The old notion of caveat emptor "buyer beware" has been turned on its head. Lately, with all the talk about “buyers’ markets” and “changing real estate values,” as well as the myriad complexities and legal ramifications of today’s real estate transaction, a more appropriate sentiment may be “seller beware.”
The average homeseller may feel like a lamb in the lion’s den. In such adverse conditions, it seems everyone is out to pull the rug—and your profits—right out from under you.
But even during the best economic times, hundreds of home owners still throw money away because of poorly made decisions during the sales of their homes.
This information is designed to give you the tools you need to protect your most important investment when it’s time to sell. Before you put your house on the market, follow this informative guide to reap the maximum rewards possible.
Clearly Know Why You Want to Sell Anticipate Buyer's Questions
Do you want to “get the profit out” of an appreciated home? Are you moving to a new area or wanting a larger home? Whatever your reasons, there are sure to be a lot of emotions involved with the selling of such a personal investment.
The more you can separate the emotions from the actual goals you need to achieve, the better a position you can be in to evaluate your options and negotiate the best results.
Make sure that you’ve examined all of the alternatives and that selling is really the best decision in your situation.
Keep in mind that no matter how much you sell this house for, you’re still going to have to live somewhere.
Make sure that what you can afford to buy after the sale makes the process of selling worth it.
David Walker can help you not only by making you aware of all of the costs involved in selling and the approximate amount of profit you can realistically expect, but also by helping you research the area or home you’re interested in moving to and how much you’ll have to spend on the other end.
Carefully Evaluate Your Property
As objectively as possible, take a walk through and around your house, trying to look at it as a potential buyer would.
Make a list of all the things you would want to change or repair if you were going to remain living here.
You may not wind up doing all of these things, but start taking care of the small and inexpensive repairs and make sure your home is as clean and attractive as possible even before contacting a real estate broker to list your property.
Their first impressions of the general appearance of your home will color an agent’s conclusions about how easy or difficult your home will be to sell and about the right price for your home.
If you make your home more inviting, the agent will be more eager to bring buyers through to show it off.
By making the broker’s selling job easier, you increase your chances of getting the price you want—or at least a price close to it.
Understand the Current Real Estate Market
As a seller, the asking price you determine for your property must take into account the following criteria:
the level of supply and demand in the current local market,
the condition and features of the house itself,
current sales prices of comparable properties in the area,
the condition and features of the neighborhood.
As you can see, very few of those things are within your control. However, you’ll be in a much better position to make the most of your sale if you at least have a full understanding of all the elements involved.
All of the economic realities that affect your home’s market value are reflected in the prices of recently sold homes.
Your real estate agent David L Walker
Contact will provide you with a complete comparative market analysis showing the listing and sales prices and the features of other homes similar to yours in the area that have sold recently as well as the features and listing prices of homes currently for sale. The report should also reflect the length of time each of these homes have been on the market.
No matter how much you think you may have already learned from talking to neighbors and looking at ads in the local papers, seeing the hard, cold facts is still usually surprising to most sellers. You’re likely to find that the people you talked to tended to “round off” or exaggerate the prices they bought or sold for.
For Sale By Owner vs. Hiring an Agent
Many homeowners believe that to get the most money out of their home sale they should sell it themselves, thereby saving the commission they would otherwise pay to a broker. Indeed, approximately one-fourth of home sellers each year do not use a real estate broker and about 72 percent of those are happy with the results they achieved.
However, close to half of that 72 percent also stated that the next time around they would hire a real estate professional to help them sell. Why?
For many, the time, paperwork, research and hassles involved in getting their home sold on their own were not worth the amount of money they saved in commissions to a broker.
For others, by the time they figured in the amount of fees paid to outside consultants, lawyers, inspectors, appraisers, and title, escrow and loan officers as well as marketing, advertising and other services and vendors, they may as well have paid the broker’s fee, which may have included some of these charges up front.
Some will also have discovered that the cost of recovering from a misstep or bad decision based on inexperience or lack of guidance more than outweighed the amount they saved in real estate agent fees.
