Los Altos Real Estate Blog

In astronomy, the "Goldilocks Zone" refers to the range of distance from a sun where habitable planets exist.  It's the sweet spot where all the good stuff can happen.  There is such a zone in real estate too.  It's the price range where offers start to come in and you have a chance to negotiate.  Let me preface that this zone will vary around the country and depends on market conditions.  In the San Francisco Bay Area and Silicon Valley specifically, it's a little challenging since there are huge price variances within a few miles.

What is the "Goldilocks Zone" price target?

Most sellers want to start a bit high on their pricing.  A good Comparative Market Analysis (CMA) will indicate the final sales price within 1-2%.  The "Goldilocks Zone" is up to 5% away from the projected sales price.  When you're within 5% of that price, you capture the interest about 95% of potential buyers.  There have been studies done on this.  Price drives appeal.  If the CMA says $1,000,000 then price the home no more than $1,050,000 to get solid offers.  Yes, it's really that simple. 

This rule generally holds for properties in whatever the "normal" home price range is.

What about the high-end?

At the high-end of the market the rules are a bit different but not much.  You tend to have a little more "gap" between the final sales price and the list price.  For homes in the $5+ million range you can be up to 10% off the price and still get offers.  However, the lower the better.  If you're over that, it's unlikely you'll get offers because buyers have enough properties to choose from they don't need to write an offer.  They'll wait until you drop the price.

Does price trigger offers?

Yes!  Yes!  Yes!  If you're on the market and not getting an offer, drop the price.  Every 30 days if you have to and in increments that make sense.  Dropping the price $10,000 on a $1 million home is useless.  Dropping the price 5% or more will get additional interest.  It may not be enough still to get offers.  If you aren't getting any offers at all, the price is too high.

Of course, all this depends on how effective the marketing is.  Assuming the marketing is good and agents know about the property, a lack of offers will be driven entirely on price. 

Deciding when to drop the listing price is difficult because it depends on the region and market.  There's no one formula that will work across the board.  However, there are guidelines that I think work in most situations.  Here are a few standards I think work everywhere...

When the feedback says "It's too high!"

If the agents and buyers are coming back with pricing suggestions or verbal offers, and those are in line with the comps your priced above, then you're priced to high.  That's the point you should drop the price.  Don't wait for "the perfect buyer" to come along - it'll never happen.  You'll increase the chances of a sale by dropping it immediately.

When you haven't had a showing in 30 days

With the exception of open houses, which don't count, if you haven't had a call to either preview with an agent or show a client, you need to drop the price.  Regardless of the price range, if you're not getting at least one showing a month, the price is too high.  If it's priced right, you should be getting a lot more showings.  How much to drop depends on the property but drop it enough to get showings.

When a similar property sells for less

If a property in the same market that is a good comp sells for less than your asking price, drop the list price to capture buyers who were looking at that other property. If you want a little negotiating room, fine, but come to within 2% of the other listing price as soon as that home goes to "pending sale" status.

When the last price drop was 90 or more days ago

If the last price reduction was 90 or more days ago and you don't have a serious buyer on the hook, drop the price.  Even if a buyer is considering the property, drop the price.  Dropping the price will engage more buyers and existing potential buyers will be motivated to write an offer before someone else does.  I've seen sellers sit on properties for months while potential buyers make up their mind.  The result:  wasted time and opportunities.

When you list with me, I'll work with you to price the home right to start.  However, if the price starts out higher, I'll walk you through all the data-driven rationale behind bringing your price down to get a buyer.

As a homeowner, you want to sell your home quickly and for the highest possible price.  I'm going to be brutually honest with you, there is a long list of things you, as the homeowner, can do to prevent your home from selling.  No matter who your agent is and how much marketing they do, these things will stop buyers in their tracks.  I've got a very good record of selling homes because I talk through these issues with my clients before we list.  Take a look and see if any of these ring a bell.  If so, call me and we'll talk about how to get past them and sell your home.

1)  Your price is too high.  This happens all the time.  What's going through your head is "I need some room to negotiate." and so you price your home 20% over the nearest comps to give you that room.  Guess what, you're losing all or nearly all your buyers.  A research study done years ago showed that overpricing by 5%, you lose 50% of your buyers.  Overpricing by 10% you lose nearly 95% of the possible buyers.  If you're 20% overpriced, you're unlikely to even get a showing.  Overprice a home and it won't sell.  THE SOLUTION:  Don't overprice.  Set the price near the comps and you'll get buyers.

