Selling a Home
in Hidden Meadows
Allen Polk Hemphill
Real Estate Broker
Hidden Meadows is undergoing a continuing transformation from a retired community to an active, working community. As development continues North along the 15/163 corridor, Hidden Meadows comes closer and closer to falling within the "psychological commuting time" – a theory I have that says, in essence, that communities change as people are more willing to accept a drive from that community to their work.
The psychological driving distance varies with geographic communities: In Connecticut, that acceptable "commute time" is two hours, in L.A. it is one hour and a half, and in San Diego it is about 40 minutes.
As this acceptable drive time increases to 45 minutes, and eventually an hour, the Meadows falls within the drive time of more people, and that changes the dynamics of selling in the Meadows. We attract more working people, and that changes more than the residential mix of families – it changes the number of people wanting to live in this community.
Over the next five years, we will see an increase in the number of working families living in the Meadows. More homes will be built on our boundaries, particularly in the "island" in the middle of the golf course, and on the Mountain Meadow Road entrance to the community. The 130 new homes on the island and 57 patio homes across from the Condo area will swell the number of commuting families in our midst. The marketing done by Greystone had a huge effect on homes listed below $650,000, and the marketin attracted $900,000 buyers to Greystone homes helped sell off our higher-priced listings.
This all adds support for more competition in buying a home in the Meadows, and therefore higher prices for the listed homes. While it will be a decade until we have the kind of competition for homes that currently exists in Rancho Bernardo, we already see even well-priced homes in tall price ranges just sitting. Our relative seclusion diminishes our desirability, except to potential buyers in Escondido, San Marcos, and possibly Vista. This will slowly change.
What Current Buyers are Looking For
In August of 2006, it it obvious that we are attracting a younger element. Younger people are looking for light, bright, homes – and on quiet streets. Homes that are dark, and have outdated carpets and appliances are not good candidates for these new buyers. Even after five continuous years of many tradespeople working in the Meadows, we still see too many homes with older, heavy draperies and ’70s era appliances. Buyers of this new generation are busy, and therefore even the attraction of a lower price does not have much interest, because they are very busy and do not have time for redecorating.
Therefore, if the home is badly outdated (defined for these purposes as carpet, drapes, and appliances more than 8 years old), a home requiring $25,000 in redecorating must be discounted far more than that in order to attract a buyer.
Single level homes are still more popular than multi-level homes, even among younger buyers. Many young families have two working adults, and they do not have time to clean larger homes or maintain difficult landscaping, even though they may well have the money to do so. The Meadows has a difficult topography that does not easily lend itself to single level homes, and that makes the few single-level homes even more desirable.
The market will always dictate that homes below a certain threshold will sell more quickly. Generally, in the 2005 market, homes below $600,000 move more quickly, simply because there are more people able to qualify for those homes. Homes above $650,000 are more difficult to sell because Hidden Meadows is just becoming known as a luxury neighborhood. That is changing because the newer homes are all high priced, and their advertising brings attention to the upscale homes in the area.
Regardless of the value of a home, there are psychological barriers that need to be kept in mind. Those barriers are the multiples of $50,000. A home listed for $655,000 is less likely to be shown than one listed at $649,000, simply because of the listing price limitations placed on real estate professionals by buyers. (Above $900,000, the $50,000 psychological barriers increase to $100,000.)
For the latest information on the current market, please click on this link to my Hidden Meadows Blog: http://www.allenhemphill.com/weblog/welcome.html
How Much is my Home Worth?
Evaluating the listing price of a home is one of the main jobs of a Realtor, and there are so many factors that it is as much an art as a science. Realtors, particularly those who regularly work Hidden Meadows, are very good at predicting the eventual sale price of a home, but valuation is NOT an exact science – and many sellers impose a higher price than their professional recommends.
I was designated as an Expert Witness on Real Estate Values by the Superior Court of the State of California in 1978, and I can attest that Hidden Meadows is as difficult to appraise as any place in the world. We have an entire community of custom homes, some new, some old; some luxurious, some rather plain; some on tiny lots and some on huge acreage; some with great views and some nestled in for privacy; some with pools, and some without...
