Buying and Selling

Once you have made the initial decision to sell, you will immediately be faced with another tough question – is it best to hire a real estate sales associate or try to sell the house yourself?

To sell and market a house requires specialized skills, is time consuming, and costs money. Are you prepared to buy advertising space? Advertising is one way to let the buying public know your house is on the market. If not, can you afford the time it will take to sell your house with only a sign in the yard? Are you willing to stay close to home for days, weeks, maybe months to show your house? Do you possess the necessary legal and financial knowledge to answer the buyers’ questions, negotiate a contract, or close a sale?

If you answered “No” to any of the above questions, perhaps hiring a real estate firm to help would be the most efficient way to sell your house. They can be indispensable to you in the following ways. A real estate professional will:

• Access the Multiple Listing Service (MLS)
• Assist with pricing based on Comparative Market Analysis
• Provide a detailed marketing plan
• Screen potential buyers for financial qualifications
• Suggest ways to make your property more attractive to buyers
• Show your home whether or not you are there
• Answer potential buyers’ questions
• Present all offers
• Assist with negotiating the best sale price
• Facilitate the closing process

Once you have made the initial decision to sell, you will immediately be faced with another tough question – is it best to hire a real estate sales associate or try to sell the house yourself?

To sell and market a house requires specialized skills, is time consuming, and costs money. Are you prepared to buy advertising space? Advertising is one way to let the buying public know your house is on the market. If not, can you afford the time it will take to sell your house with only a sign in the yard? Are you willing to stay close to home for days, weeks, maybe months to show your house? Do you possess the necessary legal and financial knowledge to answer the buyers’ questions, negotiate a contract, or close a sale?

If you answered “No” to any of the above questions, perhaps hiring a real estate firm to help would be the most efficient way to sell your house. They can be indispensable to you in the following ways. A real estate professional will:

• Access the Multiple Listing Service (MLS)
• Assist with pricing based on Comparative Market Analysis
• Provide a detailed marketing plan
• Screen potential buyers for financial qualifications
• Suggest ways to make your property more attractive to buyers
• Show your home whether or not you are there
• Answer potential buyers’ questions
• Present all offers
• Assist with negotiating the best sale price
• Facilitate the closing process

Determining the “right” selling price for your home will take some work. If the set price is too low, you could lose thousands of dollars. If it is too high, the home may not sell within your time frame, costing you time, money and anxiety. The “right” price is a balance between the maximum amount the current housing market will allow, your “competition,” and your own time limits in selling. A reasonable time frame for selling a house may be between 30 and 90 days. If a house is on the market too long, potential buyers may avoid the house, wondering if something is wrong with it.

An excellent first step is to have a Comparative Market Analysis done on your house. This information details the current housing market in your area, showing you what houses similar to yours have sold for recently. The market analysis should also list your “competition” – houses like yours which are also on the market. With this information in mind, you will also want to consider the following points before deciding:

• Location – This is an important factor in pricing. Look at both the area in which the house is located as well as the surrounding neighborhood. Does the house back up to a busy street, is it on a cul-de-sac, etc. Try to put yourself in the buyer’s position: what are the tradeoffs and advantages of your property?
• Features – Does your house have specific features that set it apart from other houses in the area, such as a spectacular view, a pool, mirrored closets, room additions?
• Condition of the House – Has the house been adequately maintained during your stay? Are there minor or major repairs that could make a difference in the immediate sale of your house?
• Age of the House – Potential buyers will want to know the age of the plumbing, furnace, roof, appliances, etc. If anything has been replaced, this could add to the value of your property and the sales price.
• The Current Market – Is today’s market a “buyer’s market” or a “seller’s market”? A “buyer’s market” means there are several similar houses for a buyer to choose from. Usually, interest rates are attractive and prices are steady. A “seller’s market” is the opposite. Interest rates may be low or high, but housing prices are on the rise, and there are few houses to be sold.
• Your Time Frame – How long do you have to sell this house? What was the average time on the market on a comparable home? Can you wait while a buyer arranges financing? Does your purchase of another home depend on this deal closing quickly?

With these points in mind you should be able to determine a fair price for your house. A word of caution: Avoid the temptation to “pad” the price excessively, thinking it will give you negotiating room. Most buyers have limitations on how much they can spend. If your property out-prices other properties in the neighborhood, it could remain on the market longer than you wish. Even though you may be planning to lower the price later, studies show that the longer a house is on the market, the lower the price at which it is finally sold, compared to the original list price.

Although not a specific part of the price setting process, concerns about the amount of profit realized from the sale, tax regulations regarding the sale of property, and settlement or closing costs should be addressed. This is particularly true in markets with a predominance of FHA/VA buyers or areas where lender “points” are absorbed by the seller.

Anticipated costs of selling include the mortgage pay-off amount, any early pay-off penalty, the real estate broker’s fee, other loans against the property (perhaps for a pool or room addition), the price of inspections, taxes, and other seller’s costs. Your net profit can be estimated by subtracting these costs from the sales price. But, remember, this is only an estimate. Any change in the numbers or closing date will alter the final figure.

Tax Facts
If your lender charges a penalty for paying off your mortgage before its due date, the amount charged is usually deductible.

Homeowners may also qualify for an immediate deduction of many of these costs if the move is prompted by a job transfer to another city, and the costs are not reimbursed by the employer.

