Pricing Your Home:
The first step is to be sure you establish a good price for your home. Improper pricing is the most common mistake that costs home sellers thousands of dollars.
Here is what to consider:
If the price is too high- it will sit unsold and become stigmatized as "shop-worn." On the other hand, price it too low and you may give away thousands in profit to a total stranger. Either way you lose. Finding the appropriate price sets the right stage for the entire selling process. A great benefit to you is to get in the right frame of mind for the sale.
Be objective and remember that selling your home is a business transaction, and you need to put your personal feelings and attachments to your home completely out of the equation. This is critical! Keep in mind that potential buyers are not looking to buy your home - they are looking to find a house that they can make into their home.
Establishing A Price:
The next step is to arm yourself with the facts. By not establishing a realistic price from the beginning, many home sellers end up costing themselves thousands of dollars. The value of a home is determined by supply and demand. If there are a lot of sellers and few buyers, prices tend to go down and homes take longer to sell. This is referred to as a "Buyers market".
But when the opposite is true, and there are many buyers but few homes for sale, prices will rise and homes will sell very quickly- this is known as a "Seller's market." So how do you know which market you are currently in? It is best to access the knowledge of a professional - but don't spend money on a formal appraisal - I will provide a market analysis for you. I will then determine which type of market you are closer to; then study your neighborhood to compare your home to others based on style, size, number of bedrooms, baths, garage, basement, view, and lot size.
Bottom Line:
Once you have established market value, you can calculate your bottom line or net figure. This is the check you will receive after all the expenses related to selling your home are paid. Closing costs vary depending on how the contract was structured and where the closing takes place. The "Calculating Net Profit" button will guide you through a list of items that need to be deducted from your sales price in order to establish your net.
When you meet with me, you will get a very accurate estimate of which costs will be incurred and what these costs will mean to your net figure or bottom line.
There are really two phases when it comes to preparing your home. The first phase is getting it ready for the market and the second phase is getting it ready for showing. We'll start with the first phase - getting it ready for the market. Take as much time as necessary but as little money as possible to maximize appeal. The best way to do this is to walk around your entire home with a notepad- paying careful attention to everything; check the walls for chips, holes or uneven paint. Fix all leaky faucets and make sure they shine- and consider replacing them if they don't. I've included some helpful tips on the home's interior and exterior with checklists to print out to make sure you cover everything from top to bottom.
Make Your Home Sparkle:
Now on to the second phase - Once your home is officially "For Sale", you need to make your home sparkle. This is an area where you can't overdo it. Be sure to concentrate on your kitchen and bathrooms. Your buyer will be expecting a used home- but the brighter your home shines, the easier your buyers can 'see' themselves purchasing and moving into your property. It's a good idea to box up any items that haven't been used for a while. By boxing up your possessions you will add visual square footage to your home- thus increasing its perceived value. Ask a friend or relative to help you out with this - or even consider renting a storage space to keep your belongings until you sell.
Un-cluttering the home is the toughest thing for sellers because they have built so much intrinsic value in the house. After years of living in a home, clutter collects without the owner even realizing it. But unfortunately the buyer does notice it and is affected drastically by it. Clutter collects on shelves, counter tops, drawers, closets, garages, attics, and basements. Pretend you are walking into your home for the very first time. Or better yet - get an outsider's opinion. Ask a friend to point out clutter. Notice all areas of clutter and begin eliminating it by boxing it and putting it into a storage unit until you move. Now might be a good time for a garage sale. If you were going to get rid of anything before your move anyway, do it now before the house is even shown.
Marketing:
It is now time to bring on the buyers. While I will be doing most of the marketing, it is a good idea to know all the avenues to be used. Today's technology offers many new ways of marketing to give your home exposure to more potential buyers than ever.
To better maximize your potential for success, it is important to market to three tiers-brokers, neighbors and buyers. To effectively target all three tiers aggressively, the following resources may be utilized: open houses, flyers, newspaper, magazine, e-mail, and the Internet. But since all REALTORS® have access to buyers, they will be especially incorporated into a plan through the local multiple listing service.
