Getting Your House Ready to Sell...
Emotion v. Reason
Whenconversing with real estate agents, you will often find that when they talk toyou about buying real estate, they will refer to your purchase as a "home."Yet if you are selling property, they will often refer to it as a"house." There is a reason for this. Buying real estate is often anemotional decision, but when selling real estate you need to remove emotionfrom the equation.
You need tothink of your house as a marketable commodity. Property. Real estate. Your goalis to get others to see it as their potential home, not yours. If you do notconsciously make this decision, you can inadvertently create a situation whereit takes longer to sell your property.
The firststep in getting your home ready to sell is to "de-personalize" it.
De-personalize The House
The reasonyou want to "de-personalize" your home is because you want buyers toview it as their potential home. When a potential homebuyer sees your familyphotos hanging on the wall, it puts your own brand on the home and momentarilyshatters their illusions about owning the house. Therefore, put away familyphotos, sports trophies, collectible items, knick-knacks, and souvenirs. Putthem in a box. Rent a storage area for a few months and put the box in thestorage unit.
Do not justput the box in the attic, basement, garage or a closet. Part of preparing ahouse for sale is to remove "clutter," and that is the next step inpreparing your house for sale.
Removing Clutter, ThoughYou May Not Think of it as Clutter
This is thehardest thing for most people to do because they are emotionally attached toeverything in the house. After years of living in the same home, cluttercollects in such a way that may not be evident to the homeowner. However, itdoes affect the way buyers see the home, even if you do not realize it. Cluttercollects on shelves, counter tops, drawers, closets, garages, attics, andbasements.
Take a stepback and pretend you are a buyer. Let a friend help point out areas of clutter,as long as you can accept their views without getting defensive. Let your agenthelp you, too.
<!--[if !supportLists]-->· KitchenClutter <!--[endif]-->
<!--[if !supportLists]-->· Thekitchen is a good place to start removing clutter, because it is an easy placeto start. First, get everything off the counters. Everything. Even the toaster.Put the toaster in a cabinet and take it out when you use it. Find a placewhere you can store everything in cabinets and drawers. Of course, you maynotice that you do not have cabinet space to put everything. Clean them out.The dishes, pots and pans that rarely get used? Put them in a box and put thatbox in storage, too.
You see, homebuyers will open all your cabinets and drawers, especially in thekitchen. They want to be sure there is enough room for their "stuff."If your kitchen cabinets, pantries, and drawers look jammed full, it sends anegative message to the buyer and does not promote an image of plentifulstorage space. The best way to do that is to have as much "emptyspace" as possible.
For that reason, if you have a "junk drawer," get rid of the junk. Ifyou have a rarely used crock pot, put it in storage. Do this with every cabinetand drawer. Create open space.
If you have a large amount of foodstuffs crammed into the shelves or pantry,begin using them – especially canned goods. Canned goods are heavy and youdon’t want to be lugging them to a new house, anyway – or paying a mover to doso. Let what you have on the shelves determine your menus and use up as much asyou can.
Beneath the sink is very critical, too. Make sure the area beneath the sink isas empty as possible, removing all extra cleaning supplies. You should scrubthe area down as well, and determine if there are any tell-tale signs of waterleaks that may cause a homebuyer to hesitate in buying your home.
<!--[if !supportLists]-->· ClosetClutter <!--[endif]-->
<!--[if !supportLists]-->· Closetsare great for accumulating clutter, though you may not think of it as clutter.We are talking about extra clothes and shoes – things you rarely wear butcannot bear to be without. Do without these items for a couple of months byputting them in a box, because these items can make your closets look"crammed full." Sometimes there are shoeboxes full of"stuff" or other accumulated personal items, too.
