FOR SALE BY OWNER: AN EXPERT'S GUIDE FOR SUCCESS
Greg Blake and Tim Smith e and Tim Smith
Table Of Contents
How To Sell Your Home Faster ... And For More Money 2
Why Some FSBOs Sell And Others Don’t
Violate This Home-Selling Rule And Lose Money 8
High-End Tactics To Sell Your Home For Top Dollar
Does Clutter Matter?
Get Buyers Off The Fence In 8 Seconds
Details To Remember
Tactics For More Showings And More Money 34
If A Billionaire Sold ‘For Sale By Owner’
10. Why Most FSBOs Screw Up Negotiations
11. Advanced Negotiating Tactics
12. The Crucial Point Sellers Can’t Afford To Miss 58
13. The Easiest Way To Lose $36,000 On Your Home Sale
14. Why Homes Don’t Sell
15. Preparing To Market
16. All You Need To Know To Show Your Home 84
17. How To Close Effectively
18. Once You’ve Sold Your Home
19. What Has To Be Disclosed When Selling A Home
20. Hire A Real Estate Agent Or Not?
CHAPTER 1 How to Sell Your Home F our Home Faster ... and for More Money In the process of selling, you will spend an incredible amount of time holding shows for potential buyers. Unfortunately, many are not interested in buying your home. This wastes a lot of your time. The average home showing process takes three–four hours. Most owners show their home at least 8–10 times before making a sale. The average owner spends 24-40 hours of his or her life showing their home. It can easily take 80–120 hours to complete the process. Many homeowners will jump at the chance to show their home to anyone and everyone. When a buyer calls, they drop everything. This reactive approach is a big reason why it takes them anywhere from 8–30 showings to find the right buyer! The process will consume your life. Over time, stress begins to build. Not just on you. Repeated showings are stressful on your entire family. It gets worse as casual buyers continue strolling through and walking away undecided. Do you have children? Pets? Showings cause chaos in their lives! Kids are rushed off to a friend’s house or whisked away to the park. Toddlers are parked in a playpen so you can begin the hurried cleaning process.
Maybe your pet gets locked in a crate, sent to the basement, or tied up in the yard. Your dog can’t run around during the showing or even while you clean house. The poor pooch is cooped up for hours every time a buyer wants to stop by. Children and pets do not like chaos. They might start misbehaving or need extra attention to counter the stress. At the same time, the house needs to be spotless from top to bottom. Someone has to rush around frantically cleaning and organizing every time a buyer calls. Chances are you are going through all this stress to prepare for someone who was never serious about buying in the first place . Most people who look at a home are not going to purchase that particular house . Many “buyers” come only out of curiosity. Many real estate agents show buyers multiple houses in order to increase their odds of making a sale. According to the National Association of Realtors®, an average agent sells 11 houses a year. Therefore, each transaction represents approximately one month’s worth of income. The agent wants to close a deal quickly and receive his or her commission. Here’s the problem you are facing. Most real estate agents go about it the wrong way. They believe they will increase the odds of making a sale by showing as many houses as possible to their potential buyer. They flood the buyer with options, hoping something will catch his or her attention. At the same time, they do not have a clear picture of exactly what the buyer is looking for, so they are unable to deliver.
Let’s look at how the typical process usually works. An agent has a potential buyer who would like to buy a three-bedroom/two- bath house in a specific area. First, this agent prints out every listing that matches the buyer’s criteria, including a few close matches. These houses might not have three bedrooms, or they might be slightly over budget. She then takes the client from one house to the next. The buyer will see many houses, but in most cases, won’t be interested in any of them. Nothing has that special something they want in a home. This leads to wasted time, both for the buyer and the sellers they visit. Most buyers end up touring 20–50 houses before making a purchase. If the buyer visits 30 houses, and each seller takes three to four hours per showing, that buyer wastes 90–120 hours of his and the sellers’ time. Many hours could be saved if real estate agents and sellers learned how to qualify buyers ahead of time . Buyers could then look at the listings and know immediately whether they want a particular property. What if you could find serious buyers and get them interested in buying your home? In an ideal world, buyers would not go out to see a property they didn’t want. If you were the seller, you would not have to prepare your house for a buyer who wasn’t likely to make a purchase. You would only show it to people interested in buying. That would help you sell your house faster while reducing stress on you and your family. It would cut down on the number of showings, but each visit would be a potential sale.
This book will help you turn that ideal world into reality. First, though, you need to have a clear understanding of exactly how much your house is truly worth in today’s market.
POINTS TO REMEMB O REMEMBER:
• The average owner spends 24–40 hours on the 8–30 showings needed to sell their home. • With preparation, the process can take 80–120 hours, causing stress for adults, children and pets. • Most real estate agents show potential buyers many homes, hoping one will catch the buyers’ attention. • A better method is to show your home only to serious buyers, by qualifying them in advance.
