Selling a nice house for a good price is not unusual for Palo Alto. What is unusual is when a home sells for over $1 million more than expected. A sale like this requires impeccable timing, inspired presentation, and subtle negotiation, plus a sixth sense for reading people and the market.
Martha and Scott originally bought their five-bedroom home in Old Palo Alto as the ideal place to raise their children. Five years later—as imminent empty nesters—they decided to move permanently to their second home on the coast.
They had purchased the home for $2.7 million at the height of the pre-bust market in 2007. When it came time to sell, they said, “We knew Mike Dreyfus was our man. We hadn’t seen any other Realtor with same the depth of knowledge for this area.”
After decades in high-end real estate, Mike knows that valuation is a subtle balance of both art and science. “You’re trying to predict something,” he said. “I have a bunch of emails in my inbox telling me buyers want five-bedroom houses in Palo Alto. I also know there aren’t any for sale.”
Mike also knew the local market was gaining momentum, and that imminent high-profile public offerings such as Facebook could affect local real estate.
Navigating between this hard and soft data, Mike initially put the house at $2.8 to $3.2. The sellers were thrilled.
Mike and his sales team, Summer Brill and Ashley Banks, got to work. They re-painted the home with contemporary colors to appeal to their target buyer. They changed out the lighting fixtures and brought in expert stagers. The full-service, team approach appealed to the sellers: "It was like this machine came in, and it all happened within a week."
With the home prepped, Mike tuned his radar back to the local market. Overbidding and multiple offers were occurring, but at a lower price level. "The leap of faith I had to make was that what was happening in the $2 million price level would translate into the threes."
He moved the range up, to between $3 and $3.5 million. He then decided to test his intuition, and see if a buyer would pay a premium on the private market. Mike emailed his personal mailing list, an exclusive collection of top agents in his area.
His inbox flooded with frantic queries—including a pre-emptive offer (a request to make an offer prior to the house coming on the market). “I thought, holy moly—my original big number was not the big number.” He decided to put it on the public market after all.
The open houses—and a broader print and online announcement—built the buzz. The day of the offers, three bidders showed up. The final offer: $3.860, $365K over the original asking price, and $1 million over Mike’s initial valuation.
The sale was a win-win for everyone. "The buyers were ecstatic," the sellers said. "The Realtor was jumping up and down when they got the deal."
Now comfortably settled into their new home, the sellers couldn’t be happier with the result. "If you are buying or selling a house in Palo Alto, we know of no better Realtor than Mike," they said. "His team approach makes it easy for anybody to work with them. Really, we think you would be lucky to get them.”
Martha: When we bought this house about five years ago we weren’t avidly looking, but we saw it for sale right across from where our girls went to school. We had taken Mike’s daughter on vacation with us. As we were dropping her off we came to realize Mike was a real estate agent.
Scott: We were working with another Realtor and we didn’t really know when we first started out that we wanted to be in Old Palo Alto.
Martha: They were accepting offers on a Tuesday. We asked Mike’s advice about how much we should offer for it because seven people were bidding on it. He said, “This is what I would do.” We were the top bidder and got the house! Five years later, Mike had gotten even more developed around town, and we just knew he was going to be our man.
Scott: When we sold our first house, we were in the room listening to the offers that came in. It was clear that having a Realtor who really knew the market and knew the other Realtors in that market would be able to get us an extra ten or fifteen percent on our house.
When we got ready to sell our house in Palo Alto we knew that we wanted a Realtor who was an expert on that particular local area. We kept our eye out and we hadn’t seen any other Realtor who has the depth of knowledge that Mike has for that particular area of Palo Alto. He’s a demonstrated expert.
Scott: His understanding of the market. It’s not just a track record, but being on top of the market situation. In this particular case it was essential because the market had just recently taken off, and if you weren’t a Realtor in a particular area you may not have aggressively gone after the price Mike went after.
Martha: The research he’s done over the past 10 years: charting the inventory at different months and knowing that over the last three years not as many houses have been coming to market and people were holding on to them and waiting for the big pop and weren’t really sure. It’s amazing all that research he does that you wouldn’t think real estate agents would be doing.
