How To Sell Your Home
IDEAS TO SELL YOUR HOME MORE EFFECTIVELY
Pricing Your Home:
Price your home according to recent comparable sales in your area. What is a comparable sale? Houses and neighborhoods are unique. Picking good "comparables" is very subjective. It may not be the house next door, which is too different, or a house two streets away may be too far. There may be five sales in your neighborhood that work, or the best comparable may be a mile away.
Automated market analyses provided by title companies and the MLS system are frequently fancy hokum -- like toilet paper, they come in fancy packages, quilted with meaningless data for extra thickness. Unfortunately, computerized data analysis can not factor in the unique attributes of neighborhoods and homes. This is why appraisal calculations must be performed manually. The analysis is very subjective and the subjective criteria should be explained to you.
Ask the agents presenting the "comparables" what criteria they used and how they adjusted the prices for the variables in each criterion. That should not be a hard question to answer if the agent has done their homework and truly understands the process. A good property valuation should take several approaches, which reach a similar conclusion. The conclusion should be a price range, because this is not a pure science and it is impossible to come up with a precise number.
There is a saying "price changes go one way." Don't price too low. Although in a "hot market" under-pricing can start a bidding frenzy, which drives the price sky high. This is a risky strategy.
On the other hand, the real estate marketplace defies common logic. Few agents will take the time to make offers substantially below list price -- even if the list price is way out-of-line. Lazy? Probably, but it is a phenomenon. Don't price to high. I've gotten great deals for buyers on over-priced homes, because our low offer was the only offer.
Market time stigma. Many agents/clients are afraid of homes, which have been on the market too long. The assumption is that there is something wrong with the house. Buyers think that if you are having problems selling, then they might have problems when they need to sell.
Consider the urgency of the sale. The lower the price the shorter the marketing time, the higher the price the higher the profit. Does it really need to sell that fast? Why?
Discuss the commission. It is not set in stone. How hard will your house be to sell? If it is a main-stream "cream-puff" which will sell in three days, who needs to pay 6%. If your house needs special attention and has major problems, how can incentives motivate the market? I sometimes suggest advertising a higher percentage to the Buyer's agents on very tough home sales -- it works. Tie commissions to performance or marketing time -- you are the boss.
Ask for a reduced commission for dual representation (double-ended) transaction at the time of listing. If your listing agent is representing both buyer and seller, he or she is doing more work, but not twice as much. The buyer may also expect a price reduction, since they believe that they are representing themselves (though not usually the case). The agent's liability exposure increases under dual representation, and that should be considered.
If the buyer negotiates credits or closing costs are paid by the seller, the commission should reflect these reductions of the seller's net proceeds. This should be stated in the listing agreement, and reflected in the contract, usually in a counter offer or addendum.
Showcasing the Home:
Make your home look as appealing as possible to the widest range of buyers. Main stream homes sell very quickly. Specialty homes take more time, or require discounts so people will adapt.
Go to model homes to get ideas. These homes are professionally decorated and staged for maximum effect (E-mail me for examples).
Try to follow these guidelines if you can.
1. Avoid extremes in colors/decor. Neutral is good, bold is risky.
2. The more light the better. But avoid a stark "hospital" look. Light and warm colors work best.
3. Replace worn or dated carpet and window coverings -- simple & sharp.
4. Get rid of clutter, and put away excess furniture. The home should look as spacious as possible. Don't be defensive about your realtor's suggestions. Rent a storage locker.
5. Don't expect Buyers to visualize how it could look - show them.
Put everything in good working order. If buyers see deferred maintenance issues, they might think that there are many unseen issues as well. Get those things fixed. Think of the efforts Proctor & Gamble put forth to package toilet paper and soap. The package can be more important than the product, especially in an emotional issue.
Consider having inspections (pest control and home inspections) performed before you put your house on the market. Knowledge is power. Surprises during escrow inspections lead to difficult negotiations, and sometime abandoned escrows. Knowing the problems in advance will allow you to fix them or address them to your advantage. A cancelled escrow is a stigma on your home, and can mean several weeks of lost marketing time.
Put your home on the market during the prime months: March, April, May, June and July. These are the best months of the year to sell. That's the time when the most buyers expect to buy.
Make sure your home shows well. Turn on lights when you leave the house. Make sure there are no potent odors. Tobacco, fish dinners, pet dander, litter boxes. These are all normal smells, but they do turn-off buyers. Provide mood music. Don't necessarily pick your favorite, go neutral light classical or jazz. Use a medium that will repeat or play all day. If you use a radio station, pick one with few commercials (I can help).
