INSIDER SECRETS TO GET TOP DOLLAR FOR YOUR HOME
Published by Authorify Publishing Copyright © 2020 Authorify Publishing
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Table Of Contents
Not All Home Sales Are Equal
Understanding The Home-Selling Process 7
Pitfalls Of FSBOs
Common Mistakes To Avoid
The #1 Secret Strategy To Sell Your Home For More
Curb Appeal: Find The Charm And Show It 59
Staging For Effect
10. Home Improvements That Make Sense 77
11. Negotiating Tips
12. The Vacant Home
13. The Distressed Home
14. The Inherited Home
15. Home Sales When Divorce Is Involved 123
Testimonials & Reviews for Dick Carr
Here’s a list of people whom I have helped buy or sell a home, and what they said about working with me:
Dick had a tough job, but he did it!
We were tough clients! We were moving to the Quad Cities and didn’t have a lot of time to look at houses, having to deal with our employer’s relocation, and all of the other challenges that came along. But Dick and his team went above and beyond to help us. Even now, one year after the sale closed, I can still call him for business and service recommendations in the area — he knows just about everyone, and is very happy to help.
Dick Carr is the best agent in the Quad Cities!
I’ve used Dick Carr twice so far, and I was impressed both times. I bought my dream home with Dick a year ago. He worked long and hard to find me the perfect home. And he just recently sold another property of mine. Everything went quickly and smoothly. Both of my real estate deals were done very quickly and professionally. Dick is honestly the BEST in his business. I would highly recommend him.
Dick's perseverance got me the house
My experience with Dick Carr during the entire home-buying process, from start to finish, has been nothing short of
exceptional. I have a unique work structure, and because of this, it was very difficult to find mortgage lenders that would approve me for a home. I was very frustrated and on the verge of giving up, but Dick insisted that we continue searching. Not only did we find a mortgage lender but also a mortgage that I felt great about. His perseverance is the reason I am now a homeowner. He is professional, knowledgeable and very easy to work with. With the highest regard, I will recommend Dick to all my friends and family.
Very attentive to concerns, details, and negotiations
Dick helped me find a house by literally picking it out for me. Every house I wanted to go to, I got there and didn’t love it. Dick was busy taking notes of the likes and dislikes I was stating and said “I have a house that you’re going to love”.... AND I DID! I went back 4 or 5 times to show other members of my family, and he accommodated me without complaint. I was a first-time homebuyer, and he walked me through the steps of everything, gave me advice, and constantly followed up to make sure I was doing OK. With his help, I was able to close on the house early, right before I started my new job. I would recommend Dick Carr to EVERYONE, buying or selling.
Dick made it so so easy.
He guided us through the entire process. He recommended great people to work with every step of the way. He was available (almost :-) 24/7 to answer any questions we may have had. With his high standards, expertise in the industry, and patience, we would recommend him as a Realtor to anyone looking! He was amazing!
Dick even advised me on how to prepare my house
Dick Carr was awesome. In addition to being highly knowledgeable about the real estate market, with many years of experience, he is a consummate professional. He was extremely easy to work with, got me very good advice about preparing my house for sale and was very responsive during the entire process of receiving offers, selling and closing. I would work with him again in a heartbeat. He’s that good.
Dick Carr is the first agent I would call
Dick Carr and his team were able to rapidly list, show and sell my property. Being an expert in real estate, he was spot on in his pricing of my property and getting the deal completed. Overall, I highly recommend him and his team. If I want to buy real estate, Dick would be the first person I’d call.
Dick got us an offer in three days!
Dick Carr was the consummate professional during our stressful and difficult process. In the midst of juggling a ‘failed’ marketing effort with another agent, he presented a well thought out plan and strategy to sell our home in short order. We needed to move quickly due to a growing family and another baby on the way. He helped alleviate that pressure by securing an acceptable offer with 3 days of listing. We put pressure on him, and he delivered. We couldn’t thank him enough.
Dick kept us calm throughout the process!
Dick Carr always made himself available to answer questions. He worked hard to sell our home and find the best fit for our new
home. He and his team worked with us through the entire process and kept us calm when we got anxious.
I am 100 percent satisfied!!
Dick Carr is professional and knowledgeable about everything. He is also always available. I would definitely recommend him to anyone. Very smooth transaction from start to finish. I felt confident with his experience.
Dick Carr found us our dream home!
Dick was very efficient and helped us find our dream home within a few short months. He was able to negotiate the price that we wanted for the house. Overall, I would look for him again to help us look for a house if need be in the future. Thank you so much!
Efficient communication and service
Dick Carr and his staff were very helpful in selling our condo. They kept me informed frequently with email, sending reports on showings, offers, and feedback from potential buyers. We are very satisfied.
Dick Carr will get your house sold fast!