Questions You Need to Consider:
Do I fully understand the steps and legal and tax ramifications of selling a home?
Am I prepared and able to deal with buyers—especially those who see FSBOs as ready targets for low-ball bids?
Do I have the time and ability to devote my energy and efforts to everything that selling a home requires?
Do I have a plan for handling the legal contracts and agreements involved as well as any disputes with buyers both before and after an offer is presented?
Have I researched financing options that buyers will need and expect information about?
Have I contacted all necessary professionals, including a real estate attorney, a home inspector and a termite inspector, etc., and agreed with each on their specific parts of the deal?
If you are a first-time seller, these questions are even more important since you haven’t been through the process before.
Set a Realistic Goal
After answering all these questions, if you still feel that maybe you’d like to try to sell on your own, you may want to give yourself a time limit—just as you would give an agent in a listing agreement.
Then, after trying it on your own, if your home hasn’t sold, reevaluate your situation and consider whether you need to pursue other options.
Whatever the case, you always have the option to consult with several qualified agents and determine whether their services are worth the price you would pay.
In the vast majority of cases, they are.
Choosing the Right Real Estate Agent
Once you’ve decided to consult with an agent, the decision of which one to choose is probably the biggest and most important decision you’ll make in the entire process.
The best first step is to talk with close friends and relatives who have recently sold a home. Ask if they had a good experience, whether they would recommend the agent and if they had any reservations or things they wished the agent had done differently.
Also talk to professionals you may know in related industries, including lenders, title officers, contractors or builders, accountants or lawyers. Ask them what it is they recommend about the agents they refer and whether they themselves have ever used the agent’s services.
Finally, look around your neighborhood to see what agents seem to be listing and selling the most houses. Take a look at the ads, direct mail, brochures, signs and other materials that the agents use to promote the houses they sell.
Do they seem professional and high-quality?
Do they present an image of an organized, competent professional?
Do they impress you as someone you may be interested in working with?
Keep in mind that if you don’t like the way they market themselves and other people’s homes, you probably won’t like the way they market yours either.
Once you have a list of several names, call each of them and explain that you’re thinking about selling your home. Ask them if they have any information that they could send you, since you’d like to be able to make a decision about which agents to interview before you list.
The most professional agents will have personal brochures that introduce you to them and let you know a little bit about who they are and how they work.
What You See Is What You Get
Again the quality of these materials will say a lot about the quality and the professionalism of the service they provide. Also, pay attention to how they respond to your request.
How quickly do they get the information to you?
Are they friendly and helpful?
Or just pushy and hungry for a listing?
Does this seem like someone you’d be interested in talking with?
If they aren’t organized and professional enough to respond promptly to your first request to find out more about them, they’ll probably handle potential buyers for your home the same way.
If you like the way they respond to you and are impressed with the information they supply, invite them to make a listing presentation.
It’s always a good practice to meet with more than one potential agent before making a final decision—usually three to five for sellers.
Just make sure that you don’t meet with more than one from the same company. This could cause internal strife which would be counterproductive in marketing your home.
What to Look For During the Listing Presentation
Every agent you meet with will have a different style and a different way of presenting his or her services. During your meeting, think about how comfortable you feel with this person and how well they communicate with you.
This is your chance to evaluate this person at his or her “best” in a sales situation. If you don’t like what you see, think about how potential buyers for your home will respond.
What you should be looking for, first and foremost, is an honest and knowledgeable individual, working full-time and representing a solid and reputable real estate agency, who will treat your best interests as paramount.
Length of time in the business, track record of success, previous experience, expertise in and knowledge of the local real estate market—all of these are factors to consider.
While the right agent to market your home may not be number one in terms of every aspect, you want to make sure that the person you hire is a well-rounded individual who you can trust and respect as a professional.
Get to the Heart of the Matter
Ask the agent what he or she will do to expedite the sale of your home.
A good response is one that is a direct and comprehensive plan of action reflecting your goals and your unique situation. Despite having the same basic marketing tools at their disposal, every real estate professional has a different marketing strategy.
