Dave:
Welcome to the BiggerPockets Podcast. I’m your host, Dave Meyer, and with me today is Henry Washington. So today, we have an awesome show for you. And Henry, I think you’re going to like this one. We are going to be talking about a side of real estate investing, home buying, that we don’t talk about that much on this show, which is selling your home. We love to talk about buying.
That’s how you grow your portfolio. That’s how you find the house that you’re going to live in. But selling is actually, when you make all the money, and you return all that capital that you’ve put into your home. So it’s a pretty important part of the process. So to help our listeners with this topic, where you’re bringing on the trends expert from Zillow, her name is Amanda Pendleton. Henry, can you tell us what we’re going to learn about today?

Henry:
Absolutely. We’re going to talk about what’s going on in the real estate market in terms of who are the people that are actually buying in this market. Are there people buying? Who are the people that are actually selling in this market? What are the demographics?
What do they look like? We’ll talk about interior and exterior design hacks that anyone can use to increase the value or sales price of their home. We’re also going to talk about how do you capitalize on the eyeballs that are viewing your home both in person and virtually.

Dave:
Sounds like a super exciting show. And for anyone out there who’s listening to this, whether you’re an investor, a home buyer, a home seller, you’re going to want to pay attention to some of the really practical tips that we’re going to cover because these are things that you can do today. These are actionable things that can really net you a positive financial benefit in the near term. So with no further ado, let’s bring on Amanda Pendleton from Zillow. Amanda, thank you for joining us today.

Amanda:
[inaudible 00:01:42] so great to be here. Thanks, Dave.

Dave:
Let’s just start with some basics here. For people who aren’t as up to speed on some of the trends, some market data, can you tell us a little bit about housing inventory? Maybe tell us what it is and then where it sits right now.

Amanda:
So housing inventory is basically how many homes are for sale on the market, right. When we look at housing inventory, we look at active inventory, which is all the homes that are on the market. We also look at new listings. That’s how many homeowners are entering the market listing their home for sale. So buyers do have a few more choices available than last year, but we’re still down 25% from pre-pandemic levels.
As of January, that’s our latest data available. A total inventory is up about 3% from a year ago. New listings to the market are up nearly 6% nationwide. I should mention in January, we did see sellers show up much stronger than last year in Southern California and in Florida. So new listings in San Diego were up 28%. Annually, they were up 22% of Miami. They were up 20% in Riverside, California. Dallas, Atlanta, Minneapolis are also seeing at least 15% more new listings this January compared to last January.

Dave:
Do you have any why things are starting to increase, and particularly in those cities?

Amanda:
Yeah. I think when we look at Southern California and Florida, these are warm weather places that weren’t dealing with the deep freeze I think the rest of the country experienced in January, and I think those places had extremely low inventory levels. So sellers were looking around and saying, “You know what? I don’t have a lot of competition. Maybe I’ll put my home on the market now and see if I get any bites, and then I can always leave it on through the spring home shopping season.”

Dave:
Okay. And so do you then expect that we’ll start to see some more inventory as the rest of the country tends to warm up and follow this general trend?

Amanda:
That’s certainly the hope, right. We’re about to enter the spring home shopping season, and we do typically see a pretty big boost in inventory between February and March, so we’re looking to see a lot more inventory start coming online this month. That said, interest rates are still keeping a lot of homeowners back, right. Rate lock is still a real thing, but we think that’s starting to thaw as well. Zillow recently did a survey of homeowners.
We do it every single quarter, and what we found last June was that homeowners who had a mortgage interest rate of 5% and above were far more likely to say that they were going to consider selling in the next three years compared to homeowners who had a mortgage rate of 5% and below. Well, now it’s about the same. So regardless of interest rate, about 21% of homeowners say that they plan to sell in the next three years. So we’re starting to see rate lock loosen. Maybe homeowners are getting used to these 6% interest rates, and maybe they will be more willing to list their home for sale this spring.

