Sell Fast: Do What No One Else Does

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Here’s a short note from a seller in Florida that could easily be any seller in North America in our current market place:

“I have an investment property in Poinciana, Florida, that I have been trying to sell since February this year (2006). It is a brand new 4 bedroom, 2 baths, 2 half-baths condo and we did have it under contract for sale twice and both times, the deals fell through at the 11th hour. We now have it on the rental market and are still having a difficult time finding a qualified tenant. I am currently working with a property management company and am not pleased with the results to date. I am wondering if you have any investors that may be interested in purchasing the property at a discount or any creative ideas for selling/renting in the current market.”

If you’re going to sell in this market there are really only a few — but very important — things you must do.

  1. Fix up the place. I’m dealing with sellers these days who think that if they just make the house look better than how they’ve been living in it, then maybe that will draw the buyers. This approach is not working in today’s market.One of the ways to overcome this push-back is to simply visit some houses that are in the same market area and type of home that you own. How do they look compared to yours? On top of that — how does your house look compared to the new construction in your price range? Make the house look, “Wow,” in this market or you’ll lose buyers right when they walk into the front door.
  2. Price it below market. Don’t mess around on this second point or you could lose more money as each month floats by without a sale. If the fish are biting at 20 feet, no expensive bait is going to bring those catfish up to 10 feet. The same is true about your house. If your competitors are selling at $30,000 or $50,000 less than yours, the hot tub, new kitchen and bath are obviously not attracting your “fish.” Get with it, lower your bait, and sell now so you can take advantage of the lower prices when it comes time for your own purchase.
  3. Market the deal as much as the house. If you will consider closing costs, don’t just say you will, put a dollar mark on it. Offering $5,000, $10,000 or more right up front in your marketing will draw some of the cash-poor buyers to your doorstep.
  4. Bonuses and higher commissions. Well, it’s not just the buyers who are cash-poor these days — some agents are looking for a little more income themselves. Offer more than your competitor’s commission offer. If the competition is listed at 2.5 percent — pop it up to 3; or go from 3 to 3.5 percent. Another strategy is to offer the same on commission, but throw in a bonus of $2,500, $5,000 or more, to the selling agent. In some offices agents must split the commission with their brokers, while bonuses pass through without any split involved at all.
  5. Offer other non-real estate incentives to the buyer. Vacations, automobiles, jet skis, media centers, shopping sprees — could be what the buyer wants when it comes to moving into their new home. Check with your loan officer to make sure you can put together a program that will allow such incentives or you can construct them outside of the sales contract in a separate agreement between the buyer and the seller.

In essence, make your house a one-of-a-kind deal that the buyer would be crazy to turn down.

Written by M. Anthony Carr

The Bath: Enjoy It Before You Sell It

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Friends of mine decided to sell their townhouse a while back and immediately knew what they had to do to demand top dollar, if not, multiple contracts: get the house in shape. A couple of weeks, two contractors and $10,000-plus later, they had new carpet; new kitchen appliances with white flooring; new paint throughout (including the demolition of a mirrored wall); power-washed/stained deck; and a few plumbing issues taken care of.

Once all the work was done, they sat back in their newly revamped dwelling and sighed: “Why didn’t we do this sooner?” The investment was quite small when you consider the benefit, but many homeowners wait till it’s time to sell the house before they replace all the items of their home that have been bugging them for years.

Giving your home a facelift could be more affordable than you think. This was especially brought to mind during a visit to one of my favorite restaurants. Visiting the restroom, I was appalled at the condition: old plywood; an old mirror losing its reflective backing; mildewed caulking; and a stench very unbecoming this particular establishment.

A bathroom is probably one of the easiest and most affordable rooms to give a face lift and provide a “wow” factor for buyers coming into your home. I’m not even talking about a complete remodeling, just a face lift that can change the room’s look and shift your personal feelings about the room.

Think about it — when you walk into a 20- to 30-year-old home, would you be more excited about one with the original vanity, sink, faucet, shower door, mirrors and lighting? Or would you have a wow factor when seeing fresh paint, upgraded hardware, a modern vanity, and a dual showerhead found in most fine hotels? In addition, how would you like to create that wow factor for less than $1,000? It can be done.

Looking over a few large home improvement web sites will give you a grasp of how attainable this face lift can be. What you want to spend on the bath is up to you. You can upgrade your showerhead for as little as $6 for a low-grade plastic energy saver model or as high as $3,750 for a multiple head shower tower. We’ll keep our budget a little in the middle for a run of the mill bathroom, that WarmlyYours.com says is about 100 square feet.

