The decision to purchase a home is a big one, and one that should not be taken lightly. When you approach the buying process in a careful, methodical way, and when you have the right people on your team, buying a home can be a wonderful experience. If you approach the buying process haphazardly, however, it can bring you a lot of unnecessary headache and aggravation. Remember that when you purchase a new home, you’re not only investing in the property itself, but in your financial future.
When you’re ready to buy your new home, you’re bound to have a lot of questions about everything from the house-hunting process to the potential size of your monthly payments to the projected time frame from listing to closing.
The Cindy Jasper HummerHomes Team has 20 years of experience helping people buy their dream homes in the greater Nashville area. We use top-of-the-line home search technology to help you locate properties in your ideal neighborhoods, designs, and price range. We’ll email you new listings daily, and alert you immediately if a suitable home comes on the market. And our commitment to client education ensures that you’ll feel knowledgeable and secure through every step of the home buying process. So whether you’re a first-time buyer or a long-time real estate investor, let the Cindy Jasper HummerHomes Team help you buy your next home!
Advice for First-Time Buyers
The process of purchasing a home is often the most confusing for first-time buyers. But it doesn’t have to be that way. If you educate yourself about the process, you’re sure to have a much more enjoyable home buying experience.
Here are some things you need to know about when you’re buying your first home.
Before you start looking…
- Get pre-qualified. Meet with your mortgage broker to determine what size and types of loans you’ll qualify for.
- Get pre-approved. Pre-approval is different from pre-qualification. To be pre-approved for a mortgage, you will actually apply for a mortgage (often at the maximum amount of money you’re pre-qualified for) and receive a letter of commitment from your lender stating your pre-approved status. There is often a nominal fee attached to the pre-approval process, which your lender may allow you to pay at closing rather than up front. Pre-approval is a valuable asset to first-time home buyers because any offers you submit on properties are more likely to be given consideration by the seller.
- Make a list. In fact, make two lists. One list should include the features you absolutely need in any home you choose: number of bedrooms and bathrooms, square footage, lot size (especially if you have pets), storage space, etc. The other list should be your ‘wish list’, and should include features you would like to find in your ideal home: in-ground pool, granite countertops, hardwood floors, bay windows, master suite. When you’re buying your first home, you probably won’t be able to find (or afford) all of the features on your ‘wish list’, but it will give you an idea of what amenities are important to you and which you can comfortably live without.
- Find a real estate agent. A buyer’s agent is an important asset to all home buyers, but especially to first-timers. A reputable, professional Realtor, using the Multiple Listing System (MLS) can help you find properties in your ideal neighborhoods and price ranges. They can arrange showings, research properties, offer information and advice about the current market conditions, and help you navigate the entire home purchase process. Most importantly, they can act as an advocate for you when it comes time to enter price negotiations and decide on seller contingencies.
Once your start your search…
- Keep your focus. Create a file for all paperwork that pertains to your home search, including your pre-approval letter. This will prevent any important documents from getting lost. Other useful items include
- A blank notebook and pens. Take notes on searched properties and jot down impressions of properties you’ve viewed. Also take notes on the area: are there any neighborhood features you like (shopping areas, parks, highway access) or dislike (abandoned homes, excessive trash, adult businesses, noisy street)?
- A digital camera. If you see a home you’re interested in, snap a photo of it from the street. Also, take pictures (with the owner’s permission, of course) of homes you like at showings or open houses. This will keep your memory of the properties fresh.
- Maps, brochures, and articles. Especially if you’re searching in master-planned communities, brochures will help you remember neighborhood features and amenities. Maps can help you remember the locations of properties you like, and show you nearby amenities.
- Visualize yourself living in a property. When you go to a showing or an open house, try to visualize your own furniture, accessories, and art set up in the home. Ask realistic questions. Are there enough windows? Are the hallways too narrow? Are the ceilings too high or too low? Try to determine which negative points about the home can be corrected with simple touches like fresh paint, and which would require a major commitment to fix. Also, if you have a lot of oversized furniture, you may find it helpful to take measurements (with the permission of the seller).
- Be objective. Don’t make an offer on the wrong house simply because you’re in love with its charm. When you fall head over heels for a property, ask yourself if it really meets your needs. Refer to your list of ‘absolute must-haves’ if you find yourself slipping. Remember, buying a home is a big commitment; you want to be sure that you won’t regret it a year from now.
