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Who Needs A Realtor? I can Sell My Own Home!
It appears that, at least for a period of time, you and I may be in the same business, finding the perfect qualified buyer and selling a beautiful home.
I have had the privilege of working with many sellers just like you—and many of those have been individuals and families that chose to sell their home without the services of a professional.
During this time, I've gained a tremendous insight into the process of selling real estate.Now, I'd like to share some of this knowledge with you to assist you during this time. As a free service, here are some helpful hints:
CAN YOU SELL YOUR HOME WITHOUT A BROKER?
The answer to this question is “absolutely” if you take the time to prepare and market your home. There are costs associated with selling your home, and then there can be the issues of time, aggravation, and disappointment. However, regardless of whether real estate is listed and sold with a broker or sold directly by the owners, the process is basically the same. The process involves the following steps:
Proper Pricing
Marketing And Presentation
Qualifying Buyers
Negotiating Offers, and
Transaction Management
PROPER PRICING
Correctly pricing your property is probably the most difficult to accomplish both for the real estate professional and the owner. However, it is the most important. The best home won’t sell if it is overpriced; and the least desirable home will sell if it is priced right. As an owner, pricing your home can be difficult because it is difficult for you to remain objective. After all, it is your home. You are proud of it, and you should be. If you can let go, and price your property based upon the market, you will have a good shot at selling your home in a reasonable period of time.
Price is normally based on 3 things:
Intrinsic Value. This is the value of the land and the cost per square feet of the structure. Intrinsic value isn’t affected by interest rates, or economics. It isn’t even affected by the real estate market.
Market Value. Most real estate professionals use recent sales in the neighborhood to help them establish the best asking and probable selling price of your home. This is what buyers are willing to pay for homes like yours, in the same neighborhood. Market value is also measured by what homes like yours have actually sold for in the last few months. Your need to sell, or the amount of money you need to realize have nothing at all to do with market value.
Added Value. Most often when people make improvements to their home, they don’t think about how it will impact the future value. They decide to add a pool or deck, remodel or finish their basement, improve the landscaping, install ceiling fans, replace appliances, hang wallpaper, or add shelves because they want to benefit and enrich their day-to-day lives. However, when it comes time to sell their home, many sellers expect to receive all, if not more than they paid for the improvements. This may be appropriate if they have been made to bring up the property to the standards of other homes in the neighborhood. This would definitely add value to the home…maybe not the full cost of the improvement, but at least a portion of it. Realistically, most improvements make the property more showable and maybe even more salable, but they don’t always make it more valuable to the buyer. In other words, it may increase the appeal of your property to a buyer, resulting in a sale; however, it won’t result in a higher price than what the market dictates.
So where can you obtain information on prior sales? You can research all of the county records, look at property transfers in the newspaper. Remember that buyers looking at properties in your neighborhood, represented by a real estate professional, will have access to this market information. And they will be counseled by their buyer’s agent on a pricing strategy should they wish to make an offer. Because of this, it is extremely important that you realistically price your property based on facts and not on emotion. By knowing what other buyers have paid for similar properties, you will have a better idea on where to price your home.
A basic definition of market value is simply what we can reasonably expect a buyer to pay today, based upon what recent previous buyers have paid. To overcome the pricing hurdle, be objective. It’s difficult, but try to detach yourself from the property and objectively look at it through the eyes of a potential buyer. Oh yes, and don’t forget to include at least a partial commission in your selling price that you can pay to a real estate professional who might have the perfect buyer for you!
MARKETING AND PRESENTATION
Marketing can simply be defined as the ability to expose a property to the greatest potential market in the hopes of finding a buyer at the highest possible price and in the shortest time. Agreed, a broker has a tremendous advantage in this area, but it is also true that an owner can still market their property. So where do you begin?
Attracting Buyers - You need to make buyers know that your home is on the market. Spend a little extra money for a nice, professional sign in your yard. You should make a complete and detailed fact sheet very similar to the multiple list service brochures you may have seen on other homes for sale. Include a picture of the property and any information that will be important to a potential buyer. Then have at least 100 of these brochures of these printed and begin an intense marketing blitz. The first place is to put them in a brochure box outside your property. Another immediate source of exposure will be to the brokers that have properties for sale in your area. Deliver a flyer to each salesperson that has a listing. However, make sure you are willing to pay a buyer’s agent a commission at closing before doing this! Next, make sure all of your neighbors know your property is for sale. Mail or hand deliver a flyer to every homeowner, letting them know about this incredible new home for sale.