Stay out of the way when buyers view the home, and don't take them on a tour. Buyers generally dislike that and it may communicate anxiety to them. If buyers come back a second time, that is a good sign, leave the home if you can. Give them the "space" to envision their new home.
How Long Should it Take?
If your home doesn't get an offer within 2 or 3 weeks of coming on the market, talk with your agent about the problem, because there is one. Consider a price reduction, but that is not the automatic solution. Consider possible problems and their symptoms. Is the house being shown? Is there a problem with entry, with pets, with perceptions? How much activity are competing homes receiving?
Not all homes will sell quickly. The more unique the home is, the less likely that the right buyer will be looking just when you decide to sell. A lower price might entice another buyer to adapt. Can you wait for the right buyer? If you can you will make more money.
Keep the process in perspective. Your home is a very personal possession, but, selling your home might be your biggest business deal this year. What could have more impact on your bottom line? Think business, think smart, and put aside emotion if you can. Play to win, not to teach someone a lesson in manners, etiquette, or taste.
Don't over estimate the logic of the buyer. This is an emotional process. Those who keep their heads will win the prize. Use this to your advantage.
Understand the contracts that you are signing. Counter-offers and addenda are part of the contract. These should not be treated like memos between agents (common). Sometimes it is best to abandon a sloppy contract of negotiation, and replace it with a comprehensive document which clearly states the intentions of both sides, when the negotiations are complete. Ambiguities cause arguments and worry lenders – worried lenders delay escrows.
Escrow is a process where items are placed with a third party pending the fulfillment of a contract. Your deposit is placed with the escrow company in the beginning. Toward the end the home, the lenders money, the sellers money, and the rest of your money flow into the escrow. At the end, you get the house, the lender gets a note, and the seller gets the money. In practice escrow is the time period where pest control and home inspections are done and funds are secured. It's kind of like a circus. The inspectors make the seller jump through hoops and the lenders make the buyers crawl through fire.
Escrow is usually performed by a title company, which also issues a title insurance policy. These policies protect the buyer and are generally required by lenders. Traditionally the buyer pays most fees.
Picking Your Agent:
Interview several top agents. Pick one who is experienced and knowledgeable in negotiations, contracts and the inspection/disclosure process. Be careful of "Neighborhood Experts" who don't access out-of-area buyers. Just because someone sold a house in your area, does not mean that it was sold well, or to the Seller's advantage. Some issues will haunt sellers for years after the close of escrow. Ignorance is not bliss.
Don't hire a rookie, but avoid "experience" that has lost touch with the modern marketplace. The recent requirements for complete disclosure and the trend toward detailed buyer inspections can make the selling process a technical one. How do you know that a buyer's requests for repairs are legitimate or reasonable? What is the law? What are the customs in the marketplace? Make sure that you realtor knows the answers.
As with any emotional decision, a buyer's course of action is subject to persuasion and perception. Select a savvy agent who can help you turn lookers into buyers. Use an agent who knows how to help you pick the best offer, and understands how to keep the buyers interested and committed to the deal. Personality and communications truly are important factors. The buyer is likely to meet your agent and the agent's presentation and credibility are important.
Ask to see examples of an agent's contracts and addenda (past transactions). Ask them to explain the process of those negotiations. Is the content clear? Are there loose ends? There should be no slang, sentence fragments, or ambiguities. These are binding contracts. Good fences make good neighbors, and good contracts make good deals.
Treat your home sale like a business. How do you interview job applicants at work? How do you pick your employees? Should you check references?
Is a 'big name" brokerage an advantage. There are good and bad agents in big offices, in small offices and operating as one person shops. The type of brokerage affiliation really makes very little difference in selling your home. What is very important is that the agent is a member of the local multiple listing service, licensed by the state, and has a good reputation with the other agents in the community.
Most agents start with large brokerages to get some credibility when they have no experience. Large agencies offer office space and support staff for part-time agents - this enables clerical staff to fill-in when the agents are not available. Agents with a strong customer base often become independent to eliminate the brokers fees and commission splits. Agents should be evaluated on an individual basis.
The most important factor is the human relationship. The agent you choose should understand your objectives, and communication between you and your agent should be easy and candid. This is a very personal process, and liking the agent makes the process go smoother. You should also be able to trust the agent. This is not always easy, because realtors in general are not trusted.
You should findout how accessible the agent is. You would be surprised how many agents are ill-equipped for what should be a virtually all day access by clients or buyers. In today's electronic age, those agents without good communication tools are left in the dust, and so are their clients.