Be skeptic. If you’re unfamiliar with a neighborhood, scrutinize it from all angles. Drive through the area at different times of the day. Some areas that look inviting in the sunlight may not be so appealing after dark.
And when you find your perfect home…
Be thorough. Make sure that you have all appropriate inspections performed, and that the seller has met all inspection requirements and contingencies specified in your purchase contract. If the seller was required to make major repairs (like roofing, siding, foundation sealing) prior to closing, you may want to have a professional home inspector check out the property a second time. The additional cost is well worth it to ensure that all repairs are to code and of reasonable quality.
Be Patient. It’s not always a quick step to closing once you’ve found your perfect home. It’s important to remember that each step in the process is important, and that rushing things may cause greater delays and expensive problems in the end.
When you buy a home for the first time, you’ll want a professional real estate agent on your side through the entire process. Trust Cindy Jasper and the HummerHomes Team to guide you through every step of the home purchase process with total dedication to your satisfaction. For more information, please call 615.300.4695 today, or email email@example.com.
Negotiating with Sellers
When it comes time to negotiate the sale price for your new home, it’s important to be prepared. Knowledge of the current real estate market, as well as a firm understanding of your personal financial capabilities, can make sure that the negotiations reach a conclusion you’re comfortable with.
Shape your offer
When you’re ready to submit your initial offer on a home, your offer price should be based on a number of factors. Consider your offer price carefully. An offer that’s too high can cost you money, while an offer that’s too low may induce the buyer to refuse you outright. What you’re aiming for with your initial offer is a platform for mutually beneficial negotiation. Here are some questions to ask when considering your initial offer.
What is the current market condition in the area? In this particular neighborhood?
What have similar properties in this area sold for during the last 12 months?
Why is the homeowner selling? If they’re moving because of neighborhood factors like excess noise, nosy neighbors, or (in the worst cases) escalating neighborhood crime, you should take these factors into consideration as well.
Does the homeowner need to make a quick sale? Sellers who need to move fast may be willing to take a price cut in exchange for a short sale.
What is the sellers’ time frame? What is the estimated closing date? In some cases, the sale of a home is contingent upon the seller purchasing and moving into their new home. Decide how long you’ll be willing to wait to move in to your new property.
How long has the home been on the market? If it seems like an inordinately long time, there may be problems with the home, the neighborhood, or even with the seller’s disposition.
Are there any major defects in the home that will need to be addressed immediately? An outdated kitchen can be fixed at your leisure. A leaky roof needs to be taken care of right away. Your offer should reflect the need for immediate attention. You will also have to decide whether you or the seller will be responsible for the repairs.
How much did the seller pay for the home? In what year was it purchased? Knowing this information can help you determine the seller’s flexibility; sellers with a big mortgage to pay off don’t have as much room to maneuver. Also, if the seller paid more than they’re asking for the property, determine if the decline is due to a real estate downturn or a problem with the area.
Keep your advantage.
As the buyer, you want to maintain the advantage in any negotiation. Here’s how to do it.
Don’t get personal. While you should ask questions of the seller, try not to reveal too much about your own circumstances. Never disclose personal information like your income, the amount you’re able to afford for a down payment, or the time frame in which you need to move out of your current property. Ask your agent not to reveal these details to the seller or the seller’s agent.
Practice your poker face. Even if you’re in love with the property, it’s not a good idea to let the seller know how much you want their home, because that will give the seller the upper hand.
Don’t get emotional. There are a lot of emotional ups and downs that can occur during the home purchasing process. It’s best to keep your frustration (or your elation) tightly under wraps, and remain as businesslike as possible.
Frame your timeline
If the seller feels pressured to sell their property, the buyer has a singular advantage at the negotiating table. Still, it’s best to be cautious, since you don’t want to be rushed into buying a property you’re uncertain of just because the price is right. Rushed sales often mean big problems, so pay close attention to any contract concessions, and schedule a thorough home inspection by a reputable area professional.
If you’re comfortable with the general time frame that the seller is proposing, negotiate exact dates for the closing and the seller’s vacating of the property.
All About Mortgages
A mortgage is not a single entity, but a product, just like anything else you purchase. Fortunately for home buyers, there are thousands of lenders out there offering thousands of mortgage products. With so many to choose from, there’s certain to be a home loan out there that’s perfect for you.