CHAPTER 2 Why Some FSBOs Sell and Others Don’t
The key to this successful home selling approach is a revolutionary finding discovered by Italian economist Vilfredo Pareto. His greatest contribution, the Pareto Principle, is better known informally as the 80/20 rule. In 1906, Pareto noticed that 20% of the pea pods in his garden held 80% of the seeds. Taking a closer look at this ratio, he found that 80% of land in his area was owned by 20% of the people. After detailed study, he observed this ratio held true in many aspects of life. For example: • 80% of your income is derived from 20% of your work. • 80% of a business’s income is derived from 20% of their customers. • 80% of your value to an employer is derived from 20% of your work. In a nutshell, approximately 20% of what you do matters. The other 80% is insignificant. It is important to understand this is not always split at 80/20. It can be 70/30 or another percentage. The key is that the two numbers are not equal and they are usually close to 80/20. Applying the 80/20 rule can save you time selling your home. Unfortunately, many real estate agents and sellers buy into the
false idea that more is more. They completely ignore the Pareto Principle. Stop trying to sell people on the entire home. Based on the rule, only 20% of your home’s features are important. The remaining 80% are trivial. That’s because they are the same features many other homes in your neighborhood have. Instead of focusing on those trivial features, focus on the unique features to grab the attention of buyers. These features make your home different from others. They’ll make it easier to sell your home for the full asking price. Let’s look at a few real-life applications and examples of how the 80/20 rule can have an impact on selling your home.
POINTS TO REMEMB O REMEMBER:
• According to the 80/20 rule, only 20% of your home’s features are important to buyers. • To sell your home, focus on the 20% of its features that make it unique.
CHAPTER 3 Violate this Home-Selling Rule and Lose Money
Remember that buyer in the market for a three-bedroom/two- bath house? Let’s assume the agent found that buyer five houses to preview. Each meets his general criteria, and is located in the area where he hopes to live. The agent and her buyer drive out to look at the five houses. All five have similar features. The prices are comparable. In theory, you might think the buyer will have a hard time deciding between houses. No matter how similar they may seem, no two houses are exactly alike. In real life, the 80/20 rule comes into play. Imagine four of the houses don’t have a pool, but one does. The buyer is not aware of this though because the agent didn’t mention it. The buyer sees the four houses that don’t have a pool. He isn’t particularly interested in any of them. Then he sees the fifth house and the pool! Suddenly, he is ready to make an offer. He might even pay full asking price, even though this house is more expensive than the others. The buyer’s offer isn’t based on the 80% of features this house shares with the rest. Instead, his bid is based on one unique attribute: a pool. The 80/20 rule predicted the sale of this house. Sadly, in this case, much time was wasted finding the perfect house. Had the agent known to look for the 20% difference, this might have been her first stop. As a seller, you can leverage 8
the rule to work in your favor. Draw attention to defining characteristics in your home. Here is a real-life example. A real estate agent had a client visit from out of town. He did not have a list of criteria, just liked the area. The agent drove him from house to house. In each case, this buyer suggested offers 10% to 20% below the asking price. He would not budge. She began to worry; the whole day was turning into a big waste of time. As the sun set, they stopped at one last house. It was not good- looking and had little curb appeal. She was out of options. Nevertheless, this house broke the tough negotiator down. He was suddenly willing to offer the full asking price! What set this house apart from the others? It wasn’t because the buyer had a thing for ugly houses. Nope. The 80/20 rule kicked in again. Buyers pay more for unique features. This agent and her client had spent the whole day looking at houses that shared 80% of the same features. He did not care about any of those details. A bedroom was a bedroom as far as he was concerned. He fell in love with the one remarkable feature of this house. As he walked into the great room, there was a large window. The house sat atop a hill with a gorgeous view. And to top it off, the sun was setting below the distant tree line. That view sold the buyer. The other 80% could be improved. He did not buy the house because he liked the floor plan or the number of bedrooms and bathrooms. That view caused him to stop negotiating and offer full price on the spot. Such is the power of the 80/20 rule.
Learn how to tap into this rule, and you will not have to settle for less than your asking price. Leverage a unique selling point. Buyers who fall in love do not haggle over pricing; they make good offers. In some cases, the 80/20 rule even helps people make a sale without conducting a showing. This is a huge time saver. The house in the following example had languished on the market for months. Unlike the previous house, this place was not ugly. On the contrary, it was a brand new custom-built home. But nobody seemed to care. It sat on the market more than seven months without a single offer. The builder was baffled. His fancy new house would not sell. He ended up firing his agent and hiring a new one. Fortunately, the new agent knew the importance of finding that special feature. He drove out to give the house a thorough investigation. What he found changed everything. The house had a gorgeous five-acre yard. Other houses being sold in the area were all on one- to two-acre lots. Not only was the yard bigger, it was more private than other lots available. The new real estate agent marketed the five acres. He mentioned details and a description of the house, but the house was not the main selling point. He shifted attention to the five-acre lot. In no time, his phone rang! A buyer was relocating and had noticed the house was for sale, but it hadn’t caught his eye. That changed suddenly when the buyer learned it was built on a five-acre lot. He submitted an offer from 1,000 miles away, never
having seen the property in person.