2)  Dreaming of "the right buyer".  This is related to the pricing discussion.  Do you think pricing your home higher because "just the right buyer" will come along and overpay for it.  Stop dreaming.  It won't happen.  It never happens.  What does happen is your home won't sell as it sits on the market for months with no showings.  A person who likes you home will pay what it's worth and that's determined by the comps.  THE SOLUTION:  Don't wait for "the perfect buyer" and price your home to sell to the broader market.

2) The home looks and smells bad (property condition).  Would you buy a home that has junk in the yard, dirty walls, or last nights dishes on the counter?  No, and neither will anyone else.  A home won't sell if it's a mess.  Smells are also a factor either from pets, food, or other sources.  Curb appeal is important but it continues inside the house.  Everything has to be clean, working, and in pristine condition to appeal to as many buyers as possible.  You have to "declutter" so rooms look as spacious as they can.  It's annoying, but to make the best impression, your home needs to look like it's staged, even if you're living there. THE SOLUTION: Your home has to look as nice, clean, and new as it possibly can.  Let my stager do their job and you won't have to stress about it at all.

3)  Buyers can't get into the home.  I can understand you want to keep living in your home while it's on the market.  However, buyers need to be able to get in to see it.  Your home won't sell if buyers can't see it.  If you put restrictions such as "appointment only", "24 hours notice to show", no lockbox, and restricted showing hours, the majority of buyers won't even try to see it.  If you had to jump through hoops to see a home, would you?  No!  Especially if there are other homes that can easily be seen.  THE SOLUTION:  Don't make it hard to show your home.  If you have kids, dogs, in-laws, etc that make it hard to show - you need to make the effort to get them away so buyers can visit.

4)  Nobody knows it's on the market.  There are some sellers who insist on no street signs, no advertising, and very little marketing.  They basically just want the home on the MLS and hope someone will notice.  The message that sends to buyers is; "I'm not serious".  It alienates serious buyers and after you've been on the market a long time, it brings out the lowball bargain hunters.  It takes marketing and exposure to find buyers and hiding the home means that can't happen.  THE SOLUTION:  If you're serious about selling, let the agent get the word out.  Marketing is a comprehensive program of advertising and networking to get buyers in to see your home.

5)  You don't negotiate with buyers. Some buyers and their agents will start with a verbal offer to get things rolling.  You should have an agent who is empowered to respond to that.  Written offers, no matter how low, should also be considered and negotiated with.  Your house won't sell if you don't get to the negotiating table.  The fact that you got an offer is good because that can be passed to other agents and buyers so they know you've got interest.  Ignoring offers and not talking about them will impact the impression of your home in the market.  THE SOLUTION:  Work with any buyer and any offer as much as is reasonable.

6)  You set dfficult conditions on the sale.  There are times when sellers put conditions on the sale of a property that make it very unappealing to buyers.  The most common one - rent-back.  Others that don't help include unusually long escrow periods and conditional sale on you finding a home.  There are more but the point is that when you make it hard for a buyer to actually complete the sale, it's a turnoff that prevents offers from being made or continued.  THE SOLUTION:  Make sure you have a place to move to, coordinate the escrow to close when you have a place to move to, and forget a rent-back if it's at all possible.

There are many more reasons that your sale didn't go through and I'll update this area to reflect more of those as time goes on.  Just remember, as a seller it's important to take the sales process seriously and don't put up barriers.  If I'm passing along feedback from buyers on why they didn't make an offer or backed out of the deal, it's to help you get the home sold.

Selling a luxury home requires creating an image that engages buyers.  A couple of basic descriptive paragraphs and some photos will not get the job done.  Once the elements of a luxury home's unique story are assembled, you need to craft the visual side of the marketing.  The combination of the story and the visual elements become the basis for the marketing.  Once the home is cleaned up, it's time to work on...

Staging:  Many agents and nearly every stager will tell you that staging is essential to selling a home.  Yes and no.  If a home is vacant, then yes, it's important to show how rooms are used.  If it's occupied, it depends on how the home is decorated.  I review the home and decide which is best.  A vacant home can benefit from "Virtual Staging" which uses photos of various rooms in the house into which digital furniture is placed.  This is cost effective and often enables more rooms to be staged.  Virtual staging can cost several hundred dollars (only once) for 7-8 rooms, compared to thousands of dollars per month for long-term live staging.  A combination of live and virtual might be desirable.