When you’re shopping for a mortgage, you may be confused by all the different types of loans you’ll encounter. The truth is, most mortgages fall into one of two categories: fixed rate or adjustable rate (ARM). Depending on your credit history and financial situation, you may qualify for a variety of loan packages – or, you may qualify for only one. Either way, the more you know about the different types of mortgages out there, the better prepared you’ll be when it comes time to shop for your home loan.
Fixed Rate Mortgages
Adjustable Rate Mortgages
FHA and VA Loans
Fixed Rate Mortgages
Choose a Fixed Rate Mortgage if you:
- Plan to remain in your home for a substantial period of time
- Like to know the exact amount of your monthly payment
When you choose a fixed rate home loan, your payment amount and interest rate will be guaranteed for the life of the loan – a period which might be 15, 20, or 30 years, depending on the loan you choose. If you choose to make extra payments toward the principal of your loan (in addition to your monthly minimum payments), you will be able to pay off your loan faster with no additional interest penalties.
Timing is everything when it comes to fixed-rate mortgages. If interest rates are high (or if your credit score dictates a higher interest rate), your rate will not change until the expiration of the loan, or until you refinance. However, if you apply at a time when interest rates are low, you’re guaranteed a great rate no matter how the market fluctuates.
Here are some advantages and disadvantages to the different terms of fixed-rate loans.
15-Year Fixed Rate
- The loan will be paid off in half the usual time, an advantage if you plan to stay in the home for many years.
- The amount of interest you’ll pay is far less than on a 30-year loan.
- You’ll build equity more quickly as the principal is paid down.
- Higher payments may be a deterrent for some people.
- If you lose your job or your income changes, it may be harder to make these high payments.
20-Year Fixed Rate
- The loan will be paid off in 2/3 the time of a standard 30-year loan
- The amount of interest you’ll pay is far less than on a 30-year loan
- You’ll build up equity more quickly than with a 30-year loan
- Higher payments may be a deterrent for some people
- If you lose your job or your income changes, it may be harder to make the high payments.
30-Year Fixed Rate
This is the most common type of fixed-rate loan. It’s also one of the easier loans to qualify for, especially for first-time homebuyers.
- Lower monthly payments than with 15- or 20-year mortgages.
- Maximum interest deduction for tax purposes
- Equity builds slowly, a disadvantage if you plan to sell within a few years.
Adjustable Rate Mortgages (ARMs)
If interest rates are very high at the time you’re applying for your mortgage, if you expect your income to increase substantially within the next 12 months, or if you’re comfortable taking a risk with your monthly payments, an ARM may be for you.
ARMs are useful for owners who plan to own their properties for only a short time, as they can potentially cut down on interest payments. Generally, interest rates on ARMs are lower upon the inception of the loan that rates for fixed-rate loans. The interest rate on your ARM is tied to the prevailing interest rate, plus two to three points. Which index determines this rate will depend on your loan: indexes include the Certificate of Deposit Index, the Cost-of-Funds Indexed ARMs, the Treasury or T-Bill Rate, and the London Interbank Offered Rate (LIBOR). When interest rates on these indexes rise or fall, you can expect your monthly payment to respond accordingly.
As we have seen recently with the sub-prime mortgage crisis and the subsequent string of foreclosures nationwide, buyers who choose ARMs must be prepared for large spikes in their monthly payments if they intend to carry the loan past the duration of the initial interest rate. Ask your lender to calculate the maximum possible amount of your monthly payments based on your rate index and your rate cap (the maximum amount of interest you can be charged based on your loan agreement). If you’re not comfortable making the maximum possible payment for a period of up to one year, you should choose another loan package.
Here are some advantages and disadvantages to the different terms of fixed-rate loans.
- Since initial interest rates are lower than with fixed-rate loans, you may qualify for a larger loan – and therefore a more expensive home.
- Lower interest rates can save you money in the short term, especially if you plan to sell within a year or two.
- ARMs are easier to qualify for than fixed-rate loans, and may be a viable only option for buyers with poor credit.
- Monthly payments are much smaller during periods when indexed interest rates are low.
- Spikes in interest rates may cause monthly payments to increase dramatically, often with little or no notice.
Convertible Adjustable Rate Mortgages combine the more appealing qualities of both fixed rate loans and ARMs. Convertible ARMs offer the initial low interest rates of a traditional ARM, but convert to a fixed-rate mortgage at a pre-determined rate after a specified number of years.
VA and FHA Loans
Government loan packages can be a tremendous help to first-time homebuyers, to people with lower incomes, or to veterans.