He was afraid someone else would buy it before he could, and he would lose out on the perfect house. That sale happened in 45 days. The builder was amazed! His house had been on the market close to eight months without so much as a nibble. Suddenly it was sold. Purchased sight unseen, all because of the 80/20 rule. For a short time, this “unsellable” house became the hottest house on the market. Don’t create an advertisement like the ads for every other house in the area. Turn a spotlight on something different about your home. You will attract interested buyers willing to pay full price.
SELLING TO INTERES O INTERESTED BUYERS
Find something unique about your home and build advertisements around that one item. It will catch people’s attention. Buyers who are looking for that one item will ask to come see your home in person. As a result, you will stop wasting time showing to people who are not interested. Instead, you will be showing your home to buyers who are motivated to make a purchase. You won’t have to show quite so often. You also won’t have to sift through lowball offers from apathetic buyers. Less stress for you. Take time to uncover your home’s most attractive and unique features. Compare notes with other houses in the neighborhood to see what makes yours stand out.
POTENTIAL UNI AL UNIQUE FEATURES
Each house has unique features. You may already have some in mind. If not, these ideas should get you started: • Hilltop views are an excellent defining feature. As with the earlier example, a high vantage point offers a spectacular view of the surrounding area. • Maybe your home looks out on an open field frequented by wildlife. Many people would like that view. • Perhaps your house has an unobstructed view of the sunset. That would interest potential buyers. • Patios are another great feature. Maybe the rest of your neighbors have smaller patios or none at all. That vital feature could help you sell your home. • Location can set your property apart from others. Not your addressed location but rather your location compared to the surrounding homes. A buyer once paid extra for a townhouse simply because of its location in the complex. Most of the surrounding homes did not have any yard. However, a few shared a large half-acre “yard area.” One of the owners whose townhome backed up to this yard area sold his townhouse for a higher price. It set his property apart from others on the market. His home had a characteristic shared by fewer than 10% of the others. He had the only available listing offering that feature. With this easy point of difference, the house sold for a higher price. Another townhome seller in the same complex did not have a yard, but his property backed up to a lake and fountain. That extra feature helped him sell his townhouse quickly and for a
• You might have a private location. For instance, your lot might be partially concealed by trees, or you might have an empty lot next to you. Use this to market your property. • You might have a unique backyard. If you have a larger backyard than your neighbors do, use that to your advantage. • A shady backyard can also help you sell your property. Some people like the idea of lounging in the shade. • A fenced-in backyard is also a big selling point. People with kids and pets flock to homes with fenced backyards. • You also can look at other features. For instance, a finished basement can help you sell your home. You can market a large attic, an extra-large garage, a swimming pool, or anything else that makes your home stand out. Look for the 20% difference and find a way to market it. That is how you will get results. You cannot just throw the information into your listing, though. You have to take the right approach.
POINTS TO REMEMB O REMEMBER:
• Focus on the features that set your home apart. • Buyers often pay more for unique features.
CHAPTER 4 High-End Tactics t actics to Sell o Sell Your Home for Top Dollar op Dollar
The rich and famous use this secret strategy to sell their homes. In one instance, a real estate agent reported this strategy caused one condo to sell for $110,000 more than a similar condo in the same building. In reporting, the real estate agent mentioned having intimate knowledge of both condos. Neither listing was bank owned, a short sale, or a distress sale. The only plausible explanation why one home sold for more than the other was the seller’s use of this secret home selling strategy. This strategy is effective in any market, no matter what type of property is being listed. It applies equally to houses, apartments, townhouses, or condos. Agents and sellers using these tactics have a greater chance of closing a sale for more money. This real estate agent discovered the secret strategy, almost by accident. He met a wealthy executive who was interested in selling his condo. The owner was willing to hire the agent, on one condition. The real estate agent must agree to use the man’s secret method to sell the condo. It sounded crazy, and the agent was naturally skeptical. On the other hand, selling the condo would bring a handsome commission. Conversely, if it did not work out, their agreement would expire, and the agent would walk away. 14
The real estate agent decided to give it a shot. He helped prepare the listing. They priced the condo at $554,900. For reference, two similar condos in the same complex were listed for $479,000 and $439,000. With two similar condos listed for less, the agent was doubtful of a sale. But the condo went on the market. Almost immediately, he began to doubt the strategy. The condo was showing regularly, but no one was making offers. People were just walking through and leaving. To make matters worse, most visiting agents thought the condo was overpriced. They could not understand why the owner was asking for so much money. After all, a similar condo just around the corner was available for $100,000 less! They counseled their buyers to keep looking, and left without making offers. The story is real. The condo had no special attraction that set it apart from the others. This unit was not a penthouse. It was on the sixth floor of a 10-floor complex. The top-floor units were not penthouses either. And the other agents were not wrong. The price was high. Still, the owner stood firm. One day, four months and many showings later, another buyer walked in. This time it was different. This buyer loved the condo the moment he stepped through the doorway. He made an offer before he finished the tour. The agent could not believe what he had heard! He rushed to call the owner. The owner accepted the man’s offer, while the agent began to worry. Maybe the buyer would find out he was overpaying. Maybe the deal would fall apart. But no, everything worked out.