  • Sinks: ($150 – $400) This can be as bland or fancy as you want.
  • Vanity: ($150 – $900) For every bland sink, there’s a vanity to match.
  • Faucet Hardware: ($30 – $100+) There are hundreds of models from which to choose — from chrome to polished brass.
  • Lights: ($50 – $100+) Again lots of choices.
  • Towel racks, etc.: ($50 – $100+)
  • Paint/Caulking: ($50 – $100+)
  • Flooring: ($45 – $100+)

Obviously, you can push the budget up a lot higher than what’s quoted above, however, I’m talking about a budget-conscious face lift, complete with a wow-factor, not gutting the bathroom for a complete remodel.

Your facelift can be as low as a few hundred dollars or a couple thousand bucks. But here are a few fix-its that are really (really) cheap, require a very minimal investment and just some good old-fashioned elbow grease:

  • Deep cleaning: maybe all this room needs is just a good cleaning. Think sanitizing. Really get down to the nitty-gritty and cut the grease in all the crevices.
  • Kill the mildew with a commercial spray. White caulk gleaming from underneath mildew can make all the difference.
  • Remove old caulk and recaulk the complete bath.
  • Regrout floor and shower tiles.

Before you invest a lot of money to make the next owner happy with your home — work on a redo so that you enjoy it yourself.

Written by M. Anthony Carr

10 Steps To Sell More Quickly In Stalled Markets

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We’re well into the prime real estate selling season for much of the country, a marketplace less certain in many areas than in the past few years.

We don’t fully know what will happen in 2007, but to date many markets have stalled if not declined. For most long-term owners selling in such a marketplace, appreciation from past years assures profitable sales, but perhaps not as profitable would have been the case in 2006.

But still, owners in all cases would like to maximize their profits. What to do? If you’re a seller, there are 10 negotiating steps you can take to make sure your home has the best chance for a top price and a quick sale.

Step 1: Get a local broker. In a slow market there are relatively fewer buyers. It follows that to generate the most demand you want your property exposed to as many purchasers as possible. Who do buyers contact when they want a house? Brokers. Figures from the National Association of Realtors show that 85 percent off all buyers rely on real estate brokers when buying a home while 80 percent rely on the Internet. Who posts real estate information on the Internet? Local brokers .

Step 2: Read the sale agreement. Virtually all jurisdictions have a standardized real estate contract which over the years have become lengthy and complex. If you use one then you’re automatically agreeing to all unmodified terms and conditions, so read the entire agreement so you know what is being said.

But is there something in the proposed agreement that should be changed, removed or added? Brokers should provide a copy of the sale agreement they expect to use at listing presentations and this document should be read to avoid surprises and misunderstandings. Since these are form agreements, anything not required by law can be changed with a suitable cross-out or addenda. For details, speak with your broker or attorney.

Step 3: Know the marketplace. In terms of negotiation it’s not good enough to know recorded sale prices because they frequently don’t tell the whole story. For instance, two homes may both have recorded sale prices of $500,000. One may actually have sold for $500,000 while the other sold for $500,000 but the owner gave a 3 percent seller credit to the buyer for a new roof and appliances — that’s $15,000 off the top. Local brokers who actually make sales know the innards of recent transactions are thus are in the best position to provide negotiating advice.

Step 4: Know your terms. You know your property will sell at some price point, but rather than a given price it’s best to think of a home as a package of price and terms. For instance, in a slow market it may be better to pay a “seller contribution” to help buyers off-set closing costs than to lower the sale price. In many cases, the seller contribution may be smaller than a price reduction and much more attractive to buyers who need cash to close.

Step 5: Reduce deposit requirements. To make a contract work there’s a need for a buyer deposit, the “consideration” necessary to bind a deal. If you’re a seller you want the largest possible deposit, but in a slow market you may have to settle for less. Buyers, for their part, want to make the smallest possible deposit if only because a big deposit represents a huge psychological commitment — and a financial one.

Less consideration may be appropriate if the buyer is pre-approved for a loan, the purchasers have a strong interest in the property and no better offer is in the picture.

Step 6: Throw in stuff. Do you really want to move a swing set or a washer/dryer? In some cases it may be best to “reluctantly” part with such items if only a buyer will make an offer.