VA Loans are offered to veterans by the Veterans’ Administration. There are limits to the amount that can be borrowed, so this option works best for those purchasing low- to moderately priced homes.
FHA Loans are offered through the Federal Housing Administration. Most applicants will have to meet income standards to qualify. Also, you will need to look for homes that state ‘”FHA Approved” in their MLS listing or print advertisement. Some states also offer accessible home loan programs to lower-income individuals and families; ask your real estate agent for more information.
Get the Best Rate on Your Mortgage
Comparison shopping doesn’t just apply to cars and electronics. You can – and should – shop around for your mortgage as well. Different lenders offer different products, and often have different qualification criteria. You deserve to get the best possible rate on your home loan, so don’t be afraid to research a number of lenders until you find a package that works for you.
There are two ways you can find your best loan and rate. You can shop on your own, or you can employ the services of a mortgage broker.
On Your Own
With so much information available over the internet – indeed, with many mortgage companies operating solely through the internet, without the use of brokers – it’s easier than ever for you to find a loan on your own.
When you’re shopping for that perfect home loan, there are some things you should remember.
- Interest rates change fast. Sometimes daily. If you find an unbelievable rate – attached to loan package you can live with – you should jump on it. Check out BankRate.com for up-to-the-minute rate information. E-Loan is also a good source of information.
- Make sure you’re comparing apples to apples. If you’re holding an ARM against a fixed rate mortgage, you won’t get an accurate picture of either.
- Sometimes it takes a little delving to figure out what a loan’s really about. A 30-year term doesn’t necessarily mean a fixed rate. Always read the fine print before submitting an application.
- Factor everything in. If you know the approximate amount you’re ready to spend on a home, you should be able to estimate your tax and insurance payments. Some sites have rate calculators that take these factors into account for you, but many do not. If you’re unsure – or if the site’s information is unclear – ask the lender for a statement of all points, fees, and surcharges associated with the loan before you submit an application.
With a Broker
A qualified mortgage broker can do a large portion of your research for you. They may also have access to loan packages that are not offered to the general public. Also, unlike a bank loan officer or a customer service representative at a lending company, a broker is paid to represent you, and will keep your best interests in mind. However, a mortgage broker may only write loans for a certain lender or lenders, and therefore may not be able to offer you the range of products you could find on your own.
The best way to find a reputable mortgage broker is through referrals. If you have friends or colleagues who have recently purchased homes, ask them about their broker and lender. Or, ask your professional real estate agent for a referral.
Sign on the Dotted Line
Once you’ve negotiated your final offer on a home, and you’ve signed the purchase agreement, you’ve officially opened escrow. For many buyers, this is the time when panic sets in. But as long as you remain organized and calm, and follow the expert advice of your Realtor, everything between now and closing can go as smooth as silk.
So that you can prepare and schedule accordingly, here’s a list of things you’ll need to do after you sign your purchase agreement.
Deliver your “earnest money”
The delivery of your earnest money shows that you are a serious buyer. This amount will be dictated by your purchase agreement, but it is often 3% of the total purchase price. This money is considered a deposit and will be applied to the total purchase price of the home. Your check will be cashed and the monies held by the seller’s attorney or by the broker’s trust account. Make sure that you have enough money in your account to cover this check – or better yet, get a certified check or bank check.
If for any reason the sale does not go through, you may be able to reclaim your deposit, minus standard cancellation fees. If the sale is forfeited through actions on your part, the seller may be able to keep this deposit as “liquidated damages.” When negotiating your purchase contract, you may want to consider adding a liquidated damages clause to cover any unforeseen events.
Meet your obligations.
You’ll probably be in escrow for about 30 days, although that period is prone to vary. Over the course of those 30 days, every contingency specified in the purchase contract must be met. At the end of this period, when you open escrow, you will have reached an agreement with the seller about the closing date, contingencies, and any other contract conditions.
Although each purchase contract is different, most will include the following standard contingencies:
- Inspection contingencies. This requires that the property be inspected by a professional home inspector to ensure that the property has no undisclosed defects. You should schedule the inspection as soon as possible to ensure that you are satisfied with the condition of the property. If you are dissatisfied with the results of the inspection report, you may choose to cancel the purchase contract.
- Financing contingencies. This applies to you, the buyer, and states that you must secure financing within a specified period of time. If you’re already pre-approved for your mortgage, you’re one step ahead; you should have a letter of commitment from your lender in hand. If not, you will need to be approved for a mortgage before escrow is opened, or risk forfeiting your deposit. If you need additional time to secure your mortgage, the seller may provide you with a written extension.
