It’s easy to get caught up in all the drama of selling a home. Minimize the stress with these 10 action steps, strategies and insider secrets.
Selling a home can put you on an emotional roller coaster. At the top, you feel excited and proud that your place looks the best it ever has and relieved when it finally sells.
At the bottom, though, you might be disappointed at the offers that come in or even desperate when you don’t get any offers at all. What if the buyer’s deal falls through? Now, that’s a potential freak-out moment!
#1: Get — and stay — clear on the reasons why you are selling.
For eons, self-help gurus have told us to further our goals by asking ourselves, “What’s your why?” Staying mindful of why you decided to sell your home in the first place can help you steer a straight and stress-free course through the rocky seas of seemingly interminable days on the market, disappointingly low offers and buyer requests for repairs. Focusing on your why is simple — it just takes a yummy little mixture of conscious intention and few minutes’ effort glazed over with the courage it takes to own your personal vision and values.
Your ‘why’ can be as unique as you are! Back in the day, people sold homes for a few basic reasons: to cash in on appreciation, to get a bigger or smaller house or to relocate. Now, there are as many reasons to sell as there are sellers! The era of Conspicuous Frugality has replaced the era of Conspicuous Consumption, so downsizing to create a sustainable lifestyle is a valid, even commendable reason to sell. So is closure — if you’ve been doing the underwater dance with your lender and are just unable to keep up with your mortgage payments, it might be time to wrap it up and move forward with your life by doing a short sale. If you’re in a good equity position, you might even want to move up while the market is still favorable for your purchase. Whatever your reason, so long as it’s yours, it’s a good one!
Write your ‘why’. Once you are clear on your reasons for selling, write them down. Take 10 minutes to journal your motivations and the vision for your life that you hope to manifest by selling.
Revisit your ‘why’ at key decision points. When you are faced with the tough decisions involved in selling in a buyer’s market, like whether to counter an offer or take it, flip open your notebook and revisit your why. It’s natural to get depressed when your home is getting no bites, but returning to your why can make the otherwise somber thought of a price reduction seem like an empowered no-brainer that gets you closer to your true goal for selling.
As the old saying goes, pride goes before a fall — and one of those falls is the fall in the your home’s sale price. Some sellers are simply too proud to listen to the market about what their home is worth, and they list it too high. Don’t fall into this trap just because you wish it were worth more. Your list price can actually have an inverse relationship to the actual, eventual sale price. What I mean is, if you list it just a tad lower than its fair market value, you are more likely to get multiple offers. List too high, though, and you can end up with no offers or only the dreaded lowballs.
Embrace your inner Goldilocks. Remember her mantra? Not too high, not too low — your aim should be to price your home juuuust right. How do you do that? It’s all about the comps, real estate slang for comparables — the similar homes in your neighborhood that were recently listed on your local Multiple Listing Service (MLS). To price your home right, look at how the comparables were priced, making adjustments upwards or downwards for differences in size and upgrades between the comps and your home.
Comp it out. Looking at the closest comps (those most similar to yours in beds, baths, square feet and location) that have sold within the last few months will help you narrow down the universe of possible prices to a reasonable range. Then, pay special attention to the ones that sold quickly or for more than the asking price. These are the ones whose pricing you might want to emulate. The pending comps give you an idea of what price points attracted qualified buyers from the same exact pool of folks as those who will see your home, in the same market time frame — usually, the pending properties will have been on the market within the last few weeks. The active comps help you assess the competition; also, actives that have been sitting on the market for a long time tell a cautionary tale. They are often overpriced, which helps you know how high is too high.
Go team! Lest you start to worry that this is a big project to take on all by your lonesome, don’t despair — this is not a DIY task. Pricing your home right is one of the most important advantages of having a Realtor. Your listing agent has the info, the experience and the good horse sense to help you figure out the price point that will attract buyers, but knowing how to work with comps helps you have a richer pricing discussion with your agent. More importantly, when your Realtor gives you pricing advice, listen to them and don’t give into the temptation to overprice your place. Nothing turns a good buyer off faster than an overpriced listing.
#3: Catch qualified buyers on the Web.
If I told you that 92 percent of dogs like peanut butter, you’d generalize that to make your new Labradoodle your BFF, you might want to slip him some creamy Jif, right? Well, get this — 92 percent of homebuyers start their house hunt on the Internet! So, if you want to unload your house anytime in this century, your best bet is to make sure that it is fully exposed on the Web.
The importance of being on the MLS (Multiple Listing Service). First things first: today’s homebuyer’s Web obsession makes it critical that your home’s MLS listing has as many clear, attractive photos as possible. More photos is better. While you do run the risk of showing a feature that might turn someone off, the reality is that if it’s a deal-killer for them, you’re not going to trick them into buying the house by not having a picture of the feature with the listing. They’ll just get turned off after they come see it in person! Ensuring that the Web photos of your home are as full and attractive a representation of your home as possible just makes it more likely that the buyers who come will be buyers who are serious about your place.
Now for some logistics. There are literally dozens of real estate listing sites out there. You already know that — you’re on one of the best ones around right now! Most of these sites’ listing databases are fed by your local MLS. That’s why it is critical that you work with a listing agent who will list your place on MLS; unless you’re an uber-exclusive multi-million dollar price range, you want as many buyers as possible to be aware of your place.
Make your home like Paris and Kim — inescapable on the Web. Ideally, your Realtor will also have a plan in place to post your home on other popular sites like Craigslist — it’s free, and it’s another very common starting place for your target market, Web-savvy homebuyers, to check for homes. Oh and did I mention that it’s free?! Funny enough, when I’m scouting for properties for my own buyer clients, sometimes a Craigslist posting will catch my eye, when the MLS listing for the very same property didn’t! In real estate, it pays for your home to be like a reality-show-having celebutante: everywhere.