Advertise - Advertising, in reality, is the least effective method of finding a buyer. In fact, only about 9% of sales come from advertising. But it is still an area that must not be overlooked. Advertising in the local weekly newspapers is usually not as expensive as in the dailies, but of course the exposure is also less. Make sure you have enough directional signs to lead potential buyers from every major road.
Be Available - You need to make sure you are always on hand to answer calls from potential buyers. You also need to make sure your home is available for buyers every day and evenings too. You may begin to feel like you’ve sacrificed your freedom while you are trying to sell your home. But, the truth is, you have to show it to sell it. Make sure you have a plan in place for how you are going to allow access to the home. Research shows that buyers are much more comfortable looking at a home when the owners are not present. Are you comfortable stepping outside while strangers walk through your home?
Showing Your Home - So now you have the marketing done and you are ready to open your doors to buyers. It’s much like preparing for a theater production. Everything needs to be ready for “opening day.” So what should you do? Try these four hints: clean it, paint it, fix it, and box it.
Clean It! It should be obvious that the property should be kept clean throughout the selling process, all day-every day. But what we are referring to is that you go beyond vacuuming and dusting. When was the last time you cleaned the oven and completely emptied the refrigerator? Look up at the ceiling, especially in the corners. Any cobwebs? Are the light covers clean? Clean around each light switch for handprints. Are the areas where your pets stay clean and odor-free? Make sure all of the windows are clean and bright. If, as a buyer, you walked into a new home, you would expect everything to be new and shiny. Even though everything in your home won’t be new, you can still make it shine. Consider this a “detailing of your home.”
Paint It! Painting is next. Are there areas in your home that need touch-up or repainting? Remember, a $20 bucket of paint could well mean $500 on the wall! And don’t forget what a difference it might make if you paint the garage walls! Remember the light switches? If after scrubbing, the paint begins to disappear, you will need to repaint. One last thing, this might be a good time to “neutralize” the colors in your home. The bright blue walls in the bedroom were great for you, but most buyers will better be able to visualize their furniture in rooms with more neutral colors.
Fix It! The third area of presentation is fixing…everything from the dripping faucet, creaky hinges to the loose handle in the kitchen cabinet. If it’s broken, fix it. Remember: buyers will tend to “horrible-ize” anything that is wrong with the house. Reduce that tendency by fixing it before you even show the house. Clean the water heater, fix any leaks, repair any damage to the porch or deck. Don’t give buyers reasons to walk away from the house or to cut the offered purchase price.
Box It! Finally, box it. You’re going to pack to move anyway. One of the best selling features and one that buyers always notice is the amount of closet space. Take a look at your closets. If you aren’t using it, remove it! Make the storage areas in your house look as large and spacious as possible. The same rule applies to the kitchen cupboards and linen closets. A recent shopping survey found that Lowe’s offers the best price on boxes and other packing materials. Buy 5 to 10 good-sized boxes. Pack up all of these treasures and store them in the garage, or better yet, rent a storage unit for a few months.
If you clean it, paint it, fix it and box it, your home becomes more showable, which means it becomes more salable, and yes, even more valuable. At least more valuable than if you didn’t do them.
QUALIFYING BUYERS
The third area of expertise required to successfully sell your home is qualifying your buyer. There are 3 areas that need to be explored when qualifying a buyer: the buyer’s ability to buy your home, is your home what they want or need, and is the buyer someone you can trust to safely bring into your home.
Financial Qualification - When it comes to financial qualification, this is normally best left to the experts. The qualification criteria are in a constant stage of change because of the volatility of the mortgage market. With interest rates moving up and down on a daily basis as well as the many loan products coming in to the market, qualification requirements change just as rapidly. You’ll want to make sure that buyers are qualified to buy your home before they even come inside. There is not much worse than thinking you have a solid contract only to find out weeks later that the buyer is not able to obtain a loan. That is why most real estate professionals pre-qualify buyers before they even show them the first house.