- Title contingencies: This contingency states that the seller must provide marketable title. Have your attorney review the title to ensure that the seller’s ownership of the property is clear, so you don’t run into trouble down the line. Check into local and state property transfer laws to make sure that both you and the seller have complied fully with them.
- Insurance contingencies. In some states you will be required to produce a binder, or proof of insurance coverage, before you can open escrow. In order to avoid possible complications, it is best to apply for insurance as soon as your purchase contract is signed. Special coverages like earthquake, flood, or fire insurance may take longer to acquire.
Once you’ve fulfilled your contractual obligations, you’ll be ready to open escrow and close the sale. But before the closing date, there are still a few more details to take care of.
- Schedule a final inspection. This may consist of a simple walk-through with your realtor. If the seller was required in the contract to complete repairs, you may wish to have a home inspector pay a second visit, to ensure that all repairs are up to code. Make sure that all applicable permits for completed repairs are valid.
- Contact local utilities. Service should be turned on in your name as of your closing date. It’s best to call at least 2-3 days in advance in case the utility company needs to send a technician.
Now, it’s on to closing, after which you’ll be the proud owner of a new home!
When you’re selling your home, you don’t want to wait for buyers to knock on your door – you want to bring your home to the buyers! That’s why you need the effective, proven marketing services of a professional Realtor. With the right exposure, your home will attract a ready buyer in no time.
Remember that when you’re selling your home, you’re also selling your lifestyle. You want buyers to want to live where you live, and how you live. It’s important to ensure that the appearance of your home is as perfect and inviting as it can be, because buyer’s first impression is the one that they’ll carry with them. Also, remember that your neighborhood is a significant factor when it comes to pricing your home; sale prices in your area will affect the listing price of your home almost as much as the condition of the property itself.
Cindy Jasper and her HummerHomes Team have helped hundreds of people sell their homes in the Nashville area. In fact, we have over $125 million in closed sales so far! Our homes consistently sell at or above listing price, in all Middle Tennessee neighborhoods. That’s because we have a comprehensive print and internet marketing plan in place to help you sell your home fast, and a dedicated team of real estate professionals who make customer service their first priority. We utilize a professional home stager and a professional home photographer, so the first exposure buyers have to your home will be magazine-perfect.
If you’re selling a home in the greater Nashville area, you deserve to work with Nashville’s premier real estate agents – Cindy Jasper and the HummerHomes Team! For more information about listing your property with us, please call 615.300.4695, or email firstname.lastname@example.org.
Don’t Risk Remodeling Without a Permit!
In most cities, homeowners are required to obtain a building permit before making structural, electrical, plumbing, or other major modifications to their residence. The exact guidelines regarding these modifications will vary by location. Some cities’ regulations are more stringent than others, especially in areas prone to severe natural occurrences like earthquakes, wildfires, tornadoes or hurricanes.
If a homeowner wishes to obtain a permit for renovations or repairs, he or she must file architectural plans with the city government, and pay the attendant fees. Also, the renovations are analyzed to see if they will increase the value of the property; substantial improvements to a home may result in a property tax increase. You may be required to have your property inspected prior to beginning your improvement project, and completed work may have to be approved by an inspector as well.
As the inspection and permitting process can often move rather slowly – and can be rather expensive –some homeowners opt not to obtain permits for their home improvement projects. This is never a good idea. First, if your municipal government learns that you failed to obtain a permit, you will be required to obtain a retroactive permit, which requires inspections of the completed work in addition to hefty fines and fees. If the inspector isn’t able to determine that the completed work is compliant with municipal regulations, you may be required to rip up floors, knock out walls, or tear out cupboards so the inspector can complete his survey. Second, sellers are required to disclose any improvements made without a permit. This may affect the sale price of your home – or result in your having to redo some or all of the work in order to prove it to code.
If you’re selling your home, chances are you’re also buying a new one. If that’s the case, it’s important to research the improvement history of your prospective home. You can check on permits, non-compliance issues, and code violations by visiting the Building and Safety office in the municipality. You can also hire a “permit puller” to research a property or properties for you.
For Sale by Owner: Selling Your Own Home
While there are certainly advantages to working with an experienced Realtor when selling a home, some homeowners choose to sell their properties independently. If you decide to take this route, realize that there is a substantial amount of preparation, research, time, and investment involved. If you are already pressed for time, or if you need to sell your home quickly, you may benefit from the services offered by a professional Realtor.
