Sellers and Today’s Market
So often we get calls from sellers looking to list their home. Often the biggest job is to get sellers to understand current market conditions and how it affects the sale of their home. We are in different times now. What was 6 months or a year ago in selling one’s home changes every day. Sellers who really want to sell must understand that what they want out of the sale of their home and what the market will bear is two different things. People who bought homes in recent years and have now decided to move on must realize that when they bought a home at the height of the market, now prices have come down, may not be able to make a profit on the sale of one’s home. Selling one’s home and trying to pay off other debts as credit cards is not market value. Nor is needing more money to move on. Market value is what the house is worth today, in today’s market. This is the market today. Appraisals are coming in very tight and low compaired to previous years. So to list one’s home too high and then when the appraisal comes in low, kills a deal, what has been accomplished? Lost time and energy and possibly a lost buyer. Now your house is back on the market at the more realistic price and the waiting for the right buyer starts all over.
There are more homes on the market today with approx. 40% less qualified buyers. Mortgage approvals are getting harder each day.
To sell your home you must be the best home on the block. Homes that are priced right, look good and smell good in the right location will sell.
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Today’s Market – Sellers must be prepared to make the move physically and mentally.
Another seller who was not prepared to make the move. The home was up for sale with another realtor, over priced and few showings. Angelina and I took the listing, set the price and did the marketing. The offer came in what we thought was a good offer. The negotiations on the price were not the toughest. It was the timing of the move. The deal was almost lost on making a move one week different than what the buyers wanted. Okay things can be worked out but here is the real story behind the story. The seller was not mentally nor physically prepared to make the move. When the seller listed the home the seller did not start the process of mentally leaving their home nor start to physically empty out the home. I am not saying that the seller should not be able to live in their home while the house is one the market, but once the house is listed a seller should start to prepare for the move. Start getting rid of the things you never use, the things that have been packed up for years that are waiting for whenever. If you have not used it in 2 years you do not need it. It makes the move go more smooth.
Prepare for the move both mentally and phsically. Make a list of things that need to be accomplished. Things that will need to be done before the move, during the move and after the move. This will help you organize yourself and help you realize that when the deal is done you are prepared to make the move.
FAQ’s
(Frequently asked questions by sellers)
Question: Why shouldn’t I price my house a little high, since I can always drop the price later?
Answer: This sounds like a good strategy, but it may more than likely result in a lower price. The first few weeks that your house is listed for sale and on the market is when it will have the most activity. If a house is overpriced, it will be competing with houses at a higher price level. The homes will probably be larger and be newer homes possibly with upgraded features. The overpriced home will not attract buyers or interest agents in showing the home. The house is now sitting on the market with little or no activity.
Sooner or later the seller will have to drop the price, and may be even to a lower price than first suggested by the listing agent. “You have “Chased the Market” and lost valuable marketing time. Buyers will wonder why the house has been on the market so long and will factor this time on the market into an offer price should they decided to make an offer on your home.
Question: What if my house doesn’t sell in a reasonable amount of time?
Answer: While it takes one buyer to purchase your house, it may require patience until that buyer comes along. If few potential buyers are being shown your home despite strong marketing efforts, it could be a pricing problem. Again you may have been supplied with a Cost Market Analysis when you first listed your home, but the market changes weekly and even daily. You cannot “Chase the Market” You need to price your home according to today’s market. Selling your home in today’s market is very different from years ago, months ago and even weeks or days ago.
Ask yourself; what is your motivation and objectives in selling your home? How fast do you want to sell? If the home is not getting showings, you may need to consider a price improvement to attract a larger pool of potential buyers. Am I doing what I need to move on?
Question: Once the agreement of sale is signed, are there any issues that I as the seller should be concerned about?
Answer: Yes, See the questions and answers below.
Question: Once the agreement of sale is signed are there any other factors that could affect the sale or sale price of the home?
Answer: Yes, Maybe, or No, see the other questions and answers below.
Question: What are contingencies and how do they affect the agreement of sale of my home?
Answer: The agreement of sale typically will contain several contingency clauses that the sale of your home is subject to. Examples are: Mortgage commitment (if the buyer is unable to obtain financing within a certain timeframe in order to complete the purchase the home) the agreement of sale will be voided. Inspections and clear title are other contingencies which will be in the agreement of sale
Question: What happens if the home inspection reveal issues, serious or not?
