A house that “sparkles” on the surface will sell faster than its shabby neighbor, even though both are structurally well maintained. From experience, REALTORS® also know a “well-polished” house appeals to more buyers and will sell faster and for a higher price. Additionally, buyers feel more comfortable purchasing a well-cared-for home because if what they can see is well-maintained, they assume that what they can’t see has probably also been well-maintained.
How Much Should You Spend To Prepare Your House For Sale?
In preparing your home for the market, spend as little money as possible. Buyers will be impressed by a brand-new roof, but they aren’t likely to give you enough extra money to compensate you for the effort. There is a big difference between making minor and inexpensive polishes and touch-ups to your house, such as putting new knobs on cabinets and a fresh coat of neutral paint in the living room, and doing extensive and costly renovations, like installing a new kitchen that may or may not provide you with return on your investment.
Your REALTOR® is familiar with buyers’ expectations in your neighborhood and can advise you specifically on what improvements need to be made and which improvements are most effective. Don’t hesitate to ask for advice.
Maximizing Exterior And Curb Appeal
When preparing to put your home up for sale, your first concern is the home’s exterior. If the outside, or “curb appeal” looks good, people will more than likely want to see what’s on the inside.
Here are some tips to enhance your home’s exterior and curb appeal to buyers:
Maximizing Interior Appeal
You want your home to look as spacious, bright, and clean as possible. Also, the home should look neutral—without a lot of your personal and sentimental objects—so buyers can begin to imagine living there.
Here are some tips to enhance your home’s interior appeal to buyers:
Suppose you bought a house and later discovered, to your dismay, that the stucco exterior concealed a nasty case of dry rot. Or suppose that when you fired up the furnace in the winter, you discovered a cracked heat exchanger leaking gas into your home. The best way to avoid unpleasant surprises like these is to arrange for a home inspection before you buy.
Home Inspections Help You Avoid Unpleasant Surprises
A good home inspection is an objective, top-to-bottom examination of a home and everything that comes with it. The standard inspection report includes a review of the home’s heating and air-conditioning systems; plumbing and wiring; roof, attic, walls, ceilings, floors, windows, doors, foundation, and basement. Getting a professional inspection is crucial for older homes because age often takes its toll on the roof and other hard-to-reach areas. Problems can also be the result of neglect or hazardous repair work, such as a past owner’s failed attempt to install lights and an outlet in a linen closet. A home inspection is also a wise investment when buying a new home. In fact, new homes frequently have defects, whether caused by an oversight during construction or simply human error.
Getting An Inspector
Real estate agents can usually recommend an experienced home inspector. Make sure to get an unbiased inspector. You can find one through word-of-mouth referrals, or look in the Yellow Pages or online under “Building Inspection” or “Home Inspection.” Home inspections cost about a few hundred dollars, depending on the size of the house and location. Inspection fees tend to be higher in urban areas than in rural areas. You may find the cost of inspection high, but it is money well spent. Think of it as an investment in your investment – your future home. Some builders may try to dissuade you from getting a home inspection on a home they’ve built. They may not necessarily be trying to hide anything because most builders guarantee their work and will fix any problems in your new home before you move in. Some builders, in fact, will offer to do their own inspections. But it’s best to have an objective professional appraisal – insist on a third-party inspector.
An Inspection Will Educate You About Your House
Education is another good reason for getting an inspection. Most buyers want to learn as much as they can about their purchase so they can protect their investment. An examination by an impartial home inspector helps in this learning process. Ask if you can follow the home inspector on his or her rounds. Most inspectors are glad to share their knowledge, and you’ll be able to ask plenty of questions.
Inspection Timing And Results
Homebuyers usually arrange for an inspection after signing a contract or purchase agreement with the seller. The results may be available immediately or within a few days. The home inspector will review his or her findings with you and alert you to any costly or potentially hazardous conditions. In some cases, you may be advised not to buy the home unless such problems are remedied.
You could include a clause in your purchase agreement that makes your purchase contingent upon satisfactory inspection results. If major problems are found, you can back out of the deal. If costly repairs are warranted, the seller may be willing to adjust the home’s price or the contract’s terms. But when only minor repairs are needed, the buyer and seller can usually work out an agreement that won’t affect the sale price.
Once you’ve settled on a couple of preferred neighborhoods for your home search, it’s time to pick out a few homes to view. Having a house feature “wish list” keeps you focused on which features are most important to you.