Look for someone who doesn’t rely on the same marketing tool every time.
What worked for yesterday’s seller may not get the results you want. The key is to find an agent who will use all the tools available to your best advantage.
Communication is another key.
Make sure your agent not only demonstrates an in-depth understanding of the entire process, but is able to explain it to you clearly and let you know what things, if any, are particularly critical given your individual transaction.
He or she should have enough experience and expertise to be able to handle whatever comes along during your sale, even if it’s something they’ve never seen.
Ask your agent exactly what you can expect from them during the sale in terms of service and communication.
A true professional will provide you with a checklist of exactly what they’ll do for you as well as a systematic method of providing you with frequent feedback on the status of your sale.
Only with the proper up-to-date information can you make the decisions about your sale which will help you realize the most profit.
Be Open to Your Realtors's Suggestions For Staging Your Home
Chances are, your real estate agent will make specific suggestions regarding cosmetic and/or major changes in your home’s appearance to make it more attractive to buyers—perhaps even specific buyers he or she has in mind.
This is called staging the home, and any good Realtor® will go over this information with you.
Remember not to take things personally—you may love bric-a-brac on every surface and may feel emotionally attached to the many antiques filling each room, but your agent may ask you to pack some of them away so that potential buyers can picture their own furnishings in the rooms rather than feeling they’re intruding on your personal space.
A competent and professional agent will make these type of recommendations based on the experience he or she has gained through other transactions as well as an earnest desire to help you get the results you need.
Checklist of things you can do to improve your home’s saleability
Rearrange furniture to enhance the room’s appearance.
Remove all excess furniture or rugs on top of rugs.
Review color scheme of walls, drapery, carpets and furniture. If the room is too dark, repaint the walls, add brighter wallpaper, replace dark paneling, or install lighter carpets and drapes.
Remove magazines, books and other personal items from surfaces.
Clean carpeting, mop and wax or vacuum all floors and dust furniture.
Make sure walls are clean and free from holes and dents. If necessary, use spackling compound for dents and holes before painting.
Rearrange bookshelves and knickknacks to enhance the room’s overall impression.
Rearrange pantry and cupboards to create a neat and orderly appearance.
Clean all appliances and sinks.
Place new burner plates under the burners of stove.
Clean or patch grouting between tiles and replace missing or cracked tiles.
Use porcelain repair products to fix chipped porcelain on sinks or appliances.
Polish faucets and faucet handles. Buy replacement faucet knobs if necessary.
Make sure all appliances are in proper working order.
Remove all garbage.
Check oven to ensure that all vents are clear of grease and odors. Clean or replace filters, ventilation and exhaust fan.
Replace low-wattage light bulbs to make the room as bright as possible. For very dark kitchens, install track lighting.
Paint cabinets or install new ones.
Replace older cabinet handles.
Thoroughly clean dining room table. Revarnish the surface if necessary.
Repair worn upholstery on chairs.
Clean glass in china cabinet and polish china and silver on display—or pack it away.
Check tiles. Replace all that are worn or chipped.
Replace floors worn by water damage.
Caulk and grout tile joints.
Remove all grime, water stains and mildew.
Thoroughly clean all surfaces.
Repair all leaky faucets and shower heads.
Polish faucets and faucet handles. Buy replacement faucet knobs if necessary.
Clear counter tops and rearrange cabinets inside to create a neat and orderly appearance.
Clean and rearrange medicine cabinet. Remove clutter.
Put out fresh towels, including a guest towel.
Check strength and condition of all towel racks. Tighten loose racks.
Replace worn shower or bath curtains.
Install bright light bulbs.
Check exhaust fan. Repair if in poor condition. Clean vent openings.
Rearrange furniture to improve impression.
Remove excess furniture: more than one double/queen/king bed or more than two twin beds per room, or extra chairs, dressers or night stands.
Make all beds and wash all bed coverings and replace if worn.
Remove loose or extra toys and clutter from children’s rooms.