<!--[if !supportLists]-->· FurnitureClutter <!--[endif]-->
<!--[if !supportLists]-->· Manypeople have too much furniture in certain rooms – not too much for your ownpersonal living needs – but too much to give the illusion of space that ahomebuyer would like to see. You may want to tour some builders’ models to seehow they place furniture in the model homes. Observe how they place furniturein the models so you get some ideas on what to remove and what to leave in yourhouse.
<!--[if !supportLists]-->· StorageArea Clutter <!--[endif]-->
<!--[if !supportLists]-->· Basements,garages, attics, and sheds accumulate not only clutter, but junk. These areasshould be as empty as possible so that buyers can imagine what they would dowith the space. Remove anything that is not essential and take it to thestorage area.
Or have a garage sale.
Fixing Up the HouseInterior
<!--[if !supportLists]-->· Plumbingand Fixtures <!--[endif]-->
<!--[if !supportLists]-->· Allyour sink fixtures should look shiny and new. If this cannot be accomplished bycleaning, buy new ones where needed. If you don’t buy something fancy, this canbe accomplished inexpensively and they are fairly easy to install. Make sureall the hot and cold water knobs are easy to turn and that the faucets do notleak. If they do, replace the washers. It is not difficult at all.
Check to make sure you have good water pressure and that there are no stains onany of the porcelain. If you have a difficult stain to remove, one trick is tohire a cleaning crew to go through and clean your home on a one-time basis.They seem to be wonderful at making stains go away.
<!--[if !supportLists]-->· Ceilings,Walls and Painting <!--[endif]-->
<!--[if !supportLists]-->· Checkall the ceilings for water stains. Sometimes old leaks leave stains, even afteryou have repaired the leak. Of course, if you do have a leak, you will have toget it repaired, whether it is a plumbing problem or the roof leaks.
' You should do the same for walls, looking for not only stains, but also areaswhere dirt has accumulated and you just may not have noticed. Plus, you mayhave an outdated color scheme.
Painting can be your best investment when selling your home. It is not a veryexpensive operation and often you can do it yourself. Do not choose colorsbased on your own preferences, but based on what would appeal to the widestpossible number of buyers. You should almost always choose an off-white colorbecause white helps your rooms appear bright and spacious.
<!--[if !supportLists]-->· Carpetand Flooring <!--[endif]-->
<!--[if !supportLists]-->· Unlessyour carpet appears old and worn, or it is definitely an outdated style orcolor, you probably should do nothing more than hire a good carpet cleaner. Ifyou do choose to replace it, do so with something inexpensive in a fairlyneutral color.
Repair or replace broken floor tiles, but do not spend a lot of money onanything. Remember, you are not fixing up the place for yourself. You want tomove. Your goal is simply to have as few negative impressions upon those whomay want to purchase your property.
<!--[if !supportLists]-->· Windowsand Doors <!--[endif]-->
<!--[if !supportLists]-->· Checkall of your windows to make sure they open and close easily. If not, a spray ofWD40 often helps. Make sure there are no cracked or broken windowpanes. Ifthere are, replace them before you begin showing your home.
Do the same things with the doors – make sure they open and close properly,without creaking. If they do, a shot of WD40 on the hinges usually makes thecreak go away. Be sure the doorknobs turn easily, and that they are cleaned andpolished to look sharp. As buyers go from room to room, someone opens each doorand you want to do everything necessary to create a positive impression.
<!--[if !supportLists]-->· OdorControl <!--[endif]-->
<!--[if !supportLists]-->· Forthose who smoke, you might want to minimize smoking indoors while trying tosell your home. You could also purchase an ozone spray that helps to removeodors without creating a masking odor.
Pets of all kinds create odors that you may have become used to, but areimmediately noticeable to those with more finely tuned olfactory senses. Forthose with cats, be sure to empty kitty litter boxes daily. There are alsoproducts that you can sprinkle in a layer below the kitty litter that helps tocontrol odor. For those with dogs, keep the dog outdoors as much as possible.You might also try sprinkling carpet freshener on the carpet on a periodic basis.