Step 7: Update MLS photos. If it’s August and your MLS photo shows a home with four feet of snow in the front yard then buyers can guess that the home has been for sale for a long, long time — meaning the price and terms are, um, flexible. Perhaps more “flexible” than you would like. Have your broker post newer photos.

Step 8: Review the marketing plan. The marketing plan developed by your broker should be reviewed as often as necessary to assure that; one, it is being followed and; two, it is changed as necessary.

Step 9: Visit open houses. It’s always good to visit open houses or, as they’re otherwise called, the competition. It’s not easy to be objective, but is there something other owners are offering which might work for your property? Something you can make into a bargaining point? Maybe an offer to re-paint the living room in a color of the buyer’s choice is not a bad idea.

Step 10: Have context. It’s silly to worry about small costs and concessions when your core goal is to sell the home.

In one situation, a buyer demanded an extra $500 to resolve some alleged concern just before closing. We thought this was simply an example of buyer’s remorse and said yes, got an otherwise terrific price, and closed. Soon thereafter the local market slowed and prices softened. It was far cheaper to “lose” $500 then to locate another buyer a few weeks or months later when the market was harsher and our final sale price might have been many thousands of dollars less.

Would we have rather not paid the $500? Sure. But $500 was a small cost in the context of a rapidly changing market, one where delay could have meant a serious price reduction.

Written by Peter G. Miller

Helping The First Time Buyer Understand The Process Is Paramount To Our Industry.

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One of the things about running a mortgage company that I miss is taking a loan application with people who are buying their first home. Oh sure, I still get my fair share of loan volume but frankly, my clients usually apply online or had previously purchased a home. Just the other day, I took one of my rare face-to-face loan application meetings from a couple buying their first home. These first-timers typically ask the very same questions, only worded a little differently. But no matter how much technology has impacted mortgage lending… some things never change.

The most common reaction from first-timers is one of surprise, surprised at how much they qualify for. First-timers are usually renting an apartment, or a house, somewhere and then something happens to them, and they think “Eureka! I’m going to buy a house!” But the enthusiasm soon turns to confusion.

“How much house can I afford?”

This really means, “How much money can I borrow?” My response is usually quite startling to them… I begin by asking them what they would feel comfortable paying each month, and work from there. For example, a couple nearly fell out of their chairs when I told them they could qualify for up to $350,000 in mortgage money, based upon their gross income and current rates. Their new house payment would be around $3,000.

“Oh no,” they replied, “That’s WAY too much!” So, we went back to their rent payment, which was $750 per month. “Can you afford to pay more each month and if so, at what point do your hands start to tremble when writing a rent check?” “About $2,000,” they both answered.

Even though standard debt ratio “guidelines” are used to pre-qualify someone for a house payment, typical first-timers are hard-pressed to take the entire qualifying amount. Instead, it’s common for them to compare their new house payment with their old rent. Makes sense, doesn’t it?

First-timers also get a funny look when they see how interest rates affect not only how much they can borrow, but how lenders can offer “no closing cost” loans simply by adjusting their note rate upwards.

Just as a borrower can “buy down” an interest rate by ¼ percent by paying 1 discount point, a lender can also “buy up” the interest rate by ¼ percent by applying 1 credit point towards their closing costs. At which point you’ll usually see “A-ha! So that’s how they do it!” materialize on their faces.

Start by showing them how interest rates are priced, who prices them, and how most lenders are all about the same in interest rates, it’s usually a difference in costs. Soon, the fog of mortgage lending begins to lift and they feel more comfortable. When they feel more comfortable, it’s usually easier to establish trust.

I think if mortgage lenders would spend less time talking about indexes, velocity of money, margins, or prepayment rates and more time on how mortgage lending actually operates on a day-to-day basis, the customer satisfaction rates would go up, and stay up. People are more open to options when they feel like they have a firm grip on what’s going on. You’ll typically lose them if you just sit behind your desk and rattle off terms they’re not familiar with.

Sometimes it takes another session, with a first timer, to appreciate how much our industry has to learn. It comes down to education, educating loan officers on how to work with people who don’t know escrow from an omelet. A young couple, excited about their first home, asking the same questions I’ve answered thousands of times walks in. While answering their questions I realize, I’m still having fun.

