How to Make an Extra $50k When Selling Your Home
Volition was featured on HGTV.ca to share strategies for getting top dollar for your home – you can check it out here.
As usual, we have more to say. Read on for the extended version!
To get top dollar for your home, you need to be strategic. We’re going to go beyond the “regular” advice (i.e. staging, remodelled kitchens, curb appeal, etc.) and challenge some of the preconceived assumptions around getting top dollar for your home. Any run-of-the-mill Realtor can throw something up on MLS and hope for the best… What separates an average realtor from a great one is their strategy and their market knowledge, and their ability to create a personalized Market Strategy for your home. Also keep in mind: Investor Realtors make the best Realtors! Investor Realtors work with regular home-buyers and home-sellers as well, and are trained to have higher-order thinking skills and possess the ability to see value where others can’t, leading to better outcomes and higher sale prices for you as the seller.
- Realtor Strategy: You need to be strategic about who you select as your Realtor. Your Realtor is the quarterback for the entire transaction, so don’t hand out this responsibility lightly. And definitely don’t go with someone just because they are “cheaper”: you may very well be stepping over pounds to pick up pennies. The $5,000 you may save could mean that you’re leaving $25,000 or even $100,000 on the table – it’s not always “all things equal” because you may not be getting the absolute top sale price for your property. You wouldn’t want a discount heart surgeon; why would you settle for anything but the best on the biggest financial transaction of your life? Do your due diligence and find the best; you owe it to yourself. What makes the best Realtor? Keep reading to find out.
- Market Strategy: not to be confused with Marketing, a market strategy will help you understand the inner workings of your particular market, and give you deep insights into the current market environment, including important considerations such as supply/demand, mortgage interest rates, new government-imposed vacancy property taxes, pending tenant law policy changes, etc. – and more importantly, what this means for you and selling your home. A good market strategy would then create an ideal target buyer persona and determine how to best position your home in light of the market conditions, and then cater all activities toward trying to attract that particular buyer profile. If your expert Realtor develops a personalized Market Strategy for you and your home, then everything else flows naturally from this… marketing, renos, staging, descriptions.
- Reno Part 1 – Reno Strategy: Now that you know who the intended audience is, does your home already fit your particular buyer profile’s needs, or do you need to make upgrades to cater to their desires? Don’t just make changes on a whim, or because you read an article about it. Your Realtor expert should be able to clearly identify with laser precision what fixes or upgrades need to be done in order to attract the right buyer and what increased selling price you can expect as a result. It’s even better if your Realtor expert has the renovation team internally (for example, Volition Properties has done many $25k kitchen upgrades resulting in an increased $75k sale price for clients!) or at least has partners who will do the renovations under the supervision of your Realtor expert.
- Reno Part 2 – Best Reno Bang For Buck: That begs the question: will spending $25k on a kitchen remodel always yield an extra $75k in selling price? Will I get a better ROI if I finish off the basement or if I improve curb appeal? Contrary to popular belief, there is NO one size fits all answer – every property and every market is different. Perhaps your property is a starter townhouse and your target buyer needs a move-in ready home because they won’t have any money left over for renos, in which case it makes sense to do renos prior to listing and you would see the ROI in the increased sale price. There are lots of simple, general, easy to understand, but wrong, answers to this very popular question. Get expert advice from your Realtor as your starting point.
- Reno Part 3 – Knowing When To Do Nothing At All: Sometimes, you just aren’t going to get the money back, and the ROI isn’t worth it. In a hot sellers market, perhaps you just need to get it listed ASAP to catch the hot market. Timing could be everything, especially if you’re trying to get sold prior to new stricter mortgage regulations coming into effect, or other proposed changes that could affect the market. Or maybe you do nothing because in your particular property in your particular neighbourhood, buyers require a blank canvas to put their own finishing touches on. In addition to reno costs, other things to consider are time/energy spent, additional holding costs, living through renos or moving out, approvals/permits, and additional headache that you may not wish to take on.