For homes that haven't been built, we get into some interesting options.  I use 3D virtual staging combined with 3D virtual tours to show how a home under construction will look when it's all done.  These detailed digital interior models do a "fly through" of the home so buyers can get a sense of the floor plan, views, and overall look.  The cost of virtual tours is expensive with high-quality tours costing $10,000 or more.  Virtual tour and 3D tour companies I recommend include:

• Virtually Staging Properties
• Obeo vStager
• iTour
• Archiform3D

Professional Photography:  This is a must in luxury home marketing.  The photographers I use all obtain the highest quality pictures to emphasize views, perspective, and colors to make a home look its best.  Depending on the size of the home and number of rooms, its easy to get 25 or more photos.  There are also aerial shots for larger homes and lots that run about $1000 each!  Those all become the basis for a virtual tour (not the 3D type) and printed materials including brochures and ads.

Videography:  Virtual tours are fine but a professionally shot video can really make a home stand out.  Having a presentation by the listing agent, tour of the neighborhood, walk around the property, and other shots can highlight features that would otherwise be "flat" in pictures.  You can go the Hollywood route and include a dramatic drive up a long driveway or a walk through grounds. 

Branding:  Having the story and visuals enables creating a "brand", just like Mercedes or Burberry.  The brand is the image conveyed by the home using those elements.  The home can be shown as impressive or understated, luxurious yet casual, and many other combinations.  The brand will then appeal to the appropriate buyer.  For example, BMW tends to appeal to sporty luxury car buyers and the brand conveys that.  A home that is luxurious but low-key might appeal to buyers wanting quality but a low profile.  That's where the brand has power.

Once the overall brand and image are done it's time to work on the actual marketing.  That includes...

• Broker tour events
• Advertising campaigns
• Special buyer/market events
• Agent targeted marketing
• and more in part 3...

Marketing is everything in real estate.  Some would say it's sales but it's really marketing.  First-class, high-quality marketing brings in buyers - lots of them.  There are varying degrees of marketing but for high-priced, high-end homes you have to give the "extras" that get a buyers attention and an offer on the table.

This is the first of a three-part series on how I approach high-end marketing.  How much of this is done depends on the home, what the seller wants, and what the budget is.  When I sit down with a client, we talk about each of these areas, the cost, time involved, and specific details that need to be addressed.  A complete "action plan" is created that outlines everything that needs to be done.  The first areas to be addressed are...

Inspections:  No matter what, every home needs these!  However, luxury homes may have other considerations that need to be addressed such as commercial grade power, security system, intra-home networks, and other features that need to be verified as working.  I use a home inspector who has experience with these sorts of things and more.  When an issue is identified, it needs to be addressed as part of the repairs so the home is in the finest possible condition.

Repairs:  Every little detail that can be fixed, should be fixed.  Some common issues I run into include floor scratches, nicks in walls, chipped paint, broken switch plates, and leaks.  The physical impression is critical and even the smallest detail flaw will stand out in an otherwise gorgeous home.  I have a list of contractors who do high-quality work quickly and at a reasonable cost.  The emphasis is always on quality.

Clean up:  As with any home, preparation is key but a luxury home takes even more.  Beyond just dusting, polishing, vacuuming, and general cleaning up, sellers need...

• windows washed
• roof and gutters clean
• landscaping trim and clean (add new if necessary)
• house and hardscape pressure washed
• remove anything that doesn't compliment the home

Features and Story:  When reviewing the pros and cons of a home, it's important to note what materials were used, who the architect is, who the builder is, and what unique qualities it has.  Along with that is research into the history of the property and area to make sure that the "identity" of the home is clear.  As with any luxury product, the message used to talk about the home has to reflect what it is in the right way to connect with possible buyers.  If the home has a custom feature, that should be identified and the name of the manufacturer noted.  This information becomes the basis for writing the story and describing the home.

There's a lot more to this than meets the eye.  For example, a home that has a unique location or history may have a "story" that can be told to make the home more appealing to buyers.  Perhaps a famous person lived on the site or it was part of the local town growth.  This research helps make the marketing much richer and interesting beyond just bedrooms and bathrooms.

Next up....

• Staging
• Photography
• Videography
• Aerials and more...

