As Silicon Alley Insider’s West Coast Editor, I need to be in the centre of the technology industry, the San Francisco Bay Area.
That meant moving from Seattle, where I’ve lived for the last decade. Seattle’s got Microsoft and Amazon, and a pretty good start-up scene, but it can’t compare with Northern California in terms of diversity and breadth.
My wife and I bought our home in Seattle in 2003. The national housing market is an ugly mess, but Seattle never had the spike in prices that sun belt cities like Las Vegas and Phoenix did, so prices haven’t fallen as far. (You can see the difference clearly in this interactive chart of average housing prices in the 20 Case-Schiller index cities since 2005, via the bearish Seattle Bubble blog.)
We were fairly confident we could sell the house for an acceptable price within three months. That would have gotten me down to the Bay Area around the beginning of January.
It actually took two days to get an offer at full asking price. We put the house on the market on October 5th. On the 7th, we had a signed contract pending inspection from a prequalified buyer who was in a hurry to move in. The inspection was finished by the 10th, and our final contract was signed on the 12th. We closed today, November 8th.
Most surprisingly, we sold it for a profit of about 30%.
Everybody’s been asking me how we got so lucky. So I put this slide show together to show what we did right–and almost did wrong.
One great choice we made was to live within the city limits of Seattle. While the market varies greatly by neighbourhood, and sometimes even by block, prices in the city have generally held up much better than prices in the suburbs. That's because Seattle was basically full 20 years ago--there's not much more space to build free-standing houses in the city.
But over the last decade, developers have carved out huge new tracts in formerly wooded areas about 30 minutes from downtown, like Auburn and Snoqualmie Ridge (shown here from the top of a nearby mountain). A lot of these houses are now sitting empty, depressing prices in the surrounding areas.
When we were shopping in 2003, we briefly considered buying a condo in the urban core neighbourhood of Capitol Hill. Our lender actually talked us out of it, pointing out that we'd only own the air inside the walls and that condos typically didn't hold value. (This sounds amazing, but apparently there are some responsible lenders out there...or were back in 2003.) 'Buy a house with four walls,' she said.
She turned out to be exactly right: downtown Seattle has a glut of abandoned condos, and townhouses aren't doing very well either. This townhouse development down the street from our house started going up in late 2008, right before the crash. It's still vacant and unfinished.
Within Seattle, some neighborhoods are much hotter than others. Bryant-Ravenna, where we lived, is one of the hottest. A similar house up the street from us sold for $30,000 more than ours in only six days. Another house one block from us sold in a month...but they were asking $200,000 more than we were.
One big reason: last year, the Seattle School District made a change in the elementary school selection process, moving from a weighted blend of factors to strict geographical proximity. All of these houses are within a couple blocks of Bryant Elementary School, which has consistently rated as one of the top schools in the city. It also feeds into solid middle and high schools. Our friends in some other parts of the city aren't so lucky.
Microsoft had to lay off 5,000 people in 2009, but the company is in one of the few thriving sectors of the U.S. economy, and still employs about 30,000 people in the Seattle area.
It's also created a lot of other jobs: I covered the company as a technology analyst for 10 years, and I know patent attorneys, health care professionals, and even personal chefs who owe their livelihood to Microsoft.
Our neighbourhood is about 20 minutes away from Microsoft headquarters by car, or a little longer by bus or the free employee shuttles that run every morning.
My wife and I interviewed several real estate agents. One of them had reams of printed reports showing us how bad the Seattle housing market was. She told us we needed to get rid of almost everything in our house and put it in a storage unit before we could even think about showing it. (Impossible: we have two young children and no time.)
Then, she said, if we priced our house low--about $60,000 less than we actually sold it for--we might be able to sell it within a month. She also scared us by saying that no houses sell between Thanksgiving and Christmas, and decided to mention that we'd never fit our couch into any house in San Francisco.
She was completely 100% wrong.
The agent we chose has been selling houses since 1997. She knew our neighbourhood very well. She printed out detailed recent sales data from our neighbourhood--not the United States, not the entire city of Seattle, but just our area--and gave us pricing recommendations if we wanted to sell the house immediately, in one month, or in three months. She also had great contacts to help us get it ready to sell.
I spent one morning driving looking at comparable houses on the market. One--and only one--had been sitting on the market for more than 100 days. And guess who the listing agent was? The relentlessly negative agent who we rejected.
A lot of bozos joined the real estate industry to capitalise on the boom. Now they're struggling. If you're using an agent, choose one who's been around for a while and knows your neighbourhood well.
Our agent recommended a professional stager, and it's the best $200 we ever spent.
This woman spent two hours in our house helping us declutter, move furniture, and rehang pictures. She also told us the hard truths we didn't want to hear. Like: there must be absolutely no children's stuff in any of the front rooms. (People love their own kids, but not a stranger's.) And: in the kitchen, box everything that doesn't match the colour scheme or doesn't have a matching mate, and hide the sponges and paper towels. The result made us wonder why we hadn't gotten somebody in years ago to make our house more livable.
Our agent also had the place professionally photographed, which shouldn't be overlooked. This picture of our staged living room and dining room is amazing--a wide-angle lens makes it look huge, and the colours are pitched all the way up. Our stuff never looked this good...and probably never will again.
My wife and I aren't handy enough to renovate a complete fixer-upper, but we were on the lookout for bargains.
The house we bought in 2003 was perfect: it had a lot of obvious but easily fixable flaws. For instance, this deck used to have the power line from the street running right over it, about six feet above the surface. Right after we moved in, a Seattle City Light inspector told us that this wire was 23 years old and was meant to be a one-year temporary fix. She couldn't believe that nobody had been killed.
It cost a few thousand bucks to move the wire back against those pine trees, but it raised the value of the house immeasurably by turning unusable space into the deck where we spent almost every summer evening. We also had the old linoleum in the kitchen covered with bamboo, put some new windows and skylights in, and painted most of the interior. These are the kinds of little and relatively affordable fixes that can raise the value of the house by far more than they cost. Full kitchen and bathroom remodels are often recommended, but they're much more expensive and might not pay off.
Most of the houses in our neighbourhood are selling very quickly. This one has been on the market for a couple months. It's a lovely house, remodeled top to bottom on the inside. But it's got about the same square footage, bedrooms, and bathrooms as ours...and it's priced more than $150,000 higher. As we learned from our agent, you don't want to lowball your price too much or everybody will think there's something wrong with it. But you also have to be realistic.
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