Answer: If an inspection report is received by the buyer and reviewed with the buyer’s agent and there are issues that they would like to bring to the attention of the seller, a “reply to inspections” will be sent to your listing agent to review with you. At this time you and your agent will review the “reply to inspections” and discuss each aspect of the inspection that may need attention. Generally there are a number of ways that these issues may be dealt with in the terms of the agreement of sale. First; a seller may choose to fix the problem, Second; the buyer may accept some or all of the issues “as is” Third; the seller may choice to credit the buyer at closing for the some or all of the repairs necessary, Fourth; the seller and buyer may renegotiate the sale price of the home to compensate the buyer for some or all of the necessary repairs to be done, Fifth; the seller and buyer may choose to terminate the contract. Any of these five resolutions must be agreed upon by both the seller and buyer. In order for the sale of the home to keep moving it is critical to resolve critical issues. If an agreement of sale is terminated due to critical issues not resolved, these issue must now be updated on the “Seller’s Disclosure” form for review by all new perspective buyers.
Question: Radon what is it and what happens if the Radon test comes in above acceptable levels?
Answer: Radon is a radioactive gas produced by the natural decay of other radioactive substances (note: this is common in the Pike County area). If the gas dissipates into the atmosphere, it is not likely to cause harm.
If this gas is trapped in high concentrations (usually in basements with inadequate ventilation) it may cause health issues. The general rule is that remediation is indicated if Radon levels measure four (4) picocuries (pci) or more.
Remediation may be another factor that will affect the sale price of the home. The seller may have to install a remediation system before closing in the home to satisfy the buyer desire to fix the issue of Radon within the home. The buyer may accept the home “as is”, the buyer and seller may split the costs of the remediation system. The seller and buyer may terminate the agreement of sale. If an agreement of sale is terminated due to presence of Radon, the presence must now be updated on the “Seller’s Disclosure” form for review by all new perspective buyers and the remediation should be done at this point in time.
Question: What happens if an appraisal does not reflect the sale price of the home and comes in lower than that of the sale price?
Answer: Though you may have been supplied with a Cost Market Analysis when you first listed your home, factors that change the actual value of your home at the time of the sale change every week and every day, especially in this market. At the time of the sale of your home, should this happen there are a number of actions that may be taken by both the buyer and seller. These actions will also depend on factors such as if there is a mortgage being taken out and the total mortgage amount in relation to the actual appraised value of the home. A buyer may if possible pay the difference in the appraised value of the home and the sale price, the buyer and seller split the difference in the price of the sale of the home and the appraised value, or the homeowner may have to readjust the sale price of the home to reflect the appraised value of the home, or the agreement of sale may be terminated. Note: that if the agreement of sale is terminated at this point the seller should now list the home at that appraised value or just very slightly higher and expect to receive offers that will only reflect the current appraised value but even lower. Remember it is a buyer’s market and ultimately you the seller must decide on your motivation to make your move. Selling a home above the appraised value does not happen often in this market, and again if a mortgage is involved it is likely that the deal will end at this point unless the sale price of the home is renegotiated.
Question: What is a tile search and how does affect the sale of a home?
Answer: A tile search is done to ensure the buyer that they will have clear title to the home they are purchasing. A title search company will due a search to make sure that the seller actually owns the property and to see if there any claims against the property. A buyer will want ‘clear title” when closing on the property; meaning that there are no claims or judgments against the property that they will be responsible for if they take possession of the property.
These are some of the most asked questions we come across. We hope that this information will help guide you through the some of the selling process and help you make educated decisions on listing and selling your home.
THE TEAM ADVATANGE
A BETTER WAY OF SELLING REAL ESTATE
Market Value
I am working on a offer to purchase for a buyer. We have provided a Cost Market Analysis to show the seller and their agent that the listing of their home is over priced.
The response was – We had to do repairs to the home that is why we priced it the way we did. THIS IS NOT MARKET VALUE! This only brought the home up to a condition that it could be sold in. Sellers must understand that making necessary repairs to a home do not increase the value but makes it more sellable. Reovering those costs is not how it works, expecially in todays market