Selling property is primarily driven by marketing. The techniques are fairly similar but the considerations to make with different types of properties varies greatly. There are 3 basic categories of residential properties these can be thought of as high-end, mid-range and entry-level. Mid-range and entry-level are the most similar with high-end occupying what functions effectively as a completely different market. Within each of these market segments there are many complex decisions to make when selling your house including: Pricing, Timing, Repair/Remodel, Staging, Photography, Copy Writing, Advertising, Contract Comparison among others. Let’s try to take a look at several permutations to get at my basic conception of residential real estate marketing.
To get started, I would like to further complicate this by drawing a distinction between the quality of the home/grounds and the desirability of the location. So you may have a high-end home in an entry-level or mid-range neighborhood (this is often the case in a transitional neighborhood) or visa versa.
Let’s start with perhaps the easiest of all sales in any part of Boulder County: entry-level. I think the most important aspect to acknowledge first is that almost any place in Boulder County is above average in terms of desirability, with perhaps the exception of some parts of Longmont, even then it’s still a pretty nice place to live. In each city or community the entry level is a little different and we won’t have the space here to look at each, so let’s look at the city of Boulder as a good example and proxy for the 4 Ls (Louisville, Lafayette, Longmont & Lyons) and other towns and unincorporated areas. Entry level is really focused on pricing and clearly in Boulder County the city of Boulder is the epicenter of high value property with each town and other areas being judged in large part based on proximity & similarity to Boulder. I think of entry-level in the city of Boulder as anything up to around $600,000 this includes condos and single family homes. The condo market in this range is much larger, very few single family homes sell for under 600k currently, this is as of the spring of 2017 and of course these numbers will change over time.
In this market segment there is a lot of pressure from first time home buyers, people just moving to the area on a budget and investors. These homes are all in less desirable areas, typically away from downtown and other hubs of retail activity and to the east. The marketing of these places in general is pretty basic it goes something like this: “hey you get to live in Boulder so you better jump on it”. I am joking a bit about how little marketing goes into these homes, but only a little. If properly priced and marketed, these homes should sell for a bit more than the listing price and should be able to get under contract within a week or so.
When deciding on the price for an entry-level home the quality/size of the home will have a relatively small impact because quality/value of the neighborhood determines the largest part of the value of the home. It is not worth it to spend a lot on updates, but it can be worth it to do some affordable updates to the big draws, most specifically updates to the kitchen and master bath will be rewarded if kept to a reasonable budget and designed aspirationally. Your basic strategy here is find nearby properties that have sold in the past three months and list for the same price that those sold for, you’ll most likely get a little bump on the final number. You have to make sure your property isn’t overpriced. If your home is the most affordable of all the current listings (even if by just a little bit), you are golden. If your place is the most expensive, you are probably in trouble.
I can also tell you that staging is very important. If your house is staged and your competition isn’t, your house will fetch more offers and thus a better final price and a quicker sale. On the other hand if every other house is staged and yours isn’t, watch out! You won’t be getting any offers until those other homes are off the market, even in Boulder.
Because of the high number of buyers trying desperately to get in to Boulder, a properly priced home with a little bit of marketing magic sprinkled on top will win the day with multiple above listing price offers. This isn’t to say this is a flat-out no-brainer, just that with the right approach there is a very clear path and set of expectations that can be met 9 out of 10 times. We still have to do all the little things: make the house look comfortable, inviting and livable, pitch the positives of whatever neighborhood it’s in, advertise the property on the MLS and other appropriate venues and in the end make buyers think “oh, this place looks good, especially compared to the other properties on the market, let’s check it out!” When we are successful with this part the offers roll in and you will have your pick.
The mid-range home in Boulder can go either way, depending on the location. I generally define mid-range homes in Boulder proper as $600,000-$999,999, although that $1M barrier is really more psychological and it is deteriorating, soon mid-range will be above $1M if the market continues it’s current trend. If you have a more modest home in a desirable neighborhood (that is, westerly and/or close to retail centers) you can look to the high-end market as a possible guide depending on your own circumstances. If your home is in a less desirable location, then your market dynamics will work more like the Mid-Range segment, even if your home is large and well appointed.
Note 1: With regards to location, there are many little neighborhoods and micro markets that influence pricing in the larger towns, this is particularly true of the City of Boulder. Proximity to the mountains is one important gauge but there are many desirable neighborhoods that are not right next door to the foothills.
In the mid-range the dynamics are more similar to entry-level than they are to the high-end. This is because there are still a lot of people who can afford something in the $600k-$1.2M range than the $1.2M+ range. Clearly the higher the listing price the smaller the market and it does drop off pretty rapidly so marginal changes in pricing can have a big impact on the dynamics of the listing, showings and offers.
Some important differences between the entry-level and the mid-range do exist. I think the most important difference is that
buyers in the mid-range are much more feature conscious. Typical mid-range buyers have bought before and care more about potential issues in a house as well, usually avoiding problem properties. They value a home that is truly fully remodeled and will pay for the features because they recognize the time and costs that go into a quality remodel. The flip side of this is that they can easily spot poor remodels and won’t pay extra for something that needs to be re-done. Many will also consider fixer-uppers that are priced properly, so that they can do the remodel themselves and get the exact house they want.
Note 2: When I talk about the value of remodels, I am thinking of something that you would see in a contemporary design magazine. Open design concepts, indoor-outdoor living, high-end fixtures and finishes, clean lines. A good example is that in the master bath, the shower must have a so-called euro door (glass with no frame) if you don’t put this in your remodel plan you are wasting your time and money.
Again, proper staging is a must in this range. There is a lot of competition and a home that isn’t properly staged will be ignored by most buyers.
Homes in the mid-range can sell quickly or sit on the market for some time. There are fewer buyers and they are more selective about what they want in a home and the buyer typically is not in a huge rush, they’d rather make the right decision than a fast one. This means that successfully selling a home in this range is all about fit. The thing is that the buyers won’t know if they’ve got that fit until they come see the property and this means that my job is to get as many qualified (financially) buyers in to view your property as possible. Then we hope that one or more of them find the home is a fit for them.
The other important thing sellers can do with a property to give it the best chance to sell at the highest price is to load it up with features. Each buyer will have features they must have and others they’ll ignore completely, but we’ll never know exactly what each buyer prefers. How we handle this is to go through an ordered list of the most important updates and features and add all of them starting from the top until you have reached your budget. Of course, this assumes you want and need to update the home to maximize sale price. The decision matrix on whether you should do this or not is a bit complex and is greatly affected by location. While working together, we’ll explorer all the possibilities and define potential upside as well as risks and limitations.
If it turns out that remodeling/updating is not in the cards, for whatever reason, there are still plenty of things we can do to enhance the prospects of your property sale.
Luxury homes (highly desirable location and a high-quality home) are such a different dynamic that I have dedicated a separate page for this discussion. If you think your home falls into the luxury end of the scale please see my page about selling luxury homes in Boulder.
The biggest mistake I see sellers make is valuing their home significantly higher than any buyer in the market. Typically this is either based on an over-valuation of location or home quality or both. I highly recommend that you get multiple professional opinions about the value of your home (be sure to ask for an honest evaluation and do not try to sway their opinion) to help you set proper expectations.