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Real Estate Fundamentals
1) Stop being a homeowner; start being a negotiator
Your home is your pride and joy, but the next guy coming in is always looking for a deal and may not share your enthusiasm. Also, they have probably looked at, or are about to look at, between thirty and forty other properties before making a decision to put in an offer.
Itemize the true value points of your property before you speak to prospective buyers. Be sure you know some statistics regarding the appreciation of home values in your neighborhood, what separates your home from the rest on the block or the other condos in your building, and anything else that distinguishes your propertys value from the rest. If your presentation has a solid basis in sound logic your chances of receiving your desired price increase dramatically.
2) The value of your property is relative to the market
What you think your home or condo is worth and what the market may bear are two different things. Base your research and your figures on the square footage of your home and the square footage of the property before setting your sale price. Once youve established those figures, factor in any unique features your property may have that the surrounding properties do not; cul-de-sac location, oversized backyard, fireplace, etc.
3) Have your comps (comparable sales) ready
The foundation of real estate values is based on comps or comparable sales. Speak to your neighbors or conduct your own research through country records to find out the most recent sales prices for six similar properties in your immediate area. Comps from across town will do nothing for you. Remember, the operative word is comparable. Do your homework and average at least six comps together to come up with a true median price for your home. The most effective way, of course, is to hire a licensed appraiser.
4) Pricing strategies
Everything comes down to how fast you want sell your home, how much money you have into it, and how much you want to make. Everyones situation is unique. One homeowner may have 90% of their homes value financed while the guy next door has owned his property cash outright for the past ten years. In some cases homes are sold so owners can move on to bigger properties in and in other situations people are transferred to jobs in another state so they are time-pressed to sell. Evaluate your situation and set your figures accordingly.
5) Reasonable prices yield reasonable buyers
As in business and in life, like attracts like. If you set a reasonable price for your home you will most likely attract reasonable offers. If you want $400,000 for a $250,000 house, the road ahead may be rocky. Be reasonable and remember that in order for someone to buy your home, the deal has to make sense for all involved parties.
6) Never get emotional and be patient
So your home is listed for $425,000 and someone offers you $350,000. The worst part is that they tell you why. Dont get upset. There has always been a tremendous opportunity to make money in real estate and in the last ten years this fact has only intensified. The best strategy is to be calm, rational and counter with what you believe to be a fair price or simply decline the offer; another one is bound to come along.
7) The first steps in preparing a home for sale
If you believe your home is presentable and ready to sell then move forward. There are two important things to keep in mind; always keep a clean house and keep anything that may be deemed offensive out of site. The biggest turnoff to a prospective buyer is a dirty home. Professional buyers wont even notice this but the fact of the matter is that most buyers are not real estate professionals. Cat litter boxes, full garbage cans, food smells and a variety of other non-issues can kill your sale. Once your home is branded the stinky house by the local real estate community you may have a problem.
Keeping an immaculate home and throwing a few scented candles here and there can mean a speedier sale and an extra $20,000 in your pocket.
8) Never over improve when selling your home
Try to stay away from extensive renovations if you are about to sell your home. Once renovations begin it becomes difficult to show your home and even more difficult for the prospective buyer to visualize the final outcome of the work in progress. If one of your bathrooms is a little outdated or the place could use a new roof you always have the option of offering the buyer a credit so they can get the work done themselves. Dont complicate a simple situation.
9) Some minor repairs make all the difference
There are no absolutes in real estate when it comes to home improvements. If the lighting fixture in your kitchen ceiling is horrid or just gives off bad lighting, replace it if it can be done for a few hundred dollars. The same goes for switch plates, faucet handles and door knobs. These are inexpensive items that can be replaced in a matter of minutes that can make all the difference in the world. Last but not least, trim all overgrown hedges, plant a couple shrubs where appropriate and replace bad sections of sod. Once again, these are minor details that have tremendous impact.
10) The color consideration when selling your home
If you want top dollar for your home and are unsure if the current color scheme is going to turn away potential buyers, take a few hours out of your schedule and visit the nearest subdevelopment in your area. Model homes are typically designed and decorated with the input of a professional interior designer who knows more about neutral color schemes than you can imagine. Take some notes and even go as far as asking for paint chips. Most developers will readily provide these because prospective buyers need them to match furniture, carpeting and artwork. You dont have to go to design school to think like an interior designer. If after your evaluation you believe your home could do with a fresh coat of paint or even a total color conversion, then do it if your budget permits. If youre confident in your homes appearance and want to put in on the market as is you always have the option of painting it later if you dont get the offer youre looking for.
11) The model home factor AKA living in a dull home during the sales period
Sorry, but this is just the way it goes. Youre going to have to keep your home a little tidier than usual and youre always going to have to be prepared for a showing at any given time. Make sure sinks are wiped down, trash cans are always emptied and personal items are put away after being used.
12) The fast offer at full price
Be prepared for the possibility that you may get an offer for your full asking price the first few days or week your home is up for sale. If this occurs, well, everyone should be lucky enough to have the same problem. Be prepared to react accordingly so as not to be caught off guard. The same opportunity may not come along again for months, if ever. Get ready to make some serious decisions and do not treat the home sales process lightly.
13) The time factor in selling a home
Everyones timeline is different so dont worry about what the next guy is doing because his situation is probably completely different from your own. Factor in the amount of time youve spent in your particular home or condo with where you plan to move next. Also consider the time of year, how many other houses are for sale on your block (or how many other units are for sale in your building if you live in a condominium).
