Tips for Sellers

Understanding Agency

It's important to understand what legal responsibilities you real estate salesperson has to you and to other parties in the transactions. Ask your sales person to explain what type of agency relationship you have with him or her and with the brokerage company.

  • Seller's representative (also known as a listing agent or seller's agent). A seller's agent is hired by and represents the seller. All fiduciary duties are owed to the seller. The agency relationship usually is created by a listing contract.
  • Subagent. A subagent owes the same fiduciary duties to the agent' sprincipal as the agent does. Subagency usually arises when a cooperating sales associate from another brokerage, who is not representing the buyer as a buyer' representative or operating in a nonagency relationship, shows preperty to a buyer. In such a case, the subagent works with the buyer as a customer but owes fiduciary duties to the listing broker and the sell.er Although a subagent cannot assist the buyer in any way that would be detrimental to the seller, a buyer-customer can expect to be treated honestly by the subagent. It is important that subagents fully explain their duties to buyers.
  • Buyer's representative (also known as a buyer's agent). A real estate licensee who is hired to prospective buyers to represent them in a real estate transaction. The buyer's rep work in the buyer's best interest throughout the transaction and owes fiduciary duties to the buyer. The buyer can pay the licensee directly trhrough a negotiated fee, or the buyer's rep may be paid by the seller or by a commission split with the listing broker.
  • Disclosed dual agent. Dual agency is a relationship in which the brokerage firm represents both the buyer and the seller in the same real estate transaction. Dual agency relationships do not carry with them all of the traditional fiduciary duties to the clients. Instead, dual agents owe limited fiduciary duties. Because o f the potential for conflicts of interest in a dual-agency relationship, it's vital that all parties give their informed consent. In many states, this consent must be in writing. Disclosed dual agency, in which both the buyer and the seller are told that the agent is representing both of them, is legal in most states.
  • Designated agent (also called, among other things, appointed agency). This is a brokerage practice that allows the managing broker to designate which licesees in the brokerage will act as an agent of the seller and whcih will act as an agent of the buyer. Designated agency avoids the problem of creatinga  dual-agency relationship for licensees a the brokerage. The designated agents give their clients full representaton, with all of the attendant fiduciary duties. The broker still has the responsibility of supervising both groups of licensees.
  • Nonagency relationship (called, among other things, a trasaction broker or facilitator). Some states permit a real estate licensee to have a type of nonagency relationship with a consumer. These relationships vary considerably from state to state, both as to the duties owed to the consumer and the name used to describe them. Very generally, the duties owed to the consumer in a nonagency relationship are less than the complete, traditional fiduciary duties of an agency relationship.

 

5 Things to Do Before You Sell

  • Get estimates from a reliable repairperson on items that need to be replaed soon, such as a roof or worn carpeting, for example. In this way, buyers will have a better sense of how much these needed repairs will affect their costs.
  • Have a termite inspection to prove to buyers that the property is not infested.
  • Get a pre-sale home inspection so you'll be able to make repairs before buyers become concerned and cancel a contract.
  • Gather together warranties and guarantees on the furnace, appliances, and other items that will remain with the house.
  • Fill out a disclousure form provided by your sales associate. Take the time to be sure that you don't forget problems, however minor, that might creat liability for you after the sale.

 

Tips for Holding a Yard Sale

Hold a yard sale to reduce the clutter in your home and get rid of items you don't want to move.

  • Check with your city government to see if you need a permit or license.
  • See if neighbors want to participate and have a "block" sale to attract more visitors.
  • Advertise. Put an ad in free classified papers, and put up signs and balloons at major intersections and in stores near your home.
  • Price items ahead and attach prices with removable stickers. Remember, yard sales are supposed to be bargains, so don't try to sell anything of significant value this way.
  • Check items before the sale to be sure you haven't included something you want by mistake
  • Keep pets away from the sale.
  • Display everything neatly adn individually so customers don't have to dig through boxes.
  • Have an electrical outlet so buyers can test appliances.
  • Have plenty of bags and newspaper for wrapping fraglie items.
  • Get enough change, and keep a close eye on your cash.