Written by David Reed

Clean Homes Show Better–Five Areas To Scrub to Make Yours Sparkle

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So, here’s a question for you. Would you rather walk into a clean home or a dirty one? No, it’s not a trick question but it is an important one. You see, when it comes to selling a home, many people forget how important the answer to that question really is. Sellers get busy looking for their new home, preparing the kids for a move, packing up their belongings, getting organized for their new life and relocation so much that sometimes their home that’s for sale doesn’t get the TLC that’s needed to push it to the top of the buyers’ must-have list.

It’s not until the home sits on the market for long periods that sellers realize something has to change. Sometimes it’s the marketing, sometimes it’s the price, and sometimes it’s the fact that the home that’s being shown isn’t clean enough. Yes, a clean home shows better and there are five ways to make yours sparkle from roof to baseboards.

Hard to Reach Windows/Skylights. These often get overlooked either because they’re difficult to access to clean or because they aren’t right at eye level. Whichever the case, cleaning windows in high ceilings or skylights provides a brighter light to shine in your home. Sometimes just getting out the cloud of dust and dirt that accumulates can make a difference between a murky-looking room and one that is eye-catching. And here’s a tip from Buzzle.com, “Clean the windows on a cloudy day, but not a rainy one. If you clean the windows in the direct light of the sun, traces can appear on the window, as the cleaning solution gets dry before being cleaned.”

Baseboards and Walls. I have written about giving your home a fresh coat of paint prior to putting it on the market. But maybe you can get away with a good wipe-down instead. Using a wet, mildly soapy cloth you can scrub the baseboards and walls to make them look like they’ve had a fresh coat of paint, if the paint isn’t chipped or too worn. However, a product called Mr. Clean’s Magic Erasers will save you the mess and ease the elbow grease. These rectangle-shaped cleaning pads help take the grime off nearly everything. You don’t have to spray anything on the surface you’re going to clean; just wet the eraser and wipe off the marks. I’ve done whole walls with these pads and made it look as though the wall had been freshly painted. Be sure to get the baseboards and get down to kids’ level and wipe off the marks where they place their fingers while walking down the hall or up the stairs. When buyers see homes that are scoffed and worn like that, they may think it’s an indication that the home might not have gotten the care it needed for the bigger things too—such as furnace, disposal, plumbing, electrical wiring, etc. It gives a general feeling of un-cleanliness and can leave a negative lasting impression.

Toilets. It may seem like this goes without saying but I’m sure any real estate agent you ask will have a horror story about toilets. Whether they’re leaking, continuously running, stained, or simply stinky, they pose a major deterrent. If you’ve got an older toilet, give it a good inspection and be sure to check under the lid. Buyers sometimes use your toilet when they’re looking at your home and nothing is worse than seeing rust stains and other unsightly marks. A good product is Zep Toilet Bowl Cleaner.

Tile. When you’re showing your house, hopefully, you’ll get lots of foot traffic. This, however, can lead to very dirty flooring and grout. Yes, you can supply those footies and the sign placed by the door asking buyers to remove their shoes or put the footies on before entering your home, but, the truth is, not all will comply. Still, the tile and the condition of the grout will matter to buyers should they decide to make an offer. There are certainly many products to get the dirt out of those tiny grout lines; one that I’ve had success with is called Heavy Duty Acidic Cleaner for tile. Use a brush to really scrub those dirty lines; doing so will make the tile standout and not look like it needs re-grouting.

Closets, Cabinets, Computer areas. “Buyers love to snoop and will open closet and cabinet doors. That’s according to About.com Guide, Elizabeth Weintraub. She writes about the need to de-clutter closets, hang shirts all facing the same way, and even alphabetize the spice cabinet. Wow! Love it! I realize you may feel you don’t have time for all of that. Still, the point is, don’t have junk stuffed inside closets and cabinets so that when potential buyers open them to have a peek, everything comes crashing down on them–and gives the impression that the closets are too small. Computer areas are becoming more popular in homes and behind most of those computers is a tangled web of wires collecting tons of dust.

Organize the wires using Velcro zip-ties and dust them off! Or, better yet, if you don’t have to use the computer daily, arrange the area like you were filming a movie or shooting an advertisement—you never see wires. Remove all of the computer and accessory electronic cords. You can leave the monitor display on the desk but taking away the wires and storing them will give the area a more spacious, clean, and professionally staged look. A little cleaning and preparation before you market your home will help show buyers that you’ve cared for the house and that could be just the signal a buyer needs to make an offer.

Written by Phoebe Chongchua