Appraisers would like to make evaluations based on dollars per square foot. That concept has some validity in areas like Rancho Bernardo where one Acapulco model is very similar to all Acapulco models except for decoration. In Hidden Meadows, similar-sized homes may have vastly different construction, or views, or a pool, or marble floors, or ... None of these things are accurately reflected in a "price per square foot" valuation.
(That said, I regularly publish the $/s.f. of homes listed, because it is a “quick and dirty” method of valuation, and easily understood.)
A home is actually worth what a buyer will pay for it (assuming the Lender agrees to loan that much), so the real arbiter of prices is the market, and that is best reflected by recent comparable sales. The vast differences between homes in the Meadows makes both "recent" and "comparable" suspect terms in doing an evaluation, but knowledge of the area and experience can smooth out those bumps. If you want an "outside" opinion – and I recommend that you have one, please open the phone book and call an MAI-certified appraiser. It will cost you $350-$375 for most average sized homes, but it will really help you determine an unemotional price.
Obviously, if a nice home is priced at $1 it will sell in one second (the real estate agent will buy it on the spot) – and if a home is priced at $1 million it may NEVER sell. Any home will sell when it reaches the "market clearing price." In real estate that means a reasonable price and sufficient exposure to a reasonable number of qualified buyers. Real estate professionals want to sell your home quickly, and, since they do not get paid until the transaction closes, a wise seller will listen to the pricing recommendation carefully. You may not accept the Realtor’s recommendation – after all you are the Boss and the Realtor is simply your agent – but the Realtor has more experience than you do.
If you have more experience than your Realtor, get another Realtor!
Recognize that you have an emotional attachment to your home that your real estate professional does not have. The potential buyers, or the real estate professionals who are assisting the potential buyers, do not have the years of emotional attachment that you have. That is why I recommend an outside source, an MAI-certified appraiser, to give all parties some unemotional perspective.
ADDITIONALLY, I strongly recommend that you ask your Realtor for a list of competing homes.
The appraised value is necessary to see that you are in the ball park when the home sells, because whatever you sell the home for, the final bank appraisal sets the amount the lender will lend on the home. You may successfully sell your home for $1 million, but if the lender will only loan 80% of what the Lender thinks the home is worth, and the Lender thinks your home is only worth $500,000, your deal will quickly fall apart.
But to SELL the home (and that is your FIRST job,) check out your competition. Try to be realistic. I know it is hard, but try not to say “Well, my home is worth more because it has a Yellow Bathroom.’
You need to act like a Buyer. Buyers do not know a darn thing about “comparables” – or the latest sales – they know what is currently on the market and they generally know how much they can afford.
Buyers know they have a bucket of money, and with that bucket they can buy houses A, B and C.
You want to price your home to finish FIRST in that sales competition.
Here is My Current Rule of Thumb
A nice Covenant home, well kept and reasonably modern, will PROBABLY sell for ABOUT $180/square feet. I use that number ONLY as a current guidepost. A home that needs some minor upgrades and redecorating, might be in the $150/square foot range. A home that needs massive redecorating and/or structural help should be below $125/square foot. A home with EXTRAS (a great view, swimming pool, marble/stained glass/Viking range and Sub-Zero etc.) might be in the $230 s.f./range. A new or completely remodeled home with EVERYTHING could extend to $260/square feet. Of course, you can ask anything you want but these guidelines may give you a start.
Smaller homes necessarily sell at higher $/s.f. because the 5,000th square foot costs less to build than the first square foot. There are economies of scale, and the first square foot carries all of the permit and infrastructure costs.
Although the story is apocryphal (because I made it up), I like to tell the story of a Realtor who is on a listing appointment with a couple, and as an opener he asks, "And how much do you think your home should sell for?"
The lady of the house replies, "I believe it should sell for about $700,000."
