SOLD!

For a home seller, this one word is music to the ears, particularly in today's market. One year ago, homes in some neighborhoods were selling in less than 30 days. Today, in these same neighborhoods, homes are on the market for more than 60 days before they sell.

So, how does one sell a home in this market? Whether you are going the "For Sale By Owner" (FSBO) route or using an agent, the answer is the same.

Let me start by telling you the only two factors that sell a home: Price and exposure. It's that simple. Price is self-explanatory. Exposure is simply letting as many people as possible know you are selling your home.

Now, many people I talk to try to argue this point to prove me wrong, but their arguments always lead back to either price or exposure. Common arguments I get are "location" and "condition". However, no matter the location or the condition of the home, the price of the home can be adjusted to reflect its location and/or condition, and it will therefore sell. Price and exposure are the two least common denominators to selling your home.

Keeping price and exposure in mind, here are some tips that will sell your home even in a down market....

Price your home in the market

Most sellers think their home is worth more than it really is. Before setting a price for your home, do your homework or ask your agent to do it for you. Compare your home to others that have sold in your neighborhood. Most sellers have a tendency to set their price based on homes that are currently for sale, not those that have sold. While it is important to price your home lower than your neighbor, if your home is priced too high buyers will look in other neighborhoods. Buyers typically fall in love with houses, not neighborhoods.

Once you’ve determined the price, then you can compare it to other homes currently for sale in your neighborhood. Buyers will choose the home with the best value for the least money. If your home shows better than your neighbors’ homes, it will sell more quickly and often at full asking price. Current trends are stainless steel appliances, hardwood floors, neutral colors (off whites are best), crown molding, and modern kitchen counter tops.

In addition, when pricing your home, tacking your costs (closing, commissions, marketing, etc.) on top of the price can easily price you out of the market. Keep in mind those who sold their homes had to pay those costs too. Price your home according to previous sales.

A word of warning: If you price your home above market value and are lucky enough to get a contract on it, it may not appraise for the contract price. This usually means the deal falls through, as most lenders are unwilling to loan money on a home that will not appraise for full contract price.

Get an appraisal

Appraisals are nothing more than a professional opinion of value based upon previous sales of homes in your neighborhood. Appraisers pay no attention at all to what your neighbors are currently wanting for their homes. They base it entirely upon homes that have already sold.

Now, you may ask, "Why don't I just wait on the appraisal from the buyer's lender?" The answer is simple: The appraiser is hired to represent the interests of the lender and his job is to get the appraisal as close to purchase price as possible.

Hiring your own appraiser before you sell helps you determine what you could reasonably sell your home for and gives you a competitive advantage during negotiations. Buyers have a tendency to think the home isn't worth as much as you are wanting for it. However, producing a recent appraisal keeps you and the buyer focused on the true value, making it much easier to get close to your asking price.

Consider hiring a Realtor^®

A Realtor can do a lot of the legwork for you. He/she can help you determine the right asking price and maximize exposure by putting your home in the Multiple Listing Service (MLS) which is available to agents in at least 7 counties here in North Alabama. Furthermore, your home will appear on the National Association of Realtors web site, which is where as much as 84% of all buyers begin their search for a home.

Your agent can also handle the negotiations, give you advice, show the home (no more phone calls or late evening showings for you), handle the contracts, pay for marketing and do all the follow up.

I realize you may not want to use a Realtor to sell and market your home, and that's ok. If you do decide to go FSBO, my advice to you is to handle the marketing (exposure) and the pricing, find and qualify a buyer, negotiate the terms, and finally contact a Realtor to handle the deal from contract to closing. This is called "transaction brokering". Since you handled most of the work and expense, the Realtor should be willing to cut their commission significantly considering their workload and expenses are greatly reduced.

Unfortunately, most Realtors don't want to work for these reduced rates, even though they have less work and less expense. Find one that will! One of the key components of my Less Mess Hess program is a service designed specifically for owners selling their own home. You bring the buyer, and I'll take you from contract to closing for a low brokerage fee.

Make sure your Realtor is marketing your home on the internet

Numerous web sites allow agents to market their listings free of charge. This increases your exposure and attracts in town and out of town buyers. Amazingly, most agents aren’t utilizing technology to sell homes. The extent of most agents’ marketing is limited to the MLS and monthly real estate magazines. Find an agent who will market your home on several of these web sites. Yes, the Huntsville MLS is nationwide, but your agent shouldn’t be stopping with just the MLS. Not everyone in the nation visits the Huntsville MLS to find a home. The more sites your home is listed on, the more exposure you have. Currently, I’m marketing my listings on eight of these sites, and I’m continually looking for more places to park my listings.