<!--[if !supportLists]-->· Costsof Repairs <!--[endif]-->
<!--[if !supportLists]-->· Donot do anything expensive, such as remodeling. If possible, use savings to payfor any repairs and improvements – do not go charging up credit cards orobtaining new loans. Remember that part of selling a house is also preparing tobuy your next home. You do not want to do anything that will affect your creditscores or hurt your ability to qualify for your next mortgage.
Fixing Up Outside theHouse
Most realestate advice tells you to work on the outside of the house first, but unlessthere is a major project involved, we believe it is best to do it last. Thereare two main reasons for this. First, the first steps in preparing the interiorof the house are easier. They also help develop the proper mind set requiredfor selling - beginning to think of your "home" as a marketablecommodity. Second, the exterior is the most important. A homebuyer’s firstimpression is based on his or her view of the house from the real estateagent’s car.
So take awalk across the street and take a good look at your house. Look at nearbyhouses, too, and see how yours compares.
<!--[if !supportLists]-->· Landscaping <!--[endif]-->
<!--[if !supportLists]-->· Isyour landscaping at least average for the neighborhood? If it is not, buy a fewbushes and plant them. Do not put in trees. Mature trees are expensive, and youwill not get back your investment. Also, immature trees do not really add muchto the appearance value of the home.
If you have an area for flowers, buy mature colorful flowers and plant them.They add a splash of vibrancy and color, creating a favorable first impression.Do not buy bulbs or seeds and plant them. They will not mature fast enough tocreate the desired effect and you certainly don’t want a patch of brown earthfor homebuyers to view.
Your lawn should be evenly cut, freshly edged, well watered, and free of brownspots. If there are problems with your lawn, you should probably take care ofthem before working on the inside of your home. This is because certain areasmay need re-sodding, and you want to give it a chance to grow so that re-sodareas are not immediately apparent. Plus, you might want to give fertilizerenough time to be effective.
Always rake up loose leaves and grass cuttings.
<!--[if !supportLists]-->· HouseExterior <!--[endif]-->
<!--[if !supportLists]-->· Thebig decision is whether to paint or not to paint. When you look at your housefrom across the street, does it look tired and faded? If so, a paint job may bein order. It is often a very good investment and really spruces up theappearance of a house, adding dollars to offers from potential homebuyers.
When choosing a color, it should not be something garish and unusual, but acolor that fits well in your neighborhood. Of course, the color also depends onthe style of your house, too. For some reason, different shades of yellow seemto illicit the best response in homebuyers, whether it is in the trim or thebasic color of the house.
As for the roof, if you know your house has an old leaky roof, replace it. Ifyou do not replace a leaky roof, you are going to have to disclose it and thebuyer will want a new roof, anyway. Otherwise, wait and see what the homeinspector says. Why spend money unnecessarily?
<!--[if !supportLists]-->· TheBack Yard <!--[endif]-->
<!--[if !supportLists]-->· Theback yard should be tidy. If you have a pool or spa, keep it freshly maintainedand constantly cleaned. For those that have dogs, be sure to constantly keepthe area clear of "debris." If you have swing sets or anythingelaborate for your kids, it probably makes more sense to remove them than toleave them in place. They take up room, and you want your back yard to appearas spacious as possible, especially in newer homes where the yards are not aslarge.
<!--[if !supportLists]-->· TheFront Door & Entryway<!--[endif]-->
<!--[if !supportLists]-->· <!--[endif]-->Thefront door should be especially sharp, since it is the entryway into the house.Polish the door fixture so it gleams. If the door needs refinishing orrepainting, make sure to get that done.
If you have a cute little plaque or shingle with your family name on it, removeit. Even if it is just on the mailbox. You can always put it up again once youmove. Get a new plush door mat, too. This is something else you can take withyou once you move.
