It Ain't All Big Hair and Cadillacs

The Sweet Sale of Success
By Thomas Hall GRI QSC, Broker Associate, Rubloff Residential Properties
thall@rubloff.com


Most people who have been through a move would agree that the relocation process can be stressful. Uprooting ties to a neighborhood, schools, friends and perhaps family can be difficult and emotionally unsettling, topped off with the sale of peoples’ most valuable asset, their home.

While hindsight is 20/20, revisiting the process has provided some great insight into what really matters to people when selling their homes. If a previous relationship with an agent does not exist, often times the decision to choose a realtor is based almost exclusively on the percentage of commission charged. Interestingly enough, sellers that have gone through the process agree that the actual dollars paid in the transaction were perhaps less important than getting their home sold within the original contract terms without unexpected hiccups.

In fact, to make the sales process less stressful, here are some important issues to consider before making the move:

Chose the right agent for you.

82% of sellers used a licensed realtor in the sale of their home. Most folks find their realtor through a referral. In fact, roughly 38% of people entrust the sale of their home through a recommendation from a friend or family member. 31% of people use an agent with whom they already have a working relationship. If you do not have a previous relationship with a qualified real estate professional, consider asking family or friends for a recommendation. Research an agent’s reputation, their knowledge of the area and the reputation of the agent’s firm. The process of selling real estate is complex. The knowledge and skill of an experienced negotiator are important criteria as well. Understanding and explaining local real estate market dynamics, providing tips and feedback regarding making a home market-ready, establishing an appropriate asking price, navigating through the disclosure process, inspections and financing can be confusing. An agent’s attention to detail and ability to facilitate these steps will significantly reduce anxiety through out the process. Communication is critical. You want an agent to keep you up to date on what is happening, consistently and often. Whether it is a quick telephone call, or an email with feedback from showings, you deserve and should expect to be well informed. The value of a real estate professional can be found most often in the management of all of the behind-the-scenes actions. When the process runs smoothly and you are well informed, your agent is doing their job.

2. Establish a realistic asking price.

One of the most important concepts to understand in establishing the appropriate value for a property is that your real estate agent does not establish sales price – the market establishes sales price. The market isn’t always kind, but it is never wrong. While maximizing your return is certainly a goal, setting a high asking price may not always provide the best return in the long run. Sellers must understand local market dynamics when setting a realistic goal and time period for the sale of their home. Not all peoples’ needs are the same. Sometimes your unique needs may dictate a different pricing strategy. Before setting a price, understand your goals and realistic timeframe for selling. A good agent should be able to educate you on the relationship between market time and ultimate sales price. Typically, in many markets, well-priced property tends to sell more quickly. Just because a property may sell quickly doesn’t necessarily mean that it was priced incorrectly or too low. An asking price above what a property’s true value is may delay buyers from making realistic offers, hence extending your days on market. Longer market time may lead to paying unnecessary mortgage payments, tax payments and maintenance fees. In fact, setting an asking price that is in line with the real value of your property at the very beginning could very well net the highest and best return in the shortest period of time.

3. Consider a prelisting inspection.

They say the three most important words in real estate are location, location, location, I might argue that disclose, disclose, disclose could be a close second. In the age of unprecedented litigation, the need for the seller to disclose material information about a property is critical. While it may be true that most inspections are conducted by the party buying a potential property, prelisting inspections for sellers can also be beneficial. Prelisting inspections can identify areas of concern to be addressed before the sale and can assist in disclosure matters. In addition, identifying issues or problems prior to putting a home or property on the market allows you to rectify problems upfront, perhaps avoiding credits to the agreed upon sales price.

4. Properly evaluate bona fide offers

You are not the only person selling in a real estate transaction. Buyers are just as much selling there ability to purchase your home as you are selling your home to them. Whether the buyer is paying cash or financing through a mortgage, insist that the buyer provide proof of their ability to pay. They should have evidence of a loan PRE-approval or bank statements from a mortgage broker or banker. A pre-qualification differs from a pre-approval in that a pre-approval goes further into the process of assessing a buyer’s purchasing power. Generally a potential buyer’s income has been verified as well as their credit score has been reviewed. While it still may not be a guarantee that the buyer will get approved, it does provide some assurance that the buyer is capable of closing. While the existence of 100% financing has become more and more commonplace, be sure the buyer has some skin in the game as well. Depending upon the local market, the percentage of earnest money differs. Earnest money is essentially equivalent to your liquidated damages if your contract fails to close outside of stipulated contingencies. If you plan to take your property off of the market, make sure the buyer is committed to closing on the sale of your home. Because each contract has its own unique challenges, it is usually better to have your buyer put some of their money at risk. In some cases, you may be better off taking a lower price from a stronger buyer merely because they have more of their own money in the deal, significantly improving their ability to be approved for financing and ultimately closing per the terms of the sales contract.

While it may be contrary to conventional wisdom, sometimes the offer with the highest price may not be the best deal for the seller. Be careful to understand contingencies and their impact on the sales contract. A full price offer with a home sale contingency from the buyer may sound great, but it does put your sale “on-hold” until the buyer sells their home. Ideally, try to negotiate only those terms, conditions and contingencies that maximize your return in the shortest period of time.

5. Have a win-win attitude

The National Association of Realtors survey in 2003 found that the three recurring issues that both buyers and sellers agreed to be most important to them while engaging in a real estate transaction are:

1. Make the process easier
2. Make the process faster
3. Save me time and money

No doubt anyone involved in a real estate transaction wants to walk away from the negotiating process feeling that they got a good deal. Needless to say, compounded by the effects of stress involved in the moving process in general, the process of negotiating can be a highly emotionally charged event. Still, when negotiating the sale of your home, try to remain objective. Understand that at a high level, both you and your potential buyer share similar goals, and ultimately, you both want to feel good about the ultimate price. Concessions on both sides of the transactions may be required.

Clearly the sale of your home takes more than signing a listing agreement and putting your property on the MLS. Again the process can be complex and requires an experienced professional to assist and guide you in the successful sale of your home. In light of the demands, lack of time and patience in our day-to-day lives, it is so important to properly prepare for the sale of your home. Following the five steps above is a good approach to leaving you with the sweet sale of success!