Greg: Welcome to this edition of the Greg Fly Podcast, my excuse for talking with people I find interesting about subjects that I’m curious about. I’m Greg Fleischaker, your host, and today I’m joined by Jon Mand from Lenihan Sotheby’s International Realty, where we are both licensed real estate agents. Jon, good to see you.
Jon: Good to see you. I appreciate you thinking I’m somebody interesting.
Greg: You are! Get ready, because I’m going to bring you on frequently.
Jon: All right.
Greg: You are a good sounding board, lots of experience. I’m curious about home sales. When someone is getting ready to sell their home, ideally, if we got to pick as real estate agents, when someone approached you and asked for advice, how far in advance would you like someone to say, “I’m going to sell my house in … ” Months, years, weeks? What’s ideal?
Jon: Again, a lot of these things are hard to answer definitively, but at the point somebody’s seriously considering it, the sooner the better. As a real estate agent obviously we’re always happy to go out as early in the process … I mean, I’ve met with people years before they ever actually were ready to put the house on the market. Of course there’s those people that we get the phone call and it’s, “Hey, I need this on the market tomorrow.”
Greg: Tomorrow, that’s right.
Jon: Yeah. “What do I need to do?” That kind of thing. As early as … I don’t think you can do it too early, I guess, is my answer.
Greg: Right. Okay. If you were getting ready to sell your house, let’s say … This is for real, my kids are in high school, they’ll be going off to college in a couple years. Probably 2 years I’ll be an empty-nester, and I probably won’t stay in the house I’m in. Two years, is that too early?
Jon: No. But I guess maybe to try to try and tighten it up a little bit, what’s a comfortable time frame for us to pull everything together, help you get the property together, all that. I would say a month. If you have in your mind, “Hey, I want to sell,” and you’ve got a minimum of a month, that gives us time to go through the process of advising all the things that need to be done. Then you actually executing as the seller the plan to do all of the improvements or cosmetic items and that sort of thing to position the property the way it needs to be shown.
Greg: That’s part of the challenge. As far as the actual paperwork for an agent, that can be done pretty quickly. But it’s helping your client get the house in the right position to enter the market that could actually take a while. We did a podcast a little while ago talking about, in a strong market, houses can come and go quickly. If you’re not a clean, polished, well priced home, you’re going to languish on the market for a while. In a tight market, that’s not good.
Jon: That’s absolutely true. If homes in your neighborhood are selling in less than a couple weeks, and you’re out there for 2 months, it certainly starts to raise questions about what it is that you’re offering.
Greg: In a home, do you ask people to change carpets, paint colors, things like that? I know in my house for instance, we finished our basement, the kids played in it, they grew up in it. The carpet is beat up. We have pets. There are dings in the wall. That’s all stuff that I need to get done before I even think about putting my house on the market. Sometimes sellers think about that, sometimes they don’t. How far do you ask your clients to go and get their house ready?
Jon: You’ve really got to put on a different hat at the point that you decide to sell the home. You’re no longer the homeowner who can tolerate the loose doorknob or the nicks and scratches here and there. You’re now in asset disposition mode. That’s the goal is, “How do I maximize my exit from this particular asset?” To do that, investing a little bit of money on the front end is always going to return some value to you above and beyond the cost to do most of the improvements that we recommend.
Not only a direct return on those dollars put in on that, but just the time factor. You can get these sold. If homes in your neighborhood are selling in 100 days and you get out of it in 14, what is that extra couple months’ worth of … If you’ve already bought another house, not having that second mortgage payment, not having the utilities, the insurance, mowing the grass at 2 homes, worrying every time it rains, is your old house … Is the roof leaking or is the basement flooding? There’s emotional value that you gain as well by being able to get these done quickly.
But ultimately, it also drives the price higher. In the things that we see, the typical recommendations are going to center around really 4 things. You’re going to have flooring recommendations. If it’s hardwood, you might need to refinish it, change the color, that sort of stuff. If it’s carpet, you might need to look at replacing it if you’ve had pets or kids and it’s pretty ragged. Lighting fixtures, there’s a big bang for the buck on lighting, no question. That can really dramatically change the look of a house or of a particular room. Then painting. Painting is huge. I’ve done it on my house, homes that I’ve personally sold of my own. My wife had a particular paint colors she loved and it worked well for us, but at the time it came to sell, you better believe I repainted every one of those rooms. It was great for us, but again, I had to put on the other hat.