Dick Carr is great and has the expertise to get your house sold. The communications throughout our sale (from beginning to end) has been outstanding. Dick understands the stress involved in selling your house, and he updated our family consistently! This made us feel we were in good hands. I have worked with
numerous agents, and I highly recommend him to represent you when it comes time to sell your home.
Excellent experience topped with a personal touch
Excellent experience all around, not only knowledgeable but Dick Carr and his team have a very personal touch I felt like family throughout the entire process. He always took his time; we never felt rushed or like “just a number.” I sold my home and bought with him. We had lots of questions he gladly answered them with no problem and guided us through the entire process, eliminating lots of stress. I truly appreciate that and would recommend him and his team to family and friends.
Sold our home in a week!
Dick Carr was an absolute dream to work with. Professional, responsive, efficient, and my moral support when in time of need...unfortunately for him. We sold the home within a week. What else can you ask for? Grateful, grateful, grateful!!!
About Dick Carr
Dick Carr was raised in Decatur, IL with 4 siblings and 5 dogs. As a child, Dick had aspirations of being President. But after the violence of 1968, the idea of being an advisor/educator seemed more to his liking. Never in a million years did he think he’d stumble into the real estate industry, but you can’t always predict where or when you’ll discover what you’re meant to do in life. Dick was taught at a young age that if you want something in life, you have to work for it. So that’s what he did. As the years went by, Dick worked his way to become the top Encyclopaedia Britannica salesman and sales trainer in the Midwest, and then on to become a realtor, never wavering in his resolve to become the best version of himself with each career move. Dick Carr got into the real estate industry in 1987 when his wife became manager of a Chicagoland Century 21 franchise. He set out to help other young families aspire to the American Dream of home ownership. As his career advanced, Dick found his stride working with homesellers. He’s an expert in innovative and insightful marketing strategies to get homes sold fast and for top dollar. Throughout his career, Dick has served in and earned numerous positions and accolades, including: • Top Encylopaedia Britannica Salesman in the Midwest • President, Junior Chamber of Commerce (Jaycees) • RE/MAX International Hall of Fame Inductee Dick Carr lives in Bettendorf with his daughter Amy. In his free xiii
time, he enjoys his involvement at church, golf, reading, and curating his growing LP record collection. Dick Carr aims to provide the highest level of service to his clients and takes deep pride in helping them achieve their real estate goals.
When I first ventured into the real estate industry years ago, I did so with the hopes of helping sellers like you avoid the headaches often associated with the home-selling process. In my years of experience, not only have I helped alleviate the stress of selling for numerous clients, but I’ve also accumulated years of knowledge to help them get more money for their homes in the least amount of time. I decided to share all of my expertise in one place with potential clients. And that’s why you’re receiving this book. I want to help you have the best possible home-selling experience. And by that, I mean I want you to 1. Get the most money possible for your home, 2. Sell in the least amount of time, and 3. Avoid the headaches most commonly associated with the home-selling process. Think of this book as my gift to you. It contains insider advice on the home-selling process to help you achieve your ultimate real estate goals, including:
• Secret strategies to sell your home for more money • Marketing techniques employed by top agents • Advice on how to appeal to today’s buyers • And much, much more
If, after reading through it, you want to hire me to help you sell your home, I’d be more than happy to meet with you to discuss a specific plan to sell your home. Happy reading!
Want Top Dollar For Your Home?
There are many different things you can do to sell your home for top dollar. If you use these strategies, you get a higher sales price. But, miss any of these crucial components, and you risk settling for a lower price than you deserve. That’s why I offer a Free “Sell For Top Dollar” Consultation. I’ll meet with you, take a look at your home, and show you exactly what needs to be done to sell for top dollar. I’ll give you advice on marketing, pictures, pricing strategy, staging, negotiations, etc. Each of these items is crucial to your sale. Get them all right, and you’ll sell for top dollar. But, neglect one of them, and you risk settling for less than you deserve. So, if you’d like my Free, No Obligation, “Sell for Top Dollar” Consultation, give me a call at 563-579-3939. We’ll schedule a time that works for the both of us to meet. I look forward to helping you!
DICK CARR eXp Realty, LLC email@example.com 563-579-3939
CHAPTER 1 Not All Home Sales are Equal
Let’s Bust That Myth!