Consider offering buyer and Realtor incentives

Offering incentives for lookers to buy and agents to sell is a simple way to add value to entice a buyer to purchase your home rather than your neighbor’s home. A home warranty is a great way to add value. Home warranties cover things such as plumbing, heating, cooling, and hot water heaters. These programs cost around $400 for one year of coverage from contract date. Furthermore, as an added benefit to you, your home is covered even before you sell it! And, you don’t have to pay for the buyer’s coverage until the date of closing. That translates to no up front costs for you, free coverage for you, and coverage for your buyer for one year.

Commissions are typically negotiable in either direction. 6% is the standard commission, with 3% going to the listing broker and 3% to the selling broker. Be careful, though. Asking for too low a commission can reduce your exposure significantly. Listing agents who agree to a lower commission will spend less money and time marketing your home. Inversely, should you offer a higher than standard commission to your Realtor, you should expect him/her to offer more services and spend more money to market your home. The higher the commission, the more flexible your agent should be.

Let’s consider the opposite side of the coin – the buyer’s agent. If you offer a lower than standard commission, agents will be less willing to show your home. If you offer a higher commission, they will be willing to persuade their client to purchase your home. Recently, I’ve seen sellers offering buyer’s agents 3% plus a $1000 bonus for a contract by a certain date. Let’s face it…money still talks.

Hire an inspector

Hiring an inspector to point out needed repairs gives you multiple advantages. First, you can have the repairs complete before talking with buyers, giving them very little excuse not to buy. Inspectors are very thorough and will let you know everything wrong with your home up to and including loose doorknobs. Repairs can get expensive, so my recommendation is to do repairs on the following items:

1) Anything electrical

2) Anything that poses a health or physical hazard

3) Plumbing problems such as leaks, or problems that could be hazardous.

4) Any problems with appliances such as the stove or dishwasher.

5) Any heating and cooling issues

6) Any issues with natural or propane gas connections or appliances.

Any other problems on the report may be addressed at your discretion. This does not, however, absolve you from revealing ANY problems to potential buyers. It is against the law to hide or attempt to hide ANY defect or problem you have with your home. Even though a buyer will probably hire his own inspector, you must still disclose any known issue whether or not their inspector found it. My best advice is to give a copy of the inspection to the buyer as soon as you have a contract and let them know what you have and have not repaired. Furthermore, if a repair has a warranty associated with it, provide that documentation to the buyer.

If you decide not to do any repairs, be prepared to lower your asking price to reflect that.

Consider hiring a professional stager

Professional stagers make a living transforming empty homes or cluttered homes into an inviting environment. Statistics show empty homes do not sell as quickly as occupied homes. Even if you have to move out, a stager can make your home look cozy and warm. This one thing could bring you much closer to your asking price in a shorter amount of time.

Be ready to pay closing costs

Most buyers now expect a seller to pay their closing costs. Be aware there are certain closing costs you are expected to pay as a seller even if the purchaser pays closing. The termite letter, half the title insurance and binder, commissions, taxes, tax stamps, and deed preparation fees are considered the seller’s responsibility. Buyer’s closing costs include lender’s fees, attorney fees, title search fees, appraisal fees, and surveys. These are what are called the “negotiable closing costs”, and are typically about 3% of the contract price when the buyer is borrowing 100% of value (aka 0 down).

Buyers may also request the seller pay pre-paids, which include homeowner’s insurance and required lender’s escrows. These costs can be as much as 3% of the contract price.

In either case, if you agree to pay closing costs and/or pre-paids, CAP IT! You can get yourself into a whole world of hurt if you agree to pay everything without limiting the amount of negotiable closing costs you pay on the contract. If the buyer asks for closing costs, and you estimate the costs to be $3000 then make sure that limit is written in the contract.

Alabama law requires your Realtor to provide you with an Estimated Settlement Statement with each offer. This statement estimates potential costs associated with the offer, and will help you determine where you should place the cap.

Be willing to leave some of your personal possessions behind

Sometimes a buyer will ask for furniture or an appliance such as a refrigerator be sold with the home. Simply estimate its value to replace it and reflect it in the contract price. Typically, buyers will be willing to pay a higher contract price to get these items, particularly if they do not have the cash to buy the item. This one tip can often mean the difference between a deal and no deal.

Keep your home ready to show

If you are living in your home, you should always require agents to give you notice they will be showing your home and at what time. Do not stick around! Nothing is more awkward for everyone involved if the buyer, seller, and an agent are all present. You, as the seller will not be comfortable and the buyer certainly won’t be comfortable since they won’t be able to talk to their agent about what they like and don’t like.

Be ready at all times for an agent to show your home. Keep your home clean and ready to show. I can assure you if you request a 24-hour notice from an agent, they probably are not going to show your home. Typically, a buyer will not be interested in looking at your home after your request.

Buying and selling your home can be a positive and fun experience. My goal is to reduce the mess and stress typically associated with buying and selling real estate. That’s why I created the “Less Mess Hess” program. Please feel free to contact me or visit my web page at www.LessMessHess.com for more articles and information.