Seller Frequently Asked Questions
Q. Doesn’t it make sense to price our home higher because buyers will negotiate the price down?
A. Because virtually 100% of today’s home sellers have their home marketed on the internet, today’s home buyers can shop on-line anonymously. When perusing on-line, home buyers are able to compare your home against other homes to see if they feel it is a value (price and feature). In essence, they are able to judge your home without even having to make an appointment. If you price a home too high, many buyers will make the decision to not even view your home in person. Your home will then remain on the market for months, while you continue to pay your mortgage payment, basically eroding any sort of profit you were hoping to make by pricing it higher. The best strategy is to price it correctly so that prospective buyers searching on-line believe that their offer would even be considered.
Q. Does it make sense to test the market with a higher price for a short period of time?
A. Because newly listed properties typically attract the most interest from buyers during the first three weeks, it is imperative that you price it correctly to attract educated buyers. When looking on-line, buyers are going to compare your home with other homes on the market. If they do not perceive your home to be a value (price and features), they will not make an appointment to see your home, thereby causing it to languish on the market. The longer the home stays on the market, the less you can expect to receive for a selling price because buyers feel that a seller will take less for a home that has been on the market for a long time. Moreover, if you do happen to get the price you want for your home, you run the risk of it not appraising for the full price. When establishing your sales price, it is important to also consider your objectives – do you want to sell it quickly or are you looking to achieve the highest price possible?
Q. If I list my home at or below the market, won’t buyers think there is something wrong with it?
A. Because buyers have access to a wealth of information on-line they, now more than ever, have a keen sense of a home’s real worth. Moreover, because your home will presumably have an adequate amount of photos showcasing it to prospective buyers, they will be able to see the quality of your home on-line.. Additionally, buyer agents will know it is priced realistically and they will let their clients know.
Q. What are methods to determine value?
A. There are two methods that can help sellers determine price. The first method, a Comparative Market Analysis (CMA), is prepared by a listing/seller’s agent and is used as a means to informally provide a reasonable price range at which a seller may list their home for sale. The CMA typically contains local real estate activity for the last 90-120 days pertaining to active housing inventory (used to show how your home compares to the competition), under contract housing inventory (demonstrates what price range was sufficient for an offer to be tendered), and sold homes (shows the exact price at which the home sold). There is no charge for the CMA and should not be confused with an appraisal, which is the second method.
An appraisal, performed by an appraiser hired by the seller, is also designed to help determine the value of the home. Just as in a CMA, the appraiser makes an on-site visit to the home to see first-hand the home’s condition to make an evaluation against similar homes in the area.
Listing Your Home For Sale
Q. When is the best time to list a house for sale?
A. The simple answer is – whenever you are ready to sell your home. While Spring is typically when most homes go on the market, homes go up for sale all year long. During the Spring, sellers will have more competition for their home because there are typically more sellers going on the market during this time. However, there are more buyers as well. During the off-peak seasons – Fall and Winter, we typically see fewer homes go on the market, and fewer buyers. But you can be assured that the buyers who are looking during these seasons are extremely serious.
Preparing your home for sale
Q. Should I fix my house up before it goes on the market?
A. To successfully sell a home, it needs to “win a price war and a beauty contest” all at the same time. If you hope to achieve the highest selling price and the shortest amount of time on the market, you want to make certain that you home shows well. The type and amount of work you do depends largely on the price you’re asking, the time you have to sell, and the present condition of the house. Quite frankly, potential buyers want to buy a home that shows well and is well taken care of. Buyers will steeply discount items that they feel need to be improved or replaced.
Q. What should one do to make the home show well?
A. Regardless of the market, all sellers should make certain that their home has the curb appeal to draw potential buyers into their home. Keeping your lawn mowed, shrubbery trimmed, trash removed, toys off the lawn, etc. On the inside of the home, make certain that the walls are freshly painted, that the home is clean and de-cluttered, that there are no strong odors, and that personal photos and momentos are kept to a minimum. Because the buyers should be able to envision themselves living in your home, it is best to limit distractions.
If improvements need to be made, make certain that you do not over improve – start with simple improvements such as painting, carpet cleaning/replacement, replacement of fixtures, etc. If more significant improvements are required, consider making those improvements only if the local real estate market will support the cost of the improvements.
Q. Should I make any major home improvements?
A. Certain home improvements are useful to almost everyone and have proven to add value or speed the sale of houses. These include adding central air conditioning to the heating system; building a deck or patio; finishing the basement; doing some kitchen remodeling (updating colors on cabinets, countertops, appliances, panels, etc.); and adding new floor and/or wall coverings, especially in bathrooms. On the other hand, improvements that return less than what they cost are generally ones that appeal to individual personal tastes that not everyone may share. These can include adding fireplaces, wet bars and swimming pools, or converting the garage into an extra room. The challenge that comes with any home improvement designed to help sell your house is recouping your investment. There’s always the risk of over-improving your house — that is, putting more money into it than neighborhood prices will support.