Clean all carpets, floors and drapes. Leave drapes open to brighten rooms.
Replace burned-out or low-wattage light bulbs.
Clean night stands and side table surfaces.
Remove personal items and clothing from all surfaces.
Install lights where needed.
Rearrange storage areas and remove clutter.
Rearrange clothing to create an orderly, roomy impression and pack away excess or out-of-season clothing to give a spacious appearance.
Repaint inside surfaces if needed to make closets as bright as possible.
For smaller closets, install shelves to increase storage space.
Rearrange storage areas and remove clutter.
Clean floors, removing oil stains and dirt.
Sweep the entire area.
Clear workshop area and store all tools and equipment.
Remove all spider webs, lint and dirt.
Make sure all openings to outside are screened or vented.
Make sure garage door(s) and opener, if any, function properly and are in good condition.
Check washer and dryer, clean filters and call service company for required maintenance.
Clean appliance surfaces.
Remove all laundry.
Repair sagging beams as needed.
Check for water damage, make needed repairs.
Investigate musty odors or smell of gas, and make necessary repairs.
Repair broken lights.
Inspect air conditioning, heater or furnace, and water heater for maximum safety and energy efficiency. Replace filters and maintain as needed.
Check insulation and repair or replace as neccessary.
Repaint when wall or ceiling conditions are poor, or previous paint is faded or too dark. Paint in white, beige or light pastels.
Remove wallpaper that is too bold, outdated or damaged. Replace with neutral paint or subtle, tasteful and neutral prints so that color scheme coordinates throughout house.
Replace loose, shifted or deteriorated sheetrock or panels. Repair all cracks and holes.
Clean all walls and moldings.
Wash all windows and replace broken panes. Also replace all cut or rusted screens.
Check all windows for alignment and ease of operation. Repair so they work freely.
Check window moldings and weather stripping, and repair for water damage and age.
Clean and check all draperies and repair or replace as necessary.
Clean and wax exposed floors.
Repair creaking or loose floorboards.
Repair loose steps, and check stairs for loose handrails, treads or posts.
Clean carpets or replace old, worn carpets or rugs.
Check all doors. Oil to eliminate noises, tighten knobs and hinges and ensure that all doors shut and/or lock properly.
Replace all broken light bulbs, cracked lighting fixtures or old switches and plates.
Repair all inoperative electrical outlets and plugs.
Polish all brass, chrome or glass surfaces.
Make sure all smoke alarms and burglar alarms are functioning properly and add or replace them as necessary.
Keep fresh flowers on display.
Open windows before showing home to air it out.
Eliminate all odors with a pleasant air freshener.
Remove pet bedding, food and water dishes, and litter boxes.
Replace or repaint worn front door to create a good impression.
Polish or add brass door knocker.
Make sure front door has a working peephole.
Check doorbell and repair or replace as necessary.
Replace worn mailbox.
Make sure house number is clearly visible and attractive.
Polish, repair and/or replace all door handles and locks. Make sure all outside doors have deadbolts or other safety locks
Mow lawn, remove all weeds and water regularly.
Use a good quality lawn food to make grass healthy and ammonia sulfate (available at garden or hardware store) to bring out the green. Reseed or resod thin or brown lawn.
Cut grass back from edge of house as well as from plants and trees.
Trim edges by fences, walls, walkways, sidewalk, driveway and around plants, hedges and trees.
Remove all children’s toys, garden tools and hoses.
Repair loose or broken fences, or cracked or loose retaining walls.
Clean up after pets.
Remove all dead limbs.
Remove and/or replace dead trees or shrubs. You can also use potted plants in yard and then take them along with you when you move.
Remove overhanging or intruding limbs from walkways, gutters and utility lines. Cut limbs from neighboring yards.
Spray for insect infestations.
Trim all vines or other growths from fences.
Remove debris from all surfaces.
Clear storage areas.
Restain, repaint or seal all wooden decks.
Check and secure all railings.
Clear all spider webs and insect nests.
Wash entire area.