Henry:
I tend to agree with that. It does feel like there’s some normalization going on like people are just getting used to what rates are, especially as we’re seeing them kind of stay flat over the past several months, and life starts life, and people don’t always move because it’s the right financial decision, right. They have tons of other factors that play into those things.
But what I’m seeing in my market is homes that are done well and priced well, gone. It’s like they’re not on the market very long. Homes that aren’t done well or people still have… sellers still feel like they want to get 2021 pricing, and they’ve got them listed for the moon, those things are sitting for 2, 3, 4, sometimes five months. Is that… Are we seeing that nationwide?

Amanda:
You’ve nailed it, Henry. Homes that are priced and marketed correctly are finding a buyer, and they’re going under contract in 29 days nationwide. Now, homes that aren’t priced right, maybe they don’t have all the desirable features, or they’re not being well marketed, they’re lingering on the market for months, and that’s pushing up the typical age of all listings to 72 days.
I do want to say, in fairness to listing agents, it’s really hard to price a home right in today’s market because there’s just so few recent sales out there available as comps. So it’s no surprise. We’re seeing one in five homes have a price cut. That’s what we saw in January. These are pretty necessary price corrections, right, that bring a seller’s expectations down from 2021 levels to be more in line with today’s market conditions.

Henry:
We know there are people looking. People are getting used to it, but kind of what are the demographics of the people who are typically looking and shopping in this particular environment?

Amanda:
I’ll paint a picture for you of the typical prospective buyer who’s out and about in today’s market. So the median age of a prospective buyer today is 39 years old. They’re an elder millennial. About three and five were born before 1980, so they’re 43 years old or younger.

Henry:
You just called me elderly.

Amanda:
Hey, I’m with you. I’m an elder millennial too. Look, I’m in the same boat. Look, one in five are 20… are in their 20s or younger. Only 10% of prospective buyers today are baby boomers, so we can’t blame them. The typical prospective buyer is likely to be married, is likely to live in the South, and 70% of them have a dog. They’re more likely to have a dog than a child.

Dave:
Wow.

Amanda:
It is what it is. I don’t know. The vast majority, 75%, are looking for their primary home. Only 11% are looking for an investment property. And the number one priority for a prospective buyer in today’s market is affordability. More than half of prospective buyers are in the market today because they need a more affordable home. They’re moving for affordability over a job, over being close to friends and family, over lifestyle.

Dave:
And could you tell us actually about maybe the profile of people who are selling, because that seems even more rare that people are opting to sell? So who is choosing to actually list their market for sale right now?

Amanda:
It’s like you mentioned, the number one reason for selling is life events. The baby’s coming or you’re retiring or you’ve got grandkids on the way or you’re just… you’ve got to move for a job. That’s what’s driving people to sell right now is life events because, especially if you’re holding onto a mortgage rate that is 3%, you are able to refinance and grab those historically low mortgage rates. You don’t have a lot of motivation to get back into the market unless you absolutely have to.
So today’s sellers who are in the market they need to sell. Chances are they have a lot of equity built up in their home, so they’ve been in their home for many years, and then they’re able to take that equity and transfer it into their next property. So maybe they don’t have such a big mortgage, and rates may not be such a big factor.

Henry:
Yeah, I’ve got a 2.3% interest rate, so I may die here.

Dave:
No. 2.3. If you die before me, let me assume that mortgage from you, Henry.

Amanda:
Mortgage rate bragging is also a real thing in today’s market.

Dave:
I think that might be the lowest one I’ve ever heard.

Henry:
Yeah, it was all by pure luck. It was no planning at all. We just happened to get it.

Dave:
Okay, so this is a wealth of useful data, and I, of course, am having a great time listening to it, but we do have to take a quick break. And when we come back, Henry and I are going to ask Amanda if now is a good time to sell. We’re also going to talk to her about which home improvement projects boost your home value and which ones you should skip, and what the exact right paint color is. That’s selling homes at lightning speed right now. That’s all coming up right after this break.

Henry:
Welcome back, investors. We’re here with Amanda Pendleton, the trends expert at Zillow, talking about everything you need to know to sell your house for top dollar. Let’s jump back in.