Hello! Nice to meet you. Thank you very much for picking up my book on Home-Selling Strategies I Use to Sell Homes for More Money. I am a real estate agent — and proudly so! It’s a wonderful way to make a living for an entrepreneurial and people-person type, as I am. I pride myself on my ability to help people settle into their little piece of the American Dream. If you are reading this book, you’re likely considering selling a home, and I’ve got plenty to tell you. I’m not trying to sell you anything, although my hope is that you will want me to sell something of yours (your house) after reading this book. However, I’m pleased to be of service either way. Later, if you want me to help you sell your property, we can talk. In the meantime, take advantage of the information in this book to get up-to-speed on selling a home for more money. I’m giving you the benefit of experience and professional advice I have garnered working with both sellers and buyers. I have worked on both sides of the street, which is helpful in getting around and lessening a seller’s stressors. Most sellers don’t venture alone into selling their home, instead finding it better to have a knowledgeable, experienced real estate professional with whom the sellers are comfortable. I wrote this book to provide some of that comfort without the direct stressors of salesperson-to-person contact, allowing you — someone interested in potentially selling a home — to learn, reflect, and
consider leisurely. At the end of this book, you’ll find material on why you should consider professional services in selling your home. I want the prospective or active home seller to independently achieve a better understanding of the home-selling process without stress, while getting to know the professional services I provide. I’ve also provided actionable insight into how best to market your home and avoid critical mistakes.
HOW TO LOOSE $36,000 ON A HOME SALE: NOT ALL HOME SALES ARE EQUAL
Now, I’m going to introduce my Big Idea, the main premise of this book. There’s a widespread myth that any home will sell within a narrow price range compared to other more-or-less comparable homes in the market at the same time in the same area. Allow me to shatter that myth to pieces. No, everyone does not sell their home basically for the same price, and it’s not, like they say, all location, location, location. It is anything but that! You can sell your home for more profit than someone else might sell the same piece of property, or sell a comparable home in the same neighborhood for a significant price difference from what the owner of that home sells it for. It’s what you do before to make the sale that determines how much, and that is the Big Idea of this book — how to maximize your sale potential.
Let’s put this into an example to drive my point home.
Chuck wanted to sell his home. Word got around that Chuck was slated to be relocated; however, he had not started the process of selling his house. It wasn’t listed, and he didn’t have a real estate
agent. He hadn’t really given thought to that part of his promotion and move. A fast-moving buyer’s real estate agent contacted Chuck and got him excited by telling him that someone wanted to buy his house before he even put it on the market. The buyers were offering $285,000 and were approved for a loan. As the buyer’s real estate agent put it, this would be an easy, quick, and painless sale. The agent put on the pressure. “If you get a real estate agent, what you get for your home will be reduced by 6% and the deal won’t be as good. Besides, the house around the corner sold for $280,000 just 60 days ago. So? Will you sell your home?” On the surface, it seemed like a great deal. Chuck could sell his home quickly and avoid the inconvenience of the standard selling process. Chuck accepted the $285,000 offer and moved on with his life. The sale Chuck accepted was quick and easy, as the buyer’s agent said it would be. But it wasn’t painless. A few weeks later, Chuck’s neighbor sold his house for $321,000. The neighbor’s house was slightly smaller than Chuck’s, but otherwise comparable and in similar condition. Why did Chuck sell his house for $36,000 less than his neighbor did? What features made his neighbor’s house ~10% more valuable? Was it because it had a red door? Was it because the grass was cut? Why did Chuck bother to work so hard to pay down his mortgage? Why did he work so hard to keep his house in tip-top shape, only to sell it for less than it probably was worth?
Why? Because, unfortunately, Chuck didn’t check with anyone to find out what his house was truly worth on the market. He didn’t get an appraisal or a second opinion. His great mistake was not talking to a real estate professional other than the buyer’s agent (who, of course, is looking to maximize the deal for his/her buying clients). Really, it was because Chuck was an amateur in the real estate game, up against a professional. Here is my tip on how to avoid having this happen to you: Obtain a second or even third opinion on the value of your home before you put it on the market. Valuing homes for sale is a range game; both art and science are involved in the process. But there’s a lot of art — probably more than you think. If you don’t price your home correctly, you risk selling it for less than it’s worth and/or wasting time while your home sits on the market because it’s not priced correctly. Your objective is to price your home so that it sells quickly and for the highest price possible. Each of us probably has a skewed idea of the worth of our home. Either we think it’s far more marvelous than it is, or we’re so tired of it that we think of it as a horrendous cross to bear that no one would ever want. Add to that your hopes and dreams of what to do with your money once you sell, and pricing your own home is a total danger zone. This is indeed an area where a real estate agent comes in handy. However, it’s certainly not the only area. Throughout the rest of this book, I’m going to “take you to school.” We’re going to take a trip through Real Estate Selling Land. Through the rest of Part 1, we will take up Home-Selling Basics:
Understanding the Home-Selling Process, Pitfalls of FSBOs (For Sale By Owner), and Common Mistakes to Avoid. Part 2 is devoted to Proven Strategies to Sell Your Home for More (i.e., professional marketing strategies adapted for unique situations; thinking like a buyer; knowing and addressing what buyers want; and marketing in the new online era, with chapters dedicated to Better Marketing, Top-Quality Pictures, Curb Appeal, Staging, Home Improvements That Make Sense, and Negotiating.) Part 3 wraps up Special Home-Selling Situations that sellers may face, including issues with The Vacant Home, The Distressed Home, The Inherited Home, and Home Sales When Divorce Is Involved. And only after all that will I try to sell you something — my very professional real estate services in selling your home for more money with A Last Word: Why You Should Hire Me to Sell Your Home.
