When you make the decision to sell your home and contact a real estate agent in the Bay Area, one of the first things that your realtor will tell you is that they’re going to “run comps” on the property. If you’re not already familiar with what that means, let’s get a better understanding of that first. When an agent runs comps, they’re looking at properties that are comparable to yours that have sold within a certain time period. In some markets, comps can go back one or more months. In hotter markets, where real estate sells quicker, the agent may only have to look at sells from within the last couple of weeks. They will consider the square footage of your home, the number of bathrooms, bedrooms, and any other number of features, including special amenities that make your home unique. This can include pools, solar panels, or anything else that you’ve invested into your home.
Once that data is gathered, your real estate agent will look at properties similar to yours and the price that they sold for. These comparable properties are what your agent is referencing when they say “comps.”
The numbers that they gather will largely determine the amount that they advise you to list your home at. Obviously, you want to get the most out of your home. You don’t want to list your home for $100,000 less than comparable properties have sold for. In the same vein, you don’t want to overprice a property, as it’s one of the biggest hindrances to selling a home in the Bay Area. However, when your home is listed for the right price, there are still ways for you to sell your home for more than comps. In fact, it’s become even more common for homes in the Bay Area to sell for more than comparable properties in recent months. How do you sell your house for more than comps? These four tips can help.
A hot market is a term that real estate agents use to describe a market when homes are quickly being bought. Real estate, like every other industry in the world operates on the principle of supply and demand. When there are more homes on the market than there are buyers, prices drop, and homes sit on the market for a longer period of time. Why? Because there is too much supply and not enough demand.
Conversely, a hot market is when there are plenty of buyers, but not enough inventory. This is the perfect market for sellers, as it usually produces bidding wars. Hypothetically, let’s assume that you’re selling your home and there are only four other homes on the market. Additionally, let’s say that there are 50 people looking to purchase homes. When 50 people want to purchase a home but there are only five on the market, a bidding war (or bidding skirmish) can break out, and you can sell your home for more than comps.
A lot of people believe that marketing doesn’t matter when they’re trying to sell their home. In some cases, that may be true. For instance, homes in the Bay Area are probably going to sell, regardless of the marketing that is put behind them. The area is popular, beautiful, and has everything that people want when they’re shopping for a home. However, if you want to sell your home for more than comp prices, great marketing is imperative.
The ultimate goal behind a marketing campaign for your home is to make people believe that they need to purchase your home. What makes your home special? Why is your property better than the two properties that are for sale in the same area? Effective marketing creates a sense of anticipation and potential buyers believe that your home is the home that they need.
In a lot of ways, this principle revisits the first one that we discussed. When you list your home in a hot market, you’re more likely to be able to negotiate up. While you may list your home for $500,000 based on comparable homes, when you have multiple bids, you’re able to negotiate a higher price, which is the goal of anyone who tries to sell their home.
People pay more for a home when they believe that someone else wants to buy it. This natural sense of competition is ideal for home sellers. Remember, when you list your property for sale based on the comps that your real estate agent has provided, you’re not locked in on selling it for that price. Instead, you can negotiate higher prices.
The most effective way to sell your home for more than comp prices is to have a better home than other people in the area. Sure, you may have a 4 bedroom, 3 bath home just like the person down the street who is selling their home, but how can you make your home better than them. Sit down with your real estate agent and look for features of your home that make is special. Then you can discuss ways that you can invest in the home to make it even more special.
It may seem counterintuitive to invest money in a home that you’re planning to sell but doing so can put you in a position to get a higher offer. However, your investments need to be wise. Don’t spend $300,000 on your home so you can sell it for $300,000 more. There’s no positive return on that investment. However, if your agent and a trusted contractor tell you that you can spend $75,000 to increase your home’s value by $250,000, that’s certainly something that you should consider. For example, some markets will pay more for a gourmet kitchen. If investing in one area of your home can net a positive return, it’s a good move for sellers who want to sell for more than comp prices.