Dave:
So we’ve talked to Amanda a little bit about what’s going on in the general market, and I think we talk on the show a lot about buying property. But given the low inventory, I’m curious if you think now is an advantageous time to sell a property.

Amanda:
Sellers today are still going to get a really strong price, right. Because we know with low inventory, with prices the way they’re at, this is a great time to sell. I think a lot of sellers were looking back to 2021, 2022 and thinking, “Did I miss my moment? Did I miss my window?” Well, you know what? Home values are still up 3.6% over last year, so your home is probably worth more now than it was in 2021, 2022. You’re still going to get a really strong price for your home as long as it’s priced correctly and marketed right.

Henry:
Would you say that home sellers probably need to pay a little more attention now to the product that they present to the market? And so making sure that they’re taking advantage of the few buyers that are out there and ready to pounce so that they don’t miss those opportunities go make some changes later, and they’re having to relist?

Amanda:
100%. Yeah, you have to be particularly savvy in today’s market. I think the first thing to do is obviously you want to be hiring a listing agent who’s an expert, who has the expertise in your area because chances are there’s not going to be some easy comps available, right.
They’re going to be pulling comps from other neighborhoods from places that may be a little bit farther afield. So you need a true professional who’s going to have a much better sense of what your home is worth and who’s going to know the kind of improvements that you may want to consider before you list your home for sale.

Dave:
Can you tell us about those improvements? Because I think everyone listed is probably very curious about what kind of improvements generate the best ROI.

Amanda:
Would say yes, you do want to make improvements, but you want to be incredibly strategic when you’re selecting those projects, right. We know most sellers complete at least two projects before they list their home for sale, but if you’re not doing the right two projects, you’re just not going to see the return on that investment. So instead, I’m going to recommend two low-cost projects. Combined, they average a little more than $5,000 if you hire a pro to do them. And the first one is interior painting. We know a fresh coat of paint just makes everything look shiny and new, and if you’re strategic about the colors that you select, you could sell your home for even more.
So Zillow does a paint color analysis, and our most recent analysis finds that buyers are willing to pay about $2,500 more for a home that has a dark charcoal gray kitchen. Dark gray outperformed white in every single room that we tested. So it is a really good option, even in the bedroom and the bathroom, if you feel like, “Oh, dark gray is way too much for my kitchen.” Maybe you don’t have enough natural light, you don’t think it’s going to look good there.
But I’m telling you, dark gray covers a lot of imperfections, and it feels modern. It feels contemporary. The second project you should take on as landscaping. Outdoor space we know is more important than ever to post-pandemic buyers. It’s something they’re looking for. If you clean up your yard, so trim back your bushes, add flowers, add bushes, add shrubs, stage it as functional space. So put out a dining table or some lounge chairs, you’re going to see a return on that investment because a buyer’s really going to understand how they can use that outdoor space.

Dave:
Just for everyone listening and not watching on YouTube, Henry, during that literally got out a pad of paper and is now writing down. Do you have a hex code for the exact paint color that Henry could go break to Home Depot right now?

Amanda:
Yeah, Henry, I’ll shoot you over a couple of recommendations for the exact paint color and brand that you might want to consider.

Henry:
This is perfect timely information as I’m doing a big flip project, and I was going to say asking for a friend. When you say dark charcoal paint, are you referring to the paint on the walls or the paint on the cabinets?

Amanda:
Yeah, it can be either one, but this particular analysis was looking at the paint on the walls.

Dave:
Just one question, Amanda. Have you been doing this analysis for a while because I feel like a year or two ago, kitchens, white kitchens we’re really in, and now you do see these darker ones. Does it change frequently?

Amanda:
It does change. It certainly doesn’t change as quickly as fashion does, which is the good news. That if you paint your home a certain color today, it’s probably still going to be on vogue in five years from now. But yeah, we have seen some changes. Last year, it was all about, or rather the year before, we conducted this analysis, it was all about light blue. Everybody wanted a spa-inspired light blue bathroom, or light blue bedroom and white and light grays were much more popular.
Everybody wanted light and bright and airy and white walls sort of had that boho thing going as well. So yeah, it was a big change when we started to see some of the darker colors. Dark navy blue in the bedroom performs really well. Dark charcoal gray performing really well, and performing well in the common spaces of a home too, not just in the private spaces like a bedroom or a bathroom.