CHAPTER 2 Understanding the Home-Selling Process
Financially and emotionally, a home is often an individual’s or family’s largest single investment. That makes selling a home — whether a single-family residence, duplex, or condominium— the single largest, most complex transaction a person will undertake, and for most people, no more than two or three times in their lives. It involves new terms and concepts, financial acumen, and larger figures than people usually deal with. Emotions can overtake good judgment. As a seller, you might think, “Surely, my home, where I invested so much money and sweat equity, and raised my children, is worth more than ‘you people’ [appraisers, prospects, and buyer’s agents] think it is. You aren’t considering that the neighborhood was named ‘Most Livable’ in the local paper!” (five years ago, and the old neighborhood has since changed). Emotions almost always lead to problems in a sales price negotiation. Further, real estate transactions involve multiple decisions points and often substantial investment in the homeowner’s time, energy, and money. As a seller, you want to find that home shopper who simply can’t resist buying your house at the highest price. However, to do that, you must provide potential buyers a striking home sales presentation that outshines other homes on the market. This requires creating a fantastic first impression, giving 7
buyers an immediate feeling that they’re traveling up the front walkway of “their” new home for the first time, and not visiting someone else’s. Selling a house is about falling in love at first sight, from the curb, in those initial (and fleeting) seconds. As I said before, here’s the big news — everybody doesn’t get the price they could when selling their home. For example, take two little ranch houses across from a well-kept cemetery in a nice suburban city near Cincinnati, in Southwest Ohio. One of them, 25 Cemetery Road (3 beds, 1 bath, 936 sq. ft., built 1957) was described as: “Neat as a pin and ready to go. Complete remodel kitchen w/SS appliances, breakfast bar, flattop stove, beautiful tile. Complete bath remodel. Hardwood floors, replaced windows. Great fenced yard, covered rear patio.”
It was being fought over at $124,000+.
Meanwhile, a comparable 3 bdrm/1 bath, 936-sq.-ft., 1956 single- family home located at 19 Cemetery Road, had the same 3 bdrms/ 1 bath, approximately 936 square feet, and was built in 1955. It sold for $111,800. That’s enough of a difference (almost $15,000!) for the owner of 25 Cemetery Road to pay the cost of his real estate agent’s commission and pocket some profit. Frankly, that commission was money well spent, because it was hiring the real estate agent and following the plan that made all the difference. We’ll talk more about that as we move through this book; however, it was the advising, planning, staging, pre-marketing, marketing, negotiation, and professional know-how that sealed the deal.
THE BASIC HOME SALES PROCESS
We begin our look at “Selling Your House for More!” with a practical examination of what the home-selling process is, and how it works. We’ll examine how listing prices are determined, and look at various ways that a listing price is set. I will discuss online valuation, professional appraisal, and the great benefit of a Current Market Analysis (CMA) by a Realtor®. I’m also going to drive home the importance of the seller’s time, effort, “sweat-equity,” financial investment, and working as a team with a carefully selected real estate agent. It’s not a hire-me-and- you-are-done transaction. To get the most money for your house, you’ll have to invest in touchups, improvements, staging, keeping the grass cut, and many other items.
LISTING PRICE SETTING
Setting a listing price is a strategic exercise that aligns the seller’s goals to the selling approach. If the seller is in a situation in which the house must be sold quickly, that calls for a price that will move the home quickly. However, it may forfeit selling for the most money. Where the house is an inherited property and not in the best of condition, but is in a great location, that takes another kind of pricing strategy, and might involve repairs and staging to get the best price. As you see, there are plenty of factors that go into setting a listing price. Therefore, it’s critical for home sellers to know the considerations that determine a home’s price. There is both an art and a science in setting a listing price. Setting the price at which to sell your home is not a formula, nor simply mathematical. There are many factors that go into the decision — for example, location (even location on the same street), condition, features, and unique amenities.
A calculated home value isn’t necessarily what you believe your home is worth. Recognizing this helps avoid overpricing, a major factor that leaves homes languishing on the market or unsold.