The place successfully sold for $549,000, which was a record high! Naturally, the real estate agent was thrilled. So was the owner. He made a substantial profit. The price was $110,000 higher than the previous condo that had sold two and a half months earlier for $439,000. The higher price was not because prices were rapidly increasing. The next unit that sold (28 days later) went for $435,000. It was a less desirable second floor unit. Five months later, another similar condo sold for $450,000. Would you like to use this secret strategy to sell your home for more money? It does take some extra time and some extra work. But as you can see, the payoff is well worth the effort. What is the secret strategy? What was the special request the wealthy home seller had for his agent? It was simple. He wanted to stage the condo. Staging is the act of sprucing up a home to make it as visually appealing as possible. It might sound crazy, but it causes homes to sell for more money. In fact, a whole lot more. Many agents encourage sellers to stage their homes. However, very few of them could ever show you a case study proving it will help your home sell for more money. Fortunately, this real estate agent knew he was on to something. He began researching everything he could find on staging, and the impact it had on sale prices. He put his findings together in a big write-up, sharing the tactics the wealthy seller had taught him. He included all the examples he had found as case studies.
The next chapter is an excerpt from his report, with one of the case studies he recorded.
POINTS TO REMEMB O REMEMBER:
• Staging is a method of making a home as visually appealing as possible. • The staging strategy has power to make homes sell for much more money.
CHAPTER 5 Does Clutter Matt er Matter?
STAGING VS NON-STAGED CASE STUDY & REPORT
We wanted to give you the most convincing proof possible. Many people find it hard to believe the simple act of staging helps one home sell for more than another similar home. In our research, we looked for examples of similar houses being sold for differing amounts of money where only one of the two houses were staged.
The clearest example we could find was in these two listings.
This development has 200 equivalent townhomes.
Every single townhome in the neighborhood is 3 stories with 3 bedrooms and 3 bathrooms. Every single unit has the exact same floor plan.
We looked for two sales there, and found these:
• Townhome A sold on August 26. t 26. • Townhome B (5 doors down): sold on July 26, f y 26, for $40,000 r $40,000 less. We personally visited this neighborhood, and we are familiar with these properties. You could not find a better example of two
identical properties that sold for different prices.
The details show these two homes are identical in every substantial way: • The lots the units sit on are identical as far as the desirableness of the location. • Both units had the same kitchen plan with the same cabinets and a tile floor. • Both units had nice hardwood floors in the living room, and carpeted bedrooms. Every important detail of these two townhomes was identical. We studied every aspect of these sales to find what made the difference. There are two reasons one home sold for $40,000 more than the other: • Townhome A was professionally staged, giving it a more appealing appearance. • The agent selling Townhome A took higher quality, more attractive photos of the home. Those two seemingly small actions made the $40,000 difference! The buyers of Townhome A made a higher offer because the agent presented the home in a more appealing and attractive way.
- END OF STAGING REPORT -
Even simple things can make a big impact on the final sale price of a home. Staging done well is one of those things!
YOU HAVE TWO OPTIONS FOR STAGING A HOME:
• Option 1: Do it yourself. Learn how in the following chapter. • Option 2: Hire a professional home stager. If you are considering hiring someone to handle your staging, contact us for a list of references. We’d be happy to share recommendations and send you information on stagers who will do a good job for you.
POINTS TO REMEMB O REMEMBER:
• Professional staging can dramatically increase a home’s sale value. • Staging creates opportunities for high-quality pictures to show a home to its best advantage.
CHAPTER 6 Get Buyers off the F ers off the Fence in 8 Seconds
Buyers decide in the first eight seconds of touring a home whether they are interested in it. That is why it is so important to stage it. You can hire someone to do much of the hard work, but some things you can handle yourself.
MAKE IT SPOTLESS
It is vital to do a thorough, deep cleaning of your home. It works for people selling a car (they get more money), and it will work for you on a bigger scale when selling your home.
For a good deep cleaning, you should do the following:
Declutter: Begin with decluttering. As a standard, go through your home and get rid of 50% of your belongings. Highly personalized items, photographs, out-of-season clothes, random junk and excessive furniture need to go. To be clear, you do not have to throw the stuff out! Donate it. Sell it at a yard sale. Give it away. Someone can use what you don’t need. Put precious items, such as family photos, into a safe or offsite storage. Once you declutter, you will be amazed how much roomier and nicer your home feels. The goal is to de-personalize the home so potential buyers can envision themselves living there. 22
Hardcore Cleaning: Now that the clutter is gone, move on to hardcore cleaning. Be meticulous. Tidy each room from top to bottom.
DON'T FORGET TO:
• Get rid of cobwebs first. This keeps you from getting dust bunnies all over freshly cleaned floors and furniture. • Dust ceiling fans and lighting fixtures while you clean the cobwebs. • Dust your blinds. • Wash walls, unless you plan on painting. • Clean all glass surfaces: mirrors, television screens, patio doors, and windows. • Polish all wooden surfaces. • Wipe down any leather furniture. • Attack all appliances with cleaning fervor. Make them shine! • Sinks, toilets, tubs, showers, faucets, and countertops need to be impeccable. Every room is important, but the kitchen and bathrooms always draw buyers. They need to be eat-off-the-floor clean. • Vacuum rugs, shampoo carpets, and mop as if your life depends on it. Painting: Fresh paint provides a clean canvas. If you have not painted your house in the last year, consider doing the entire inside of the home right now. If you have painted it, you might want to paint a second time. When planning to repaint, include everything. Paint the ceilings, the trim and window casings, and the doors. Do not forget the
closets. And, of course, paint the walls.
