This week we're talking about how to analyze your home before it hits the market. In Business, they call this a SWOT Analysis. Which stands for Strengths, Weaknesses, Opportunities and Threats.
For context, this step is right after we talk about comparable sales in the neighborhood and understand the trends affecting values...things like how long a home sits on the market before it sells..
Analyzing a home in this specific way is great for when we start to understand who our buyer is, how we reach them, and what we SAY to them once we get in front of them.
So let’s get started:
The first step in the SWOT analysis is looking at the strengths of a house. An obvious strength is architecture. Right now, people are going nuts over mid-century modern homes. That's a good strength.
What about layout... Is the house all on one level? Does it have a 2-car garage, storage space, outdoor space, is it updated? Pool, view, good for entertaining? Make a list, and we'll come back to them later.
Strengths are easy to come up with. Let's try the next one... Weaknesses.
This is where we hit a nerve because nobody wants to talk about a home's shortcomings.
What ABOUT the layout? For some reason, certain styles of architecture can have pretty bad layouts. Craftsman homes in particular. You usually have to walk through 9 different rooms to get into the kitchen.
But maybe that has to do with the fact that 100 years ago, people bought these houses out of the Sears catalog and put them together themselves like a puzzle.
Anyways... How much space does the house have overall? Sometimes square footage can be misleading... I've seen some homes with a WHOLE BUNCH of rooms, but they're all really tiny.
Are there a lot of stairs? If you live on a hillside, not only do you have a lot of stairs inside, but usually you have to climb a bunch just to get in the house… Not the end of the world, but it is a weakness.
Here’s a big one… Does it have a small master bathroom? Or only one bathroom?
What about the neighbors’ houses, are they right on top of yours? Does anyone have the dreaded "blue vinyl sheets" covering a bunch of junk on the side of the house?
Write these down in a separate column. Your buyer is going to notice them the second they walk through the front door, so we might as well get ahead of it.
I like to think of opportunities as outside factors that we can exploit. This is why it really helps to analyze the neighborhood, and the trends, before we get to this.
Let's say you live in Los Feliz where the month of November is usually a pretty slow month for new listings, but fir homes that DO list during this month, they usually see great results...
If you're ready to hit the market in October, you may want to wait. Let that pack of new listings hit the market and go stale, before you come on... that way you can be the only show in town. Just a thought, but it can be a good opportunity.
This is especially true right now over ALL of Los Angeles. There are very few new listings hitting the market every week, but still a bunch of homes going into escrow. November is a great time to be on the market.
Sticking with Los Feliz real estate, if you live in The Hills North of the Boulevard, you should know that only 10% of the homes up there are 2-bedrooms. It's rare, so show it off.
As they say... "If you can't fix it... Feature it." … I like to think of weaknesses as "low-hanging fruit" for the right buyer. Especially if it's something that doesn't come along very often.
You can list it with a low price, and have people banging down the door to get it.
With opportunities, you want to start sentences with: "We are the only..."
Like this, "We are the only Spanish style home up here with a view... and a pool... and under 2 million dollars."
Last but not least are threats. Right now, the big threat is Interest Rates. They're going up…
Here's the situation: The higher the interest rate, the higher the mortgage payment, the less a buyer can afford, which affects the sales prices. Something to think about.
Another big threat is Seller Competition. Let's say you're going to list your home in April or May. Well, so are a lot of other people. I’m not saying you won't sell your house, but it can definitely affect your Buyer pool, your days on market, and your final sales price.
It can also be people who don’t even LIVE in your neighborhood, but still spend time up there… like Hikers! If you live up in the hills near great hiking, you’ve seen these maniacs put their car on two wheels going around some of those corners.
Imagine looking at homes and getting run off the road by one.
How to Use the SWOT Analysis
OK, so what do you do with this SWOT Analysis? First, Let's assume you've written them all down. So, now we find ways to leverage them.
Turn weaknesses and threats into strengths, and opportunities.
You're going on the market in May with everybody else, but you don't have a choice. You have to sell now.
You need to exploit the threat of your competition and be the "Bell of the Ball". Knock it out of the park with the marketing, then hit the MLS with a great low list price.
Pull out all the stops and steal the show from your competition. Pack the open house, have a party, encourage everyone to write offers.
This is turning Lemons into Lemonade.
But first, you need to sit down with your real estate agent and take an inventory of the tools you have to work with. Then, you can start to formulate the strategy.
OK, so that does it for the SWOT Analysis. Hope that gives you some things to think about. Tune in next week when we talk about doing repairs and upgrades to your house before you hit the market.