MARKET VALUE, APPRAISAL VALUE, AND ASSESSED VALUE
The price at which to list a home is the seller’s decision, although a savvy seller will solicit professional advice or work with a trusted real estate agent to arrive at that decision. Knowing the real estate concepts of “market value,” “appraisal value,” and “assessed value” allows the home seller to more meaningfully engage with a real estate agent in coming to a determination of a home’s listing price. “Market value” is the probable price a property should bring in a competitive, open market under conditions requisite to a fair sale. Essentially, this is a pre-negotiation opinion of what a house should bring in its local market — i.e., its geographical area, generally an area such as a suburb or neighborhood. In other words, in what range do similarly situated houses in the area/ neighborhood sell for? “Appraisal value” is an evaluation of a property’s worth at a given point in time that’s performed by a professional appraiser. Appraised value is an important factor in loan underwriting and determines how much money could be borrowed, and under what terms. For example, the Loan to Value (LTV) ratio is based on the appraised value. Where LTV is greater than 80%, the lender generally will require the borrower to buy mortgage insurance. “Assessed value” is the amount local or state government has designated for specific property and frequently differs from market value or appraisal value. This assessed value is used as the basis of property tax and when a property tax is levied. The
assessed value of real property isn’t necessarily equal to the property’s market value. Approximately 60% of U.S. properties are assessed higher than their current value; however, this doesn’t reflect what the homes will sell for.
WHAT IS YOUR HOME WORTH?
The first step in selling your home is knowing the difference between value, worth, and price. Let’s examine the determining factors at work. Understanding those factors allows them to be leveraged. There are several ways a home’s value is derived.
ONLINE HOME VALUATION
A place to begin researching a rough estimate of a home’s market value is online. Several free online tools provide an estimate of your home’s current value based on recent comparable home sales in your area using a comprehensive database. The downside of these systems is that the assessment is based on available public data, with no guarantee of accuracy and often using an algorithm that simply averages comparable sales in the geographic area. These are quick and easy, but do not answer questions regarding factors like location and current local trends. Be aware that in practice, the prices arrived at might be highly inaccurate. For example, a home in Ohio was put into one such system, Redfin (https://www.redfin.com/what-is-my-home-worth). The home last sold for $180,000 in 1998; it was appraised for refinancing in 2015 at $275,000. In 2017, Redfin’s calculator valued this 1890 Victorian home (4 bedrooms, 1.5 baths, and 2,100 sq. ft.) in a four- block area of “Grand Old Ladies” at $158,000.
The apparent reason is that the six “comps” (comparable recent sales) include only two homes in this desirable neighborhood (over $300,000), while four others are outside this small neighborhood, although close, and sold for $150,000 to $199,000. Information that would be known to real estate professionals in the area is missing. These tools are worthwhile for obtaining “comps” of area sales; however, they aren’t accurate enough to use in arriving at a listing price.
Real estate appraisal (a.k.a. “property valuation”) is the process of developing an opinion of value for real property. This is the “market value,” or what a willing reasonable buyer would pay for the property to a willing reasonable seller. Real estate transactions almost always require appraisals because they occur infrequently on a given property and every property is different or unique in features and characteristics. An appraisal helps in various decision points. The seller can use the appraisal as a basis for pricing. The buyer can use it on which to base an offer. Lenders use appraisals to know how much money to credit to their borrowers.
The most important factors in a house appraisal are:
• dwelling type (e.g., one-story, two-story, split-level, factory-built) • features (including design); materials used and the type of structure present and how they were built • improvements made • comparable sales • location — type of neighborhood, zoning areas, proximity to other establishments • age of property 12
• size • depreciation
Condition, of course, is a crucial factor in valuation. Location is also a factor, but as property can’t change location, it’s often upgrades or improvements to a residential property that can enhance its value. A professional appraiser should be a qualified, disinterested specialist in real estate appraisals with expertise in your region. Their job is to determine an estimated value by examining the property, looking at the original purchase price, and comparing it with recent sales of similar properties. The fee for this service is usually between $300 and $500.
CURRENT MARKET APPRAISAL BY A REAL ESTATE PROFESSIONAL
This home valuation is free from real estate professionals and more helpful than automated online offerings. It provides detailed information on each house sold in your area over the last six months, along with the final sale price. It also includes the specifics of all the houses for sale in your area, including the asking price. These homes are your competition. The real estate professional will also answer any questions and help you price your home realistically. Along with an understanding of how the worth of a home is determined, the current market has to be considered. By utilizing a professional real estate agent, you can rely on proven expertise to market your home at the best listing price. I’ll be happy to provide you with a Current Market Analysis (CMA). See the last page of this book if you would like more information on how to request a free home valuation.
EXAMPLE OF DIFFERING HOME VALUATIONS: 13
Let’s say a buyer is interested in a home listed at $420,000. The online valuation determines the house is worth $440,000. Based on that estimate, the buyer offers the asking price. When a professional appraisal comes in at $400,000, and the existing tax records assess the home at $300,000, the buyer wonders why the values are so different, and if he overpaid. The house was listed at $420,000 because at that price, the home would sell in a reasonable amount of time. Why wouldn’t the appraised value be whatever a buyer was willing to pay? The fact that they paid $420,000 doesn’t mean that is the true value of the home. Certain factors may weigh in (undesirable businesses located near the property, for example). Online valuations can’t take into consideration the condition of the property, or the qualities of the neighborhood. Since an assessed home value is for taxing purposes only, it can be much more or much less than the market value. Ideally, they should be the same, but usually they aren’t. It’s based on a percentage of the appraised value determined by a professional. From legal descriptions to onsite inspections to comparable home-selling prices, the assessor will take all these items into consideration when appraising a home. Location near industry, high traffic, or potential development will also affect the appraisal.