Make sure you paint the right way. An artist creates a new painting on a plain, primed canvas. Through your efforts with painting, you are delivering your potential buyers a clean, primed canvas, where they can imagine their family in your home. Keeping all of this in mind, use neutral colors. That does not mean everything must be lifeless or stark white. That can have a negative effect as well. Rather, you want colors to be unobtrusive. Stick with gray, beige, off-white, and white. If you just painted the master bath turquoise and added cute polka-dot trim, change it! Remember, a blank canvas opens the imagination to endless possibilities. Polka dots do not. Kitchen and Bath: Focus on these high-impact areas. Buyers are most turned off by dirty, grungy bathrooms and kitchens. Now, that doesn’t mean you can create stunning bathrooms and kitchens, while leaving the rest of the home a mess, and still expect to sell your house for top dollar. Just be sure to address your bathroom and kitchen first. Keep this in mind: potential buyers might forgive a less than stellar child’s room, but a questionable bathroom or kitchen could cost you a sale. Now it’s time to move on to another important issue — appliances. New appliances can be a great idea or a waste of money. Fortunately, you can follow a few guidelines to make the big decision.
Should you buy new appliances? It depends on your situation. No
doubt, new appliances make an impact with buyers. The National Association of Realtors® did a survey of buyers in the market over the past several years and found: • Buyers were somewhat or very interested in buying a home that featured new appliances. • 41% percent of home buyers were willing to pay more for a home with stainless steel appliances. • The most important factor: appliances were available. • Buyers who were unable to get their sought-after appliances said they would have been willing to pay, on average, nearly $2,000 more for them. Potential buyers want appliances included and will pay more for them, especially if they are new, or at least in excellent condition. If you can afford it, new appliances might be the feature that sets your house apart from the home for sale across the street. If new appliances are out of your reach, offer buyers your current appliances, immaculately clean and fully functioning. Updating Hardware: Take a nice, long look at your bathroom and kitchen hardware. You will likely notice it looks well used. Put yourself in a buyer’s shoes. They are looking at your old house as their potential new home. Old, worn-out fixtures are not going to speak to them the way shiny new hardware will. That does not mean you should run out to buy all new fixtures. Unless your knobs, pulls, handles, and hinges are broken, there is no real reason to replace them. Get that new look simply by thoroughly washing and repainting them. There is spray paint made specifically for this reason. The project should be inexpensive. 25
Here are some items of household hardware you can make look almost new with a paint overhaul:
• towel bars • toilet paper holders
• door handles • light fixtures
The goal is to patch up your home nicely, with as little cash as possible. This is a great way to do it. If you do have broken or completely worn-out hardware, you had better replace the whole set, unless you can find matching pieces. You could paint the old and new to match. You could also combine the good parts in one bathroom, and replace all the hardware in the other.
OTHER INEXPENSIVE BATH AND KIT TH AND KITCHEN UPGR CHEN UPGRADES
• Buy a new toilet seat. • Refurbish worn-looking cabinets with a paint project. • Replace an outdated sink with a pedestal variety. • Repair grout in tile backsplashes, floors, and tub surrounds.
POINTS TO REMEMB O REMEMBER:
• Staging is important because buyers establish interest in the first eight seconds of seeing a home. • Start with decluttering and a thorough cleaning. • Repaint walls, ceilings, and closets in neutral colors. • Focus especially on kitchens and bathrooms. • Replace or rejuvenate worn hardware. 26
CHAPTER 7 Details to Remember emember
According to the National Association of Realtors®, most recent home buyers would have preferred improved and greater closet space, as well as other storage opportunities. People have lots of stuff, and they need somewhere to hide it. You can never have enough storage! Give buyers great storage, and you’ve won their hearts. If you can add new closets to your home with ease, it is a huge bonus for you. Building a simple closet is not difficult if you are even moderately handy. If you are selling an older home, where closet space is typically at a minimum, this will help. Of course, adding closets is not always a possibility. If your rooms are already small, you might not want to take any square footage away from them. You might not have the skills—or the funds to hire someone—to build new space. This is when we turn to closet organizers for help: • You can easily design your custom closet kit online with a storage solution company such as Closet Maid. • Your standard superstore or hardware store often has exactly what you need in an inexpensive, pre-fabricated form. Organizers might not enlarge your closets, but maximizing vertical and horizontal space is a good substitution.