When we sit down, we'll cover other ways of targeting agents that specialize in your price range and area.
Qualifying The Buyer:
Once an interested buyer is located, they need to be qualified in the following terms: financial ability, buyer wants and buyer needs. This is not something you will be responsible for - it will be up to the mortgage lenders and the buyer's REALTOR®. I, in the meantime, need to be on top of every detail for your sake. Anytime there is a call or contact, many details need to be discovered. Has their loan commitment come through? What conditions are on it? Has the appraisal been done? Are there any repairs needed, etc.
Remember- this may be only one of 30 deals the lender has this month- but the only buyer you have. It is my duty to make sure there is an open line of communication at all times to ensure that everything is done. You must also watch out for contingencies that could cost you time off the market. If a buyer wants to close the sale contingent on selling his or her current house, include a kick-out clause that allows you to back out of the deal within 72 hours (or better yet 24 hours) if you receive an offer that does not contain contingencies.
Negotiating:
The key to remember here is not to get wrapped up in any games. If you keep your goals in focus at all times, you will be better able to respond to offers. You will have three choices when an offer comes in. You can accept the offer, reject the offer or make a counter offer. You should know however- that technically- a counter offer is a rejected offer. The buyer has no legal tie or obligation to the contract once any minor changes are made on it. Although the price will be the main focal point of the offer, you need to review every detail closely. These details include down payment, earnest money deposit, possession date, interest rate, loan costs and inspections- what type and who pays, home warranty plan, personal property items included in the deal such as washer/dryer, refrigerator etc.
Remember - any little change of the original contract is technically a rejection- so only make changes if you are absolutely positive that you cannot or will not go along with what was offered. Contingencies for example- are things that must or must not happen in order for the transaction to be valid. These in particular must be spelled out very clearly and followed up on as to not open the door to the contract falling apart. Again- you must keep your goals clear throughout negotiations so that you keep your decisions objective- not based on emotion. It is also important to put yourself in the buyer's shoes and not see them as an enemy or rival- but rather as someone who want to purchase your home. It has been said that imitation is the highest form of compliment.
Once an offer is accepted, the escrow process begins. The escrow period is an important part of the home-selling process and one of the final steps leading to closing. If you are interested in some of the activities escrow may include, click on the button at the top.
Closing & Moving:
Once the closing date is set, the excitement really grows because you are only a step away from selling your home. Be careful not to go to the table without knowing what to expect. It is important to know the procedure including buyer and seller closing costs, so that you can stay on top of everything- especially your buyer's portion of the transaction since they may be asking you to share in some of their expenses. The total closing costs will vary depending on the type of loan the buyer has, the location of your home and the complexity of the transaction. To learn more details about the elements of the purchasing agreement click the button at the top.
Now we'll go through the components involved in the closing process. The first component of the costs is marketing fees- commonly referred to as commission. The next component of closing costs are origination fees which include a loan origination fee, an appraisal fee and the cost of ordering your buyer's credit report. Other related costs may include hazard insurance, mortgage insurance and any interest accrued on the mortgage from the closing date to the end of the month. Then there are the optional discount points for the loan. This is a one-time fee that is paid at closing and varies depending on the loan amount. Some buyers choose to pay this amount up front to reduce the ongoing cost of the mortgage while others choose to have the seller pay for this as a stipulation in their offer. The taxes and any miscellaneous items (which vary according to the requirement of your local government) can include personal property taxes, homeowner's association dues, and other local assessments. As a seller, you will be required to credit your portion of unpaid property taxes to the new owners- we will be able to arrive at a very accurate estimate of this when we meet.
Next is the documentation or "Doc Fees". This covers the cost of researching public records to trace the title and ensure that the property can be legally turned over to your buyer at closing. Other doc fees include recording and transfer fees that cover the legal transfer of the deed from your name to the buyer's name. Some of these fees are variable depending on the structure of the offer that you receive.
A Successful Sale:
There are many variables that can help your home sell faster. These variables can range in scope, target and value- but the key point to keep in mind is to make your home stand apart from the competition. This is the time to get creative. The more incentives you offer, and the more people you offer them to, the better the odds of selling your home get.
