home sale Archives - Real Estate News and Commentary

January 11, 2023January 11, 2023

Make More Listing with an Agent

Should you hire a real estate agent when selling a home? During any recent sellers’ market, there are many home sellers who opt to sell their home “for sale by owner” (also known as FSBO). The recent sellers’ market is no exception. Many home sellers sold FSBO with the perception of saving money by not paying a real estate agent commission. But did they really save money? Can you make more listing with an agent?

Over forty years ago, it was theorized that technology would replace many service professionals. Over time, the prediction manifested. However, the exception has been real estate agents. The role of the real estate agent has and continues to evolve. Real estate agents continue to demonstrate their value, and provide a valuable service.

Seasoned real estate agents are sales and marketing specialists. Experienced agents understand the market and use home sale data to determine a price, as well as suggesting when to list your home. Professional agents can suggest how to prepare and present your home to attract potential home buyers.

Regardless, there are many home sellers who feel they are saving money by selling without an agent (including those who sell to investors). Nonetheless there’s a body of research that has demonstrated that hiring a seasoned professional real estate agent yields a higher sales price and shorter time on the market. And a recent study reveals that selling your home FSBO could actually cost you.

Can you make more listing with an agent ?

Research by Miller, Sanchez, Sklarz, and Vamosiu investigated price differentials in FSBO and agent listed home sales (Saving Real Estate Commissions at Any Price: Does Having a Real Estate Agent Influence the Sales Price of a Home?; Journal of Housing Research, 2021, vol 30, no 2). They point out that although MLS premiums are no longer a factor, the study indicated that FSBOs sold for significantly lower sale prices than agent listed home sales. However, the amount of price differential depends on the type of home and region.

If you’re planning a home sale. Hire a professional for a smooth transaction with little drama. However, if you’re leaning toward a FSBO sale, consider all the factors. Although it may seem easy to sell a home on your own, the idiom “the devil is in the details” holds true. Even in a sellers’ market, when home buyers are competing for homes, you could be losing out if you’re unable to procure, manage and negotiate multiple offers prudently.

By Dan Krell
Copyright © 2023

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

December 21, 2022December 21, 2022

Selling to a real estate investor

Needless to say, real estate investing has become popular again. Selling to a real estate investor was even embraced by tech companies that are called “iBuyers.” To get your attention, real estate investors post road signs, send direct mail, and inundate social media with a promise of getting cash for your home. But real estate investors are not all the same, and their intentions are not always fair: which begs the question “Should you sell your home directly to a real estate investor?”

Selling to a real estate investor

When most people think of a real estate investor, they think of someone who will renovate and resale the home. This is commonly called “flipping.” However, another type of flipping has become popular, where the investor, also known as a “wholesaler,” flips their purchase contract to another buyer (usually at a huge profit for them). Also, there are investors who buy and then keep the property to rent.

What’s the catch?

The typical lure from the real estate investor is a quick sale. Although many can close quickly, others not so much. The reality is that real estate investors offer the quick sale in lieu of a huge reduction in their sale price. After all, they never promised you top dollar. The truth remains that real estate investors pay a fraction of what you can likely sell your home on the MLS (and the irony is that the MLS buyer is likely to be to an investor).

What about the promise of cash? Although investors offer cash for your home, you won’t literally be getting cash at settlement. Rather, just like any real estate transaction, you’ll either get a check from the title company or a wire to your bank.

Many real estate investors tout “no Realtor fees.” Sounds good, right? Not so fast. Many real estate investors charge premiums and/or miscellaneous fees. Some make you pay their closing costs. In truth, your unexpected fees can exceed the average agent commission.

Real estate investors also promise “no contingencies.” However, many investors use a “study period” in lieu of specific contingencies for various reasons, including obtaining the funds to close. Wholesalers use the study period to find a “buyer” (usually another investor) for their contract (you may not have assurance that the assigned buyer has the ability to complete the purchase).

Due diligence

Before you sell directly to the real estate investor, consider your goals with the pros and cons. Due diligence on your part will help you obtain your goals. Don’t be afraid to approach a local real estate agent to understand the value of your home. Compare an investor sale to the MLS sale (which is typically getting your money a few weeks sooner for a fraction of the value). You should consult with an attorney to review the purchase contract to ensure you understand what you’re signing.

By Dan Krell
Copyright © 2022

November 30, 2022November 30, 2022

Home Selling during the Holidays

Home sales have been in a slump for several months. But the lackluster volume of homes being sold isn’t what most people are making of it. Of course, rising interest rates have curtailed some home buyers’ plans, but the historically low supply of homes for sale continues to drive the market. If you’re home selling during the holidays, consider that supply will continue to dwindle as many homes will be removed from market.

What does that mean if you’re a motivated home seller? Although the housing market normally slows down during the holiday season, it’s not entirely closed. Motivated home buyers are always looking for the perfect home. And with limited home seller competition, you could potentially do well with your sale. The only obstacle to your sale would be severe winter weather.

Things to consider when selling a home during the holiday season:

If you’re selling your primary residence, consider how and when your home will be available for home buyer visits. Be proactive with your communication to your listing agent so there is no confusion about showing times. The idiom “strike while the iron is hot” holds true. If you make your home available to show, stick to the schedule. Buyers will get frustrated and turned off when their scheduled appointment is canceled at the last minute.

If you’re selling a vacant home, it will be easy to show. However, you should plan to visit the home regularly for cleaning and maintenance. Maintenance is especially important during the colder winter weather.