Determine What Type Of Home You Want To Buy
There are several forms of home ownership: single-family homes, multi-family homes, condominiums, and cooperatives.
Decide What Age And Condition Of Home You Want To Purchase
Weigh your needs, budget, and personal tastes in deciding whether you want to buy a newly constructed home, an older home, or a “fixer-upper” that requires some work.
Consider Resale Potential
As you look at homes, you may want to keep in mind these resale considerations.
Use A Features Wish List To Keep Your Search Focused
Make a features wish list to clarify which features are most and least important to you when looking for a home. Using a “features wish list” will keep your house hunt focused and effective.
Use A Home Comparison Chart To Keep Your Observations Organized
While house hunting, it’s a good idea to make notes about what you see because viewing several houses at a time can be confusing. Use a home comparison chart to help you keep track of your search, organize your thoughts and record your impressions.
Act Decisively When You Find The Right Home
Before you begin the home-buying process, resolve to act promptly when you do find the right house. Every REALTOR® has stories to tell about a couple who looked far and wide for their dream home, finally found it, and then said, “We always promised my Dad we’d sleep on it, so we’ll make an offer tomorrow.” Many times, the story had a sad ending—someone else came in that evening with an offer that was accepted. Resolve that you will act decisively when you find the house that’s clearly right for you. This is particularly important after a long search or if the house is newly listed and/or underpriced.
When it comes to shopping around for a new home, there are a few considerations that should be made when deciding which neighborhood to purchase in. Here is a quick guide to help you in your decision-making process. Of course, if you have more questions, feel free to contact us or your agent to assist you. Our real estate agents are extremely knowledgeable about the areas we help our clients purchase a home in.
Choose A Specific Area
This helps keep your search focused and efficient. Your local REALTOR® can offer neighborhood information to guide you in your search. When evaluating a neighborhood, you should investigate local conditions. Depending on your own particular needs and tastes, some of the following factors may be more important considerations than others:
Neighborhood Search Strategies For Limited Budgets
Look for communities that are likely to become “hot neighborhoods” in the coming years. They can often be discovered on the periphery of the most continuously desirable areas. Check for planned future development such as additional transit; new community services such as pools and theatres; and chain stores planning to move in. Look for a home in a good neighborhood that is a bit farther out of the city. If commuting is a concern, purchase a home that is close to public transportation.
Identify Neighborhood Trends
Look at the neighborhood demand by asking your real estate agent whether multiple offers are being made, whether the gap between the list price and sale price is decreasing and whether there is active community involvement. You can also drive around neighborhoods and see how many “sale pending” and “sold” signs there are in a particular area.
Look into purchasing a condominium or co-op, rather than a house, in a desirable neighborhood. This way you still may be able to purchase in a prime area that you otherwise could not afford.
Setting the list price for your home involves evaluating various market conditions and financial factors. During this phase of the home selling process, your REALTOR® will help you set your list price based on:
If you’re still not convinced of the value of a REALTOR®, here are more reasons to use one:
Pricing Considerations – Find A Balance Between Too High And Too Low
When setting a list price for your home, you should be aware of a buyer’s frame of mind. Consider the following pricing factors:
Price Against Comparable Sales In Your Neighborhood
No matter how attractive and polished your house is, buyers will be comparing its price with everything else on the market.
Your best guide is a record of what the buying public has been willing to pay in the past few months for property in your neighborhood. Your REALTOR® can furnish data on sales figures for those comparable sales and analyze them to help you come up with a suggested listing price. The decision about how much to ask, though, is always yours.
Competitive Market Analysis (CMA)
The list of comparable sales a REALTOR® brings to you, along with data about other houses in your neighborhood that are presently on the market, is used for a “Comparative Market Analysis” (CMA). To help in estimating a possible sales price for your house, the analysis will also include data on nearby houses that failed to sell in the past few months, along with their list prices.
A CMA differs from a formal appraisal in several ways. One major difference is that an appraisal will be based only on past sales. Also, an appraisal is done for a fee while the CMA is provided by your REALTOR® and may include properties currently listed for sale and those currently pending sale. For the average home sale, a CMA probably gives enough information to help you set a proper price.