Don’t stop there. After all, storage is not restricted to clothes closets. Storage improvement opportunities also apply to cabinets, linen closets, attics, and basements. It is important to make sure you organize your cabinets. The same places that provide closet organizers can help you with this. Take a good look at your laundry room or linen closet. Adding extra shelving in these places makes a big impact. Look for any place you can add attractive and inexpensive storage. Make sure your improvements are tasteful. Buyers really love this stuff. Use the bedroom addition trick. Who doesn’t want to add tons of extra value to a home? Here’s an easy way: add another bedroom relatively inexpensively. Okay, before you start laughing, take a minute to consider your options. While not every home will benefit from an extra bedroom, in special cases, it can really set your home apart from others in the market. This does not mean you need to add square footage to your home. Simply create space for another bedroom. For example, add a closet to an extra junk room. Voila! You have a bedroom. You can easily convert a den, office, spare room, or conditioned attic into a third or fourth bedroom by building a closet. Before rushing off to build closets, compare your home with similar houses available in your area: • If three-bedroom homes are the norm in your neighborhood, a fourth bedroom might give you a real
advantage. • However, if buyers in your area are looking for one- or two-bedroom homes, an additional bedroom would be a waste of money. Do some homework. Find out configurations of rooms in nearby homes. Talk with a real estate agent about buyer preferences. They can help you determine whether you would benefit from a simple bedroom addition. Bottom line: if you need a significant boost to your home’s worth, adding a bedroom is one great way to do it. Mechanical maintenance is a must. It is easy to get wrapped up in the more eye-pleasing aspects of getting a home ready to sell. But never overlook the upkeep of all the mundane aspects of your home.
Take a closer look at these mechanical features:
• electrical boxes and wiring • natural gas lines • plumbing • central heating and air conditioning system
If these components of your home are old, outdated, or not working properly, you are lowering your home’s price significantly. According to the National Association of Realtors®, heating and cooling costs were the most important environmental features for recent home buyers, with 83% finding these features at least somewhat important.
It is true that people buying homes want to purchase something that reflects their aesthetic tastes and lifestyles. However, they also want a home that is safe and sound. Faulty electrical systems do not provide a feeling of safety. Leaky plumbing arouses concerns of mold infestation. These areas are no fun to fix, but they are extremely important. Overlook these areas in the preparation stage, and you run the risk of trouble later with inspections and appraisals. Take care of the many mechanical features of your home, and you’ll profit from it. Obviously, professionals should do most of the mechanical work. Having a professional inspection is a big plus to most buyers as well: • Have a certified plumber inspect your entire water system for leaks. Check the well and septic field if applicable. • Hire an electrician to check your wiring. • Call your local HVAC company, and have their technicians perform a thorough service checkup. • Contact your natural gas supplier and have them double check the mechanics of your tank and lines. There is an alternative option to calling and arranging all these different inspections. Certified home inspectors usually can cover all the different items related to mechanical issues, and more. They can identify possible trouble spots you need to address. Many buyers hire an inspector, so you might even be saving them a step. Replacing antiquated wiring and plumbing is not cheap. If you have mechanical issues and decide to sell your home as is, you might have to lower your selling price. Turning to a real estate agent for a professional opinion can help. As with the extra bedroom step, it pays to know what competition you are facing.
You can also choose to wait and negotiate with buyers.
Sometimes you will get lucky and find a buyer who is already interested in remodeling. Sometimes you find a buyer who has certification in that area, and will buy the house for a lower price and plan to do his or her own work. If you are unable to update and repair, be honest, upfront, and flexible. An interested buyer will work with you. If you can update, highlight fixes you can handle. Then, note any fixes requiring professional assistance. Finally, note anything you wish you could fix. Start with the easiest items and work down the list. Remember the 80/20 rule, and focus your efforts on the updates and repairs that bring the greatest returns!
POINTS TO REMEMB O REMEMBER:
• Adding inexpensive storage space can increase your home’s appeal to buyers. • Often, creating another bedroom is as simple as adding a closet to an unused area. • Before making additions, study what other homes in your market have to offer. • Consider hiring professionals to maintain or upgrade plumbing, electrical, HVAC, or other mechanical systems.
CHAPTER 8 Tactics for More Showings and More Money
Floors are a key in your home. Buyers will be sure to notice how worn they are and if the floors need to be replaced. Replacement can be expensive and difficult. Installing new floor coverings of any kind, including carpeting, hardwood, or tile, can get pricey. Costs vary widely, based on the size of your rooms and the flooring material used. Fortunately, replacement is not your only option. Use these cleaning tips to avoid expensive flooring work. Carpeting: Carpets take a beating. General traffic, pets, children, muddy shoes, coffee, and wine all leave their calling cards on your carpeting. Unless you have been extremely fussy about your carpeting, it shows signs of use. This job calls for more than a good vacuum. Shampoo: You can often rent or purchase a carpet shampooer inexpensively. If your carpet does not have stains, spruce it up with a good washing: • Move furniture out of the rooms you need to shampoo. • Follow the shampooer’s instructions. • Go over the carpet thoroughly to remove all soap residue. • Keep traffic off the carpet until it is completely dry. You should see a significant difference in both the smell and look of your carpet. Buyers will notice the fresh, clean feeling, too.