Resurface stained or worn areas. Repair all cracks.
Resurface stained or cracked areas.
Patch all holes.
Seal all asphalt.
Replace thin gravel areas.
Repaint or reshingle if necessary.
Check all shutters and awnings. Tighten if loose or replace if worn.
Clean out gutters and downspouts. Repair or replace as necessary.
Check, repair and replace flashings, vents, chimneys, stacks and skylights.
Check, repair and replace exterior lighting as necessary. Use bright bulbs.
Paint all railings.
Repair cracks in foundation, walls and steps.
Clear leaves, snow, ice or other debris from walkways and porches.
Replace worn trashcans.
Know What Upgrades Will Bring You the Best Return
Generally the best investments when preparing your home for sale are those upgrades or modifications that bring you highly visual improvements throughout a large area for a minimum amount of money rather than those that concentrate a substantial investment into a small area.
For example, replacing worn carpet throughout the house is in most cases more valuable to a buyer than a customized closet in the master bedroom.
Remember quality counts, up to a point.
If the stove in your kitchen is broken or extremely worn, replace it with a middle-of-the-line model from a well-known, quality appliance manufacturer rather than the best of the best.
At the same time, making shoddy repairs or using cheap replacements to “get by” may save your initial investment, but won’t get you anywhere in the perceived value of your home.
Potential buyers will see through them and figure they’ll still have to redo it themselves anyway.
Ask your real estate agent for a list of suppliers and contractors who may be able to help you with major repairs or services. Most Realtors® have formed relationships with various vendors who may be able to offer you preferred pricing or exceptional service.
Anticipate Buyer’s Questions
If your home has the potential for major improvements or renovations, find out ahead of time what the feasibility and approximate costs some of the more obvious ones would entail as well as what improvements may be restricted by your city or homeowner’s association.
This helps buyers realize the long-term value and potential of your home.
Once again, your real estate agent may be able to put you in contact with contractors who could give you estimates or have access to reliable information about the costs of renovations or additions other homeowners in the area have made.
Understand Disclosure Laws and What Inspections You Will Need
In addition to having your home appraised for market value, you will also be required to have your home inspected at least twice: once for structural problems and again for termites.
During the past decade, legal rulings have made it clear that sellers and their brokers must not only make purchasers aware of known problems and defects with the property, but they must also…
“…conduct a reasonably competent and diligent inspection of the residential property listed for sale and to disclose…all facts materially affecting the value or desirability of the property that such an investigation would reveal.”
So not only is it important to be completely up front about problems you’re aware of, but even what you don’t know can hurt you.
David L Walker
Contact can help you find the right qualified inspectors to investigate all the structures and systems of your home.
Know Who You're Dealing With
When your home is listed in the Multiple Listing Service, many agents may be showing it to various buyers and actually helping to get it sold.
With the many roles that agents play—seller’s agents, buyer’s agents, dual agents, transaction brokers, etc.—it’s sometimes hard to keep straight exactly who is working for whom.
Make sure you know who is represented by any agent presenting an offer.
Your seller’s agent is bound by fiduciary responsibility to you. Never tip your hand or reveal your bottom line to anyone who is not.
Plan Your Negotiation Strategy Ahead of Time<
Determine in advance what your real “bottom line” is—the minimum offer that you would accept. Keep in mind that it’s one thing to think about a minimum offer, and it’s another thing to be faced with losing a sale if you won’t accept a little bit less.
Some flexibility may be required. Your real estate agent can help you understand all of the implications of price versus yields and terms. In some cases, you may decide to save a deal by giving the buyer his price while working out terms that are even more favorable for you.
Know How to Tell a Good Offer From a Bad One
Take a proactive approach to looking at any offer that comes your way.
Review each offer in the following order:
Deposit. How much and who has it? Is it a sufficient deposit to indicate a serious offer?
Price. How does the amount offered compare to your asking price and your private bottom line?
Down payment. Cash? If not, why?
Terms. Is it a new first loan? Are they requesting seller financing? How do these terms affect your profits?