Formal Written Appraisal
A formal written appraisal (which may cost a few hundred dollars) can be useful if you have unique property, there hasn’t been much activity in your area recently, co-owners disagree about price, or if there is any other circumstance that makes it difficult to put a value on your home.
PRO TIP: If you do order a market value appraisal, make it clear you don’t need an elaborate, or full narrative report, i.e., the kind that’s complete with photos of the house and neighborhood. Floor plans and a site map is sufficient in most cases.
Market Conditions – Is It A Buyer’s Market Or A Seller’s Market?
A CMA often includes a Days on the Market (DOM) value for each comparable house sold. When real estate is booming and prices are rising, houses may sell in a few days. Conversely, when the market slows down, the average DOM can run into many months.
Your REALTOR® can tell you whether your area is currently in a buyer’s market or a seller’s market. In a seller’s market, you can price a bit beyond what you really expect, just to see what the reaction will be. In a buyer’s market, if you really need to sell promptly, offer an attractive bargain price.
If You Price High, Set A Schedule For Lowering The Price
Some sellers list at the rock-bottom price they’d really take because they hate bargaining. Others add thousands to the estimated market value “just to see what happens.” If you want to try that, and if you have the luxury of enough time to feel out the market, sit down with your REALTOR® and work out an advance schedule for lowering the price if need be.
If there haven’t been many prospects viewing your home after three weeks, you may need to lower your list price. If that doesn’t bring any prospective buyers, you may need to lower your list price again. Plan on doing that regularly until you find a level that attracts buyers. Make a written schedule in advance, before emotion takes over and you’re tempted to dig your heels in.
Offering Incentives To Hasten A Sale
Sometimes cash incentives are as effective as lowering the price, especially in the lower price range where buyers may be “cash poor.” You may offer to pay some or all of a buyer’s closing costs, and discount points required by the buyer’s lending institution.
If you haven’t had much traffic through your house and you’re in a hurry to sell, you may want to add the offer of a bonus to the selling broker, in addition to their commission. An example of the wording for such an offer may be “to the broker who brings a successful offer before Christmas.”
Estimating Net Proceeds
Once you’ve been given an estimate of market value by your REALTOR®, you can get a rough idea of how much cash you might walk away with when the sale is completed. This can be particularly useful when you start looking for another home to buy.
To estimate your net proceeds, from the estimated sales amount, subtract the applicable costs in the three sections outlined below: seller’s costs, buyer’s/seller’s costs, and closing costs.
Seller’s Costs: Subtract the following costs as applicable.
Buyer’s/Seller’s Costs: Additionally, your REALTOR® can tell you whether local customs or rules dictate whether the buyer or seller pays for the items listed below. Subtract the following costs, as applicable.
Closing Costs: As far as closing costs are concerned, you and your eventual buyer may agree on any arrangement that suits you, no matter what local practice dictates. Your REALTOR® will assist you in estimating what your final closing costs will be.
1. Sustainable Homes Are Energy And Water Efficient.
Energy efficiency is at the core of green home building. Features include solar panels, closed foam insulation, sealed attic spaces, low-emissivity windows, advanced framing techniques, and energy-efficient heat pumps.
In terms of water usage, sustainable homes help to preserve supplies for future generations. With the use of efficient plumbing to reduce waste, high-efficiency appliances, and advanced irrigation systems, you can rest assured you’re using natural resources responsibly.
It’s now even possible to build a Net Zero home, which means your house is essentially powered by the energy created by its eco-friendly systems.
2. Low Operating Costs
With construction techniques to ensure the efficient use of water and energy, it makes sense that the operating costs of sustainable homes are reduced. Enhanced daylight throughout the home, solar heating, and environmentally friendly lighting are just a few of the money-saving options. Furthermore, green homes are durable. This means you’ll spend less money on ongoing maintenance and utilities.
3. Reduced Environmental Footprint
The building practices minimize waste and recycle materials, which helps achieve efficient use. Best of all, as they’re built with the intention of reducing energy consumption, sustainable homes reduce emissions that impact climate change.
4. Increased Property Value
In recent times, numerous studies suggest that green homes result in higher resale values, across the country. In fact, many buyers view sustainable features as “must haves”, so green homes are also selling much faster than their counterparts.
Furthermore, you benefit from state and federal tax credits, for your home’s energy efficiency. Eco-friendly properties are the way of the future!