For further tax information, consult a tax accountant specializing in real estate matters in advance.

Your Closing Costs
Closing costs will vary from area to area. Your sales associate can provide categories and the approximate amounts of settlement costs you will be expected to pay. These may include various fees and miscellaneous closing costs negotiated by the buyer to be paid by the seller.

Pest/Termite Inspections
In many states pest inspections and termite reports are required before a house can be sold. Even if these inspections are not state mandated, most lenders will require them. If termites are discovered they must be eradicated, and the proof documented. Inspection prices vary. Shop around for a good price, but use a reliable company. Check with your sales associate about laws in your state.

After choosing a real estate company, you are ready to sign the listing agreement. This agreement will state how much brokerage fee, or “commission,” shall be paid, who will receive it, who has the right to produce potential buyers, and how long the agreement is valid. It should also include a list of personal property that will go with the house. The length of the listing contract will vary.

In the “Exclusive Right to Sell” agreement, the listing company is entitled to a commission regardless of who sells your property. If another office produces a buyer the commission you pay is shared between the two companies.

A listing agreement is a binding contract. Read it through carefully and ask questions until you understand every part of the agreement before signing.

Review Financing Options
When the time comes to negotiate a sale, it is best to be aware of current financing available to the buyer. With the help of your real estate professional, review the mortgage climate – are loans in abundance or hard to obtain? If the buyer isn’t able to qualify for enough money, you may want to offer a second mortgage out of your profits (if this is allowed by the first lender). Does your property qualify for VA/FHA loans? Is your current loan assumable?

Does the buyer expect you to pay any of the discount points connected with the cost of his loan? Determine your time limits in waiting for financing to be secured by the buyer, including alternatives.

Of course, any major repairs should be completed before showing the house, if a top selling price is expected. Limit your repairs to functional parts of the house, such as the roof, plumbing, and major appliances. Cosmetic changes like new carpeting and draperies may not match your future buyer’s tastes, and could even discourage the sale.

The key words to remember in preparing your house are neat and clean….. sparkling clean…… clean enough for royalty to visit. Take a look at your house as if you were seeing it for the first time. You may not notice crowded closets and untidy flower beds, but potential buyers will!

Make a list of jobs and begin work today.

Outside

1. When potential buyers drive up to your house, what they see will make a lasting first impression. Keep the grass mowed, edged and the weeds pulled. trim trees and bushes away from windows, put children’s toys in the garage. Plant some flowers to add a touch of color.
2. If your house needs painting do it now. A good paint job will more than pay for itself in the selling price. Try to maintain the neighborhood look when choosing paint; you don’t want your house to be remembered as “the green one with the blue door.”
3. Remove oil stains from the driveway. Buy an inexpensive drip pan to avoid further stains. Replace a weather-beaten mailbox. Make sure your doorbell works. remove torn screens. Clean outdoor light fixtures. Repair loose brickwork and fill cracks in the walk and driveway. In other words, make your house a show-piece from the curb to the front door.

Inside

1. A coat of paint will brighten interior walls. Choose neutral shades of white, off-white, beige, or light pastels that will coordinate with most decor. This inexpensive investment will increase the show ability of your house.
2. Clear out closets and cupboards. Have a garage sale or donate your unused items to charity. With less clutter, your closets will appear bigger. Remove all necessary furniture to make your rooms seem more spacious.
3. Open the curtains and pull up the blinds. Turn on as many lights as possible. Give your house an airy look. Fresh flowers bring color, fragrance and a touch of spring that enhances a room.
4. The bathroom should be absolutely spotless. Remove any stains from fixtures, repair dripping faucets, and polish the mirrors. Add a sanitizer to the toilet bowl and keep the lid down. Wash and fluff bathroom rugs, hang fresh towels. Potpourri or scented soaps add a nice fragrance to the air.
5. A clean kitchen tells the buyer that the house has been well cared for. Remove excess pots, pans, bowls, and clutter from the cupboards. Clean the oven inside and out. Run a lemon through the garbage disposal for a fresh smell. Make sure all appliances are working.
6. When a sales associate is showing the house, keep children and pets under control. Also turn off the televisions and stereos. The noise may distract tired clients, causing them to overlook many fine features.
7. Check garages and basements for debris. A two car garage should have plenty of space for two cars. Brighten basements with the highest wattage lighting allowed and clear away any cobwebs.

All offers for your property must be presented. Your sales associate will counsel and advise you, but the final decision will be yours. Review every offer, comparing the financial qualifications and readiness to buy of each buyer.

When you decide what terms are acceptable, let your sales associate negotiate with the buyer. The sales associate will review all costs you are willing to pay and what you expect of the buyer. A suitable deposit will be collected from the buyer prior to any acceptance of their purchase offer. A written agreement stating all conditions of the sale will be signed by both parties.

Now comes the time to sit back and be patient. The buyer is busy arranging mortgage financing. The real estate company and the title company are beginning to accumulate data and prepare documents. The sales associate is checking on the progress of the sale. You can concentrate on the important matter of packing and moving to your new home.

Final closing day will be scheduled when all the steps are completed. Both parties must sign the final closing documents. Once you present the deed to the buyer and receive his check in the amount agreed upon, your house is successfully sold.