The Realtor, a bit taken back, gently queries, "Now Mrs. Smith, the home next door just sold, and it was built at about the same time, by the same builder, with approximately the same square footage, but it had a swimming pool – and it sold for $675,000. Mrs. Jones had a home down the street, and it was similar in size and quality as yours, and, although it had a magnificent flower garden and a spa and gazebo, it sold for only $680,000. Why is your home worth $700,000?"
"Well," replied the Lady of the House, "My home has a yellow bathroom."
The Lady of the House values highly a yellow bathroom. Had she wanted a spa, or a pool, or a luscious garden, she would have had those, but her values are in a yellow bathroom – and she is going to be surprised and hurt that the Realtor does not share her values, because the general market does not share them.
You may be absolutely taken with concrete floors, black walls, and rotating disco lighting, but the market is not. You may love blue carpets, or red, or green – but the market is not ready for bright-colored carpets.
You may be satisfied with your 1979 stove, "It still works" is what we often hear. Well, an 1850 wood stove would "still work" but we can’t easily sell homes with a wood stove, and we have more difficulty selling a home with the original 1979 stoves than with newer ones!
Real estate professionals do not want your home to sit on the market for long periods, because a listing that has not sold represents advertising dollars and "open house" time that is being expended with no return on investment. On the other hand, the real estate professional wants you to get as much as possible for the house, because they represent you and because their commission is tied to the sales price. These competing interests are the same ones you have as a seller. You don’t want your home sitting on the market, getting "stale," and having to keep it clean and orderly for all the potential buyers that may wish to see it. You don’t like having to leave your home every weekend while it is kept "open." You don’t like getting caught in the shower by a couple looking at the home when you never heard the doorbell.
On the other hand, you want as much as possible for the property.
You and the real estate professional have similar interests.
Selecting a Listing Agent
Deciding with whom to list in Hidden Meadows is not easy. There are several fine professionals and you need to list with the one who can best represent you. How do you select a Realtor?
Most importantly, you should choose someone with whom you are comfortable, because you are going to be asking for advice and you need to be confident that the listing agent will give you good advice. This requires substantial personal and professional trust. This is a business arrangement. Listing with friends is fine, but only if the friend is a solid business person.
And there are some other issues that should be considered.
What comes first, the agent, or the company the agent works for? That is hard, because there are good people working for bad companies, and bad people working for good companies. In the end, the agent you select will be your primary interface, so the agent is the most important, but you need to give some consideration to the company.
Does the real estate company have "Errors and Omissions" insurance? In this litigious society, only two kinds of companies do not carry insurance for their inevitable mistakes: Those who cannot afford the insurance, and those who have lost their insurance because they have had too many mistakes. In either case, consider this to be your first "gate"! If the company you are considering cannot show proof of Errors and Omissions insurance, distance yourself immediately. Whatever their other merits, if they are uninsurable, you don’t want to do business with them.
At the basic level, all listing agents will put a sign on your lawn and place your home on the Multiple Listing System. There are some very well-known Realtors who list in Hidden Meadows, but they do not have offices here, and all they do is list. After they list, but they will not "work" your property.
Listing a home is less than half the work.
You are looking for something more than simply "listing" your property then going away and waiting for some other agent to sell the property. You should look for "value added" services above and beyond simply listing.
Will the listing agent place your home on several websites on the Internet? Every home that is listed is automatically placed on the Internet, but in a mass marketing effort of millions of MLS homes, it will be lost. If the only Internet site is the Multiple Listing System site (www.Realtor.com), that will not differentiate your home from millions of others.
If your Realtor has purchased an upgrade to the www.realtor.com site – that is a plus. Ask!
Does the agent have his or her own website where your home is just one of a very few homes? The Internet is so huge that you need to have your home in several places, and, if possible, those places should feature only a few homes at a time – or your home will get lost in the huge Internet.
Ideally, the local company will have its own website dedicated to Hidden Meadows, and the agent should have his or her own website. If the website is not updated almost daily in this market it is virtually useless. Ask!
Too many homes on one website, for example, covering an entire Zip Code instead of just the Meadows, is too confusing for buyers. The problem on the Internet is too much information, not too little.
Will the listing agent sit" Open House" on your home? Sitting an "Open House" is more than just a commitment of time and effort on behalf of the listing agent. It is a good marketing tool, one that will sell your home more quickly than any other single method. For a more complete explanation, see the information below in "Do Open Houses Really Work?"
Will the agent commit to specific advertising? First, let me admit that most advertising does little good – that is why it comes under "value added." Most homes are sold from the sign in front of a home telling the public that the home is for sale. At least a plurality of buyers follow this scenario: First, potential buyers drive through a neighborhood they have selected. Then they find homes that have some "curb appeal" for them. Then they pick up a flyer in front of the home to see if the home is in their price range. (They may pick up flyers from every home in sight just so they get a feel for the neighborhood pricing.) Then they follow the homes in the area on the Internet – either at Realtor.com, or at one of the two specific Meadows websites that track Meadows homes. FINALLY, they find a Realtor to discuss the neighborhood, the homes in their price range, and the two or three homes they have collected flyers from.
Some fewer number of potential buyers come into a convenient real estate office first. In our case, they usually say, "Where are we? We were just driving around and we took Mountain Meadow Road because it was big and we guessed it might lead somewhere, and 'Wow' is this place beautiful! Why didn’t we know it was here?"
In a few cases, an advertisement will bring potential buyers to a particular home, but it is not the primary means of attracting buyers. Still, a listing agent should have a list of mediums in which they advertise regularly, because you should expect a lot of service from a listing agent – not just a sign, an MLS sheet, and "Goodbye, I hope someone sells this property."
Finally, your listing agent is your representative in the eventual negotiations, so they must have a strong personality. Agents should not be easily intimidated in the negotiation. This is usually not a problem. Most real estate agents have strong personalities, but the problem is that those who do a poor job never get discovered because people seldom do more than one sales transaction with an agent. By the time you discover you have been poorly served, it is too late and you have moved out of the area.
Competition Among Agencies
Despite anything you may hear, the major agencies in the Meadows all sell each other’s properties. Regardless of rivalry, nothing gets in the way of business. You may have heard of problems among agencies, and agents, in the Meadows, but business continues among all the agencies and the agents without pause.
Everyone is civil to each other in the business side, even friendly, and that is all that counts. You can list with any of the four agencies in the Meadows with assurance that all the agents of all the agencies will show your home.
Actually, all Realtors form a "caravan" each Thursday morning and "tour" each others listings! We ride in each others vehicles. The "feuds" you may have heard about are more in the minds of some people than in the hearts of the Realtors in the area.
Why List With Meadows Brokers?
Like politics, all real estate is local. The fact that the real estate office has offices in Dusseldorf, or Del Mar, or even Escondido is not a bit of help in selling your Meadows home. The fact that the corporation spends $6 million annually on their international website will not sell a single Meadows home.
People who buy in the Meadows, constantly shop the Meadows. They drive the Meadows. They pick up flyers from flyer boxes -- by the HUNDREDS!
Several years ago, we had a call from a local resident who complained to us that he had listed with a real estate broker from the coast on the recommendation of a friend. The friend said the agent was just dynamite.
The real complaint was that the coastal hotshot had taken the listing 10 days before, but had not placed the property in the MLS, or put a sign on the property, or produced flyers, or...
Our office jokingly asked the seller if he had to tell the coastal hotshot how to get to Hidden Meadows, and the seller said, "Well, yes, he did not know where we are." Within 4 hours we had the property on MLS, had a yard sign on the property, and had color flyers produced.
That should be a clue. We had a property in the Meadows listed so badly that following the directions was impossible – the agent had been to the Meadows ONCE!. It is difficult to represent Hidden Meadows property from half a county away. Those of us who live and work exclusively in the Meadows are like the anvil salesman in "The Music Man" who sang "You've got to know the territory".
Our office, and those of our competitors who work the Meadows exclusively, know the territory in ways that offices out of the area cannot duplicate. Out-of-area Realtors don't attend the meetings we attend on road and sewer construction; they don't know about future road plans; they don't know the demographics and psychographics of the residents; they don't know what new buyers in our area are looking for; they do not know the organizations that can assist newcomers; they don't know who the local builders are and who does what kind of repair work; they don't know…well they don’t know much.
I have a mental picture of someone going to an office in Oceanside and asking to see a property in Hidden Meadows! Our location attracts buyers – that is a fact of life. As cooperating Brokers, we show and sell ALL listings in our area, and we don't care who or where the listing agent is. What we do care about is that the home is properly priced, but it is difficult to properly price a home from far away. We like to show well-priced listings of agents with whom we can easily and quickly communicate.
There are not many of us in-area Brokers, and we compete on a friendly basis. Most are excellent professionals, and we sell their listings regularly.
Our central location gives us the visibility to attract most of the new buyers and most of the home listings.
But we do muse about what causes a Meadows homeowner to list with an agent from zip codes away.
What Can I do To Help My Home Sell
First, listen to your Realtor. He or she has a vested interest in selling your home, and his or her recommendation is intended to help you.
Remember that the majority of people have no vision – what they see is what they think they will get – and that means that if your home has a yellow bathroom, most buyers can’t see how it would look in beige, or blue.
Blue carpets will turn off most buyers, even though changing carpets is not a big deal. Most buyers will see the house in a blue carpet all the while they are thinking about the house for the next few days, if they think about it that long. They may just have an instant dislike for the house because it has a yellow bathroom or a blue carpet.
In computers, I warn buyers to stick with the industry standard, unless they have a overpowering need to do otherwise. Similarly, sellers need to make their homes comfortable for the majority of buyers. You need to market to the "bell-shaped curve." Just because you like black walls and concrete floors lighted by a rotating strobe light, doesn’t mean the market will like it. If light, bright, and white are "in" you need to try to do what you can to please the market.
Obviously, you don’t want to spend a fortune updating your home a few months before selling it. You should try to keep your home salable at any time, just in case of an emergency, and ideally, if you can predict your future moves, I suggest that you do major work four years before a planned move. Four years gives you the opportunity to enjoy your new purchases but gives the appliances the newness that buyers are looking for.
In the Meadows, we still have many homes that are badly dated – old appliances, shag carpets, wood shake/shingle roofs, and an occasional avocado-colored appliance, but mostly the problem is lack of light in the home. The easiest, and cheapest way to solve a darkness problem is a Solartube or two. These mini-skylights cost only $450 installed and each takes the installer about an hour. Most homes I have seen being sold in the Meadows could use several of these miracles, and it would help sell those homes much faster.
Unfortunately, we don’t see the flaws in our own homes, or we do and won’t admit it. Even more likely is that what is a flaw to others is not a flaw to us. We are really happy with our homes, and assume that everyone else should be as happy with it as we are.
We each drive different cars, we wear different clothes, we eat different meals, so we own different houses. But our clothes meet some general norm, as do our cars, so it is the same with homes. We cannot get too far from the "industry standard" if we want to sell our homes. Red, blue, or green carpets may just be our thing, but finding someone else who shares our love for bright carpets will not be easy.
Do "Open Houses" Help?
Many couples who will not go into a real estate office will drop into an "open house." In Hidden Meadows, the ratio of people who will drop into an "Open House" and NOT drop into an office, is about 10-1 I know this because I kept a count for several years when I was the Broker of Record of the largest office in Hidden Meadows.
Please help your Realtor by being absent during the Open House so that potential buyers will feel open to make comments about your home without offending you. The Realtors need that feedback, and will distill those comments for you in a less offensive way than some buyers may have expressed themselves.
Before you list your house, employ a maid service to get all the nooks and crannies that have eluded you, have a window washer get all the windows, inside and out (and the mirrored doors); get the spots off the driveway; pressure hose the house to get all the spots and spider webs off; and wash all the doors and plates over the light switches where hand oils accumulate.
