Why Use a Realtor When Selling a Home?
A real estate professional 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 treat 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 some of the biggest financial dealings of most people’s lifetime. Transactions today usually exceed $150,000. If you had a $150,000 income tax problem,would you attempt to deal with it without the help of a certified professional accountant? If you had a $150,000 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 some more reasons to use one:
1. When selling your home, your Realtor can give you up-to-date information on what is happening in the marketplace as well as the price, financing, terms and condition of competing properties. These are key factors in getting your property sold at the best price, quickly and with minimum hassle.
2. Often, your Realtor can recommend repairs or cosmetic work that will significantly enhance the salability of your property.
3. Your Realtor markets your property to other real estate agents and the public. In many markets across the country, over half of real estate sales are cooperative sales, that is, a real estate agent other than yours brings in the buyer. Your Realtor acts as the marketing coordinator, distributing information about your property to other real estate agents through a Multiple Listing Service (MLS) or other cooperative marketing networks, open houses for agents, etc. The Realtor Code of Ethics requires Realtors to utilize the cooperative relationships when they benefit their clients.
4. Your Realtor will know when, where and how to advertise your property. There is a misconception that advertising sells real estate. NAR studies show that 82% of real estate sales are the result of agent contacts though previous clients, referrals, friends, family and personal contacts. When a property is marketed with the help of your Realtor, you do no have to allow strangers into your home. Your Realtor will generally pre-screen and accompany qualified prospects through your property.
5. Your Realtor can help you objectively evaluate every buyer’s proposal without compromising your marketing position. This initial agreement is only the beginning of a process of appraisals, inspections and financing – and a lot of possible pitfalls. Your Realtor can help to write a legally binding win-win agreement that will be more likely to make it through the process.
6. Your Realtor can help close the sale of your home. Issues may arise between the initial sales agreement and closing (also called settlement or escrow), for example, unexpected repairs might be required to obtain financing or a title problem is discovered. The required paperwork alone is overwhelming for most sellers. Your Realtor is the best person to objectively help you resolve these issues and move the transaction to closing.
Is Your Home Ready to Show to Buyers?
A house that sparkles both inside and out will show better and sell faster than your neighbors even if both are structurally maintained.
From experience, REALTORS also know that a ‘well-polished’ house appeals to more buyers and will sell faster and for a higher price. Additionally, Buyers feel more comfortabe 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 mainatained. When getting your house ready, think about this:
Before putting your house on the market, take as much time as necessary to maximize its exterior and interior appeal.
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 s brand new roof, but they aren’t likely to give you enough extra money to pay for it. 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 rather than doing extensive and costly renovations, like installing a new kitchen.
Your REALTOR is familiar with buyer’s 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 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. The home should also look neutral – without a lot of your personal and sentimental objects. Buyers need to be able to imagine living there.
How to Set a List Price for Your Home
Setting the list price for your home involves evaluating various market condition and financial factors. During this phase of the home selling process, your Realtor will help you set your list price based on:
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:
If you set the price too high, your house won’t be picked for viewing, even though it may be much nicer than other homes on the street. You may have told your Realtor to “Bring me any offer. Frankly, I’d take less,” but compared to other houses for sale, your home simply looks too expensive to be considered.
If you set the price too low, you’ll short-change yourself. Your house will sell promptly, yes, but you may make less on the sale than if you had set a higher price and waitind for a buyer who was willing to pay it.
TIP: Never say “asking” price, which implies you don’t expect to get it. Always say “listed” price.
Price Against Comparable Sales in Your Neighborhood
No matter how attractive and polished your house, 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 porbably 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, if there hasn’t been much activity in your area recently, if co-owners disagree about price or if there is any other circumstance that makes it difficult to put a value on your home.
TIP: If you do order a market value appraisal, make it clear to the appraiser that 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, 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 on 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’ve attempted 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 institition.
If you haven’t had much traffic through your house and your’re in a hurry to sell, you want 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 particulay 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: absolute seller’s costs, typical local seller’s costs and misc. closing costs.
Absolute Sellers Costs: Subtract the following costs as applicable:
Typical 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:
Misc. 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.
The Basics of Marketing Your Home
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 always be listed though a Multiple Listing Service (MLS).
Advertising and Promotion
Properties are commonly advertised through real estate agent websites, 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 to promote it ot the buyers they are working with.
Even with all thee advertising avenues,”For Sale” signs on front lawns are still remarkably effective. Many Realtors promote their website 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, relative and neighbors can be.
Showings and Open Houses
To prepare your home for viewing, make it as bright, clean, cheerful and serene s 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 they they’ll be welcome. They’ll jump at the change 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’r 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’r 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 in 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, discuss with your Realtor 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.” Anyting 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 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 although a seller may retain a “72-hour right of refusal.” This means they’ve agreed to terms with you but can continue showing the house to potential buyers. If they find a buyer who can close sooner, you will be given 72-hours to either take it or let it go to the next buyer. 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 this exposure and emotional investment before proceeding with this type of loan.