Steam Clean: Stained carpets need more in-depth treatment than a regular carpet shampooer can offer. If that is the case, go with a steam cleaning and spot treatment. Either rent a steam cleaning machine or hire a professional carpet cleaner. If you are dealing with severe stains or damage, get a cleaning estimate first. Then compare the price to replacing the carpet. Cleaning can make a tremendous difference and save the cost of replacement. Sometimes deep cleaning works, but cannot remove an extra stubborn stain. You might be able to cover up isolated bad spots with rugs. Adding a tasteful area or throw rug makes the room a little more attractive for showings. Don’t be dishonest about a trouble spot, though. If your carpet was in such bad shape that a steam cleaning did not remove all the stains, it will be evident to buyers that the carpet needs to be replaced. Even if your carpet is beyond the help of a professional cleaning, you may not want to replace it. New carpeting is a big expense for most people to fit into their budgets. Carpet, like paint, is a very personal choice. It would be a shame to re-carpet, only to discover a family loves everything about your house but the carpeting you just purchased! Instead, work with what you have. Clean it and put down rugs. Keep it vacuumed. Stop people from eating and drinking on it, effective immediately. Confine pets to rooms with slick floors for easy mopping. Do everything you can to keep the carpet from getting worse. If a buyer loves everything in your home, except for the ugly carpeting, they might overlook it. They may be willing to
negotiate a lower price or accept a flooring allowance in your final contract. Obviously, a clean carpet is best. These alternative options can help you keep costs low, and still make a good impression.
OTHER FLOORING TYPES
No matter the material, if you have a floor that is a little worse for wear, clean it thoroughly. Pay attention to details that vary by the type of material. Take tiny steps until you find the right fix. Your hardwood floor can probably get by with a good waxing. Vacuum the joints, where dirt accumulates. Refinishing is a last resort. Give tile floors a heavy scrubbing. Clean the grout joints between the tiles. If that doesn’t work, have it re-grouted. In some instances, you might feel the only option is to replace flooring. Make this a last resort. You might be pleasantly surprised how some tender loving care can make a floor shine! When these non-carpet flooring types need more than a cleaning, consider repairs. However, in some cases, it is cheaper to replace your floor than to have it repaired. If your current flooring is damaged beyond repair, you might have to replace it. When you do, consider less expensive flooring options. For example, vinyl self-stick tiles are inexpensive, easy to install, and simple to replace when damaged.
BRIGHTENING YOUR HOME
Lighting is an essential element to update when prepping your house for sale. As with flooring, tackle lighting improvements by repairing what you can and replacing the worst fixtures.
The most important key to lighting is to be moderate and practical with your updates. Why? The National Association of Realtors® reveals many home buyers will replace lighting fixtures as one of the first changes to their new home. There is no need to go overboard in spending big on lighting fixture updates. Help existing fixtures look their best. Here are cost saving ideas to refurbish the good light fixtures you already have. Follow these tips to save cash: • Use the same spray painting principles you practiced on your handles, pulls, and knobs. • New globes give an old fixture an updated look. • If repairing an old fixture will cost more than replacing, replace it with something tasteful but simple. • Replace any light fixtures that are broken, damaged, or dangerous in any way.
• Put in new light bulbs to brighten up rooms. • Thoroughly clean fixtures you are not updating. • Don’t forget the outside lights!
Great lighting is important when showing a home. When potential buyers walk into a bright, well-lit house, they get a feeling of openness and trust. You put in a lot of hard work cleaning, so light everything up, and let your home shine! Bright lighting makes an area look more open and attractive. This will make closets and rooms in your home feel larger. One more tip: change old, haggard ceiling fan blades. Look for inexpensive ones at any hardware superstore.
Revamp the front entrance: Step outside the house and onto your front lawn. Don’t feel bad if you’ve gotten so wrapped up in updating and improving the inside of your home you have neglected the outside. It happens to all of us. You can rectify the situation quickly and efficiently. First, address the front entryway, starting with the lock and knob of your front door. What do you see? • Is it a mousy little knob from decades past? • Is it dented or rusted? Does the key stick? Is it hard to open? • Could someone break in with a bobby pin and patience? If you answered “yes” to any of these questions, you need to replace your door handle with a heavy-duty deadbolt and knob combination. Why? The knob is the first point prospective buyers touch on your home. A flimsy lock and handle on your front door tells potential buyers your home isn’t secure. It makes them feel uncomfortable, and they won’t even know why. Get a nice, big, sturdy set, and they’ll feel your home is as safe as can be. Now, take a good look at your door. Is it pleasing to look at? Or is it weathered and dinged up? Has your metal door never seen a coat of paint? Is the paint on it peeled and flaking? It is time for a change. Here are two simple ways to put a new face on your house: • Add a dash of color. Choose paint that complements the color of your home. • Use faux painting techniques to transform your metal door into a wood grain look-alike.
