How to Sell A House Quickly, and At a Profit

One-year-old Anthony on floor duty in the kitchen of our old house, circa 2003

We sold our Cupertino house today.

I'm not sure whether our method is the best, but for what it's worth, here's how we sold it quickly, and for a profit:

  1. Buy a crappy, run-down, termite-infested house at what turns out to be the start of one of the greatest housing booms of all time. (I recommend, however, that you know it's termite infested before buying it; we didn't.)

  2. Over the course of the next few years, remodel, pouring more money into it than you paid for the whole property to begin with. Include ample amounts of blood, sweat, and tears. Lots of tears. (Do save the receipts, at least for the money you spend, because it increases your basis for tax purposes.)

  3. Allow enough years to pass so that you clearly miss the peak of the housing bubble, and consider selling your house as the market seems to be starting a death spiral. Be sure to have an over-inflated idea for how much the house is worth.

  4. Fill out all the disclosure forms, but where they have a 2-inch line to answer a question about, say, plumbing issues you might be aware of, write “see attached” and provide reams of information about anything and everything you might suspect. Be very open. (After all, you remember how screwed you felt when the lies of those that sold you the house became apparent.) In the end, supply a report in excess of 5,000 words.

  5. Feel bad when your real-estate agent's first-impression instinct is that your desired price is at least $100,000 more than he feels it might be worth in the market.

  6. Feel worse when, after really checking out the house, doing a lot of research, and consulting with other experts, he suggests an asking price that's more than 2.5 times lower than his initial off-the-cuff impression.

  7. Feel even worse, still, when you add up the 1.5" thick stack of receipts from the remodels and realize that if you sell at the offered price, you'll actually take a loss on the property. Shake head in wonder.

  8. Give away, sell cheaply, donate, or throw away virtually everything you own in the house. Then spend $3,000+ to have “stagers” set up the house with furnishings tastefully arranged to make the house feel inviting.

  9. Put the house on the market on a Wednesday, and have 98 real-estate agents visit it during the “Broker Tour” the next day.

  10. Hold an open house on both Saturday and Sunday, to virtual mobs, with something like 200 people (or groups? I'm not sure) going through. Create lots of buzz.

  11. Prepare to listen to offers on Thursday afternoon (because it's Friday morning where you live now). Hope for multiple offers.

  12. Feel slightly vindicated price-wise when there are eight offers, most of them well over the asking price (three were not serious, offering substantially less than the others).

  13. Of five serious offers, one was highest, but three, at essentially the same price, were clustered in a group not far behind. So, give that cluster a second chance to be highest, and wait an hour or so for followup offers.

  14. Two from the cluster submitted followup offers that were higher than the initial highest. So, go back to the initial highest to give them a second chance as well, but when they decline to raise their offer, go ahead and pick the higher of the followup offers and sell the house to them.

  15. Note with minor satisfaction that the house sold on the first day you would even listen to offers. Officially, the house was listed on the market for 8 days.

  16. After subtracting commissions (don't get me started on the nature of how real-estate professionals are paid for their services) and other fees, realize that with the higher-than-listed price, you actually made a slight profit on the house.

  17. Try not to realize that the margin is so slim that if you take into account the property taxes you've paid over the years, your profit disappears to about a break-even scenario.

I find it hard to fathom how we could basically break even having owned the house during the housing market like we've seen since we bought it in 1998. I can't help but wonder how much we would have sold it for had we not spent a dime on improvements. Certainly, we would have gotten less, but not that much less.

As it turns out, there are two ways I can look at the bright side: one is to ignore the market, and concentrate on the fact that we got out of it all that we put into it (at least money wise — part of our soul will likely stay for some time). Another way is to conveniently forget about what we put into it, and just be happy that we were able to ride the phat part of the housing-boom wave.

(Is it okay for someone my age to use “phat” instead of “fat”, or is that against the Laws of Hip?)