For example; if there are two comparable homes on the market directly competing with yours, you can bet that anyone who sees your home will see those homes as well. So you need to be very familiar with what it is, exactly, you are competing with - and make your home as attractive to prospective buyers as possible. In this section you will learn ways to make buyers choose your home over the rest.
A Marketable Listing:
When placing your home for sale, you want to make it very appealing to buyers. You need to make it marketable. There are 3 factors that determine a marketable listing. They are: Price, Financing, and Time.
Price - If your home is priced too high, you must be willing to wait much longer for your home to sell. Either it will take that much longer to find someone to pay more than the home is worth, or the market will eventually catch up to the "asking price" of the home through inflation.
After deciding on a price, try the old retail trick - drop the number down a bit. Instead of placing the listing at $140,000, drop it down to $139,990.
Financing - You may not realize it, but the financing of your buyer can have a tremendous impact on the success of selling your home. Try to offer very attractive financing options. Consider carrying the financing yourself at a below-market interest rate or preparing your home for government financing. This could open the door for many buyers that otherwise wouldn't even consider your home.
Time - If time is important then you must be willing to lower the price.
A little known tactic to sell your home quicker and for a higher price is to offer a higher commission for the sale of your home. You may be asking yourself how paying more can actually net you more- but it's really a rather simple concept.
By raising the commission, you could consider that a 1% loss to you- but that same 1% is a 14% gain to any agent that sells your home. You have to remember that many other agents may be bringing buyers to consider your home. This is how you can appeal to those agents. Put yourself in their shoes just for a moment and pretend that you have selected three homes that could potentially work for your buyer. One is offering an average commission for your area, another is offering 1% less in commission - which to you, now translates into a 14% loss of pay. But the third home is offering a great incentive- a 1% bonus on the commission- a 14% raise.
What would you do for a 14% hike in your paycheck? The more offers you receive, the higher price you get for your home- and the quicker it sells. Keep in mind also that costs you incur in selling your home are tax deductible- this includes the marketing fee. Be sure to see your accountant for advice on this.
Allowances for buyers
Another tactic to make your home more appealing is to offer allowances for the buyers. This could range from appliances to clever financing - but it will be up to you to be creative and know what is within your boundaries. Below are some suggestions for allowances.
Kitchen Remodel Allowance
Consider offering an allowance for remodeling the kitchen- in which case you would leave professional designs of what your kitchen could look like. Not only are you offering a new kitchen, you're allowing the new buyer to mentally move into your property and customize their own kitchen. This is the biggest appeal of building your own home- custom designing it to your preferences. You'll be surprised by the response.
New Carpet Allowance
One incentive that is commonly used is the new carpet allowance. By offering to credit the new buyers with the price of a new carpet, you do several things: You save yourself the hassle of having carpet-layers in, you avoid the possibility of the new carpet being stained during showings or even by your family, and you allow the buyers to add a hint of customization to their new home by simply selecting their own carpet. Many times you will find that the buyers choose to keep the carpet and use the allowance for furniture or odds and ends. Either way- you've enticed them to choose your home over the others competing with yours
Property Tax Allowance
Consider paying your buyer's first year of property taxes, homeowner's insurance or even making their first 3 mortgage payments. Buyers get excited when they get freebies or bonuses. Imagine buying a house and not having to make a payment for the next four months- or knowing that your first year's property taxes are paid for. This incentive may put your home well above the competition.
Offer to Pay Loan Points
Another incentive you could offer is buying down the buyer's interest rate by paying discount points on their loan. This will lower the buyer's interest rate- while opening the doors to a bigger pool of buyers- since, now, buyers from a lower price range may qualify to purchase your home.
New Appliance Allowance
Try offering to buy new appliances for the buyers. The new computerized washer and dryer sets, an instant water heater that never runs out of hot water, or a talking refrigerator. The key here is to have the brochures out during showings and included in all advertising. It is common to have someone pass up another home simply because you offered something they wanted- but would never actually buy it for themselves. All you are looking for is an edge.
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