Q. When selling a home what information must be disclosed?
A. The following examples include details that would qualify as material facts that must be revealed by sellers about their homes:
- Damage from wood boring insects.
- Mold or mildew in the home.
- Leaks in the roof or foundation walls.
- Amount of property taxes paid annually.
- Problems with sewer or septic systems.
- Age of shingles and other roof components.
- A buried oil tank.
- Details about any individual who claims to have an interest in the property.
- Information about a structure on the property that overlaps an adjacent property.
- Homeowner Association/Condominium Dues paid and associated documentation.
Q. What are contingencies?
A. Sales contracts typically contain several “contingency” clauses, or stipulations that the sale is subject to. Typical contingencies include a buyer’s ability to obtain financing, inspections (structural/mechanical, wood destroying insect, radon, chimney, well and septic, etc.); HOA/Condo association document reviews, etc. If any of the contingencies that were stipulated in the contract cannot be removed, the contract is declared null and void and neither the buyer nor the seller has to go through with the purchase/sale of the home.
Q. Once a home is listed, how will prospective buyers gain access to view it?
A. Potential buyers gain access to a home through the assistance of their realtor. The buyer’s agent will make an appointment to view the home and receive all of the necessary information to gain access to the home. Buyers are not allowed to view properties unescorted.
Q. Should I take a contract contingent on the sale of a buyer’s home?
A. While the ultimate decision to accept or reject any offer is up to the seller, I typically advise that my clients do not accept an offer with a home contingency. Quite frankly, these contracts are not worth the paper on which they are written. Why? Because if a seller is going to accept such an offer, they should do so with the stipulation that they are allowed to keep their home listed as active in the multiple listing service (MLS) and that a kick-out clause is present. By keeping the home actively listed, the seller can ensure that other potential buyers will see their home. If another potential buyer wants to make an offer, the kick-out clause provides the seller with the opportunity to get out of their current contract with the buyer that had the home sale contingency. Specifically, the kick-out clause allows the current buyer to have 72 hours during which to remove their home sale contingency or else the contract becomes null and void. At the end of the day, accepting such contracts just makes more work for all parties.
Q. Do I have to make all the repairs asked for during the home inspection?
A. The repairs that you choose to make will depend on how the contract is worded and how motivated you are to sell. You may choose to adjust the purchase price or contract terms instead of making the repairs, but the buyer may not be obligated to accept. Major repairs will generally require a renegotiation. Your agent will be able to advise you on a case-by-case basis concerning common practices and negotiation tactics.
Marketing Your Home
Q. How do I reach the right potential buyers?
- Because your buyer may come from across the street or across the country, it is important that your realtor implements a variety of marketing tools that include:
- Broker’s Open – A great way to generate demand for a home, a broker’s open targets other realtors who may have potential buyers. Your realtor will send emails out to their colleagues inviting them to preview your property.
- Open houses – Hosted by your agent, an open house allows neighbors and prospective buyers to view your property at a pre-determined time.
- Signage – Proper signage at the front of your home alerts both neighbors and prospective buyers that your home is for sale. Add a flyer box and passersby can take a flyer with them to share with anyone who may be interested in purchasing your home.
- Internet-based marketing – While the aforementioned marketing initiatives are necessary, they are local in their implementation. To attract the widest audience possible, you need to leverage internet marketing efforts to spread the word about your home. Theprimary method of marketing your home on line is through the multiple listing service (MLS). Once listed on the MLS, the information about your home is disseminated to other brokerage websites as well as other 3rd party websites that allow buyers to perform searches.
Q. What should a seller expect from an open house?
A. The open house is a valuable part of the marketing process, offering prospective buyers the chance to view houses in a low-pressure, “browsing” atmosphere. With that in mind, you shouldn’t expect it to generate a sale, at least not directly. What you should look for is interest expressed and requests for private showings made to your sales professional in the days following the open house. If many prospective buyers attend, it shows you that the property is attractive and saleable. If very few people show up, it can indicate that the price is too high, and cause you to look for ways to improve curb appeal.
Q. Should I try to avoid being at home when the house is shown?
A. You should definitely plan to be out of the house during any open house your sales professional has scheduled; the same goes for first showings to prospective buyers. People often feel uncomfortable speaking candidly and asking questions in front of current owners. You want them to feel as free as possible to picture your house as their “dream home.”