Henry:
Are there any updates or tweaks people can make that maybe don’t cost any money that would be of benefit to them in this market?

Amanda:
There’s a couple of things that you can do to sort of boost your home’s sale price, boost your home’s value that don’t cost you anything. And I think the first thing that you can do is recognize that screen appeal is really the new curb appeal. We know a vast majority of home buyers are starting their home search online, and it’s a lot like online dating, right. If they don’t like your picture, they’re not going to want to see your house in person, right. You’re going to swipe and move on. So your online listing is really where you have to put your best foot forward, and expectations have changed.
Buyers have really come to expect this full media package that includes the high-resolution photography and the drone photography, and you’ve got to have a virtual 3D home tour and an interactive floor plan. Listings that have a virtual tour and an interactive plan can get 69% more views-

Henry:
Wow.

Amanda:
… and 80% more saves on Zillow than listings without one. And you can make one for free. You can use your phone, you can use Zillow 3D Home tour, and create a 3D home tour on your own. Or even easier, when you’re hiring your listing agent, ask if they have a listing showcase subscription that’s going to give them all the tools to put together that really beautiful media package and make your listing shine on Zillow.
The second thing I would say that’s going to cost you nothing is to highlight the right features in your listing description. It really does matter. So certain features you highlight can signal to a buyer that your home is desirable and is up-to-date, and as a result, those features can help your home sell faster and for more money. So we do have some new research on this. It’s not even out publicly yet. You’re hearing it here first. But it finds that if you’ve got soapstone countertops and you mention them in your listing description, your home could sell for 3% more than expected. Home buyers also love outdoor showers. They’re willing to pay 2.6% more for a home that’s got one.
And if you have a beverage center, this is not a wine fridge, but it’s very similar, your home could sell for 2.4% more. On the flip side, there’s features that could signal that a home is tired or maybe it’s dated, and that could lower a home sale price. So features like laminate or tile countertops can reduce your home sale price by 1%. So I’m not saying run out, rip out that tile countertop, put in soapstone. The research didn’t look at ROI. Instead, if you have these desirable features, you want to flaunt them in your listing description because it really is a signal about everything else you’ve got going on in your home.

Dave:
Got it. That’s a really important distinction. That it’s not ROI that these necessarily generated a return on investment, but it generates excitement. So Henry, if you were about to go build an outdoor shower made of soapstone and putting a beverage center inside that shower, you might want to slow your roll.

Henry:
Are you in my head right now?

Dave:
I saw you writing again. I know what you’re doing.

Amanda:
Can we just normalize beverage centers and showers because that would be so fun?

Henry:
Right.

Dave:
I’ve definitely followed this pattern sometimes with rental properties that I own where you keep it sort of at rental grade, and then when you go to sell it, you sort of make some of these upgrades like you were talking about. But I think I’ve made some mistakes where I’ve overdeveloped or over-improved some of these things in the past. So, curious, are there things that don’t work or maybe even have a negative ROI?

Amanda:
Think you want to avoid highly personalized projects, especially if you’re thinking about resale. So skip the statement tile backsplash, or the wild wallpaper and the entry. I think most sellers instinctively know this, right. I think the bigger risk is investing in projects that are not going to deliver on ROI. And I think that the biggie is kitchen remodels.

Dave:
Really.

Amanda:
Kitchen renovations, on the whole, offer some of the worst returns on investment. This is a really pricey project, and it typically only delivers 50 cents on the dollar in resale. And Zillow’s research finds that fewer than one in five recent sellers say that they thought their kitchen renovation actually helped sell their home. So that’s a project you want to skip. You just want to leave it to your home’s next owner.

Dave:
That’s super interesting. I wonder if it’s just because kitchen spaces are just so personal. Everyone wants their own thing, so it’s kind of hard to guess what someone else might want in a kitchen.