Selling real estate is all about good marketing.  Sure, sales skills are important and anyone can sell anything in a hot seller's market, but at the end of the day it takes good marketing to sell a property.  The one thing that will derail the slickest marketing is a bad price.  Overpricing ensures failure.

Studies have shown that overpricing a property by 20% eliminates nearly 95% of the buyer pool for any particular property.  This applies in any market, regardless of the type or price of the property.  So, if the price is even higher, nearly everyone you could sell the property to will pass it by in favor of something else.  How often is an overpriced property sold to someone stupid enough to pay more than the market rate?  You let me know how often you see that.  The opinion that a home is worth more than nearby comps, particularly on the part of a seller, is purely subjective.  If the recent sales show support for one price, and the agent can back that up with a market analysis, then going over that price guarantees sitting on the market waiting for a buyer.

When I market a property I consider all the angles and create a first-class marketing program with professional photography, videography, flyers, virtual tour, direct mailings, and more.  That marketing is designed to instill a level of trust in the quality of the property.  If I price that property too high, I damage that trust.  In every subsequent price reduction, that trust is further eroded.  Do you know why?  Because the buyers don't believe the seller has a realistic grasp on the value of the home.  They're not sure any offer will be treated fairly and even lowball offers stay away.

My suggestion for sellers is this; price your home right to begin with.  Keep it within a few percentage points of the comparative market analysis, and it will sell quickly.  Overpricing is simply a way to waste time and ensure a lower final sales price.

Part of being a professional means giving constructive feedback to the owner and agent selling a home.  As with anything in life, good communication could lead to a mutual respect, understanding, and possibly a deal.  When I preview a home with or without a client, I always try to get back to the selling agent with good feedback so they can pass it along to their client.  Without feedback, the agent has little chance of discovering what will help sell the home.  The feedback I give includes:

• The price (too high, spot on, and if too high, by how much - support opinion with comps)
• The condition (is the property accurately represented in the view of the buyer)
• Top 3 things the buyer liked
• Top 3 things the buyer didn't like

Pricing Feedback:  If the home is priced high I'll say that and give examples of comps to support my opinion.  Just saying it's high isn't enough.  The price opinion should be a "ballpark" so as not to give away too much if an offer is made.  Telling the agent you think it's overpriced by 10% is good enough - specific prices aren't needed.

Condition Feedback:  I like to give guidance on how well the home "shows".  If the home is in worse condition that the pictures portray, I tell the listing agent that it didn't show as the photos would have led me to believe.  If my clients had more specific comments, I'll pass them along.  Showing a close-up of the front of the house, leaving out the yard, because it looks like a junkyard is a big no-no and I'll tell the agent that.

Top 3 Things:  This gives a nice, concise list of feedback on specific things about the house either I liked/didn't like or that the buyer liked/didn't like.  Keep the list to major items and not little nits like a scratch in a doorframe.  These lists help reinforce what the agent is saying in their marketing or could fix to help market the home better.  I want to know what's wrong with a listing so I can fix it, if possible.

When feedback like this is given, it makes you look like you took the time to see the home and shows professionalism - in my opinion.  Next time you show a home, consider giving solid feedback so the agent and seller have the best chance possible at selling the home.

Yes, that's right, the house used to make the famous horror movie is on the market at a moderate (at least by west coast standards) $1,350,000.  It's got 3000 square feet, a theatre, gourmet kitchen, pool, and waterfront location.  It's actually located in New Jersey instead of Long Island, the location in the movie.  I just saw an interview on "The Today Show" about the home and the owner mentioned that she's never seen anything that even remotely felt like a haunting or anything scare.  According to her, it's actually a very nice home with lots of good memories.

I'm writing about this house for two reasons; it's famous and it's nothing like the movie house.  It's interesting that the owner still, after all these years, gets visitors asking about scenes from the movie and if there are any actual haunting events similar to those in the movie.  Perhaps I'm a bit too modern but, IT WAS A MOVIE!!  Not real life!  After decades I'm surprised people are still giving it that much consideration.  But, hey, that's the price of fame.

The other point is that it's nothing like the movie house.  The famous curved windows that made it look like a face on the side of the house are no longer there, it's actually located on a cul-du-sac, and after watching the interview it's amazingly well decorated.  So, that begs the question, would you live in a house that has a history of hauntings or, in this case, fictional hauntings?  Would you live in a house that was used as a movie set and is now famous worldwide?  For me, I couldn't care less and it would actually be neat to have a house with a little bit of fame.  I'm curious what others think.