 

10 Ways to Make Your House More Salable

  • Get rid of clutter. Throw out or file stacks of newspapers and magazines. Pack away most of your small decorative items. Store out-of-season clothing to make closets seem roomier. Clean out the garage.
  • Wash your windows and screens. It will let more light into the interior.
  • Keep everything extra clean. Wash fingerprints from light switch plates. Mop and wax floors. Clean the stove and refrigerator. A clean house makes a better first impression and convinces buyers that the home has been well cared for.
  • Get rid of smells.  Clean carpeting and rapes to eliminate cooking odors, smoke , and pet smells. Open the windows.
  • Put in higher wattage bulbs. This will make rooms seem brighter, especially basements and other dark rooms. Replace any burnt-out bulbs.
  • Make minor repairs that can create a bad impression. Small problems, such as sticky doors, torn screens, crack caulking, or a dripping faucet, may seem trivial, but they'll give buyers the impresion that the house isn't well maintained.
  • Tidy your yard. Cut the grass, rake the leaves,, trim the bushes, and edge the walks. Put a pot or two of bright flowers near the entryway.
  • Maintain your driveway. Patch holes in your driveway and reapply sealant, if applicable.
  • Clean your gutters.
  • Detailing. Polish your front doorknob and door numbers.

 

5 Ways to Speed Up Your Sale

  • Price it right. Set a price at the lower end of your property's realistic price range.
  • Get your house market-ready. Have it ready for at least two weeks before showing it.
  • Be flexible about showings. It's often disruptive to have a house ready to show on the spur of the moment, but the more often someone can see your home, the sooner you'll find a buyer.
  • Be ready for offers. Decide in advance what price and terms you'll find acceptable.
  • Don't refuse to drop the price. If your home has been on the market for more than 30 days without an offer, be prepared to lower your asking price.

 

7 Steps to Preparing for an Open House

  • Hire a cleaning service. A spotlessly clean home is essential; dirt will turn off a propspect fast than anything.
  • Mow your lawn. Be sure toys and yard equipment are put away.
  • Service cookies, coffee, and soft drinks. It creates a welcoming touch. BUt be sure the kitchen has been cleaned up; use disposable cups so the sink doesn't fill up.
  • Lock up your valuables, jewelry, and money. Although the real estate salesperson willbe on site during the open house, it's impossible to watch everyone all the time.
  • Turn on all the lights. Even in the daytime, incandescent lights add sparkle.
  • Send your pets to a neighbor or take them outside. If that's not possible, crate them or confine them to one room (a basement or bath), and let the salesperson know where to find them.
  • Leave. It's awkward for prospective buyers to look in your clsets and express their opinions of your home with you there.

10 Ways to Make Your Home Irresistible at an Open House

  • Add a touch of color. Put fresh or silk flowers in principal rooms.
  • Restock baths. Add a new shower curtain, fresh towels, and new guest soaps to every bath.
  • Add a welcoming scent. Set out potpourri or fresh baked goods for a homey smell.
  • Complete the look. Set the table with pretty dishes and candles.
  • Add detail. Buy a fresh doormat with a clever saying.
  • Create a sense of spaciousness. Take one or two major pieces of furniture out of every room to create a sense of spaciousness.
  • Create more counter space. Put away kitchen appliances and personal bathroom items.
  • Lay a fire in the fireplace. Or put a basket of flowers there if it's not in use.
  • Depersonalize rooms. Put away family photos, mementos, and distinctive artwork.
  • Turn on sprinklers for 30 minutes. It'll make the lawn sparkle.

