Selling My Silicon Valley Home For Nearly $1 Million Over Asking
In 2015, my partner and I bought our first home together in Silicon Valley, California. Our home was zoned for some of the best schools in the country, so the plan was to live in the house at least until our child would finish high school. Never in our dreams did we even think of selling our home just 7 years later and relocating to another state. But plans change and my partner and I are the type of people who know how to pivot when it makes sense. So today, I will share how we sold our home for nearly $1 million over the asking price!
Buying The Home
Admittedly, I was very hesitant on purchasing the home at the time because we purchased it for nearly $1.8 million. After roughly $450K in down payment, we were left with a mortgage and hefty property tax bill that put our savings rate at a level I wasn’t comfortable or happy with. Fortunately, because we were very early in our careers, our incomes rose exponentially over the years and were able to swallow the housing expenses.
For those of you wondering what the mortgage and property taxes were, we were paying about $5,000 per month in mortgage payments and close to $25K per year in property taxes. That’s about $7K per month on average. Ouch indeed!
Compared to what new home buyers in the neighborhood are paying today, though, We were quite fortunate to be paying that for our home. New home buyers are paying nearly twice as much now due to skyrocketing home prices in the area. Yikes!
Modernizing Our Home
When we first purchased the home in 2015, we didn’t move in right away. Instead, we replaced the linoleum floors in parts of the home with a combination of hardwood and tile. We also did a full kitchen remodel with brand new appliances and additional counter and cabinet space and tore down a non load bearing wall to open up the floor plan to create a great room. We also fully remodeled our owner’s bathroom and tore down some walls to create a large walk-in closet with a custom closet organization system.
A couple years later, we added custom closet organization systems in 2 other bedrooms and replaced the sliding doors with beautiful mirrored ones. We also upgraded the entire HVAC system by replacing our furnace and added dual-zone air conditioning to the home, a luxury many homes in the neighborhood do not have since most were built in the 60s and 70s.
In 2019, we redid the entire exterior of the home to install pavers and artificial turf in both the front and backyards with artificial turf. We also updated the landscaping around the home to add colorful trees in the front and an emperor Japanese maple tree in the backyard, all of which turn beautiful colors in the spring.
Suffice it to say, we made significant upgrades to modernize our home and make the nearly 50-year old home enjoyable to live in. Every upgrade we made, we always kept resale in mind. In my opinion, everything we did added value to the home.
Deciding to Sell the Home
When we decided to relocate to Texas, we considered our options for our California home. We could either keep the home and rent it out or we could sell it and unlock hundreds of thousands in equity to invest. Homes in our neighborhood were renting for about $5K per month and given that the mortgage and property taxes alone were about $7K, keeping the home as a rental just didn’t make financial sense.
Additionally, when a primary residence appreciates more than $500K (and we knew that ours definitely had), you can use the home sale exclusion rule and exclude up to $500K from capital gains taxes when you sell your home. If your home appreciates more than that, you’re going to have to start paying capital gains. Keeping the home as a rental would obviously prevent us from selling it and taking advantage of such an amazing tax advantage. The exclusion alone is why it’s usually a bad idea to convert a primary residence into a rental.
Our Listing Strategy
Before we relocated at the end of last year, we met with our realtor to decide on a home-selling strategy. We agreed to do some relatively minor cosmetic improvements to the home before listing, like repainting the interior to make the home look new, adding recessed lights to the formal living and family rooms to brighten up the home, and painting the front of the home (no need to paint the other 3 sides of the home since buyers are unlikely to notice them). We also decided to wait for the spring to sell our home because it’s usually the hottest time of the year for real estate. Our list price was going to be $2.5 million, which would be well above our $1.8 million purchase price!
Waiting a few months comes at a hefty cost since we’d be paying apartment rent in Texas while holding our primary residence in California simultaneously for an additional $7K per month for 3-4 months. Having to hold the house for 3-4 months would set us back somewhere between $20-30K, so waiting till the spring meant that we were betting that the sale price would be at least $20-30K more than selling in the winter.