Scott: I’m actually more surprised that more Realtors don’t do that. If you are selling a $3 million asset, you should really understand the market, but it seems like a lot of Realtors are out there shooting from the hip. They take the price that’s out there and then try to negotiate on the price rather than understand the market.
Scott: The Realtor we used to buy our house in Palo Alto was more reactive. He wanted to give us some incentive and he wanted to close the deal and I’m not clear that he really understood the market. So we were happy to talk with Mike during that process. If we hadn’t talked to Mike when we were going through the process of buying our house it’s very likely we wouldn’t have been the high bid out of seven offers.
And the same thing of the seller with our previous house we sold; many of the other Realtors who attempted to buy it from us had not done the research. Their clients lost out on getting the house at the right market price.
Once we felt confident that he knew the market, we kind of just handed the whole process off to him, let him decide what’s the right time to go through all the different milestones. We had faith in whatever he and his people said we should do.
Scott: We had bought the house at $2.7 million, but it was appraised downwardly at $2.4 million about a year and a half before we sold. You read in the paper that the housing market has all these foreclosure problems. I had no idea that the Palo Alto market was taking off. I was going to be happy if I could sell it for what I bought it for.
Martha: And I was going to be happy because we put in about a half a million dollars in enhancements for the bathrooms, painting, and the floors. I wanted to get that back and Mike said, “What if we could do that and more?”
Scott: He had another house that had sold recently in Old Palo Alto and he was going through his head about how this house compared with that house. He started out in the $3.2 and $3.3 range. I was thinking “Great,” because in my own head it was going to be somewhere between $2.7 and $3.0 and there was no way it was going to get over three.
Then Mike thought more about it and he said, “We will put it on the market at $3.499. I don’t know if I can get it, but that’s what we should do.” Initially he made it clear that he thought that was a stretch goal. Then there was a while there he was testing it out with buyers he already knew were looking around.
Scott: He sat us down and explained to us what was going on in the market, that there was lack of inventory as opposed to excess of demand. And because of that he thought it was important to be early to market as opposed to waiting for houses to start spiking and getting a flood of people trying to take advantage of that. But he also said he was not so sure how that was going to end up as there would be a lot more houses on the market.
He wanted to launch it early enough so we were the only one on the market, but he also wanted to wait as long as possible because the market was heating up. So it was clear that was making him nervous. The house was probably ready to go on the market a couple of weeks before he actually put it on the market.
He originally might have pushed it off another week, but because the market was heating up, ultimately he thought: “Even though it’s sub-optimal because not everybody was back from break, now is the time to go.”
Martha: They said that some people can’t really see the house as their own if it’s got too much of a personality to it. And they gave a bunch of stories about how people want to keep the staging furniture because they like the way it looks. We have been visiting open houses over time so we realized that there is something to this.
Scott: Our previous selling Realtor did a good job of educating us so we were already comfortable that if you are going to sell this multimillion-dollar asset, putting in a thousand or two to clean it up makes a lot of sense.
Martha: The thing I really appreciated that it was like this machine came in. Summer had the color scheme and the painter and she just scheduled it. I like Mike’s model where he has people like Summer who is really efficient and organized. So Mike could be freed up to totally be doing the research and the schmoozing. That just makes so much sense to me.
It was great having her figuring out things, but yet not going overboard. She said, “We need to change these lights, but you don’t have to paint the girl’s rooms because they’re fine.” We had a fence that went all the way around the house that had some pieces that were falling apart. Summer had someone who came in and made localized repairs rather than having to spend the money to put in an entire new fence.
And the fact that they have contacts with a colorist and a painter and they know how to get all those people in right when they need them. And it all happened within a week.
When we came back from our vacation, it was like it wasn’t our house any more. It was totally different. That was pretty exciting actually.
Scott: He said the market is heating up and Facebook is going to go public. And that once you go into the multiple buyer scenario it scares people away, but the serious ones are going to step it up a little bit. Which was exactly the case.