If you approach the home-buying process intelligently and with confidence, you are much more likely to buy a house you’ll be proud to call home.
And these questions are just the beginning. Buying a home is one of the largest financial transactions in your lifetime – do your research so you know what you’re doing.
Here are the two most important things to remember no matter where you are on the road to home ownership:
1. You can and should understand everything that is happening in the home-buying process.
There is nothing that is so complex that it can’t be easily explained to anyone with average intelligence. Just because you don’t apply for a thirty-year mortgage once a week doesn’t mean you have to take the first one that comes along. You’ll need to learn some new terms, apply some new concepts, and take the time to understand what you’re getting into. If at any point, something happens that doesn’t make sense to you, simply demand a full and complete explanation. If it still doesn’t make sense, seek help from someone you trust like your CPA, your banker, or maybe an online real estate columnist.
2. In the world of real estate sales, YOU are the most important person in the entire process.
It’s easy to think that everyone else carries more weight than you. The agent talks fast and has an answer for everything. The lender may decline your loan application, and on and on. But the truth is that you, the buyer, are the one person in the transaction that makes it all happen. If you decide to not buy, the entire process comes to a grinding halt. So, flex your “consumer muscle” and take command of this process. Surround yourself with a team of professionals that you have confidence in and make them work for you. Approach home buying with intelligence and confidence, and by doing your homework, you are more likely to buy a house you’re happy with and to know that you made the right decision.
A written proposal is the foundation of a real estate transaction. Oral promises are not legally enforceable when it comes to the sale of real estate. Therefore, you need to enter into a written contract, which starts with your written proposal. This proposal not only specifies the price but also all the terms and conditions of the purchase. For example, if the seller offered to help with $2,000 toward your closing costs, make sure that’s included in your written offer and in the final completed contract, or you won’t have grounds for collecting it later. REALTORS® have standard purchase agreements and will help you put together a written, legally binding offer that reflects the price as well as terms and conditions that are right for you. Your REALTOR® will guide you through the offer, counteroffer, negotiating, and closing processes. In many states, certain disclosure laws must be complied with by the seller, and the REALTOR® will ensure that this takes place.
If you are not working with a real estate agent, keep in mind that you must draw up a purchase offer or contract that conforms to state and local laws and that incorporates all of the key items. State laws vary, and certain provisions may be required in your area.
After the offer is drawn up and signed, it is usually presented to the seller by your real estate agent, by the seller’s real estate agent, if that’s a different agent, or often by the two together. In a few areas, sales contracts are drawn up by each party’s lawyers.
What's Included in your Purchase Offer
The purchase offer you submit, if accepted as it stands, will become a binding sales contract (known in some areas as a purchase agreement, earnest money agreement, or deposit receipt). So it’s important that the purchase offer contains all the items that will serve as a “blueprint for the final sale.” The purchase offer includes items such as:
Contingencies – “Subject To” Clauses
If your offer says, “this offer is contingent upon (or subject to) a certain event,” you’re saying that you will only go through with the purchase if that event occurs. Here are two common contingencies contained in a purchase offer:
The buyer obtaining specific financing from a lending institution: If the loan can’t be found, the buyer won’t be bound by the contract.
A satisfactory report by a home inspector: for example, “within 10 days after acceptance of the offer.” The seller must wait 10 days to see if the inspector submits a report that satisfies the buyer. If not, the contract would become void. Again, make sure that all the details are explicitly stated in the written contract.
You’re in a strong bargaining position, that is, you look particularly welcome to a seller, if:
In these circumstances, you may be able to negotiate some discount from the listed price. On the other hand, in a “hot” seller’s market, if the perfect house comes on the market, you may want to offer the list price (or more) to beat out other early offers. It’s very helpful to find out why the house is being sold and whether the seller is under pressure. Keep the following considerations in mind:
Inspection Timing And Results
Homebuyers usually arrange for an inspection after signing a contract or purchase agreement with the seller. The results may be available immediately or within a few days. The home inspector will review his or her findings with you and alert you to any costly or potentially hazardous conditions. In some cases, you may be advised not to buy the home unless such problems are remedied. You could include a clause in your purchase agreement that makes your purchase contingent upon satisfactory inspection results. If major problems are found, you can back out of the deal. If costly repairs are warranted, the seller may be willing to adjust the home’s price or the contract’s terms. But when only minor repairs are needed, the buyer and seller can usually work out an agreement that won’t affect the sale price.