A CRITICAL PART OF SELLING YOUR HOME FOR MORE IS YOU
We’ve seen that there’s no calculable certainty in setting the value of a home. There can be wide differences between the seller’s assessed price, the asking or listing (market price value), and the price at which the home sells (sale price). A market in which homes sell within six months of listing is considered balanced or neutral, meaning enough homeowners are
selling and customers buying that neither has an advantage. A variable, such as a major retailer entering or leaving the area, will tip the scale toward sellers to make a “fast” market or toward buyers to create a “slow” one. The average time in a fast market might be 30 days, and the average time in a slow market could be a year. Typically, any number below six months is considered a seller’s market. Let’s touch on what the homeowner/seller can do to elicit offers at the listing price, or even above, in a competitive market. As mentioned earlier, the partnership between seller and real estate agent will make an enormous difference in results. The agent can professionally market a house, bring in a qualified prospect, and then the deal is blown because the seller didn’t clear his garage of his taxidermy hobby during a critical showing. Or because the snow isn’t cleared, or because the walls are painted kind of “funky.” There’s only so much even the most talented real estate agent can do. The seller’s time, effort, and investment are the most important parts of the process. The seller’s willingness to adequately prepare the home for presentation by improving, freshening, landscaping, and generally making the home pristine — and to live in that presentation readiness state for the time it takes to sell the property — will greatly affect both the sale period the price at which the home sells.
CHAPTER 3 Pitfalls of FSBOs
You’ve sold a few automobiles in your day without trading in to a dealer, and you sell antiques on eBay. You’ve done well by both and consider yourself an astute horse trader and businessperson. So, now the time has come to sell your home, and you find yourself considering the options of selling it For Sale By Owner (FSBO) to save the commission fee. True, some people can sell their property outside the confines of a contractual agreement with a Realtor®, but the harsh reality is that most can’t, and don’t, and will spend significant time and effort spinning their wheels while qualified buyers come and go, without giving their property any serious thought, or, worse yet, never even knowing it was available. FSBO is the process of an owner selling a piece of real estate without using a real estate broker or real estate agent. While in an FSBO transaction, a seller may employ the services of marketing or online listing companies or market their own property, there’s no commission paid on the sale. This is the perceived value of an FSBO. However, sellers often need the services of attorneys to traverse the documents and intricacies of a real estate sale, and that cuts into the financial benefit. Although still out of the mainstream in real estate transactions, FSBO transactions seem to be increasing. Zillow reports a doubling of FSBO listings between 2012 and 2014 (up to 4%), ForSaleByOwner.com seeing 24% growth in 2013, and StreetEasy reporting NYC FSBO listings increasing by nearly 30% in that same period. According to a 2016 report by the National Association of Realtors® (NAR) regarding home buyer and seller
trends, Home Buyer and Seller Generational Trends Report 2016, 8% of surveyed real estate transactions between July 2014 and June 2015 were FSBO. That said, fully 92% of home sellers prefer the use of qualified representation (i.e., a Realtor®) in such a major transaction.
THE TIME FACTOR OF FSBO
One detriment to the seller of a FSBO transaction, and a benefit of engaging a real estate agent, is that in the process of selling your house, you’ll spend an incredible amount of time showing it to potential buyers. Unfortunately, most of them aren’t interested in buying your home. This is a waste of your time. On average, it takes three to four hours to show a home. Most owners show their home at least 8 to 10 times before making a sale. Sometimes more than 30 times! The average owner spends 24 to 40 hours showing their home. It can easily take 80 to 120 hours to complete the process. FSBO homeowners 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 it takes them anywhere from 8 to 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 for your entire family. It gets worse, as casual buyers continue strolling through and walking away, undecided. Do you have children? Pets? Showings create chaos in their lives, too! Kids are quickly rushed off to a friend’s or family member’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 don’t appreciate chaos. They might start misbehaving or need extra attention to counter the stress. 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’re going through all this stress to prepare for someone who was never serious about buying in the first place.
THE (IN) EXPERIENCE FACTOR OF FSBO SALES
When I started in the real estate business, I made a good living chasing FSBOs. I would call them, find out what price they were asking, and determine whether I could sell the home for more on the MLS. I sold a lot of homes and netted the former FSBOs more money in their pocket. That’s because I’m a real estate agent, and the sellers were not. It really is that simple. Unless you’re a real estate agent selling your own house, you’re entering a complex financial and legal transaction without competent assistance. An FSBO seller is analogous to self- performed dentistry or putting up a pro se (self-represented) defense in a murder case. The downfall of giving it a try yourself is that once you price a house, it’s easy to reduce the price, but nearly impossible to increase it without the herculean effort of starting a bidding war.