Statistically though, it takes approximately 90 to 120 days to sell your home.
14) Is a Realtor and a Real Estate Agent the same thing?
Technically speaking, a Real Estate Agent is anyone legally permitted to collect a commission from the sale of real estate in their particular state. A Realtor may also collect a commission but is actually a member of the National Association of Realtors (NAR) and is bound by their set of codes and ethics. Realtors pay membership fees to the National Association of Realtors and have he ability to list properties for sale on the Multiple Listing Service (MLS).
For all practical purposes, it is difficult to discern a Real Estate Agent from a Realtor in the normal course of business, due to the fact that either can sell your home.
15) Where can the closing take place?
A closing generally takes place in the office of a Title Company or an attorneys office. The attorney is usually a real estate attorney who is familiar with the intricacies of contract law and title work. Either way, it is always advisable that the Title Company or attorney handling your closing is experienced. Problems may arise at the table and unless they are handled smoothly, your closing may fall through.
16) Things to know before signing an exclusive listing agreement with a
Real Estate Agent
Unfortunately, in this day and age, it is difficult to find a Realtor or Real Estate Agent who will agree to list your property for sale without having an exclusive agency contract in place. The length of an exclusive agency agreement can be anywhere from six months to one year, so be sure to read the fine print. This means that while the contract is in effect, the Realtor or Real Estate Agent is entitled to at least part of the 6% commission that results from the sale of your home. The rationale behind this is that it can never be determined for sure if it was through the efforts of the Realtor and/or Real Estate Agent or due to extraneous facts that the sale took place.
Remember; once the contract is signed there are typically serious penalties for breaking the agreement. The law generally favors the Realtor or Real Estate Agent so it is relatively easy for them to seek recourse against the seller (you) in the event the property is sold and they do not collect their commission.
17) Do I need an attorney?
The choice is yours. If you believe the transaction is not going to be plain vanilla and you want to ensure that your best interests and your wallet are protected, it is wise to retain counsel.
18) The pros and cons to setting a high price
Setting a high price for your home is one thing; getting your price is another. If you set the price of your home above market value, the potential downfall is obvious; you may not get your sale. The secondary problem you may encounter in this scenario is that the home may stay on the market for six to nine months before you lower your asking price and then potential buyers assume that there is either something wrong with the property or that you are in a distressed situation. The best plan of action is to set a fair and reasonable price before listing your home. If you want a few extra dollars, so be it. But if your property does not sell within 60 to 90 days it may be time to reconsider your price.
19) What to do if you are selling your own home but a Real Estate Agent
wants to show it
This is a great scenario because you get the best of both worlds. You still get to act as your own agent (without collecting a commission unless you are licensed to do so) and the Real Estate Agent receives a smaller commission (sometimes 3%) for introducing the buyer. However, there are no hard and fast rules in this situation so be sure to have a letter of intent handy that spells out the terms of compensation if you are approached by a buyers agent who wants to show your home.
20) Why a Real Estate Agent may encourage to list your home for a
lower price
A Realtor or Real Estate Agent may encourage you to list your home at a lower price for one of two reasons. First of all, you set a price that is simply too high for the market. Secondly, the agent is looking for a quick sale and the price cut on your home will not impact their pocket to the same extent that it will affect yours. Be on your toes ready to do smart business. If a Real Estate Agent recommends you list your home at a lower price than you think it is worth, make them justify it.
21) Tax assessed value versus market value
The tax assessed value has little relation to the actual market value of your home. There are several formulas in place that address this topic but none are precise. Generally, the tax assessed value is lower than the market value.
22) How to increase home showings and traffic
The first and most obvious element to review is your sales price. Re-examine your comps and do a little more homework to make sure you havent priced yourself out of the market. If you are working with a Realtor or Real Estate Agent ask them what the problem is and make sure they are doing their job. It is their responsibility to market your home effectively in order to generate sufficient traffic and ultimately, a sale. If you are selling your home yourself you have to make sure that your home is getting proper marketing exposure as well.
23) When to sell your home and when to hire a Real Estate Agent
The bottom line is that its completely up to you. If you believe you have the resources to handle the sale of your home from start to finish, then have at it. Another good indicator to consider is if you have received one or more qualified offers on your home without having listed it for sale in the first place. The other factor to remember is that no one is going to care as much about the sale of your home than you will.
Fortunately, doing business in the Internet age has become dramatically easier. There are many online services in operation that will offer you advice, guidance and marketing exposure should you decide to sell your own home.
24) The Open House
Should you decide to jump into the FSBO (For-Sale-By-Owner) market with both feet, an open house is a great way to start. Depending on the restrictions of your building or neighborhood, a little local marketing is usually enough to get ten or fifteen qualified buyers through your home in the course of a weekend. It may require a little more effort on your part than just running an ad in the local newspaper and waiting for the phone to ring, but the results can be well worth it.
25) The eternal debate of the For Sale sign
Since the dawn of civilization there has been an ongoing question regarding home sales; is advisable to post a For Sale sign in the front yard? Well the debate has been settled concussively and the answer is a resounding Yes. If you forgo a For Sale sign in the front yard, or wherever it is appropriate, you are all but guaranteed to sacrifice precious drive-by traffic. Statistically, people cruise neighborhoods they like before they even contact a Real Estate Agent to assemble listings and schedule viewings. It only makes sense that if they like the neighborhood and see that your home is for sale; their only logical choice is to inquire. Its just solid common sense.
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Equal Housing Opportunity