Know your role: to check and to charm. I know, I know, you’ve got to be thinking that all this stuff is your Realtor’s job. And it is; but it’s your job to constantly check to make sure that your Realtor’s postings of your home are easy to find on the Web. Also, one of the most innovative forms of Internet marketing, YouTube home and neighborhood video tours, can be done by your Realtor, but are always more engaging when they are done by you — the seller. You can narrate all the reasons why you loved the place as you give the property tour, then your Realtor can link to it in the other Web postings.
With your Realtor blasting the Internet with your place via MLS, FrontDoor and Craigslist, and you telling a video love story about your home via YouTube, you’ll lure Web buyers to your home — just like peanut butter to a puppy!
#4: Be creative, open and flexible about structuring the deal.
Cookie-cutters are for baking, not for real estate deals during this recession. If you’re clear that you want or need to sell your home, you might need to stay open to alternative ways of getting that done. The more flexible you are, the more prospective buyers you open your home up to.
Don’t sell yourself short, sell your home short. Home values have taken a beating over the last couple years. This can leave you feeling trapped because you can’t sell your home for enough to pay off your mortgage debt. If you get offers on your home for less than what you owe, it doesn’t mean you can’t do the deal, you just need to get your lenders to sign off. In fact, if you think your home’s market value is no where near what you owe, you’re better off finding an experienced short sale listing agent up front who can handle the bank if you need them to.
Give buyers the option to buy or not to buy. If you can move on to your next place without the proceeds from this one, offer your home for sale and also as a lease with the option to buy. This gives your buyer a couple of years to work on their downpayment savings, their credit or their commitment issues! In the meantime, they can live in and rent your house. Usually, you get a premium rent and purchase price; in exchange, you put some of the rent money in a savings account every month to go toward the buyer’s down payment if and when they exercise their option to buy.
Do your part to ease the credit crunch. The stats say 1 in 10 homeowners is upside down. But the flip side of that is that 90 percent of potential sellers actually have some home equity. If you’re a member of that 90 percent, consider using your home equity to carry back some or all of the buyer’s mortgage. You can set the arrangement up however you’d like: you can finance as much or as little as you want, for a short or long period of time and at whatever interest rate you and the buyer agree on. Financing some portion of the deal yourself makes it easier for buyers to, well, buy — with or without the help of their bank.
#5: Make sure your buyer can close the deal.
What’s worse than putting your home on the market and getting no bites from buyers? Getting into contract with a buyer who can’t close the deal! And it happens all the time — the buyer’s loan falls apart, dashing both your hopes and your moving plans. And, you’re left in the lurch, kicking yourself for all the potential buyers you missed out on during those weeks that your MLS entry was marked Pending — Do Not Show.
When you get an offer, don’t let your gratitude and relief fuel an immediate acceptance. Before you pull your place off the market on a buyer’s word that they are both willing and able to buy it, go the extra mile to make sure they can do the deal.
Read the pre-approval letter. Of course, at a minimum, you’ll need to see the buyer’s loan approval letter. But you’ll need to take an extra step to be a super-smart seller: read it! Make sure that the letter is a pre-approval, not a pre-qualification. The difference is, a pre-approval should state that the letter’s author has actually reviewed the buyer’s credit report and found it meets lending guidelines. You’ll also want to know that the mortgage rep has verified that the buyer has the assets and income it will take to obtain a mortgage. If the letter doesn’t say so, you might want to have your Realtor give the buyer’s mortgage broker a ring and give the approval the smell test. How certain is the mortgage broker that the buyer will qualify? How certain is your Realtor that the mortgage broker knows what they’re talking about?
Check the deets of the wanna-be buyer’s loan. Other items you’ll find in the approval letter can also clue you in. Is the buyer planning to use an FHA loan? If so, that’s great, so long as your property is in FHA-okay condition. How much is the buyer/borrower planning to put down on the place? Don’t fret just because they are putting less than 20 percent in, but know that under 10 percent is likely to be an FHA deal and, again, you may have to do some repairs unless the place is in good shape. And if you’re in the enviable position of having multiple offers, don’t just compare offers based on their price; a buyer who is putting 20 percent down is more likely to close than someone scraping in at the 3.5 percent minimum, and that’s worth something!
Make sure the buyer has some skin in the game. Is the buyer offering an earnest money deposit? How many days do they need to finalize their loan, and are they willing to beef up their deposit afterwards? If they have no funds to deposit up front, chances are they’ll struggle to close the loan. And if they are willing to increase their deposit to 2 percent or 3 percent of the purchase price after a reasonable (15 days, plus or minus a few) loan contingency period, you can at least project that you’ll be able to breathe easier shortly. In most states, if the deal falls through after the buyer removes their contingencies, the deposit money is yours. So the average buyer will do everything in their power to avoid forfeiting a large chunk of deposit money. If the deposit is substantial, they’ll be really, really sure they can close by the end of their contingency period. And if they don’t, you’ll have their deposit money to soothe your hurt feelings!
Obviously, the problem of your buyer’s qualifications is a high-class problem — you only have to deal with it if you have a buyer in the first place! Before you take your place off the market in reliance on their word that they can do the deal, make them put their deposit money where their mouth is and do a rigorous review of their loan approval. If either is not up to snuff, negotiate to continue showing your place until the buyer removes their loan contingency. Can you say backup offer?
That was quite of information to swallow at one sitting, hence the reason that this particular post being entitled as Part 1. Stay tuned for the next installment.
While you are here, feel free to have a look a couple of my current listings below.
So until then, should you, your family, or your colleagues need a realtor please don’t hesitate to contact me via Facebook or by phone at 281.798.4599.
@TheTexasBroker (a.k.a Allen Keith Hebert)