I’m a pretty active Realtor selling here in Marin County and the North Bay. This month I have closed two deals and I’ve got two more in escrow that should close by the end of the month, so I am qualified to comment on this crazy market through my professional experiences. This past week on Trellis Drive in Terra Linda one house listed for $700,000 closed for $689,000 and another listed at $715,000 closed for $790,000. Why?
I looked to my 11 year old daughter for the answer because she can be so insightful. She said, “Always remodel before selling!” The $790,000 house was fully remodeled and the $689,000 house wasn’t. The less expensive house was in a far better location with much greater upside at the top of a knoll with awesome views while the more expensive house sat adjacent to Saint Mark’s school and the value had been completely maximized. Surprisingly location wasn’t the driving factor on Trellis.
My daughter is right on a surface level, a seller should try to do as much as they can before putting a home on the market, especially in 2013. Yet this doesn’t explain why I closed a deal in Inverness for $625,000 which was more than $100,000 over the asking price on a property in obvious and complete disrepair. So properties that are both fully remodeled and completely trashed are attracting crazy high offers, but not all properties are. What drives the inflated final purchase prices?
I have come to realize it’s not a question of what, but whom. Who is driving these prices so high in 2013? A standard question when evaluating the value of homes that I sell for banks is, “Who is the most likely buyer?” I could add, “How large is that likely buyer pool and what do their resources look like?”
In Inverness I received six offers and all were all cash. The people buying out there right now have a lot of money and they aren’t afraid to use it. The buyers for homes on Trellis Drive had loans, but the difference between them was one that didn’t need to do a thing who was willing to pay a premium for that, and another who would need to do work and was expecting a discount.
The conclusion I’m coming to is that old axiom ‘beauty is in the eye of the beholder’. So how can potential sellers put themselves behind the eyes of buyers and anticipate maximizing their value either by doing very little or completely gutting a home and redoing everything?
I think it comes down to the area and anticipating buyer perceptions. In Terra Linda right now homes with ‘potential’ are getting near their asking price. Homes with maximized potential are going significantly over asking even in less than desirable locations.
So it’s no longer a simple question of supply and demand, but what type of supply and what type of demand that is driving the market higher and how best to take advantage as a buyer and seller?