If you do decide to go it alone, there are certain things with which you will need to familiarize yourself before you set your listing price.
- Your Property.
- Know all the facts about your property, including lot size, exact square footage, property tax rates and historic amounts, zoning, and repair history (including permitting issues and code violations).
- Consider your neighborhood. Positive amenities include nearby parks, schools, shopping areas, and restaurants. Negative aspects include noisy streets and run-down areas; be honest about these, even if you think it will hurt your sale. Buyers will appreciate your full disclosure. If you live in a master-planned community, secure brochures or make a list of neighborhood amenities, and compile information about your homeowner’s association, dues and fees, and other items which will affect your buyer.
- Objectively assess the condition of your property; any obvious defects will either need to be repaired or disclosed to potential buyers. Whether it will be more cost effective to discount the list price of the home or make the repairs yourself will depend on the nature of the repair and your personal situation.
- If you’re unsure about certain aspects of your property, or if you’re concerned about structural issues, it may be a good idea to hire a home inspector for a pre-sale inspection. A pre-sale inspection report is always a positive from a buyer’s perspective, and may alleviate your liability if additional defects are found in your property by the buyer’s inspector.
- Current market value. Research home sale prices in your area for the last 12 months. What are properties comparable to yours selling for?
- Real estate laws. Homeowners are required to disclose any defects in their home (like a leaky roof or rotten shingles), as well as past damages which required repairs (like termite damage or a flooded basement). Make sure that you have copies of all permits obtained for repairs, and warrantee information for any new installations like windows, doors, or appliances. Familiarize yourself with the process of selling a home; understand the purchase contract, inspections, escrow, and the closing process.
- Financing. If you choose not to hire a Realtor to act as liaison between you and your buyers, you should have at least a rudimentary knowledge of how the financing process works. Buyers will not feel comfortable working with a seller who’s not well versed in the financial processes involved in a home sale. Contact mortgage brokers in your area, and ask about possible financing options your buyers might be offered. Also, determine whether you are willing to take on financing yourself, in the event that your buyer cannot qualify for the full mortgage amount. In most cases this is not a good idea, but some sellers choose to act as a lender for a small portion of the loan (20% or less) if they are confident in the buyer. Your attorney can provide details on these types of transactions.
- Marketing. This is the hardest part for many homeowners trying to sell on their own. Start by establishing a marketing budget. Then, decide how and where you want to advertise your home. The local newspaper may be a good place to start, especially if they offer online access. Some homeowners list their properties on craigslist.com or other classified sites. Investigate real estate publications in your area. Depending on your area, you may be able to advertise your home on a special channel on cable television. When you design your ad, make sure to include a flattering photo of your home, as well as the square footage, number of bedrooms and bathrooms, and all of your contact information. It may be worth the money to run one or two larger, color ads in whichever publications you choose, in order to catch the eyes of readers. If you’re computer-savvy, consider setting up a web page with photos of your home and property info; direct buyers to this page in your ads.
Now it’s time to perform a walk-through of your house. Take a pad and pen, and try to see the property from a buyer’s perspective. Make note of anything that needs neatening up or fixing.
Here are some questions to ask yourself as you perform your walk-through.
- Does your home have “curb appeal?” When viewed from the street, is the home attractive and eye-catching, or does it look too lived in?
- Is the landscaping in the front of the house neat and attractive?
- Is the paint or siding of an appealing color and in good condition? Bright or unusual colors are great for clothing and furniture, not for selling your home.
- Are the windows and front porch (or steps) clean?
- Is the roof in good repair?
- Are the gutters clean?
- Is the porch/deck/staircase in sound condition?
- Are your interior walls good condition? Walls that are freshly painted in a neutral color are eye-catching. Very bright colors or sloppy paint jobs can be a big turn-off.
- Are your floors in good condition? Wood floors especially can be a big selling point: make sure they’re gleaming and smooth. Carpet should be shampooed or spot-cleaned in high-traffic areas.
- Are bathroom fixtures like tubs, toilets, showers, and sinks well-sealed and in good working order?
- Are bathroom fixtures clean and attractive? If you have hard water, or if your fixtures are old and stained, you may consider replacing them. Nothing turns off buyers faster than a dirty-looking bathroom.
- Are all plumbing, electrical, and natural gas systems in good working order?
- Are the boiler, oil tank, hot water heater, and other major appliances in good working order? If you have warrantee information or receipts for these items you should keep them available to share with potential buyers.
