All the World’s a Stage

With the market as tight as it is for selling homes, this is one of the most difficult markets to move inventory in at least the past 5 years. Everything you can do to make your house more appealing to a potential buyer is important. Generally, there are four actions that you can take to increase the value of your home in this kind of market:

  • Lighten and brighten – Returns about $3 in increased value for every $1 spent
  • Clean and unclutter – Returns about $4 in increased value for every $1 spent
  • Landscape – Returns about $4 in increased value for every $1 spent
  • Stage home – Returns about $5 in increased value for every $1 spent

Some properties will not have a whole lot of work to do, others will take weeks of work to get to the point where they are ready for the market. It is not always necessary to hire a professional, but it is a good idea to bring in someone unfamiliar with your home who will tell you the truth about how it looks. For starters, get rid of the clutter. You have to be ruthless about removing any items that could cause potential buyers to get distracted or make them uncomfortable.

If you think that you might need some help going the extra mile, here are some web sites in Chicago that can help:

Staging has become so important that one firm even specializes in not only making sure that the furniture and fixtures are in place and looking spotless, but that people are provided to live in the homes if the current owners have already relocated. The Nashville firm Showhomes will move in an “account manager” to live in the home so it does not appear empty and soulless.

  • http://www.cubsdiehard.com Cubs Die Hard

    Very interesting. An account manager will move into the home. Some people will need some considerable dough to already have a place where they can move out before they close on a place. Staging in important and I personally sold a place because I spent 2 weeks getting it ready. First impressions are very important.

    Love the blog, keep it up!

  • john

    will the tax credit come back in the future??

    • http://blog.redfin.com/ GlennKelman

      Good question! I seriously doubt it though…

  • Llshames

    When will house prices stop dropping in Los Angles and San Diego?

    • Mysliwya

      I don’t know about LA but IM starting to see reduced prices in SD on allot of my Fav.

  • GG

    This is really a tough time. We were in escrow on a house but it fell through because we could not sell our house. We lowered the price $40,000, and we still could not sell our place.

    We have decided to take our place off the market. It just doesn’t make sense to lower the price again.

    • http://blog.redfin.com/ GlennKelman

      Sorry to hear it GG. If it’s any consolation, we hear that story all the time… Best of luck next spring.

  • GG

    By the way, we live in the Los Angeles area.

  • Nizamraja

    I made the offer on a house, I am worried is Las Angeles Prices will go more down. Plus this site is petty Good.

    • http://blog.redfin.com/ GlennKelman

      We think prices will go down in Los Angeles, but not catastrophically. Of course, we could be wrong…

  • Lettema_02

    “Nobody is worried about interest rates increasing significantly any time soon.” How soon and how much might the interest rates increase? Also any feedback about prices rising or falling till November election time? I live in Camarillo and hunting for a house has been a real nightmare. Not having luck at all, and I so desperately want to buy a good house and a good deal. Thanks.

    • http://blog.redfin.com/ GlennKelman

      Everyone talks about interest rates being low through the end of the year at least; some folks worried about deflation think it could be much longer… deficit hawks on the other side of that argument, and it’s a very, very deep argument. For more, read Paul Krugman, who writes on this topic frequently in the NYT.

  • hoss

    I am a cash investor and am planning to buy a property in the bay area and wish to rent it.
    Two questions:

    1) where is the best area to invest (with higher chance of long term appreciation, higher rent/price ratio and better chance of renting full term)

    2) what is the best price range for such an investment?

    thanks

    • http://blog.redfin.com/ GlennKelman

      That isn’t an easy question to answer, at least in general. There are good deals and bad deals everywhere.
      But among Bay Area investors, low-end homes in the East Bay have been reputed to be the area of highest activity, at least as recently as two months ago, in part because so many competing buyers require credit and so many sellers prefer cash. That said, I have begun to wonder if the high-end is softening up, at least in outlying areas, though such investments are very risky (low property value, high construction value).