Amanda:
Yes. Kitchens are highly personal because we use our kitchens in different ways. Some buyers, like families, they want the kitchen to be the hub of the home. Some people want the professional chef’s kitchen, and some people would rather order takeout, and they don’t care about all the improvements that you put into that kitchen.
So I think if you are going to put your money somewhere, think about a bathroom renovation. A mid-grade bathroom remodel is going to get you about a buck 70 on every dollar you put in. And it’s because we kind of use the bathroom the same way, right. And particularly for a powder room for a guest bathroom, you’re not going to turn off too many buyers with your upgrades.

Henry:
That is an interesting perspective. I haven’t heard that take, but it does make sense. And when I think about a lot of the houses that I have sold, the kitchen, some have been remodeled to a T, and some have not. And I don’t think that’s ever really… I don’t think I’ve not sold a home because of the kitchen… a kitchen wasn’t remodeled. But I can say, I’ve had a lot of bad feedback around bathrooms. So that tracks. That’s interesting.

Dave:
All right. We have to take one final break, but when we come back, Amanda tells us one of the most bang-for-your-buck changes that you can make on the outside of your home. So stay with us.

Henry:
And we’re back. Dave Meyer and I are here with Amanda Pendleton, getting a beverage center full of insight on what will make you the most money when you’re trying to sell your house. So let’s get back to it.

Dave:
So we’ve talked a bit about the interior of the home now, Amanda, but you did mention earlier that landscaping was really valuable. That’s a broad topic. So is there anything in particular that’s useful there?

Amanda:
You really want to think about making your outdoor space more functional. So think about adding a patio if you don’t have a patio space. Think about adding outdoor dining. Outdoor kitchens perform particularly well. They are associated with pretty high sale premiums, but of course, that’s a big investment, right. Something that you can do that’s a lot more affordable and that’s really appealing to buyers right now is adding a fire pit.
A fire pit kind of brings the whole family together for s’mores night. You can entertain around a fire pit, and you can install one yourself. It doesn’t cost a lot of money. You can pick one up at Home Depot or wherever, and it’s a really desirable feature. This is something that buyers are looking for. They want an outdoor space where they can entertain, where they can relax with their family, where they can spend time.

Dave:
I can attest to this personally because I own an Airbnb, and there is no fire pit at this house. And every time I go there, there is a fire pit there. Someone has built or made a fire pit every single time I go there, and I have to go out there and take all the stones and throw them back into the woods because this is in Colorado, where it’s wildfire territory.
There’s a reason there’s no fire pit. But I’ve seen firsthand how much people absolutely love fire pits. They can’t get enough of them, and they’re cheap. If they’re just going out and going to Home Depot and buying these things, it must cost like a hundred bucks because they’re just leaving them at my house.

Amanda:
This is a really affordable upgrade you could make, and it could translate to a more than 1% increase in your sale price when it’s time to sell. And that’s something that you could use just to stage your home for sale, right. Even if you’re not putting it in for your own enjoyment, that’s something that’s going to be really appealing to buyers.

Dave:
And how would this sort of external renovation compare to internal in terms of ROI?

Amanda:
You shouldn’t really think about, “Should I invest in my exterior? Should I invest in my interior?” Invest in projects that make your home more functional. That could be inside, that could be outside. That could be adding that outdoor patio, that fire pit, creating an outdoor entertaining area. Or it could be taking some unused space inside your home and turning it into a home office.
In today’s housing market home shoppers are looking for functionality over style. Remember we talked about affordability being the number one priority for prospective buyers today. They’re looking to get a home they can afford that checks as many of their boxes as possible, and if you make it easier for them to check those boxes, you’re going to have an easier time selling your home.

Henry:
This is absolutely great. So when I get ready to finish up this project, and I’m getting ready to get it ready for sale, you can just go ahead and send me your email, and I’ll flip you some pictures, and then you can guide me on what needs to be done.

Dave:
Yeah, you should start a consulting service. That would be amazing.

Amanda:
I don’t know if you could afford my hourly rate, Henry, but we can make something work.

Henry:
Oh. That’s probably fair.