- Are all light fixtures clean and in good working order? Now is the time to dust your track lighting and ceiling fans.
- Is there adequate lighting available in each room? Buyers should see every room in its most flattering light. Try to soften harsh shadows and illuminate dark corners with the proper placement of lamps.
- Are kitchen appliances clean and in good working order? Again, if you have warrantee or repair information, compile it to share with buyers. If your appliances are older, you may consider the cost of replacing them when you set your listing price – unless they’re antiques, in which case some buyers may find added value in them.
Consider your notes, and decide how all these items affect the appeal – and therefore the value – of your property. Make a list of improvements you can make for a small investment, such as fresh paint, carpet shampooing, and improved lighting.
Choose your listing price
Now that you have a better idea of the positive (and negative) aspects of your home, it’s time to choose your listing price. Again, try to be objective, and base your price on current market value, the condition and location of your property, and your location – not on what you think you deserve, or what you feel you need to earn to break even. Homes that are listed at unreasonable prices don’t sell, period.
Once you’ve chosen your starting price, begin placing ads according to your research and marketing budget. Purchase a For Sale sign for the front of your home, and install it in a clearly visible location. Clear your schedule to ensure that you have time for showings at least 2 days during the week and on weekends: a quick showing makes a good impression on buyers. If you choose to host an Open House, include this information in your signage and in your ads, and purchase additional signage to hang in high-traffic areas. If you live off the beaten path, directional arrows are helpful to buyers who may be unfamiliar with the neighborhood.
Show off your home!
Prepare a fact sheet to give to prospective buyers at showings and open houses. Included on this sheet should be the following details.
- The full address of your home, including postal code
- Neighborhood details, including names of nearby schools, restaurants, shopping malls or retail areas, and (if applicable) community amenities.
- Details about the home, including square footage, lot size, interior and exterior amenities, number of bedrooms and bathrooms, flooring types, and any other attractive amenities. New appliances or fixtures should also be noted.
- Your full contact information including phone numbers and email address.
- Photos of your home (or, if you’ve set up a web page with photos, the appropriate web address)
Once you start showing, keep a list of prospective buyers: their names, their phone numbers and/or email addresses, and their level of interest. A guest book by the front door during open houses is a great way to keep track of who’s looked at your property. Don’t pester buyers, but do follow up with any who seem genuinely interested. They’ll appreciate your thoughtfulness.
Offers and Negotiations
Don’t consider verbal offers. They’re very hard to prove, and can be unreliable. Also, don’t let your emotions cloud your judgment when you enter negotiations. You never want prospective buyers to think that you’re overeager, or that you’re hesitant to sell.
Before responding to any offers, make sure you have your paperwork in order. You will need a number of legal forms to sell your home. Aside from the actual purchase contract, there are about 20 additional forms that you will be required to provide to the buyer to make the sale legal and binding. Many of these documents are required by state and/or federal law. Check with your municipal government for details. Forms can be obtained from your local Board of Realtors. You may also consider hiring a real estate attorney to handle the paperwork.
If you’re lucky enough to receive more than one offer on your home, you’ll need to decide which to accept or counter, and which (if any) to decline outright. Here are some criteria that may make the process easier.
- Is the buyer pre-approved for a mortgage? If their financing is guaranteed, you’ll avoid problems later on.
- Is the buyer waiting on the sale of their own home? If your contract is contingent on the sale of the buyer’s home, you may have a long time to wait, depending on the market. This can pose a problem if you want to buy – or have already purchased – another home.
Always respond to offers in writing. Keep records of all correspondence between you and the buyer.
Negotiate the sale
One you and the buyer agree on a price, you will also need to come to a formal agreement on the following items.
- Inspection contingencies. If your home has any defects, you may be required to fix them. Or, you may come to an agreement with the buyer over a discount in the home price to reflect the cost of necessary repairs.
- Financing terms. This includes deposits and down payments. Make sure to establish clear due dates for deposits. You may consider hiring an escrow company or real estate attorney to record and hold these deposits.
- Closing date
- Transfer date. Many times, this will be the closing date. But if you need to remain in the house after the closing date, or if the buyer will not be moving in immediately, set a date for the exchange of keys, warrantee and repair information, and other items not included in the closing.
In the interest of accuracy and legality, it’s always a good idea to have a real estate attorney review all contracts prior to signing. It’s courteous (and required in some states) to allow the buyer a 3-5 business day review period.