  • Ecdoesit

    For me I don’t care about price drops post closing. It’s all about the interest rate! I know that I’ll be in that home for at least 7years. If I can get an average rate of return of 3% I’ll do just fine. For example: $450K home drops another 10% year 1 by end of year 7 that value is up to $483K. Oh and I’ve paid my balance down to $311K. The naysayers are saying that I’m paying $2100 in PITI, but my interest & prop taxes help to drop my taxable income by $18K off of my $75K income. Making this a nice nice nice time to get something good

    • http://blog.redfin.com/ GlennKelman

      This is the point that Damon Darlin made in his last NYT article on interest rates:
      http://www.nytimes.com/2010/03/14/business/14every.html

      • Befmed1

        You have to keep priorities as well as assumptions in mind when trying to predict the future. If you want to be a homeowner that consideration alone should be given a lot of weight. On the other hand if you want to make an investment you should try to be conservative in your assumptions about return on investment. On the surface a 3% appreciation sounds modest. On the other hand the Case-Shiller information provided above indicates that the 20 city index had a 0% return for the past seven years. That is a far cry from the 7.46% return Ecdoesit’s model would have predicted for the time period above. Additional considerations include:

        - The cost of renting is equal to $1,600/month (after tax cost) or the net cost of owning in Ecdoesit’s model.

        - 30 year mortgage rates can be had for about 4.5% (in the Washington, DC currently), but this requires a 20% down payment, or $90,000. Based on the pay down in 7 years in Ecdoesit’s example, a down payment this size is required.

        - Had the $90,000 down payment been invested in US Treasuries for the 7 year period the income earned would have been $12,592. As a down payment nothing will be earned on this money.

        - There are closing costs in purchasing real estate. In the Washington, DC area they can run a couple of percent. For the sake of this example let’s use only 1%. Modest assumption? Who knows? 1% closing costs to the buyer would be $4,500.

        - If you use Redfin to purchase the house you would get a rebate of $6,750. If you use a regular broker you would get no rebate.

        - According to Ecdoesit’s example, you would sell the house after 7 years. Presumably you would use Redfin again and the net commission you pay would be 4.5% of the sale price (6% if you use a regular broker). Again use 1% closing costs paid by the seller. Leaving a net of $425,250 if you assume the zero growth model (which Robert Shiller is predicting for the next few years). This will be a net loss of $29,250 (and more if you use a regular broker or have higher closing costs).

        - The increase in the equity position due to principal pay down would be $46,706.

        The net gain of purchasing the house is: $46,706 – $29,250 = $17,456.

        The net gain of not purchasing the house is: $12,592.

        In other words with an assumption based on the Case-Shiller information the benefit of having bought versus having rented is only $4,864. This difference could easily be wiped out if any of a myriad of expenses homeowners face occur during the 7 year period. For example replacing an HVAC system could cost $5,000-$6,000. Replacing a roof could cost $4,000 or more. Etc., etc.
        The bottom line is if you want to be homeowner, buy that dream home to enjoy. If you are buying that house as an investment, be careful what your assumptions are.

        • http://blog.redfin.com/ GlennKelman

          Wow Befmed1, great comment! Any interest in modifying this into a guest blog post for Redfin?

          • Befmed1

            Glenn, I can do that. I can make it generic. Anything special you would like it to include? Is there interest in expanding it to include cost considerations for investment properties (might be a topic for a separate blog post)? Etc.?

            By the way, if it is of interest I have put together a spreadsheet that calculates the full payment schedule for any amortizing mortgage, but not sure how to make it available to you. It can also re-calculate the impact to the schedule of making additional payments, i.e., to pay off the mortgage sooner.

          • http://blog.redfin.com/ GlennKelman

            Great. I’ll send you an email in a jiffy…

  • stacy

    i liked this house not loved it, but loved the schools. It was bought but then it fell through. we bid on it, they countered and then we walked away hoping to come back in a month. They lowered the price and now it is sold. Do you think it could fall out again. Am i wishing for something unlikely?

    • http://blog.redfin.com/ GlennKelman

      My guess is that it’s gone. A seller once bitten is twice shy, so the seller may have been unusually careful to get a binding contract from a serious buyer the second time around…

  • Busdriverbobo

    I live in Minnesota looking for a house in the area around Fort Lewis in Washington for my daughter. Every day I look forward to your Email with new and updated listings.Love the arial view in your listings,some real nice houses have some nasty industrial sites just down the road!!! THANKS FOR THE GREAT JOB YOUR DOING!!!! Looking for that special house for a super deal !!!

    • http://blog.redfin.com/ GlennKelman

      You’re the reason we all come to work BDBB… THANK YOU!

  • gdjsky01

    As someone looking for a home in west L.A. county I can tell you most sellers IMO are still in denial. 3/4 of million for a 1600 sq/ft, 3 bed 1.75 bath, 60 year old box held together mostly by the 25 layers of paint on everything.

    BTW: I already wrote the webmaster, but the site’s table below the main map will not scroll on an iPad.

    • http://blog.redfin.com/ GlennKelman

      Yeah, we fixed the bug today… sorry about that!