If your home is already on the market, maintaining a show quality home is still a must. However, if your home will be listed for sale during the holiday season, you have to take care in preparing your home for buyer visits during colder weather. Decluttering, repairs, and staging are the main staples of home preparation.

If you ask real estate agents about holiday decorations, you’ll get a variety of advice. Keep in mind how home buyers will see your home. If you decorate your home, keep it tasteful and uncluttered.

Keep in mind that selling a home means having strangers traipsing through your home. Plan ahead with a showing schedule if you’re having holiday celebrations and hosting family and other guests in your home.

Home Selling during the Holidays is not for everyone. If the holiday season is a hectic, then adding the stress of selling your home is probably not a good idea. Consult with your real estate agent about home selling during the holidays and if it is an appropriate choice for you.

By Dan Krell
Copyright © 2022

September 6, 2022September 6, 2022

Catch up with deferred maintenance

After the Great Recession, the country’s housing stock deteriorated. Many financially strapped home owners could not afford the cost of maintaining their home. Many of those home owners deferred maintenance thinking they would do it when their financial picture got better. Others abandoned their homes, willing to face foreclosure to have a fresh start.

As a result, the housing stock deteriorated as time passed. Foreclosed homes deteriorated during the foreclosure process. And many others decided to sell their deferred maintenance home. It wasn’t until five to seven years after the recession that “the cost of doing nothing” was realized.

However, the antithesis was the many home owners who opted to update and remodeled their homes in lieu of moving. The decision to stay and “make do” was primarily because of the depressed home sale market. Many home owners who wanted to move couldn’t because the potential sale price would have been much lower than what the home owner needed to move. Additionally, there were many who were “under-water,” meaning that their mortgage payoff was higher than what the home was worth at that time.

As the market improved, home sellers realized that their well maintained, renovated/updated homes, sell faster and for more. Real estate agents quickly embraced the idea of renovating prior to putting the home on the market. The pay off for this strategy was evident in the recent sellers’ market (2020-2022), where well maintained and updated homes garnered a lot of attention, received multiple offers, and launched home sale prices to double digit increases.

Just as remodeling can increase the value of your home, deferring maintenance will decrease your home’s value. Unfortunately, many home owners, and their agents, believe that years of deferred maintenance can be overcome with simple and inexpensive renovations. The truth is that years of deferred maintenance deteriorates the condition of your home, making it vulnerable to the elements, pests, and time. Deferring maintenance also makes repairs and updates more costly down the road.

If your home has deferred maintenance, it’s not too late to catch up. If there are many projects with which to catch up, prioritize the most important. You will find that as you catch up with deferred maintenance, your comfort and enjoyment of your home increases. And if you’re planning a move in near future, keeping up with home maintenance will make your home sale preparation straightforward and easy.

By Dan Krell
Copyright © 2022

February 5, 2021February 5, 2021

Short Sale Home Selling

As you probably know, it’s been a sellers’ market with many listings getting multiple offers. With such a strong housing market, it would seem unthinkable that some home owners would be underwater on their mortgages when selling their homes. But the fact remains that there are many home owners who have to go through the short sale home selling process to sell their homes.

On the face of it, the January 14th press release from ATTOM Data Solutions (attomdata.com) seems to add credence to the housing market’s strength, touting that foreclosure activity is the lowest in sixteen years. The report stated that default notices, auctions, and repossessions decreased 57 percent from the previous year, and decreased 93 percent from 2010’s peak would seem to be terrific news. But the low foreclosure activity stats are actually a manifestation of a government moratoria on foreclosure activities that was imposed due to the pandemic emergency.

Rick Sharga, Executive Vice President of RealtyTrac, an ATTOM Data Solutions company, stated “The government’s moratoria have effectively stopped foreclosure activity on everything but vacant and abandoned properties. There is a backlog of foreclosures building up – loans that were in foreclosure prior to the moratoria; loans that would have defaulted under normal circumstances; and loans whose borrowers are in financial distress due to the pandemic.” Further commenting on the foreclosure backlog, Sharga believes that the foreclosure wave won’t be as bad as what occurred prior and during the Great Recession. But he cautioned that we won’t know how large the foreclosure wave will be until the moratoria expires.

So, in the face of a strong housing market, there are many home owners who need to sell (due to job loss, job relocation, divorce, etc.) but can’t because the proposed sale price is short of the amount needed to cover the costs of selling (which typically includes mortgage, closing costs, realtor & title fees, etc.). This is where a short sale can be considered.

A short sale is basically when your sales net isn’t enough to pay the mortgage(s) on the property. In many cases, short selling home owners don’t have the funds to make up the shortage needed at settlement. Instead, they seek lender approval to allow a lower mortgage payoff in order for the transaction to close. Because short sales have become a common form of transaction in the real estate landscape, the process has become more standardized since the Great Recession. Although the typical time to complete a short sale can take three to six months, short sales can take as little as forty-five days. However, it’s important to note short sale approval can also take more than six months.

Although the core process is the same, lenders have different requirements when collecting information and conducting their due diligence. Having a professional negotiator helps facilitate your short sale. Seasoned short sale listing agents typically work with experienced attorneys to negotiate and handle the process.

If you are thinking of short sale home selling, interview several experienced and local short sale agents. Ask about their track record for successful short sales and how they work on your behalf to get the job done. Also talk to their negotiator, and ask about their track record in successfully negotiating short sales.

When considering a short sale, consider all your other options as well and get professional advice from an attorney and CPA to determine your best solution.

By Dan Krell
Copyright © 2021

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