Occupancy. How soon do you have to move out?
Contingencies. Are there any listed? If so, what are they and how do they affect your profits?
In some cases you may want to have your real estate attorney look over the offer. That’s fine if you want to be safe and have him or her explain complex clauses and protect your position.
Just be sure that your attorney doesn’t hedge your bets so closely that you lose a potentially good sale or insist that the deal so heavily favor you that no buyer would be interested.
Never Be Afraid to Ask Questions
It’s just like being back in school: There’s no such thing as a stupid question, particularly when your home and your most important investment are at stake.
If you feel your questions are being scoffed at or not answered clearly or appropriately, ask someone else and keep asking until you understand.
Never Reject An Offer Out of Hand
Don’t jump to conclusions even if you hear that an offer is substantially lower than your asking price. The terms may make up for it, or vice versa. And in any case, you can always make a counteroffer.
Even if you decide you can’t accept a particular offer, it’s almost always best to present a counteroffer.
Examine All Contingency Clauses Carefully
Contingency clauses are often handwritten into the offer document and, as a result, can be easy to overlook.
Be sure you understand exactly what the contingency means to you before you accept or reject it.
Some Typical Contingencies Are:
The buyers will only purchase if and when they sell their present home. This can be good or bad for you.
The buyers will only purchase if and when they get new financing.
Assuming they have already been prequalified, this can still mean an excellent offer.
The buyers will only purchase if and when Great-Aunt Ethel’s inheritance comes through. Forget it!
Your goal is to let as few of the buyer’s contingency clauses as possible into the agreement and to limit the ones you do allow by time and performance.
You need to decide if any contingencies are reasonable, whether they negate the value of the offer, and if you can live with them.
If not, you should proceed with a counteroffer.
Weigh Your Counteroffer Carefully
You have three choices when it comes to any offer presented to you:
You can accept it as is.
You can reject it.
You can reject it and provide a counteroffer.
You cannot accept it and then make changes!
Realize that any time you reject a buyer’s offer, they have the right to walk away from the deal completely. Therefore, if an offer is very close to what you want, you may be making a mistake to counteroffer and insist on having your cake and eating it too. You risk losing what may be a sure deal.
The most common areas in which you may wish to counteroffer are price, terms, occupancy and contingencies.
Remember that any time you make a counteroffer—even in just one area—you reject the buyer’s offer and they may decide to counteroffer by making changes in some other area as well.
Watch Out For Traps
Beware of “splitting the difference.”
For example, say you’re asking $200,000 and they offer you $180,000. You figured you’d probably only get $190,000 anyway so you split the difference and counteroffer $190,000. Rather than taking your offer, the buyer decides to play the same game and counters with $185,000.
Now you’re stuck. If you split again, you’re stuck making an offer that’s lower than your minimum. But if you reject it flat out, you may lose the deal!
Consider How Flexible You Can Be With Terms and Occupancy
If buyers are asking you to carry part of the financing, remember:
Everything is negotiable.
You may agree to their proposed terms, but change the length of the loan or the interest rate. You may be able to strike a deal that benefits them by giving them lower payments or a lower down, while making you better profits in the long run.
Also, remember that timing isn’t always everything.
If the buyer’s moving plans conflict with yours, consider some alternatives:
Change your plans.
Move and rent until you can move into your new home.
Stay and rent from the buyer.
Pay the buyer a bonus to change their plans.
Pay rent for the buyer until you can move out.
Consider how much the inconvenience is worth to sell your home.
Know When to Draw the Line
Let’s say you’ve received an offer, made a counteroffer and haven’t heard back from the buyers. Is the deal dead?
Maybe not. You may want to consider making another counteroffer.
To avoid looking like you’ll keep coming down if they just wait you out, go out of your way to make it very clear—through the agent, if possible—that you’ll only do this once. If they don’t take it, you won’t counter again.
Know What You're Accepting
Have your real estate agent, and perhaps your real estate attorney, go over all the paperwork before you sign it, making sure that you understand and agree with every part
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