Close the Deal
Before the closing date, schedule a final walk-through so that the buyer can be assured that you have complied with all contract contingencies. Ask that the witnesses for yourself and the buyer be present at this time. The buyer may also wish to schedule a second home inspection.
Make sure that all aspects of your move are arranged, so you don’t inconvenience the buyer with a delay in vacating your property. Confirm reservations with your moving company, and ensure that your new property is ready to receive you. If you are buying another home, close on that property at least 1-2 weeks before you close your sale.
Selling your own home is a laborious undertaking, but if you are confident in the process and organized about the details, it can also be a rewarding one. If at any time you decide that you are not comfortable performing the details of the transaction, you may choose to hire a Realtor to assist you.
Don't Lose Money on Pre-Sale Repairs!
If you're diligent about getting your home ready to sell, you will not only have a lot of happy buyers, you may have a fatter wallet. However, even when you think you've covered all the bases, you might get a nasty surprise when the home inspector comes to call. But that's not always the case.
A pre-sale home inspection is your best line of defense against unexpected home improvement projects. But if you do find your home in need of major repairs after you've already accept an offer, consider how best to deal with the problem.
- Work with your buyer. For certain repairs, the buyer might prefer to handle these by themselves. You may be able to reach a settlement if you're willing to adjust the sale price of the home.
- Get multiple estimates. If you have an issue with your roof, it might cost $6,000 to replace the roof outright, but $800 worth of repairs could help the roof last another 3-4 years. Working with your buyer, you may be able to negotiate a settlement that falls somewhere between the two extremes. Also, invite the buyer to bring in his or her own professionals to do an estimate.
- Often, it's a good idea to call in professionals who have nothing to do with the inspection or repair process. For example, a representative of the gas company can help determine whether a hot water heater or furnace is fit.
Above all, realize that the condition of your home is ultimately your responsibility. Being flexible and professional is key to negotiating a successful sale.
Why You Need a CMA
CMA is an acronym for “Comparative Market Analysis.” A CMA report is generated for you by your Realtor in order to compare your home to similar properties in your area.
To begin the process of compiling a CMA, your Realtor will inspect your property. This is not a home inspection, merely an analysis of your home's features and attractive qualities, which will help determine your home's worth in the current marketplace. When your Realtor arrives for the inspection, your home doesn't need to be in showing condition, only neat and clean enough for the Realtor to make an accurate determination of its condition. Please inform your Realtor if you plan to make any changes or improvements before you sell; you may discover that your changes will end up “overvaluing” your home in the context of your neighborhood.
Next, your Realtor will obtain data on comparable homes in your area, usually through the Multiple Listing System (MLS). An experienced agent will also know of properties that have sold without being listed on the MLS, such as 'For Sale by Owner' properties. Comparing your property to those that have recently sold will help your Realtor determine what you can expect to receive for your property in the current market. Please remember that a CMA is not an appraisal, and will not constitute a legal valuation of the home.
If you're buying a home, you may also consider requesting a CMA report for properties that interest you. This will help you determine if the prices owners are asking are fair and reasonable based on current market conditions. This report may also be a useful bargaining tool for you if you decide to place an offer on an overpriced property.
Back to Buyer/Sellers
Closing the Deal: Dealing with the Unforeseen
Sometimes, unexpected issues come up just when you're ready to close the sale on your home. Most of the time, problems can be dealt with, and the sale can proceed. However, this is not always the way it turns out.
If your buyers balk at the results of the home inspection, try to be flexible. Chances are, you didn't know the issue was there until now, either. Start by getting several professional opinions about the problem, and compare repair quotes. Offer to work with the buyers in whatever way you can. Perhaps you can deduct the repair costs from the sale price, or conduct the repairs yourself. The trick is to stay calm, and consider all possibilities. Remember, the condition of your home is ultimately your responsibility: no matter how frustrated you get, remember than the buyers deserve to buy a home in a condition that's acceptable to them, just as you deserve to do when you buy your next home. In some cases, the best solution for all involved is to call the deal off; you can always find another buyer willing to accept your house “as is,” and the buyer can always find another home.
An experienced Realtor is a wonderful asset to both buyers and sellers when unforeseen issues come up in a sale. Realtors can act as liaisons between buyers and sellers, keeping the negotiations calm, professional, and objective. Many problems at closing can be avoided by making sure that the purchase contract is free of loopholes, and that all contingencies are addressed in a timely manner.