- Listing Strategy: It’s not just maximum exposure that you want, you want the right exposure. Your Realtor will create a Listing Strategy, which will demonstrate how they plan to target your ideal buyer, while simultaneously getting you maximum sale price. What is your pricing strategy, should you have an offer date, and is this best served as an Exclusive Listing? Should you be advertising in foreign language publications and marketing to overseas buyers? How is your Realtor going to target their list of private buyers/investors? Your Realtor’s marketing plan should demonstrate how they will be highlighting the property against current market needs (i.e. during Covid, outdoor space, walk-out/rooftop patios, and dedicated office nooks demand a huge premium). Keep in mind – much of the “advertising” that regular Realtors do is really just to generate more business for themselves, and does very little to actually sell the property for a higher price.
Putting an Investor Hat On
- Be Flexible: Buyers may value certain things that aren’t important to you as the seller. The key is to hone in on those aspects, and offer them to the buyer – especially since it’s no skin off your back. This could include offering flexible timing on closing, or allowing the closing date to be extended at the buyers’ sole discretion (to a limit, that is). Perhaps if the buyer is planning for an extensive renovation, you could allow unfettered access to the property, allow permits to be drawn up and submitted prior to closing in your name, and then transferred to the buyer at closing. You’re only limited by your imagination – Volition’s Investor Realtors have the depth of expertise necessary to conceive and negotiate these considerations to get you top dollar.
- Be Creative: Creative deal-making can be an excellent way to get an extra boost in sale price. If you don’t need the entire proceeds from the sale, you could offer the buyer a Vendor Take Back, a form of Seller Financing in which you act like the bank and receive regular interest payments by lending the equity in your home to the buyer… and if this is not your Principle Residence, a VTB reduces your capital gains tax by deferring it over many years. Other forms of creative deals include Rent-To-Own, Agreement For Sale, Sandwich Leases, Joint Venture with a contractor prior to sale, etc. Caution: these are advanced-level strategies; make sure you are working with an expert Investor Realtor like Volition on these.
- Get Your Rents Up Before You Sell: As an investment property, one of the primary ways that a buyer valuates the property is by looking at the rents it generates. The higher the rents, the higher the ROI and therefore the higher the property value. This means staying on top of rent increases every year. Depending on your province, this also means investing in an area where there is a more transient tenant profile where you can increase the rents upon tenant turnover. This also means looking for creative ways to boost income sources; for example, coin-operated laundry, renting out the garage separately, renting out parking spaces separately, etc.
- Create Value For The Buyer: this isn’t necessarily for the novice home owner, but you can create tremendous value though change of use. Examples include putting in a basement rental suite, getting approvals for an extension or a laneway suite prior to sale, changing a single family home into a legal luxury triplex, severing/assembling a large plot of land for development use. If your land is well-positioned for a land assembly by a big developer, perhaps band together with your neighbours in a united front to demand top dollar. Change of use can, but doesn’t necessarily always involve, expensive renovations but time/energy will definitely be put into the planning process
- Work With Your Tenants: Investment properties can be more challenging to sell due to them being tenanted. This often means that you can’t stage the property, access can be restricted, sometimes the units can be messy due the tenants, coordination of schedules can be difficult, etc. One of the best tactics is to incentivize tenants: gift cards to Tim Hortons or Starbucks often work well in exchange for cooperation with showings, keeping their unit tidy for showings, vacating the unit for showings, agreeing to house their pets at their parents’ place for the listing period, etc. More extreme action could include asking them to temporarily move out for the listing period and you put them up at an AirBnb as a mini vacation for a week, or maybe if you need the property completely vacant you could negotiate a mutually beneficial scenario. Volition Investor Realtors are experts in navigating these tricky scenarios and mediating these discussions with your tenants for you.
- Is It All About The Money?: Although as sellers we always want top dollar, it’s also worth considering the non-monetary aspects that are important to you. A quick sale may be an important factor for you. Minimized headache might be your most important consideration. Perhaps reduced disruption to your lifestyle is paramount. While maximum sale price is typically the #1 goal, have a frank discussion about this with your Realtor expert about what your priorities are, and this should be incorporated into your Listing Strategy as well.
Ready to sell? The Volition team is here to help. Get in touch with us at firstname.lastname@example.org