 

7 Terms to Watch for in a Purchase Contract

  • The closing date. See if the date the buyer wants to take title is reasonable for you.
  • Date of possession. See if the date the buyer wants to move in is reasonable for you.
  • The earnest money. Look for the largest earnest-money deposit possible; since it is forfeited if the buyer backs out, a large deposit is usually a good indication of sincere buyer.
  • Fixtures and personal property. Check the list of items that the buyer expects to remain with the property and be sure it's acceptable.
  • Repairs. Determine wha thte requested repairs will cost and whether you're willing to do the work or would rather lower the price by that amount.
  • Contingencies. See what other factors the buyer wants met before the contact is final - inspections, selling a home, obtaining a mortage, review of the contract by an attorney. Set time limits on contingencies so that they won't drag on and keep your sale from becoming final.
  • The contract expiration date. See how long you have to make decision on the offer.

 

Moving Tips for Sellers

  • Give your forwarding address to the post office. Do it two to four weeks ahead of the move.
  • Notify of change of address. Let credit card companies, magazine subscriptions, and bank know of the change of address.
  • Let people know. Also develop a list of friends, relatives, and business colleagues who need to be notified of the move.
  • Arrange utilities. Have them disconnected at your old home and connected at your new one.
  • Cancel the newspaper.
  • Check insurance coverage for moved items. Usually movers only cover what they pack.
  • Clean and prepare. Do this for all appliances, if applicable.
  • Note the weight of the goods you'll have moved. Long-distance moves are usually billed according to weight. Watch for movers that use excessive padding to add weight.
  • Check exit and elevator restrictions. Ask the condo association or co-op about move-in procedures.
  • Have a "first open" box. This will have things you need most - toilet paper, soap, trash bags, scissors, hammer, screwdriver, penciles and paper, cups and plates, water snacks, and tooth paste.

Plus if you're moving out of town:

  • Check medical documents. Get copies of medical and dental records and presciptions for your family and your pets.
  • Check school documents. Get copies of children's school records for transfer.
  • Ask for introductions. Your friends might know someone in your new neighborhood.
  • Plan for your pets. Consider special car needs for pets when traveling.
  • Let people know your moving. Let a friend or relative know your route.
  • Have your personal finances prepared. Carry traveler's checks or an ATM card for ready cash until you can open a bank account.
  • Empty your safety deposit box.
  • Prepare plants. Put plants in boxes with holes for air circulation if you're moving in cold weather.

6 Items to Have on Hand for the New Owners

  • Owner's manuals. For any items left in the house.
  • Warranties. For any items left in the house.
  • A list of local service providers. The best dry cleaner, yard service, etc.
  • Garage door opener.
  • Extra sets of house keys.
  • Access to alarm systems. Code to burglar alarm and phone number of monitoring service if not discontinued.

 

20 Low-Cost Ways to Spruce Up Your Home

Make your home more ppealing for potential buyers with these quick and easy tips.

  • Trim bushes so that they don't block windows and cut down on light.
  • Buy a new doormat.
  • Put a pot of bright flowers (or a small evergreen in winter) on your porch.
  • Put new doorknobs on your doors.
  • Put a fresh coating on your driveway.
  • Edge the grass around walks and trees.
  • Keepyour garden tools out of site.
  • Be sure kids put away their toys.
  • Buy a new mailbox.
  • Upgrade the poutside lighting.
  • Use warm, incandesent light bulbs fora homey feel.
  • Polish ro replace your house numbers.
  • Clean your gutters.
  • Put out potpourri or burn scented candles.
  • Buy new pillows for the sofa.
  • Buy a flowering plant and put it ina window oyu pass by frequently.
  • Make a centerpiece for your table with fruit or artificial flowers.
  • Replace heavy curtains with sheer ones that let in more light.
  • Buy new towels.
  • Put a seasonal wreath on your door.

 

What is Appraised Value?

It's an objective opinion of value, but it's not an exact science so appraisals may differ.

For buying and selling purposes, appraisals are usually based on market value - what the property could probably be sold for. Ohter types of value include insurance value, replacement value, and assessed value for property tax purposes.

Appraised value is not a constant number. Changes in market conditions can dramatically alter appraised value.