He really didn’t want to take an offer before he had a chance to have multiple people look at it. My sense was that they were coming in a little bit over asking when they were just trying to buy it on the private market, but once there were multiple bidders they knew they had to come in higher than that to win it. These people wanted to buy it. They had been looking and they were willing to bid it up.
I think he worked the other Realtors really well. Our experience with the Realtor who sold our old house that she did job of setting expectations with the other Realtors on what they need to bid at in order to win if they were really serious.
My sense is that Mike did the same thing with the people that ultimately bought our house because the number that they came in at was about the same percentage over the asking price that Mike told us we needed to go in and use when we bought the house originally.
When we were going through the whole bid process Mike wrote down on the back of his business card what he thought the house would go for. He didn’t show it to us but had it face down on the table and then after all the bids came through he turned it over and it was within ten thousand dollars.
Martha: It was three offers as it turned out and it was pretty interesting. Two days before one couple had a check out in the car and they wanted to buy it right then and there. And then Summer said, “No please come to our office the day of the offer.” So we knew we had that buyer.
Scott: One of the buyers was located in Manhattan and really didn’t understand the local market. They were stock market traders for hedge funds and had their own pricing model and so that’s what they bid. The couple who lived locally understood that the market was hot and that they needed to go as far above asking price as they did to finalize the deal.
I think Mike was sure who was going to buy the house before any of the bids came in. He is talking to the Realtors and vice versa and has a very good understanding of the attributes of their clients. Mike has been through the process enough to know who is serious and who isn’t.
Scott: They were ecstatic — the Realtor was jumping up and down when she got the deal! I was ecstatic as well, and there was a mound of disbelief that the house sold as high as it did.
Martha: I think we were excited because we knew we had sold it at a price we originally hadn't even thought possible. You couldn’t get a loan for that amount based on its appraised value.
Scott: The reality is that we were so ecstatic about moving to the coast that an awful lot of our focus was on the final touches to the new home down here and we had really handed this thing off to Mike.
We were confident that sooner or later it would sell. We weren’t expecting it to sell as quickly as it did. We were thinking it was probably going to be on the market for at least a month or a month and a half. A home around the corner was on for a while and it seemed like they eventually got what they needed.
Martha: Everything he did he got right.
Scott: I think it is the research he does. He really understands the market and he is connected to the other Realtors so he just does what you would like for a Realtor to do as he works the market. He just gets the house sold. Buying a house would be the same thing: If I wanted to buy a house in that area he would be the one I use because he would know how to get the house that I wanted.
Any time in the near future, Palo Alto is going to be a seller’s market. So if you are going to buy a house in Palo Alto you need to have a Realtor who understands the market and understands how to work with the selling Realtor to let you know exactly what you need to do if you want to buy a particular house. And Mike has the wherewithal to do that where a lot of other Realtors don’t.
Martha: Yeah, he does and he is super confident about it. It’s not obnoxious or cocky, but he’s just like your brother. Like a big, kind brother.
Scott: It's more than just the numbers. We have seen that with other realtors who come up with just numbers, but he uses those numbers and really good sales skills. He takes those numbers and his explanations to the other Realtor as to how the market has changed and how it’s heating up and why they need to move quickly. And it’s all grounded in fact and so the other Realtors love it because they can go back and give that to their client.
He knows what’s been available, what’s going to become available, the other people that are looking. And the current trends in the market. The location and what you are interested in. Do you need a big yard for the children? Do these come on the market much? Do you want your kids to walk to school?
Scott: How high it sold. The second would probably be how quick it was to go through the process and the third thing was how quickly it sold. And how easy it was to go through all this.
Martha: I think from originally thinking could we get $2.5 back and then lo and behold $3.8. It’s just kind of — wow.
Scott: Well, I would say that if you are buying or selling a house in Palo Alto you need somebody who understands the market intimately. And I know of no better realtor than Michael for having that level of knowledge. The team approach makes it really easy for anybody to work with them, and get a house bought or sold.
Martha: I think you would be lucky to get them. Really, I don’t think you could find a better team.
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