Dave:
All right. So Amanda, assuming you make the right upgrades and you put it… your house on the market, are there any last tricks that our listeners should know about that might help the performance of their listing and eventual sale?

Amanda:
Screen appeal is everything. We talked a little bit about the importance of professional photos and drone photography, virtual 3D home tour, interactive floor plans that can seriously increase the number of eyeballs on your listing on Zillow. Now, beyond that, a lot of the old rules that help make a home look good in real life also apply online. So the first thing, declutter, clean, depersonalize rooms with a minimal amount of items are going to look more open and more appealing in photographs.
Remove or open up your drapes, let the natural light in. Oh, and here’s a hack. You should replace all of your light bulbs with warm LED bulbs because it’s just going to make sure your home is well-lit and it’s bright. The second thing is you want to consider optimizing your layout for the camera. You may love how your rooms are arranged because you’ve got a great distance between the couch and the TV, but your furniture placement might not make your home look roomy on screen.
So take some pictures with your phone, see if the current layout photographs well, and then start moving things around and see if it helps open up the space. And then the third thing is consider virtual staging. Virtual staging uses software. It digitally adds the furnishings on top of your space so it can make a home look like it’s furnished without having to move your furniture or renting real furniture. It is just a more affordable option to real staging.

Henry:
Yeah, virtual staging is getting much more popular and much accepted now. I think when it first came out, people were getting a little bit of a… they felt like they were being catfished when they get to the house, and they don’t see that staging, but I think people now understand what it is, and aren’t so offended if they get there and don’t see the furniture. But one thing you said that I want to recap and make sure people heard is you said it’s important to make sure that people have a skilled real estate agent because there’s not a lot of comps that they’re going to have to run comps.
But also, I just feel like there are not as many buyers as there were a couple of years ago. And so if you get interested parties into your property, you really have to capitalize on those eyeballs. And a skilled agent who both understands the market but also understands what people want to see and understand some of these things that you’re talking about, I think could really go a long way to helping you get that thing sold by capitalizing on the first people who are interested in your property.

Amanda:
I agree 100%. I think everybody’s got their wife’s sister’s, cousin’s, mother’s coworker who has their real estate license, and they think, “Oh great, I’ll hire them.” This is not the market for that person. This is a market where you want to do your research. You can go to Agent Finder on Zillow. You can check out customer reviews ratings. You can look at recent sales, make sure this person is selling homes in your neighborhood, make sure they’re selling the types of homes that are really comparable to yours.
And then do some interviews. Take your top three picks that you’ve found online and talk to them in person. You want to make sure that your styles mesh, that you’ve got a similar communication style, that you vibe with them, that you feel comfortable with them, and that they’re the person who’s going to hold your hand through this process and they can give you a competitive edge. It could actually boost your bottom line if you’re hiring the right agent.

Henry:
Another pro-tip. If you’re looking for a good agent outside of the BiggerPockets Agent Finder is call your title company. They’re closing transactions every day. They know who the best real estate agents are because they see them on a daily basis with their clients at the closing table. So I bet they could give you a great recommendation on a very savvy agent.

Dave:
Amanda, thank you so much for joining us. This was a really enlightening episode. I don’t think we’ve ever done a show quite like this on the BiggerPockets Network. So thank you for bringing this information and data to us and we will link to the home report and all this information in the description below if you want to learn about Amanda and all the work that her and her team are doing at Zillow.

Amanda:
Thank you. It was my pleasure, Dave. I appreciate it. And good luck with your flip, Henry.

Henry:
Thank you very much, and thank you for being better at data than the Data Deli Dave himself.

Amanda:
Never, never.

Dave:
All right. Well, thank you all so much for listening. I thought that was a great show. Let us know what you think of this show, either in the… if we’re on YouTube in the descriptions or leave us a positive review. This is sort of a new type of information we’re bringing to you.
And if you like it, we’ll make sure to bring back Amanda sometime in the future or someone like her with similar sorts of trend information. He’s Mr. Henry Washington. I’m Dave Meyer for BiggerPockets, and we’ll see you guys soon.