Greg: I like the way you said that though. I forget. Asset …
Jon: Asset disposition.
Greg: I like the way you say that. You have to go from, “But my son grew up in this room and he loved the pea green walls.”
Jon: Yeah. And the border with the basketballs running around the top, or whatever. Yeah. You’ve got to change gears.
Then the last item is in terms of value for getting things ready would just be the staging aspect of it. That doesn’t necessarily mean going out and getting rid of all your furniture and renting furniture or going through that, but just kind of reconfiguring what you have there already.
Greg: You’re a big believer in staging.
Jon: We are. I’m a huge believer in it.
Greg: I was going to say yeah, you personally. Not only the brokerage, but you personally. I’ve see you do it all the time.
Jon: Yes, definitely. It makes a big difference, along with the painting, the flooring, the lighting, all of those other things. The staging, if you’ve got great furniture, perfect, we’ll work with what you’ve got. But a lot of times, it’s not bringing new furniture in, it’s what you take away. It’s addition by subtraction on a lot of these homes where we’re pulling furniture pieces out and just kind of defining the space, defining the rooms with the pieces that are there. But not cluttering it up to the point that it starts to make everything feel crowded and small.
Greg: I have to say, this is one of the advantages of being a Realtor that I think a lot of people overlook. People get used to living in their house and it works for them. You talked about the loose knobs or whatever they’re used to. But if you’re only in one house and it’s crowded and you’re used to it… when you’re a real estate agent and you’re showing homes all day and you’re … You see what looks good, and you see what looks crowded. You have that expertise and that experience behind it that maybe you can reach a point of too much in a room. It’s easier to see if you’ve seen 100 homes with rooms a certain size that, that just doesn’t work.
Jon: Exactly. As agents, we’re in and out of dozens of homes a week, all neighborhoods, price points. Most importantly, it’s not just what we as the agents are seeing, it’s what the buyers are seeing. At the point you’ve got your home on the market and a buyer comes in, they’ve probably been through a couple dozen homes at least at that point. They get a quick education in terms of what’s attractive.
Greg: What works and what doesn’t.
Jon: Yeah. What works, what doesn’t, what’s priced well, what’s not. What is quote-un-quote “turnkey,” and what isn’t. They’re coming in highly educated in addition to seeing a couple dozen homes before they see yours, they’ve looked at hundreds of homes most likely on Zillow and Trulia and Realtor.com and those places. They know pretty well what they’re looking for. You’ve got to try to match the market’s expectations. Everybody watches HGTV and looks at that Houzz.com app now, so we’ve got to try to keep up with what buyers are expecting.
Greg: Right. It sounds like it’s hard to start too early getting ready to sell your house. Clean up a few of the things that need to be cleaned up, the carpet, the paint, the floors. Talk to a professional when you get close, get that second opinion.
Jon: Yeah. The extra timing, if it’s an unusual property or has acreage or different components to it, those are things where the time aspect becomes critical. We sell a lot of homes on acreage. There’s ways that as we approach it, the gross number sometimes, it’s not that the price per square foot or the price per acre is unreasonable, it’s that by the time you add up all the square feet and the acreage, the gross number gets to a level that it’s just-
Greg: It’s just tough.
Jon: It’s just tough in our market. We’re great at, again, the asset disposition aspect. I’m working on it with some folks now, with some larger farm properties and things where we can carve off pieces, develop pieces, sell to the neighbors, split them up into bite-size chunks, again, just to maximize the marketability of it. Bringing the price for each of those components down to a level where there’s a healthy market. Then the collective price at the points you get through the process is going to be a lot better than if you had sold the whole farm and 150 acres, the big house and 100 acres in one fell swoop. You’d be much better carving that up into pieces.
Greg: Right. I think looking at it as an asset is key when it comes to that time and you need to do the things you need to do as a homeowner to properly dispose of that asset. See? I knew I brought you on for a reason. I really appreciate your time, and I think I’ll bring you back and maybe we’ll talk about getting ready to buy a house and how far ahead of time we should start that process.
Jon: Sounds great.