Appraised value doesn't consider special considerations, like the need tos ell rapidly.

Lenders usually use either the appraised value or the sale price, whichever is less, to determine the amoutn of the mortgage they will offer.

 

Understanding Capital Gains in Real Estate

When you sell a stock, you owe taxes on your gain - the difference between what you paid for the stock and what you sold it for. The same is true with selling a home (or a second home), but there are some special considerations.

How to Calculate Gain

In real estate, capital gains are based not on what you paid for the home, but on its adjusted cost basis, To calculate this:

  • Take the purchase price of the home; This is the sale price, not the amoutn of money you actually contributed at closing.
     
  • Add adjustments:
  • -- Cost of the purchase - including trasfer fees, attorney fees, inspections, but not points you paid on your mortgage.
  • -- Cost of sale - including inspections, attorney's fee, real estate commission, and money you spent to fix up your home just prior to sale.
  • --Cost of imporvements - including room additons, deck, etc. Note here that improvements do not include repairing or replaing something already there, such as putting ona new roof or buying a new furnace.
     
  • The total of this is the adjusted cost basis of your home.
  • Subtract this adjusted cost basis from the amount you sell your home for. this is your capital gain.

A Special Real Estate Exemption for Capital Gains

Since 1997, up to $250,000 in capital gains ($500,000 for a married couple) on the sale of a home is exempt from taxation if you meet the following criteria:

  • You have lived in the home as your principal residence for two out of the last five years.
  • You have not sold or exchanged another home during the two years preceding the sale.

Also note that as of 2003, you may qualify for this exemption if you meet what the IRS calls "unforeseen circumstances," such as job loss, divorce, or family medical emergency.

 

Does Moving Up Make Sense?

Answer these questions to help you decide whether moving up makes sense.

  • How much equity do you have in your home? Look at your annual mortgage statement or call your lender to find out. Usually, you don't build up much equity in the first few years of paying a mortage, but if you've owned your home for a number of years, you may have significant unrealied gains.
  • Has your income increased enough? Will it cover the extra mortgage costs and the costs of moving?
  • Does your neighborhood still meet your needs? For example, if you've had children the qualifty of the schools may be more of a concern now than when you first purchased.
  • Can you add on or remodel? If you have a large yard, there might be room to expand your home. If not, your options may be limited. Also, do you want to undertake the headaches of remodeling?
  • How is the home market? If it's good, you may get top dollar for you home.
  • How are interest rates? A low rate no only helps you buy more home, but also make it easier to find a buyer.

 

12 Tips for Hiring a Remodeling Contractor

  • Get at least three written statements.
  • Get reference and call to check on the work. If possible, go by and visit earlier jobs.
  • Check with the locla Chamber of Commerce or Better Business Bureau for complaints.
  • Be sure that the contract states exactly what is to be done and how change orders will be handled.
  • Make a small downpayment as possible so you won't lose a lot if the contractor fails to complete the job.
  • Be sure that the contractor has the necessary permits, licenses, and insurance.
  • Be sure that the contract state when the work will be completed and what recousse you ahve if it isn't. Also remember that in many instances you can cancel a contract within three business days of signing it.
  • Ask if the contractor's workers will do the entire job or whether subcontractors will do parts.
  • Get the contractor to indemnify you if work does not meet local building codes or regulations.
  • Be sure that the contract specifies the contractor will clean up after the job and be responsible for any damage.
  • Guarantee that materials used meet your specifications.
  • Don't make the final payment until you're satisfied with the work.