If you get it wrong the first time, the only place to go from there is down, and you may end up selling for a lot less than the true value of your property. You might be a great sales professional in your own right and thoroughly knowledgeable in your own area of expertise, but unless you’ve gone through the rigorous training and education to become a licensed real estate professional, you don’t know what it takes to prepare, correctly price, market, and sell a home both quickly and legally. Yes, there are sales techniques that are transferable in any transaction, but a pharmaceutical representative wouldn’t know how to sell a house and a Realtor® would have a great deal of trouble deciphering the world of pharmaceuticals. In fact, both could get into a lot of trouble if they tried and made legal — or lethal — errors! While you might think that “location, location, location” is all you need to sell your home, that’s simply not true. Yard signs only attract 10% of all home buyers. It’s even worse for print advertising; only 1% of buyers find their homes through newspaper marketing. You must employ a technically savvy marketing campaign to compete with all dedicated websites, blogs, and social media advertising that bombard the Internet and attract buyers. If none of the above has dampened your resolve to go the FSBO route, another thing to consider is the security concerns of going it alone. Craigslist can be an effective sales tool, but you must be oh-so- careful about the scammers, criminals, and dangerous people you could be potentially letting into your home.
Real estate agents have more secure resources on which to market
your property than you have access to, including highly qualified sites such as the Multiple Listing Service (MLS), Zillow, or Realtor.com. Zillow no longer allows FSBOs to post listings directly to their site. A licensed agent has to post the listing in their MLS, then let the system syndicate to Zillow. As an FSBO, you’ll have to work within the confines of your accessibility on unknown or unqualified sites. This can be expensive and even confusing and scary. If you’re acting as your own sales agent, how will you determine who is a credible buyer and who is just browsing? Shoppers who cruise the FSBO section of your local newspaper are usually the type of shoppers who are looking for a deal at rock-bottom prices. A seller’s agent has been trained to ask the right questions about the qualification of the inquiry in order to save time showing to “looky-loos” who aren’t really serious or financially equipped to buy a house. Let’s imagine that you do manage to find your perfect buyer on your own. Now, you’re in water so deep that you might be in over your head. This is where you need help from an experienced professional, who will attend to every detail, mandatory disclosures, inspection reports, title searches, etc. At the very least, you have to engage a real estate attorney to satisfy all legal requirements. Real estate agents take care of it all, and you can relax, knowing that you aren’t going to face any potentially serious legal repercussions. The intent of this chapter is to provide the non-professional with a broad overview of what’s needed to get organized for selling a home — and the difficulties — without the services of a licensed real estate agent. FSBO is not for the faint of heart! Many find it far more productive to partner with a real estate agent because once you start infusing money into preparing your home with the upgrades and repairs, your budget for marketing might be lean. It’s to your utmost advantage to hand the task over to a professional
who will foot most of the bill for the marketing.
NEGOTIATING AND THE FSBO SALE
An amateur negotiator — or a person with negotiating experience, but who is transacting business on his/her own behalf — is prone to several negotiating mistakes. FSBO sellers often tend to take negotiating personally and are offended if the prospective buyer makes repair demands or asks for credits. Keep ego out of the transaction and let your smarts and intelligence come into play during negotiation. This is a benefit of a professional real estate agent’s assistance in the home sale transaction.
Negotiation is covered in more detail later in Chapter 11.
CHAPTER 4 Common Mistakes To Avoid
This chapter compiles frequently made mistakes sellers make in the home-selling process, whether working with a real estate agent or not. Note the items here carefully, and learn from those who have gone before, so you don’t make these errors yourself. Save yourself time and money by avoiding these pitfalls.
GUESSING INSTEAD OF RESEARCHING
Basing your home price on what the neighbor down the street listed their home for is not a reliable method of pricing your home for sale. The Comparative Market Analysis (CMA) is your best source for setting an asking price. If a home in your area sells for a lower price, don’t automatically assume yours is worth the same. Your home might have something to offer that the other one didn’t, or the other may have been inadequately or incorrectly marketed. Let the CMA be your guide, and get the advice of a real estate professional.
HIRING A REALTOR® BECAUSE THEY SUGGEST THE HIGHEST LISTING PRICE
Choosing a real estate agent because they want to put a high price on your home isn’t in your best interest. The real estate agent should know more about the market for your home than you do, so select an agent who can provide you with real numbers and solid marketing plans for your home.