Make sure the lock works easily and the key fits properly. When a homebuyercomes to visit your home, the agent uses the key from the lock box to unlockthe door. If there is trouble working the lock while everyone else standsaround twiddling their thumbs, this sends a negative first impression toprospective homebuyers.
Want to Start Off with a High Sales Price? -BEWARE!
Meeting With Realtors
So you’vedecided to sell your home and have a fairly good idea of what you think it isworth. Being a sensible home seller, you schedule appointments with three locallisting agents who’ve been hanging stuff on your front doorknob for years. EachRealtor comes prepared with a "Competitive Market Analysis" on fancypaper and they each recommend a specific sales price.
Amazingly, acouple of the Realtors have come up with prices that are lower than youexpected. Although they back up their recommendations with recent sales data ofsimilar homes, you remain convinced your house is worth more. When youinterview the third agent’s figures, they are much more in line with your ownanticipated value, or maybe even higher. Suddenly, you are a happy and excitedhome seller, already counting the money.
Which Realtor do youchoose?
If you’relike many people, you pick Realtor number three. This is an agent who seemswilling to listen to your input and work with you. This is an agent that caresabout putting the most money in your pocket. This is an agent that is willingto start out at your price and if you need to drop the price later, you can dothat easily, right? After all, everyone else does it!
The truth isthat you may have just met an agent engaging in a questionable sales practicecalled "buying a listing." He "bought" the listing bysuggesting you might be able to get a higher sales price than the other agentsrecommended. Most likely, he is quite doubtful that your home will actuallysell at that price. The intention from the beginning is to eventually talk youinto lowering the price.
Why do agents"buy" listings? There are basically two reasons. A well-meaning andhard working agent can feel pressure from a homeowner who has an inflatedperception of his home’s value. On the other hand, there are some agents whoengage in this sales practice routinely.
What Happens Behind theScenes
Whichever thecase, if you start out with too high a price on your home, you may have justadded to your stress level, and selling a home is stressful enough. There willbe a lot of "behind the scenes" action taking place that you don’tknow about.
Contrary topopular opinion, the listing agent does not usually attempt to sell your hometo a homebuyer. That isn’t very efficient. Listing agents market and promoteyour home to the hordes of other local agents who do work with homebuyers,dramatically increasing your personal sales force. During the first couple ofweeks your home should be a flurry of activity with buyer’s agents coming topreview your home so they can sell it to their clients.
If theprice is right.
If you andyour agent have overpriced, fewer agents will preview your home. After all,they are Realtors, and it is their job to know local market conditions and homevalues. If your house is dramatically above market, why waste time? Their timeis better spent previewing homes that are priced realistically.
Dropping Your Price...TooLate
Later, whenyou drop your price, your house is "old news." You will never be ableto recapture that flurry of initial activity you would have had with arealistic price. Your house could take longer to sell.
Even if youdo successfully sell at an above market price, your buyer will need a mortgage.The mortgage lender requires an appraisal. If comparable sales for the last sixmonths and current market conditions do not support your sales price, the housewon’t appraise. Your deal falls apart. Of course, you can always attempt torenegotiate the price, but only if the buyer is willing to listen. Your housecould go "back on the market."
Once your homehas fallen out of escrow or sits on the market awhile, it is harder to get agood offer. Potential buyers will think you might be getting desperate, so theywill make lower offers. By overpricing your home in the beginning, you couldactually end up settling for a lower price than you would have normallyreceived.
Realtors Talk to EachOther
Plus,remember those two conscientious agents who got aced out of the listing? Ifyour listing agent routinely engages in "buying" listings, he hasprobably aced out scores of other agents in the same way. Being human, Realtorstalk to each other. If they don’t like your listing agent, not as many of themwill be showing your home.
In short, youmay have ended up with an agent who was good at selling you, but not good atselling your house. And you’re going to pay them a commission for it.
It is humannature for you to want the highest price for your home. However, when youchoose the agent who promises what you want to hear, it often leads to stressand frustration. Most of the time, it will take you longer to sell your home.Possibly, you will end up selling at a lower price instead.