However, on the 1st Friday of January, our realtor called us and asked if we wanted to list later that day. I didn’t know what to say, because that certainly took me by surprise and was many months sooner than planned. He shared that the plan would be to list that Friday, have an open house on Saturday and Sunday, then receive offers on Wednesdays. Why Wednesday? Well, in confidence, he shared that he was waiting for a comparable home that he was selling to close the following Tuesday, 1 day before we’d accept offers. And that comparable home was going to sell for a whopping $3.8 million!!
So you know what we did? We pivoted and decided to list our home for sale that same day! To be successful, you need to know when it makes sense to pivot and make bold decisions quickly.
The Home Sale
All weekend long, my phone was going off the hook with Ring doorbell notifications. I had to snooze alerts for both of those days because it wouldn’t stop buzzing! My partner and I left our realtor to what he and his team do best: selling homes. We didn’t want to check in and bother them. All we heard from them that weekend was that the open houses were like a zoo and that it was “like trying to get on a ride at Disneyland.”
Monday and Tuesday were complete radio silence. That was to be expected since we told all buyers we were accepting offers on Wednesday.
Come Wednesday morning, 2 offers showed up in my inbox. And boy were we shocked! Both were well above the $2.5 million list price.
Offer #1: $3.05 million. No contingencies.
Offer #2: $3.2 million!! No contingencies.
Right off the bat, we were going to sell at least $700K above asking! An hour later, more offers started trickling into my inbox.
Offer #3: $2.95 million. No contingencies.
Offer #4: $3.2 million again! No contingencies.
Offer #5: $2.8 million. No contingencies.
At this point, we were over the moon! With 3 offers above $3 million, 2 of which were at $3.2 million, we expected at least one of them to outbid the other! 30 more minutes passed before we received our 6th offer.
Offer #6: $3.2 million for the 3rd time! No contingencies.
Now we were really shocked and couldn’t have been happier! We still actually hadn’t spoken to our realtor all day, and that was fine with us. We could tell he was in his element, so we left him and his team alone to continue to work their magic.
An hour passes, and the buyers with offer #6 decided to revise their offer upwards from $3.2 million to $3.285 million! This was the point when my realtor finally called and wanted to make sure we had seen all the offers on our house. The conversation was just 1 minute long, and he told me that he was working on a 7th and final buyer for us, but he wouldn’t have it in front of us for 2 more hours.
2-3 hours pass, and just as our agent said, a 7th offer comes in.
Offer #7: $3.3 million!! No contingencies.
The list of all offers is as follows:
$3.05 million
$3.2 million
$2.95 million
$3.2 million
$2.8 million
$3.285 million
$3.3 million
5 offers above $3 million, and 4 of those were above $3.2 million. We were floored.
After this 7th and final offer came in, my realtor called to tell us what the next steps are. He wanted to counteroffer everyone back at $3.71 million to make it look like we had an offer in the $3.25 to $3.5 million ballpark and try to get us to $3.75 million or more! We couldn’t imagine receiving an offer even higher! But, we were so wrong.
My partner and I didn’t receive any updates until the middle of the night because we fell asleep by 10pm. Not too long after that, our realtor attempted to call and text me. But my phone was on Do Not Disturb mode so I didn’t find out till I woke up around 4 AM in the morning (for whatever reason, probably anxiety and excitement from the sale). When I looked at my phone, my realtor’s text read, “Hey, are you awake? I got you $3.4.”
That meant $3.4 million! Holy moly is right! And we bought the home about 7 years prior for “just” $1.8 million. Talk about appreciation, not to mention insanely good sales skills on my realtor’s part!
So that morning, we officially signed the forms to sell our home for nearly $1 million over the asking price for $3.4 million! Coupled with a 30-day close and no contingencies, we had absolutely nothing to complain about.
Takeaways
My partner and I couldn’t be more thrilled about the sale price of our house. We will certainly miss the home and neighborhood, but we are also super excited about making new memories in our new, custom home in Dallas!
With a $3.4 million sales price and a $1.8 million purchase price, that’s a whopping $1.6 million in appreciation! Will we pay taxes on all of those gains? How will we deal with such a massive tax bill, and what will we do with those proceeds? Well, you’ll have to wait for a coming blog post, where I’ll talk about all of that!
I’ll also compare which investment was better: Our primary residence or the stock market? It’ll be even more interesting given the large stock market correction we experienced early this year. So be sure to subscribe below to find out!