Fumie and I were thrilled that there were multiple offers, but it was also very stressful. We rememberer exceedingly well the feelings we had putting together an offer on a house, the twisted-knot in our stomach as we waited to hear back, and the crushing feeling of having our offer rejected in favor of someone else. It was a horrible, horrible experience. Later we went on to buy this house, but that in no way makes the first experience feel any better.

All the agents (of the serious offers) presented their clients' offers well, making sure that we knew all about the client and how much they wanted to raise their kids in our beautiful house. Two of the prospective buyers even presented in person, telling us how much they loved every aspect of the house. One even called her husband and put him on her cell-phone speaker phone so I could listen in from Kyoto via my real-estate agent's speaker phone, about how he liked the electronic enhancements I'd done. He even commented appreciatively about the tactile transducer that I had bolted under the living-room floor. (It shows that he really read the disclosures I wrote!)

(Those of you who might have ever been to a movie night at my house will know what a tactile transducer is.)

It was gratifying to hear all this praise lavished on my house, and about the nice families that were interested in it, but half of me wishes that I didn't hear any of this stuff. It turns a financial transaction into an emotional one. From an emotional standpoint, I would have been thrilled for any of these nice families to have it (heck, two of the families had kids the same age as Anthony, to within a week or so).

But only one could get it, and I was now faced with having to pick, knowing that the others would feel as crushed as Fumie and I did back when our offer didn't get picked. In any case, the offer that was highest won, but we feel bad for the other families.

Fumie and I also remember how yucky it felt during our second attempt to buy a house (when we bought this house that we're now selling). Our initial offer was countered, and our counter was countered back. The last counter back from the seller (who turned out to be lying cheats) was to eek out an extra $1,000. They risked losing the entire sale (and much goodwill) because they wanted to up the price by less than 1/5th of one percent. What tightwads.

So we didn't want to be like that. Going back for a second round was entirely reasonable, and perhaps it would have been reasonable for a third round, considering that there were eight initial offers and still a lot of interest after the 2nd round. We didn't want to be jerks, so we left it at that. There was almost certainly still money on the table, but it wouldn't have been worth it, emotionally. We'd rather be able to sleep well at night.

In the end, it was the family with the cellphone-calling-wife and electronics-appreciating husband whose offer was the highest. I hope they feel thrilled. I feel good because we got more than our asking price, but realize that they probably have some measure of concern about what they spent because they “paid well over asking,” but I can't wonder if this is a result of a too-low asking price. I wonder what the emotions would be like had we listed it for my initial way-too-high price, and then come waaaaaay down and ended up selling for what we sold today. The end dollar amount is the same, but would the emotions?

Hindsight tends to be pretty good, so it's easy to second guess my real-estate agent. But in the end, I feel fortunate that we could work with him (Marc Roos). Back when we were looking for a house to buy, he personally walked us through more than 60 houses, and was entirely patient with us, and we learned to trust both his skill and integrity. Those feelings were only strengthened during this selling experience. I highly recommend him.

All 3 comments so far, oldest first...

Woohoo! Congrats on the sale.

— comment by Jeremy Zawodny on September 30th, 2006 at 6:51am JST (17 years, 5 months ago) comment permalink

“Is it okay for someone my age to use “phat” instead of “fat”, or is that against the Laws of Hip?”

Well. . . it might be okay if you use it correctly. . .;)

— comment by Sam on October 11th, 2006 at 10:42am JST (17 years, 5 months ago) comment permalink

I dont know why kids like mopping the floor. Is it common? Recently I visited the kids section in Bic-Camera Kyoto, and they were selling a range of mock mopping things, including a kids vaccum cleaner costing about 3000 JPY. I guess these kids are fascinated seeing their Mom cleaning the house.

BTW, the emotional attachment stuff really touched me. How the heart (emotional) and head (logical) does not go well together most of the times, in business.

— comment by britto on January 9th, 2009 at 9:31am JST (15 years, 2 months ago) comment permalink
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