Or maybe as aresult of reading this article, you will choose one of the "good"Realtors in the first place.
Want to Start Off with a High Sales Price? -BEWARE!
Types of Listing Contracts
There areseveral different types of listing contracts, but very few of them are used.The "Exclusive Right to Sell" is the most common, but there is the"open listing," the "exclusive agency listing," and the"one-time show."
The"open listing" is mostly used by people trying to sell their home byowner who are also willing to work with real estate agents. Basically, it givesa real estate agent the right to bring buyers around to view your home. Iftheir client buys your home, the agent earns a commission. There is nothingexclusive about an open listing and a home seller can give out such listings toevery agent who comes around.
For thatreason, no agent is going to market your home or put it in the Multiple ListingService. If your home fits the criteria for one of their clients, and it isconvenient, they may be willing to show it to their client. That is all an"open listing" is good for.
A "one-timeshow" is similar to an open listing in many respects, as it is most oftenused by real estate agents who are showing a FSBO (for sale by owner) to one oftheir clients. The home seller signs the agreement, which identifies thepotential buyer and guarantees the agent a commission should that buyerpurchase the home. This prevents the buyer and seller from negotiating directlylater and trying to avoid paying the agent’s commission.
As with anopen listing, agents will not be spending money on marketing your home and itwill not be placed in the Multiple Listing System.
Exclusive Agency Listing
An"exclusive agency" listing allows an agent to list and market yourhome, guaranteeing them a commission if the house sells through any real estateagent or company. It also allows sellers to seek out buyers on their own.
This is not apopular type of listing agreement. The reason is that there is not muchincentive for agents to spend money marketing your home. If you come up withyour own buyer, they have spent money they cannot earn back through the realestate commission. Plus, it is too easy for a greedy buyer to go around theagent and negotiate directly with the seller.
If you findan agent willing to accept such a listing, do not expect too much from them.They will probably just place it in the Multiple Listing Service and sit aroundto see if something happens. A good agent would never accept such a listing,and you probably want a good agent.
Exclusive Right to Sell
Giving a realestate agent the "exclusive right to sell" your property does notmean that there will not be other agents involved. Your agent is the listingagent and part of his or her job is to market your home to other agents whowork with buyers. Those agents will show your home to their clients. Regardlessof who sells the home, even if you sell it yourself to a friend at work, yourlisting agent will earn a commission.
An exclusiveright to sell is the only type of listing an effective real estate agent willaccept. This is because they have a reasonable expectation of earning back anymoney they spend on promoting and marketing your house.
Details of a Listing Contract...
Obviously thename of the seller and the property address will be included in the listing contract.There are many other things that are included, too, and you should be aware ofthem.
Price andTerms of Sale
When settingthe terms of sale, the main thing you are concerned with is the price. Youshould have a basic idea of what your home is worth by keeping track of othersales in the neighborhood. Plus, you have probably interviewed at least tworeal estate agents and they have given you their own ideas. Exercise great carein determining your asking price, making sure not to set it too high or toolow.
In additionto the price, you will disclose what personal property, if any, goes with thehouse when you sell it. Personal property is anything that is not attached orfixed to the home, such as washers, dryers, refrigerators, and so on.
There may besome item that is considered "real property" that you do not intendto include in the sale. Real property is anything that is attached to the home.For example, you may have a chandelier that has been in your family forgenerations and you take it from home to home when you move. Since thechandelier is attached to the house, it is considered "real property"and a reasonable buyer would normally expect it to go with the house.
Lockbox - Yes or No?
A lockbox isa basically a padlock with a cavity inside where a key to your home can beplaced. Only someone with an electronic key or the combination can get into thelockbox and access the key. Having a lockbox available at your house makes iteasy for other agents to get access to your house.