Keep the grass cut, the plants watered, the windows washed, and the dishes out of the sink. Keep the dog or the cat in the laundry room, so they don’t cause problems or get out. If necessary, put well-lettered signs where they can be seen to remind the Realtors who show your home to keep the pets indoors. Every bit of extra effort helps – remember that many, perhaps even most, Buyers do not have vision.
Get A Home Inspection!
Most sellers don't realize it, but there is a second "negotiation" that takes place after the home is sold. That negotiation is over what problems with the home will be fixed by the seller after the buyer's Home Inspector does his inspection. Under the latest California Association of Realtors contract, homes are sold "As is" – but there will be an inspection and there will be a request for repairs. The seller does not have to even answer the request, but it is politic to do so and at least fix any identified safety items.
A buyer is going to demand a "home inspection" by an inspector of their choice. It is in the standard contract. You might just as well get a jump on the issue by having an inspector look at your house before you list it, or immediately thereafter.
As a seller, you are going to be surprised with the results. Eight years ago, "home inspectors" were someone who owned a pickup truck and a ladder. Generally, they were "handymen." Today, they are professionals.
Even if you are a very handy homeowner, you will be surprised by what these professionals will find. You could easily end up with five typewritten pages of problems, and if you take care of them before someone makes an offer on your home, the list their inspector finds will be perhaps half a page!
That small list of problems will make the buyer feel considerably better about your home. I often represent buyers who are shocked with all the problems their inspector finds with a house that looks great to them.
(Equally surprised is the seller, who has been living with safety problems they did not know they had!)
Save yourself the embarrassment of having the buyer's inspector find the problems. Have your inspector find the problems, then have a qualified person fix the problems over a few weeks or months, rather than having to fix them during an escrow period.
If you want to know which "home inspector" I am using at any given moment, give me a call. I try to find the most competent person I can find, and that means the one who can find the most problems. I don't like surprises, particularly after a home has gone into escrow.
Nothing can cause more problems in an escrow than the buyer finding out that the wiring of a home is unsafe, or the foundation is cracked, or some major problem that the seller might not have even known about, or considered too small to bother with. A long list of even small problems looks like an obstacle to a buyer.
Regardless of how small the problem, the buyer's inspector is going to find it – you might just as well know early so you can get it fixed and the buyer’s inspector will not have reason to comment on it.
You can make the negotiation and the escrow run much smoother if you will take my advice: Get a Home Inspection!
There is a downside – you must include in your Transfer Disclosure Statement any negative information about which you have knowledge. Having an inspection multiplies considerably the number of problems about which you have knowledge. If you get the inspection, you will need to address most of the problems that are discovered.
What About "For Sale by Owner"
In this litigious society, I would advise against it, even if I were not in the business. If you knew how much "Errors and Omissions" insurance costs Brokers, you might conclude that there is a substantial risk in this business.
There is. You might ask your prospective Realtor how many times they have been sued. (I have never been sued by a buyer or seller…)
The Contract of Sale was a one-page document for many years in California. In our office, we now use an eight-page, small-font document – and on average the contract changes yearly or more often. These rapid changes are required by the rulings of court cases.
The joke in the industry is that the other word for "buyers" is "plaintiff."
Most sellers are not familiar enough with the laws of the State of California, particularly in the field of Disclosure, to sell their own property without substantial risk. Sellers don't have "Errors and Omissions" insurance to protect themselves against the risk.
I personally attend two or three one-day seminars annually on the subject of "contracts" and "disclosure," and few "For Sale by Owner" sellers know what they are required by law to disclose.
The entire real estate business is based on technical knowledge. The industry competes against people who sell their own homes, and the industry makes billions each year.
How can anyone charge for what is being given away for free? Simple. We do a better job. The "World’s Oldest Profession" has charged for what is being given for free since time began, on the same basis – you have to be much better at what you do to compete with "free."
We are better. We understand contracts, negotiations, disclosure, mortgages, building codes, zoning, CC&Rs, demographics, psychographics, marketing, computers, negotiating, advertising…
If you want to sell your home, call a Realtor.
Call a local Realtor.
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