Your REALTOR®’s marketing efforts and considerations will include advertising, showing the property, how long the house has been on the market, and whether you’re buying another home. Your home should be listed, whenever possible, through a Multiple Listing Service (MLS).
Advertising And Promotion
Properties are commonly advertised through real estate agent Web sites, Internet home search/listing services, classified advertising, and real estate guides. Promotion efforts through office and MLS tours are a good way of getting other buyer agents to view your home and promote it to the buyers they are working with.
Even with all these advertising avenues, ” For Sale” signs on front lawns are still remarkably effective. Many REALTORS® promote their Web sites on the sign and use brochure boxes with the signs to market the property. When appropriate, and with your permission, your REALTOR® may send a mailing about your property to neighbors. Sometimes one of them has a friend or relative who always wanted to live near them. You never know how far-reaching the benefits of word-of-mouth advertising by friends, relatives, and neighbors can be.
Showings And Open Houses
To prepare your home for viewing, make it as bright, clean, cheerful, and serene as possible. Always look at your home from the buyer’s point of view. Your REALTOR® will probably find a tactful way to suggest that you be absent while the house is being shown to prospective buyers because your presence will inhibit their actions and conversations. They won’t feel free to open closets and cabinets, test out the plumbing and discuss their observations objectively as they walk through the house. It goes without saying that your children and pets should not be on the premises either.
If your REALTOR® has scheduled an open house, you may want to notify the neighbors, and assure them that they’ll be welcome. They’ll jump at the chance to poke around in your house, and sometimes they can turn up a buyer among their friends.
Quick tips for showings and open houses:
How Long Has Your House Been On The Market?
Professional appraisers sum up their entire body of knowledge in three words: “Buyers make value.” Your home is worth as much as a buyer will pay for it.
If your home has been on the market for months, it’s a clear message that the property may not be worth what you’re asking for it. This is particularly true if there haven’t been many prospects coming to see it. What you do at that point depends on whether you really need to sell, and whether you’re working with a time limit.
If you’re not really motivated to move soon, you can always wait—years if necessary—and hope inflation will catch up with the price you want. The problem is that at that time, your home begins to feel shopworn. Buyers become suspicious of a house that’s been for sale for a long time.
If you really do need to sell, with your REALTOR® discuss a schedule for gradually dropping your price until you find a level that attracts buyers. There’s no point in saying, “We simply can’t sell our house.” Anything will sell if the price is right.
If You’re Buying Another Home
You may wonder what will happen when you’re selling one home and buying another – how will all the details work out? This is a common situation and REALTORS®, lawyers, and title and escrow companies have plenty of experience in arranging contracts and loans so that the two transactions dovetail smoothly.
And should you sell your home first then buy or buy first then sell? Ideally, it’s best to find a home you like and make an offer subject to selling your current home. This generally works in a normal market. However, in a “hot” market most sellers will not accept a “subject to sale” offer. In this case, you need to sell your home first and then buy a new home in the interim period between selling and vacating your house. If you find that you need to buy the next house before you’ve received the proceeds from the present one, lending institutions can sometimes make you a short-term “bridge” loan to tide you over between the two transactions. Make sure you fully understand the exposure and emotional investment before proceeding with this type of loan.
A real estate agent can help you understand everything you need to know about the home-selling process. Not all real estate licensees are the same; only those who are members of the NATIONAL ASSOCIATION OF REALTORS® (NAR) are properly called REALTORS®. They proudly display the REALTOR “®” trademark on their business cards and other marketing and sales literature.
REALTORS® are committed to treating all parties to a transaction honestly. REALTORS® subscribe to a strict Code of Ethics and are expected to maintain a higher level of knowledge of the process of buying and selling real estate. An independent survey reported that 84% of home buyers would use the same REALTOR® again.
Real estate transactions are one of the biggest financial dealings of most people’s lifetime. Transactions today usually exceed $250,000. If you had a $250,000 income tax problem, would you attempt to deal with it without the help of a certified professional accountant? If you had a $250,000 legal question, would you deal with it without the help of an attorney? Considering the small upside cost and the large downside risk, it would be wise to work with a professional REALTOR® when you are selling a home.
If you’re still not convinced of the value of a REALTOR®, here are seven more reasons to use one: