Principles That Affect Value
· amount spent to buy or build
history – not today’s value
· amount presently being asked
· may or may not be reasonable
· may or may not reflect market
· determined by seller
¨ Market Value
· estimate of benefit of ownership
· most probable selling price
· determined by buyers
· owner over-improves for neighborhood
most expensive home in area
· won’t sell beyond top of area price range
· lowest priced home in area
· quickest to appreciate
· higher priced homes pull up value
· sets upper limit of value
· buyer won’t pay more than cost of acquiring elsewhere
· value decreases as number increases
· as with substitution, varies by marketplace and buyer demand
¨ Faster Sale
Peak activity in first 2-3 weeks
· Buyer agents have interested buyers
¨ Less Inconvenience
· Overpriced homes are used to sell others
· Reduces number of showings
¨ Exposure to More Prospects
· MLS organized by price
· Parameters stop at upper limit of price range
· Seen by more buyers interested in your type of home
¨ Salesperson Excitement
· Priced right and good condition – marketing from strength
· Excited agents means excited buyers
¨ Attracts Higher Offers
· Closer to market value – greater risk buyers take in loosing it thru low offer
· Shorter time on market – buyers pay closer to list (NAR study)
· Increases chances of multiple offers
¨ Supply and Demand
· Buyers market or sellers market?
· Illustrate to sellers with Supply and Demand Factors
¨ Months of Inventory
· Number of homes currently in inventory – divided by
· Average number sold per month - equals
Number of months of inventory if nothing else came on
¨ Expired Listings
· Shows upper limit of value
· What buyers are not willing to pay
Selling Your Home For Profit
· Replace carpet and flooring
· Remove all wallpaper and paint wall a neutral color
· Replace or paint kitchen cabinets and bathroom vanities
· Replace Countertops
· Replace roofs
· Replace windows
· Replace furnaces and air conditioners
· Plant landscaping
· Start Packing
· Selling Your Home for Top $$$
You won’t get a second chance to make a good first impression – make the most of it.
Pay particular attention to the kitchen and baths
How to avoid double house payments
· Get yourself pre-approved for financing.
· Find out what is the equity you have in your home by getting an appraisal.
· Once you establish the price range, then go looking for housing in the areas where your price range will buy.
· Place your home for sale before placing an offer on another home. You will save thousands of dollars.
· Make sure you negotiate the closing date far in advance to give you enough time to coordinate with the purchase of another home.
When getting an appraisal make sure the realtor gives you the equity in your home after deducting the following expenses
· Revenue Stamps
· Title Fee
· Attorney Fees
· Interest in Arrears
· Proration of Taxes
Twenty Questions to Ask Yourself Before You Decide to be a FSBO
1. Do I have the time to sell my house by myself?
2. Do I know where my buyers come from?
Do I know how to make my home show the best?
4. Do I know how to weed out the serious from the curious?
5. Do I know the questions I should ask buyers?
6. Do I know the information to give buyers?
7. Do I know what to say when I show my home?
8. Do I know how to qualify my buyers?
9. Do I know the latest financing methods?
10. Do I have ways of attracting buyers other than an ad and a for sale sign?
11. Do I know what my closing costs and obligations are?
12. Do I know how to write a contract on the spot?
13. Do I know how to negotiate and compromise with a buyer?
14. Do I know what to do during the showing?
15. Do I have the time to invest in follow-up on a buyer?
16. Do I know how to ‘read’ my buyer?
17. Do I know how to close?
18. Do I know how to protect my interests if a buyer agent represents a buyer?
19. Do I know how to negotiate with a buyer agent who is looking out for the buyer’s interests.
20. Do I realize that most FSBO’s ultimately end up listing with an agent? (It’s true – 88%)
Where Buyers Come From
40% from real estate company or real estate contact
20% from the real estate company for sale sign
18% from a real estate company ad call
8% from an open house ad or sign
7% from a relocation service
3% from an advertised property
1% buy an open house they saw
3% buy for a combination of reasons
Questions to Ask Your Listing Agent
Thinking About Working Without a Listing Agent?
If You Work With an Agent
· You will sign a listing contract. Typically they give the brokerage company exclusive right to sell your property within a certain time period.
· Your agent will research the market to determine your home’s market value and help you establish a list price.
· Your agent will ensure that all federal and state required disclosure forms are prepared and available to prospective purchasers.
· Your agent will prepare a written marketing plan that includes an advertising schedule, open house and MLS/Broker viewing schedule, list of internet sites on which your home will appear, etc.
· Your agent will advise you on how best to prepare your home for sale.
· Your agent will arrange all showings to ensure the property is being shown to the ‘serious’ not ‘curious’ buyers.
· Your agent will transmit any and all offers to you and help you evaluate each one.
· Your agent will negotiate the purchase based on your requirements and recommendations.
· Your agent will arrange for any inspections required by the sales contract and will work with your attorney to resolve any issues that may arise.
· Your agent will interface with your attorney, the title company, the buyers, buyer’s agent, buyer’s attorney and mortgage company to assure you a smooth, satisfactory transaction.
If You Work Alone
· You are in charge of the transaction, including marketing your property, negotiating the purchase and handling the paperwork.
· You need to educate yourself on federal laws and state regulations governing real estate sales.
· You do your own market research possibly hiring an appraiser to determine your home’s value).
· You create your own marketing plan and handle inquiries from prospective buyers or their agents.
· You decide how to prepare your home for sale.
· You field all buyer inquiries, show the house yourself, handling all negotiations, and move the paperwork through the transaction.
· You will negotiate a commission directly with any buyer agents who want to show your property and will deal directly with them, having no representation at the time of contract.
When Your Home Is Shown
These should be OK to answer: Refer these to your listing agent:
What school will our kids attend? Where are you moving to?
Where does the bus run from here? Why are you moving?
Are there any babysitters around here? How long has the house been on the market?
What are the neighbors like? Have you had any other offers?
When You Get an Offer
· Oral promises are not legally enforceable when it comes to the sale of real estate. Please be sure you understand and agree with everything that is in your offer.
· Your agent has a legal and ethical requirement to present all offers to you – regardless of their content. As a matter of fact, in many cases, your agent will not know the content of the offer prior to presentation.
The buyer agent will have done a comparative market analysis for the buyer. It will contain basically the same information as the CMA your listing agent did for you when you listed.
Factors Affecting Value
▫ Property condition
▫ New home improvements
▫ Market conditions (that old supply and demand again)
▫ Buyer and seller motivation
▫ Seller concessions – are you being asked to give the buyer a
carpet allowance or are you being asked to help with closing costs?
If you are – the buyer should expect to pay a little more!
· Earnest Money
This is the upfront money the buyer will be depositing . Your agent can give you guidelines for how much this should be.
· Financing Contingency
The buyer will probably need to get a mortgage. Even if they have been preapproved, the lender will still need time to have the appraisal done, order title, etc. Your agent can advise you as to whether the time the buyer is asking for is reasonable.
· Home Sale Contingency
There will be a good percentage of buyers that need to sell their home and make the contract subject to the sale of their home and/or closing of their home.
· Home Inspection
Almost all buyers ask for a home inspection. Inspections usually work to the benefit of both the buyer and seller. It is much better to know about a problem prior to closing and fix it rather than being sued by the buyer after the fact. If you have any concerns about whether your home would pass an inspection, talk to your agent about the possibility of having a pre-inspection done.
You will be asked to supply the buyer with various disclosure forms. If your property was built prior to 1978 you will need the Federal Lead Based Pain Disclosure. In many states, a state-mandated Seller’s Property Disclosure Report is also required.
· Multiple Offers
If you find yourself in a multiple offer situation your agent will explain your options. Although multiple offers on your property generally work to your benefit, many sellers have taken chances in the attempt to get a higher price that have backfired. The handling of multiple offers will depend on the market, your particular circumstances and the buyer’s motivation, among other things.
From Offer to Closing
Once an offer has been presented the negotiating process begins. There are liable to be numerous counter-offers going back and forth between you and the buyer. There are a few important things to remember:
· Until an offer has been accepted and agreed to by both you and the buyer it is just that – an offer. The buyer could withdraw his offer at any time prior to it being agreed to and signed by all parties.
· If your contract calls for an attorney review, please choose your counsel as quickly as possible and let your agent know who you’ve chosen. Your attorney has a limited amount of time to protect your interest.
· Be sure to comply with all requests of your attorney and the buyer’s lender after the mortgage application has been done. Not accommodating the appraiser or providing information they need can jeopardize your buyer’s getting their mortgage on time.
· Generally, the buyer accompanies the home inspector at the inspection. Check with your agent as to whether you need to be there. Please allow at least 2 to 3 hours for an average inspection. More time may be necessary for a large home.
· Your agent will act as coordinator for all activities from this point and will keep everyone in the loop as far as what is going on. The lender, home inspector, both attorneys, the other REALTOR, the title company (or escrow agent) will all be performing necessary duties during this time. If you are also purchasing a new home, your agent will coordinate that transaction as well.
· If necessary your agent and your attorney will work together to negotiate any repairs that were noted during the home inspection.
· The buyer’s walk thru will be scheduled as per your sales contract. Your agent will schedule this with you.. It should happen just prior to the closing and as a reminder – the property is to be in the same condition it was in at the time you and the buyer agreed to the sale.
· If all of this sounds a little overwhelming – don’t worry – you’re in good hands. Your agent has been through this many times and will be there for you during the entire process. Relax and enjoy the experience.