The professional you hire to sell your home should be
knowledgeable, trustworthy, and quick to answer any questions or concerns regarding the entire selling process. Avoid this mistake by interviewing agents and selecting the one who offers detailed sales data and a strategic listing price — not just a higher one.
You have enjoyed living in your home for years; however, you’ve decided to move on. Then don’t let emotional attachments to the home affect how you price it. Memorable moments spent in your home are priceless — literally, because they do nothing to add to the selling price! Selling your home is a business transaction between a qualified buyer and you. The most objective listing price will come from the CMA provided by your real estate agent, subsequently refined by negotiation with a qualified buyer. It’s also unrealistic to add dollars because of the labor spent making the house into your home; the new owner neither benefits from, nor cares about, your efforts. By focusing on the CMA results and maintaining a business-like and professional attitude, you can keep emotions at bay.
FIRST DAY HIGH-PRICE BLUES
The most crucial time for your home is the first 10 days on the market. Once your home is on the MLS, you’ll see how much interest is generated. If your price is too high, buyers will pass you by because the home is out of their price range. By the time you decide to lower the price, they will have moved on to other properties. As your home sits on the market, buyers will
wonder why the home hasn’t sold, concluding that it’s undesirable in some way, and passing it by without a second glance. Price it correctly initially to generate interest and gain attention from buyers to sell faster. Unrealistic pricing costs money in the long run.
TESTING THE MARKET WITH A HIGH PRICE
Even if you’re not in a hurry to sell, it’s not a wise move to “test” the market by listing your home at a high price to see how it goes. Serious home shoppers may take months to find a new home, so they are continually looking for new listings, not ones that have been sitting on the market. Thinking that the market will turn in your favor might not prove reliable either. If prices in your area end up dropping instead of rising, you may lose money. By pricing your home based on current market values, you can sell your home more quickly and for more money.
Another pricing trap to avoid is insisting on a price for your home far above other homes in the area. If your home doesn’t sell after three months on the market, you might decide to lower the price. That’s okay in a stable or increasing market, but if the market in your area is declining, you could be forced to reduce the price even more to catch up to the falling market. Price competitively from the start. Don’t hesitate to reevaluate your local market. Work with your real estate agent to determine the fair market value of your home.
NOT OBTAINING REPAIR ESTIMATES
Whether you plan to repair any faults in the house before listing or
leave undone, obtain estimates for necessary or desirable repairs, and get them from more than one source. This will give you leverage in negotiations since you know exactly how much the repairs will cost.
SHUTTING OFF UTILITIES
Keeping utility services on will prevent weather damage. Additionally, a house without lights is difficult to show and gives buyers the impression that the house needs more repairs than it really does. Keeping utilities on will make it more comfortable for anyone seeing the house.
VIEWING HOME STAGING AS AN EXPENSE RATHER THAN AN INVESTMENT
What you spend on staging your home can actually boost the sale in terms of time on the market and price received. It can help you make more money. A typical home-staging expenditure might range from 1-3% of the listing price of a home. On the other hand, it may result in selling the house for 5-10% more. Don’t underestimate the miraculous impact that staging can create.
NOT REPAIRING OR CLEANING THE HOME
You’re going to lose money on the sale of your home if you’re not prepared to make repairs before listing it for sale. When you act ahead of time, it’s less expensive to fix things, and it’s an embarrassing (and expensive) proposition to let potential buyers see the faults of the property during the open house. Likely, prospective buyers will offer less or demand a credit for the expense of the repair work that needs to be done before the deal closes.
Experts say clutter is the culprit that eats at the equity and kills
deals. Decluttering your property can create a sense of a spacious home. Clearing off the kitchen countertops, overflowing closets, and filled shelves in the den doesn’t cost much, but brings ample reward. Clear the home of all unwanted things. Completely declutter the home immediately, before listing.
NOT DISCLOSING ADEQUATELY
Where you choose to sell the home without making repairs to systems or structures (e.g., leaky roof, rusty hot water tank, or not- to-code electric), ensure to disclose all maintenance and repair issues. You could be liable for problems you didn’t disclose even in an “as-is” sale, and importantly, this will help you save money and time if the buyers end up discovering the problems themselves and you must deal with them during the closing.
NOT FOLLOWING THE TIMELINE PERFECTLY
Sales that are timed for financing or tax purposes that miss the timeline even by a single day can cost you extra in taxes or other costs. Therefore, missing a day can mean losing dollars. You need to schedule the deal after consulting your accountant well in advance to find out whether any tax breaks can apply for long- term capital gains.
SELLING BEFORE GETTING QUALIFIED YOURSELF
Entering a contract to sell your home before you get qualified to buy another is problematic. Your financial circumstances may have changed since your last home purchase, and you might not be able to qualify for a loan. Or, your current home might not sell for an amount that allows you to buy the replacement house you have your heart set on. You could end up renting or buying something that was far from ideal.
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