Last week, I was in Tahoe at the "Luxury Council" seminar sponsored by Chase International, a high-end Tahoe real estate company with IMPRESSIVE listings on the lake, in Truckee, and throughout the Tahoe area, extending all the way into Reno and Sparks, NV, This wasn't just an opportunity to view some remarkable properties on the water, but to network with out-of-area Agents and to share some trade secrets. (They're really not so secret.)
This year, the speaker for the event was Jeff Culbertson of Contempo Realty, who had joined us to share his unique perspective on market trends and remind us that no matter the price of the listing, or the exciting new tools of the trade (internet advertising, video drones, virtual tours, email blasts . . .), "The basics still matter!" (Knowledge, care, communication . . .)
Jeff started in the business at 19, knocking on doors. Now in his sixties, he has years of experience and hundreds of sales under his belt, both as a Realtor and as a Broker, which makes for some interesting stories to tell . . . And while "knocking on doors" has never quite been my style (unless you count this weekly blog as a "knock"), there was a lot of value in the wisdom he had to share, especially with respect to his four "Cs" of real estate:
He went on to say that Sellers really only want to know three things:
In practice, what you believe your house is worth and what you can sell it for, can be worlds apart, especially in the "luxury marketplace." Putting aside the truly jaw-dropping prices in Tahoe (one extraordinary lakeside compound on several acres was announced at 75 million!) here in our little hamlet, homes priced between 1- 2 million dollars can nearly always count on multiple offers in mere days, but climb above the 3 million dollar mark and the air begins to thin considerably. List for more than 5 million and your home is going to spend some real time on the market, as evidenced by the current high-end listings in town which have been "active" for months - not weeks - looking for the right Buyer to step up and make a bid.
As for what you are going to get? That's entirely dependent on how you have used the equity in your home and whether you have paid down your principal, or pulled it out for expenses or investments along the way. (If you've used your home like an ATM, there's going to be far less net profit.) In either case, "what you are going to get," is not relevant to the price a Buyer is willing to pay!
But it was almost a throwaway line toward the end of Jeff's talk that intrigued me the most when he said "Are your Sellers ON the market or IN the market?"
For those unclear on the distinction, let me clarify . . .
A home is ON the market when a price is set that would entice the Seller to move IF a qualified Buyer magically showed up and plunked down his hard earned cash. Think of it as the "make me move" variable. You're testing the market to see if someone will give you want you want. You don't necessarily have to move and you don't need to move, but you might be compelled to move under the right circumstances . . . (BTW- this applies to any price point.) It's a strategy to be sure, but not a winning one. In fact, it may be a bridge too far.
A home is IN the market, when it is competitively priced to sell.
In both cases, the work is similar: prep, prepare, present and perform, but in the first, your home might languish on the marketplace for months while you ask your Agent to set a "value" you aspire to, as opposed to a "value" the market can reasonably respond to and engage.
In truth, ALL homes will sell at the right price, no matter the challenges or condition. This includes homes with 100 steps to the front door, houses next to power lines, "fixers" in need of hundreds of thousands of dollars in repair, and properties overlooking the freeway - as long as the price makes 'cents!'
Overprice your property, and no matter how well-healed the Buyers, they won't pay more than the appropriate market value. Even luxury Buyers expect a "good value'" however it's defined. For some it's a view, for others it's privacy, for others, it's a matter of square footage. And so it goes . . .
In short, if your home isn't selling, regardless of how beautiful, unique or "better" it is, it's probably priced too high - especially in today's competitive and dynamic marketplace where available inventory is dropping year after year. (Demand is still outpacing supply by a fair amount.) And while it's reasonable to conclude that Piedmont's marketplace is "undervalued" compared to San Francisco, Kentfield, Palo Alto, Hillsborough, and Tahoe (it is), savvy Buyers are going to look at the prices of comparable sales within that particular segment of the marketplace - not relative to others - which is why properties in SF routinely sell above 7 million and why properties in Piedmont do not. (Which isn't to say that they can't, but that they better be pretty darn exceptional before a Buyer will raise the bar.)
It's also why, when potential Sellers ask me: "What are you going to do if I don't get the price I want?" . . . my answer often is: "I'm going to ask you to adjust your expectations." (That's usually when I lose the listing to another Agent who is willing to tell the Seller what they WANT to hear instead of what they NEED to hear; a talent I'm afraid I still haven't developed even after all these years.)
While it may be tough to digest for some, the market is the market, and Buyers don't really care about what Sellers "want" or what they "need." They care about the "value proposition" and whether a property provides what they specifically desire. If it does, Buyers will go to battle AND may indeed, pay a premium to realize their dreams. They may even "overpay" for a house that meets all of their criteria (a term I'm loathe to use as homes ultimately sell at a price the market will bear), but Buyers won't pay MORE than the going rate just because you think they should.
Whatever you do, make sure you work with an Agent and a company that understands and employs every advantage at their disposal (internet advertising, video drones, virtual tours, email blasts . . .). Because while I agree that the "basics matter" (they always have, and they always will), if you're not employing the latest technology, you are behind the times, and that serves YOU - not at all.
BTW - if you've got 75 million you had no other plans for, I know of a sweet compound in Tahoe that just might let you negotiate.
How can I help you?
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Julie Gardner, has been writing The Perspective for 15 years and has published more than 600 essays. She is also a frequent contributor to the Sound Off column in the Real Estate section of The San Francisco Chronicle.