Homeowners are often baffled by what they think is a reasonable list of things to disclose.  They're fine with the usual stuff but then they get a little put off by being asked about other things that, on the surface, just don't seem to matter.  Oddly enough, there's a mantra in the real estate business - better to over disclose than not!  In this day and age when lawyers are running rampant and adding more pages to the standard disclosure form, it's best to disclose ANYTHING you think might impact the value or use of the home.

As it turns out, the home I'm living in has a steady stream of black widows living in the crawlspace.  I didn't know this before I moved in and, after reading up on black widows, I'm not that concerned about the cats or my kids getting hurt.  Black widow spiders tend to stay to themselves, in dark corners, and primarily at night (they're nocturnal).  Would knowing about the spiders have impacted my moving here?  Probably not.  However, it might have seriously freaked out anyone with arachnophobia!  When in doubt, disclose!  I've seen sellers write pages of single-spaced lists of everything that has ever remotely happened in and around their home for years.  It's the ultimate disclosure and a sort of peak into the history of the home.  It might seem like overkill but it's still a good idea.

A few unusual items worth considering when you sell your home include:

• Spiders! or ants, cockroaches, and any other bug that you see on a regular basis in the home.
• Rats, mice, voles, raccoons, deer, gophers, or any other animal that shows up on the property on a recurring basis.  That includes the neighborhood cat stopping by and making a mess in the corner of the yard!
• The loud dog that barks every morning at 7AM your neighbor jogs by the front of the house.  If a dog barks every day, like clockwork, it's worth disclosing.
• The same goes for other noises include frequent loud parties, loud music, someone working on an engine and constantly testing it, or anything else that is loud and regular that might serve as an annoyance.
• Bird poop!  Yes, you read that right.  If a particular tree is a favorite spot for birds their poop might cause damage to anything placed under it (outdoor furniture) and could limit use of the yard.
• Bees, wasps, hornets, and other territorial insects that have set up camp in and around the yard.  This is serious because someone with an allergy could be seriously injured by a sting from one of these.

In general, it's not just nature that invades your home but anything that makes the possible "quiet enjoyment" of the property difficult.  You may have grown used to whatever is happening over the years but a potential buyer might not feel the same way.  So, when in doubt, anything you think might be a factor to affect the property should be disclosed, no matter how silly it seems!

If you're a current resident of Los Altos and facing the prospect of divorce, you may be considering the sale of the marital home.  The decision to sell the marital home depends on many things including school-age kids, a buy-out by the other spouse, market conditions, and the condition of the home.  It's a very difficult time and I'd like you to know that I've been there.  I sold my Los Altos home due to divorce.

Before moving ahead with selling your Los Altos home, you need to settle the basic issues of timing (time of year or kids in school) and possible buy-out.  While it is to your advantage to sell your Los Altos home during the Spring and early Summer selling season, it can still be sold when prepared and priced properly.  Several homes were sold in December 2010 with multiple offers and over the asking price.

Once you have decided to sell your Los Altos home, the key to success is effective communication.  The mechanics of selling the home will be no different than any other sale.  Everything will done done first class to get your Los Altos home sold fast.  However, how the process is handled depends on the divorce situation.  If the divorce is amicable, then expect to receive frequent, effective communication to both parties at the same time to make sure everyone is in the loop.  If the divorce is not amicable, then the agent (me) will work to ensure the process is handled as diplomatically as possible.  It is important that the agent work as a partner to both spouses, regardless of the situation.

Division of proceeds from the sale of your Los Altos home can vary depending on your divorce settlement.  You may have an arrangement that requires more of the sale to go to one spouse or another, to have certain costs taken from one spouses proceeds and not the other, and other situations.  I work with my clients to ensure that these issues are taken care of during the escrow process to ensure a smooth transaction and no complications.

Lastly, divorce is a difficult time in anyone's life and it is especially important to maintain the privacy of the family.  When your Los Altos home is put on the market, neighbors and buyers alike will ask questions about why you are selling.  It is not a requirement to disclose a divorce and it's none of anyone's business with respect to the transaction.  Therefore, a part of being a good agent is making sure the sale of your home is done while maintaining your privacy as much as possible.