Looking vs. Buying - When asked, a buyer will often say they need a 5 bedroom, 3 bath home overlooking the river. However, when all is said and done, they end up purchasing a 3 bedroom, 2-bath home in a nice subdivision that isn’t even close to the water! Sometimes the disparity is great between home people look at and what they end of buying. People don’t look at bricks and mortar. They see romance, prestige, and safety for their family. Even ego and status come into play. More often though, what they buy is a home that meets their needs and one they can afford. It is a major part of the selling process for me to totally qualify the buyer in all of these areas before he shows your home. You can see why a real estate professional must be able to listen to wants and then find a property that will actually better meet their needs! You will need to do the same.
Safety Considerations – after 9/11 we are all security conscious. Getting through the airport requires several security screenings, and sometimes even searches. We teach our children – and for good reason – not to talk to strangers. But you have a sign in your yard inviting strangers to knock on your door. Be smart. Be careful. Before bringing a stranger into your home, ask for a picture ID and write down the information, including the license plate on their car.
NEGOTIATING A CONTRACT
Your home has been cleaned, advertised and shown, and you finally have a qualified buyer who is ready to make an offer. Now the negotiating begins. In order to successfully negotiate with a buyer, you need to keep two things in mind. First, you must always understand the buyer’s position and secondly, you need to try to be objective. In other words, don’t let your emotions take over.
Do you know why the buyers called directly or knocked on your door? Why aren’t they using a broker to find a property where they could see several homes that have been screened to be sure they meet their needs? The answer to that question may be that they believed they can get a better price because no broker’s commission is involved. Remember market value is market value. It is based on what other buyers have paid for similar homes, and since better than 90% of all homes are sold through brokers, the market value price includes the commission...it is not added on top. And statistics show, in every market, homes sold by a real estate professional sell at a higher price than those homes for sale by owner!!
Next decide who prepares the contract - the buyer, you, or an attorney? How much will it cost? The contract needs to be very clear as to deadlines, what happens if timelines are not met, who will hold the earnest money, how much will the earnest money be, what happens if the buyer or seller is in default, who pays for what, what is the amount of down payment, date of possession, what is included or excluded in the sale. This is not the time to cut corners. Make sure that you have thought these items out beforehand so that you quickly respond to an offer that is presented to you. Please send me an eMail if you would like a free Sample Contract.
TRANSACTION MANAGEMENT
The Contract - Congratulations! You have marketed your home, found a qualified buyer, and negotiated the contract. Now your work is done, right? Wrong!! With a signed contract in hand, now the real work begins. This is also where most problems are likely to occur. You have a date set for closing that is probably 30-60 days away. For the closing to go smoothly, there are several different agencies/companies that will be involved. There’s the mortgage company, 1 or 2 insurance companies, the appraiser, inspectors, surveyors, and attorneys. Even though it is the buyer’s responsibility to apply for the mortgage and contact the insurance agent, inspection companies and so on, remember it is your closing! To the mortgage company, this may be only 1 of 75 homes they are closing this month, but to you, this is the most important transaction! You want to make sure your file is always on top of the stack.
So what can you do? Don’t hesitate to call and find out what is going on. You may want to do just what Danny Frank does…create a sheet with every company, agency and person responsible for each facet of the closing along with important timelines and deadlines. Make a few copies so you have access to one at all times, and when you find yourself with a few minutes free, start calling. Make sure you have a plan if something falls through.
The Closing - This is the day you have waited for. Everything has gone according to plan and you are ready to transfer your keys and home to its proud new owners. Prior to closing, make sure you know what proceeds you will receive at closing and what costs you are responsible for. What will your payoff on your present mortgage be at closing? Who is paying the closing costs, etc.? Contact the closing attorney to obtain an estimate of closing PRIOR to signing on the dotted line. By planning ahead, you can avoid the surprises and disappointments that sometimes occur simply because the seller didn’t know.
Whether you're interested in buying your first home, your next home, or just want to know more about home-ownership in general, I encourage you to check out a couple of great online resources: http://www.texasrealestate.com/ or https://www.har.com/. And for all of your Pearland, TX and Northern Brazoria and Galveston County real estate needs, please visit my site at: http://www.danfrankrealty.com. All of these sites offer tons of useful, real estate-related information geared specifically for Texans.
Remember, Danny Frank is a local Pearland, TX Real Estate expert! You can see my entire blog at: http://www.pearlandrealtyblog.com
