value. Look around your yard, and make a written list of everything that could be improved: • Shrubs trimmed, flower gardens tended, walkways tidy, and beds weeded • No trash, trash cans, lawn clippings, branches, or general mess in the yard • All outside fixtures and components (door and yard lights, garage door, porch rails); functioning properly and looking their best • Outdoor features, such as patio furniture or the deck, updated with staining or painting Make all major and minor improvements to update the exterior of your property. There might be a long list of things to do. It takes hard work to get a home ready to sell. Anyone can put a house on the market, but not everyone sells quickly or with great profits. Then, await the prospective buyers who will be drawn to the inside of your home when they see how beautiful it is from your curb!

CREATING A GRAND ENTR AND ENTRANCE

As I mentioned earlier, an important part of curb appeal is the home’s “grand entrance” — the portal to even the most modest house. You want to create a sense of a great place to come home 19 29

to. Impressing the home shopper at the front door is a vital part of the home sale. This means more than putting out a welcome mat and potted plants. You want prospective buyers to feel welcome, safe, and secure when they open the door. The doorknob is the first point-of-touch on a home. Security is important to homebuyers. A flimsy lock or handle on the front door will make potential homebuyers uncomfortable, and they may not even know why. Replace a worn or loose entry handset. Consider replacing the door handle with a heavy-duty deadbolt and knob combination. This investment of less than $100 will make your home more visibly and practically secure, and everyone wants to be secure in their home. The front door is a focal point; make it impressive. Freshen it up and add a dash of color. Choose a paint that complements the color of your home. Replacing a wooden door with a steel entry door is worth the cost with a 91% ROI (Return on Investment).

SOME OTHER CONSIDERATIONS IN CREATING GREAT CURB AP T CURB APPEAL: EAL:

• Symmetry appeals to the eye and is easy to accomplish. Lopsided landscaping or unevenly trimmed bushes will detract from the curb appeal; the overall appearance of the home needs balance. • The mailbox should complement your home. If it is worn, dated, or unsightly, replace it. This doesn’t cost much and is worthwhile. • Use outdoor lighting to add to landscaping appeal as well as a perceived safety feature. • Use flower boxes and raised flower beds to add instant

color. This is an easy, inexpensive way to enhance curb appeal. • Spruce up the landscaping. Eliminating weeds and adding fresh mulch can really make a difference and shows homeowner care and maintenance. • Consider enhancing architectural appeal by adding molding to the tops and sides of the doorway or around windows. • Keep shutters and trim in excellent shape. Repainting them adds to the attractiveness. Fence gates, arbors, and fencing panels should be clean and fresh. • Clean downspouts and gutters. Repaint or touch up to eliminate rust spots. • Ensure the walkway to the front door is clear and approachable. Stacked hoses and unruly landscaping interfere with home shoppers walking up and diminish the inviting look. • Try a fresh coat of exterior paint; faded or chipping paint, siding, or trim will always detract from curb appeal. If exterior paint is good, ensure door and window trim are, too. This simple upgrade is well worth the cost. • Power washing the house, walkways, and driveway can be almost as effective as repainting, at a much lower cost. Power washers are easily rented from hardware stores. • Adding some stone or stone veneer to the face of the home is an inexpensive way to instantly update your home, if it complements the design. • Add a “smart” doorbell. Eight of 10 home doorbells are outdated or not working, so if you invest $200 in a doorbell equipped with a camera and speaker, you will gain the approval of home shoppers who are looking for

security measures.

Curb appeal is one of the most essential elements in selling your home quickly and successfully. You can create interest in your home before buyers even step out of the car, even if they didn’t think they were looking for a home like yours. If you put money into cleaning up the outside of your home, buyers will be far more likely to want to see the inside. Your home’s curb appeal draws buyers in, maintains their interest, and sets your home apart from the competition. Remember that unless you are willing to lower your home’s price well below market value, prospective homebuyers typically won’t want to take on a major renovation project.

CHAPTER 7

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

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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 townhome in the neighborhood is three stories, 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 August 26. • Townhome B (5 doors down) sold on July 26, for 40,000 dollars less. I visited this neighborhood, 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

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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 $40,000 more than the other: • Townhome A was professionally staged, giving it a more appealing appearance. • The agent selling Townhome A took higher quality, more attractive photos of the home. Those two seemingly small actions made the $40,000 difference! The buyers of Townhome A made a higher offer because the agent presented the home in a more appealing and attractive way.

THE POWER OF STAGING WHEN SELLING A HOME

Consider these results from surveys conducted by Coldwell Banker and the National Association of Realtors®: • Staged homes spent 50% less time on the market than homes that were not staged. • Staged homes sold for more than 6% above asking price. • A staging investment of 1% to 3% of asking price generates an ROI of between 8% and 10%. • Homes staged prior to listing sold 79% faster than homes staged after listing.

WHAT DO BUYERS WANT TO SEE?

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