 

Tips on How to Price Your Home

  • Consider comparables. What have other homes in your neighborhood sold for recently? How do they ocmpare to yours in terms of size, upkeep, and amenities?
  • Consider competition. How many other houses are for sale in your area? Are you competing against new homes?
  • Consider your contingencies. Do you have special concerns that would affect the price you'll receive? For example, do you want to be able to move in four months?
  • Get an appraisal. For a few hundred dollars, a qualified appraiser can give you an estimate of you home's value. Be sure to ask for a market-value appraisal. To located appraisers in your area, contact The Appraisal institute (http://www.AppraisalInstitute.org) or ask a REALTOR© for some recommendations.
  • Ask a lender. Since most buyers will need a mortgage, it's important that a home's sale price be in line with a lender's estimate of its value.
  • Be accurate. Studies show that homes priced higher that 3 percent over the correct price take longer to sell.
  • Know what you'll accept.  It's critical to know what price you'll accept before beginning a negotiation with a buyer.

 

Open House Tips

  • Advertise your open house. Ideally you should advertise both the weekend before and the weekend of the open house. Check wiht the local paper to see when their ad closing deadlines are.
  • Create a property summary sheet. This sheet gives prospective buyers an overview of your home. Include dimensions for each room, copies of a property survey, summaries of utility costs and property taxes, and a list of when capital items, such as roofs and furnace, were added.
  • Develop a sign-in form for prospects' addresses.  You'll ideally want both phone numbers and e-mail addresses to follow up with propspective buyers.
  • Put up signs. One or two days before the open house, place directional signs at major intersection within three to four blocks of your house. Be sure you check on anti-sign regulations in your area.
  • Get your house ready. Remove clutter, clean you house, wash your windows, add flowers, turn on lights, open draperies and blinds, remove valuables and breakables, confine pets, turn on soft music, and set up a table for your property fact sheet near the entrance.
  • Develop a follow-up sheet. Getting feedback on your home from prospects who attended you open house willl give you a better understand of how to make your home more appealing to buyers.

 

17 Service Providers You'll Need When You Sell

  • Real estate attorney
  • Appraiser
  • Home inspector
  • Mortagage loan officer
  • Environmental specialist
  • Lead paint inspector
  • Radon inspector
  • Zoning inspector
  • Survey company
  • Flood plain inspector
  • Termite inspector
  • Title company
  • Insurance consultant
  • Moving company

 

6 Forms You'll Need to Sell Your Home

  • Property Disclosure Form. This form requires you to reveal all known defects to your property. Check with your state government to see if there is a special form required in your state.
  • Purchasers Access to Premises Agreement. This agreement sets conditions for permitting the buyer to enter your home for activities suchas measuring for draperies before you move.
  • Sale Contract. The agreement between you and the seller on terms and conditions of sale. Again check with your state real estate department to see if there is a required form.
  • Sales Contract Contingency Clauses. In addition to the contract, you may need to add one or more attachemnts to the contract to address sepcial contingencies -- such as the buyer's need to sell a home before purchasing yours.
  • Pre- and Post-Occupancy Agreements. Unless you're planning on moving out and the buyer moving in on the day of closing, you'll need an agreement on the terms and costs of occupancy once the sale closes.
  • Lead-Based Paint Disclosure Pamphlet. If your home was built before 1978, you must provide the pamphlet to all sellers. You also must have buyers sign a statement indicating they received the pamphlet.

 

Is Your Buyer Qualified?

Unless the buyer who makes an offer on your home has the resources to qualify for a mortgage, you may not really have a sale. If possible, try t determine a buyer's financial status before signing the contract.

  • Has the buyer been prequalified or preapproved (better) for a mortgage.  Such buyers will be in a much better postion to obtain a mortgage promptly.
  • Does the buyer have enough money to make a downpayment and cover closing costs? Ideally, a buyer should have 20 percent of the home's price as a downpayment and between 2 percent and 7 percent of the price to cover closing costs.
  • Is the buyer's income sufficient to afford your home? Ideally, buyers should spend no more than 28 percent of total income to cover PITI (principal, interest, taxes, and insurance).
  • Does your buyer have good credit? Ask if he or she has reviewed and corrected a credit report.
  • Does the buyer have too much debt? If a buyer owes a great deal on car payments, credit cards, etc., he or she may not qualify for a mortgage.