Without thelockbox, agents representing buyers would have to set appointments to meet youor your agent at the house so they could gain access and view the home. Thiswould be inconvenient. Since almost every other house does have a lockboxavailable, if you do not allow one most agents will simply not show yourproperty. You will miss out on lots of potential buyers.
The listingcontract specifies whether you allow a lockbox or not. It is locked into place,usually on the front door and cannot be removed. Only other agents can accessthe key that is located within the lockbox.
Real Estate Commission
In most areasthere is a "customary" percentage that real estate agents expect toearn as a commission. Usually, it is six percent of the sales price. In someareas it can be as high as seven percent. However, just like anything else inreal estate, this amount is negotiable. When completing the listing agreement,you and your agent will agree on the amount of the real estate commission.
The listingcontract also specifies when the commission is earned. If a buyer presents anoffer that meets your listing price and terms, the agent has effectively earnedthe commission. If a buyer presents an offer and you reach agreement on priceand terms through counter-offers, the agent has also earned his or hercommission.
Multiple Listing Service
Your listingcontract should specify whether or not the house will be listed with the localMLS (multiple listing service). It is definitely in your interest to have thehouse listed. This is because your sales force is automatically multiplied byhowever many agents are members of the local MLS. If your house is not listed,then you only have one agent working for you instead of many.
Agency Duties of a ListingAgent
The listingcontract will specify that your agent is acting as a "seller’sagent." This means that, in the sale of your house, they are working foryou and only you. However, there may be times when your listing agent has aclient who wants to buy your home. For that reason, there is a little"wiggle room" in the listing contract. If your agent also representsthe buyer, the listing contract should specify that they provide an additionaldisclosure that details their duties as a dual agent.
The contractalso provides permission for your listing agent to act as an agent for otherson other transactions. They can continue to list other properties, andrepresent buyers looking at other homes.
Resolution of Disputes
There aretimes when you and your agent have a disagreement that you cannot resolve byyourselves. Maybe the agent did a poor job or misrepresented something. Maybeyour agent was really doing their job correctly, but you did not understand.Perhaps the agent will have a dispute with you.
The listingcontract specifies what methods will be used to settle such disputes. You canchoose to accept binding arbitration, which is usually cheaper than hiring alawyer and going to court. Usually, matters that can be dealt with in a smallclaims court are excluded from having to go to binding arbitration.
You are notrequired to sign or initial the binding arbitration clause. This would leaveyou free to hire an attorney and pursue disputes in civil court instead ofbinding arbitration. Consult your attorney for advise on this legal matter.
Listing Commissions and Related Issues...
In most areasthere is a "customary" percentage that real estate agents expect toearn as a commission. Usually, the customary percentage will range from six toeight percent of the sales price. However, just like anything else in realestate, this amount is negotiable. When completing the listing agreement, youand your agent will agree on the amount of the real estate commission.
Cut-Rate Listing Commissions
With theadvent of the web, a lot of agents are offering "cut-rate"commissions. Most of the time, lower commissions are tied to a lower level ofservice. If all you want is to be listed with the Multiple Listing Service anda sign in the front yard, then a cut-rate commission may be right for you. Ifyou want an agent who will actively promote your property to other agents andspend money on advertising, then you probably are not going to get that levelof service with a reduced commission.
At other times,the lower commissions are offered when you agree to tie in to other servicesoffered by the broker, such as agreeing to use a specific lender, escrow,settlement, or title company. The broker (not the agent) will probably havesome type of ownership or profit participation in those businesses. The problemwith agreeing to tie in to these other companies is that they do not have to beas competitive in pricing their products or services.
Anothercommon practice when you see an ad for a reduced commission is that thecompensation is lowered when you agree to buy your next home through the sameagent or broker. Usually, the reduced commission is not really being offered onthe sale of your existing home but on the purchase of your next one. The adsare usually unclear on this.
As a result,when you see an offer for a lower commission, you should analyze what you aregiving up by accepting such an offer.