If your door is severely damaged, have it fixed or replaced. As always, go with whichever costs less. You’ve addressed the living area inside your home. Your front entrance is inviting. Now is the time to take a critical look at your front yard. Curb appeal: Curb appeal (how your home looks from the road) is the most important image of all. You want to make an amazing first impression. A well-prepared house can even catch the eyes of buyers who never intended to visit your home. Buyers driving by who look at your home should immediately feel as though they want to go inside. This will not happen if you have poor landscaping, a dingy exterior, or an unkempt yard. Look around your yard and list everything that needs a little work. • Are your shrubs, trees, flower gardens, and walkways tidy? • Is there trash or just a general mess in your yard? • Does everything (front light, garage door, porch rails, etc.) function properly, and look its best? • Could outdoor features, such as patio furniture or the garage door, be updated with a quick coat of paint? Chances are you’ll have some improvements to do. Take heart: just think of how many people are going to beg to view the inside of your home when they see how beautiful it is from your curb! This might seem like an overwhelming list, but it takes hard work to get a home ready to sell. Anyone can put a house on the market. Not everyone sells quickly or with great profits.
Thankfully, you now have a big advantage over other sellers.
You know what it takes. Follow these guidelines to gain the best advantage for your home to sell quickly, and for the best price.
POINTS TO REMEMB O REMEMBER:
• Decide whether flooring needs repair, replacement, or special cleaning and care. • Brighten your home inside and out with new lightbulbs. Improve or replace worn fixtures. • Upgrade worn or outdated doors, knobs, and locks. • Optimize curb appeal. An initial view of your home should make visitors want to see the inside.
CHAPTER 9 If a Billionaire Sold ‘For Sale By Owner’ y Owner’
First, the bad news. There is a good chance the buyer of your home will be a great negotiator. If you don’t know anything about negotiating, you risk having them take advantage of you. Now the good news. This book reveals how an average negotiator can avoid being taken advantage of by a better negotiator.
Two things determine who wins a negotiation:
• The motivation of the people negotiating • The skill they have or do not have negotiating
Here is a story that plays out every day, across America. There is a good chance this could happen to you. A seller has a home on the market. He is an average negotiator, not great, not horrible.
Unfortunately, he is a motivated seller:
• He has had the home on the market for eight months. • He has already relocated to another city. • The home and upkeep have been stressing him out. • He is super busy at work and doesn’t have the energy to deal with another problem. A buyer wants to buy his home. This is the perfect home for her. 42
She has been looking for a home just like this for a long time. Therefore, the buyer is highly motivated to buy this home. In fact, her husband is scared that if they negotiate too hard, they will lose this house! This buyer is an incredible negotiator. She’s cool and collected. First, she gathers all the facts. She finds out the home hasn’t been shown in two months. Then, she finds out the seller has already moved. She looks up the seller on Facebook and stumbles across a revealing Facebook post. The seller vented about real estate and how badly he wants to sell the house. Now, let’s ask ourselves a question. Who do you think is going to win this negotiation? Yep. The buyer. Both parties are motivated, but one did a better job at negotiating. As a result, she wins! She buys the home for $43,000 less than the fair market value. Don’t let this happen to you! In the upcoming chapters, we’ll take a closer look at negotiation. Take time to prepare, and you’ll be ready for whatever comes along!
POINTS TO REMEMB O REMEMBER:
Negotiation outcomes are determined by the motivation and negotiating skills of the parties involved.
CHAPTER 10 Why Most FSBOs Screw Up Negotiations
Let’s start with some negotiating mistakes to avoid. After all, what you don’t do is going to be more important than what you do! One slip of the tongue can result in a negotiating mistake (and hurt your pocketbook too!). COMMON NEGOTIATING MISTAKE #1: AKE #1: NOT LEARNING THE OTHER PARTY'S MOTIVATION Price isn’t the only reason people buy. They might really like a certain feature your home has. They might be willing to pay more because of that feature. Sometimes, they might absolutely love that feature. They have been hunting for a while and have finally found a home meeting their needs completely. That means they are willing to pay more for your home. If you meet the buyers, you should ask them why they are buying a home. They might tell you they are being transferred and must find a home by a certain date. If you know that, you will be able to negotiate a higher sales price. If the buyers have an agent, ask the agent for information. Here are some questions you can ask:
• Why do the buyers like this home? • Where are they moving from?
• How does this home compare to other homes?
You shouldn’t be as blunt as that when you’re chatting with the buyers, but you can often find the answers to these questions in a roundabout way. For example, you could say, “You will love our town because of the X (insert a unique feature of your town). Do they have an X where you live now?” That will start the conversation about where they are moving from. You can learn a lot from what they say. It will be helpful during the negotiations. You would be amazed at what some people will tell you.
COMMON NEGOTIATING MISTAKE #2: AKE #2: MEETING IN THE MIDDLE
This is the most common mistake novice home sellers make. It’s the easiest way to sell your home for $10,000 less than you should. “Meeting in the middle” is never a good strategy. The problem is that everyone thinks they have to do it. There is no rule book that says you must meet in the middle. Here’s a story that illustrates this. A home was on the market for $240,000. The buyers made an offer for $220,000. The seller’s agent told him to reject the offer and told the buyers’ agent they should come back with a better offer. (The house had only been on the market two days.) The buyers came back and met in the middle with a $230,000 offer. The seller’s agent knew they were serious buyers who really wanted the house.
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