Home selling strategy Archives - Page 13 of 14 - Real Estate News and Commentary

May 8, 2009August 5, 2019

Alternatives to a Traditional Home Sale

Home Selling Alternatives

Frustrated home sellers are searching for creative solutions to selling their homes in the face of one of the most difficult housing markets in recent memory. While some home sellers reluctantly take their homes off the market, others look to the creative methods that real estate investors have used for many years.

Two creative options that some sellers are considering are “seller financing” and the “lease with the option to purchase.” Seller financing is when the buyer signs a mortgage note that is held by the seller (rather than a bank). The buyer receives deed and title like a typical home purchase, but makes their payments directly to the seller. Seller financing is not for all home sellers as all mortgages and liens on the home must be paid off prior to closing.

Lease with the option to purchase (also known as a lease-purchase) is when the buyer rents the home and agrees to close on the sale at a future predetermined time (usually one or two years when they can qualify for a mortgage from a traditional lender). Besides forking over a large deposit (usually non-refundable), the buyer pays a monthly rent that includes an additional amount that is applied to the purchase.

Some benefits when offering seller financing and a lease-purchase include attracting a greater number of home buyers, selling in a shorter time and the potential to make more money on your sale. Qualifying for a mortgage these days is much more difficult (even for some buyers who have good income and credit); however by offering an alternative to bank qualifying, you’ll attract a larger number of home buyers! Logic follows that the greater number of serious home buyers interested in your home, the quicker your sale.

You can potentially make more money on your sale by selling for a higher amount. If there is seller financing, you don’t have to worry if the lender’s underwriter will limit the sale to the appraised value- because you are the lender. However with a lease purchase, your buyer will most likely be limited to a lender’s appraisal when they are ready to settle on the home.

Seller financing and lease-options are very risky. Besides the downside of being a landlord, your buyer could default on their payments to you. It is important that your mortgage note or lease-purchase should specify your rights in eviction and foreclosure. Eviction and foreclosure can sometimes be drawn-out and expensive. Additionally, you may have to spend money to fix up the home again after your home is vacated; you can potentially lose money while your home is vacant while you look for new buyers.

It is highly recommended to hire an attorney to assist you in these transactions because of the many legal and financial ramifications. The concepts of these transactions may be easy to understand, however writing contract clauses to ensure you’re covered in all circumstances is another thing entirely; there are many variables to consider. Many home sellers have been burned from improperly prepared contracts.

Some have used creative techniques in selling their homes with great results; but before you decide to sell using seller financing or a lease-purchase, consult an attorney. The seller financing and lease-option transactions are very risky and should not be undertaken without legal counsel.

By Dan Krell
© 2009

This article is not intended to provide nor should it be relied upon for legal and financial advice.

August 13, 2008November 23, 2021

De-mystifying Home Staging

by Dan Krell © 2008
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Home staging is often thought of as a fancy name for decorating or cleaning a home prior to it being sold. In fact, “home staging” is a term that is used to describe the process of preparing your home for sale that goes beyond normal maintenance. The purpose for staging your home is to make your home as appealing as possible to potential home buyers so your home will sell quickly. Surveys conducted by the Accredited Staging Professionals a (StagedHomes.com) and Homegain (Homegain.com) indicate that staged homes sell faster than non-staged homes.

Although home staging has been around for over thirty years, it only gained wide acceptance this last decade. Many home staging techniques are derived from interior design; home stagers often sketch rooms to analyze the best use of space.

Staging your home’s exterior is just as important as staging the interior because a home buyer’s mood is set by their first impressions. You should consider the condition of your home’s landscape, façade, roof and gutters. Unkempt flower beds and cracked walkways can quickly give the impression that the home is in disarray. Additionally, missing shingles and misaligned gutters give the impression that the home has been poorly maintained.

The basics of home staging include decluttering, rearranging, and sometimes redecorating. Home sellers often have tunnel vision about their homes. Removing the clutter of your daily life from your home is the cornerstone to home staging. Decluttering goes beyond cleaning and storing unused items. Because home buyers can get distracted by the home seller’s lifestyle when viewing a home, home stagers talk about “depersonalizing” a home.

You may have spent years making your home personal to your lifestyle, however now that you are selling it you need to depersonalize it. Depersonalization means to neutralize your home by removing as much of your lifestyle as possible from the home so anyone can feel as if this could be their home. Personal items, such as family photos, can focus the home buyer’s attention on your lifestyle and away from the home.

Additionally, the layout of each room needs to be considered so it feels bright and roomy. Properly placed furniture can assist home buyers to feel at ease and “at home.” Too much furniture in any room tends to make a large room look small and feel cramped. Additionally, misplaced furniture can make a room feel awkward and unsettling.

Let’s face it, sometimes a room needs a makeover. However, redecorating does not have to be an expensive affair. Sometimes having an extra lamp or even painting a wall can make the difference between shabby and chic. If your furniture is out of date or in poor condition, furniture rentals can be a short term solution.

If the home you are selling is vacant, staging each room tastefully can facilitate your sale. An Appraisal Institute study indicated that a decorated home sells faster than an empty home.

Although many real estate agents have been certified in home staging, professional home stagers usually have a background in interior design. The International Association of Home Staging Professionals (IAHSP.com) is a source of information about home staging, including tips on staging your home and finding a home staging professional.

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of August 11, 2008. Copyright © 2008 Dan Krell.

August 21, 2007October 5, 2019

Going once, Going twice…sold!

by Dan Krell

When you think of a real estate auction, what may come to mind is a foreclosure sale. The foreclosure sale has been popular for many years with investors and home buyers looking for a good deal. However, auctioneers have been auctioning all types of real estate (such as commercial, residential, and land) for many years.

Real estate auctions have increased so much over the last few years, such that the National Association of Auctioneers reports that residential real estate auctions have increased 8.4% from 2004 to 2005 (auctioneers.org). The growing trend is national as well as local.

Is an auction the right tool for everyone? According to Fernando Palacios, the local representative of Tranzon, LLC (a national auction company), a real estate auction would not benefit everyone. Typically, real estate auctions have been used by investors and builders to sell their inventory quickly. However, in the present real estate market more home owners have been taking advantage of the “fast track” process so as sell their home quickly. He explains that the auction process is right for you if you want a quick sale and you can set your reserve price about 10% below the market.

Why the discounted price? Mr. Palacios explained that although the goal is to get a full retail price or higher, the reserve price is set below market value to help create a “buzz.” The buzz attracts potential home buyers to the auction.

There is a lot of activity the day of the auction as the excitement builds. Sometimes several bidders bid against each other in an effort to get the winning bid, resulting in a higher than market price. According to Mr. Palacios, this happens more often in moderately priced homes.

Mr. Palacios described the benefits of an auction as having a set sale date, maintaining privacy, selling “as-is,” and receiving a “cash” offer. Having a specific date for the sale can be helpful in planning as well as being, as Mr. Palacios states, “emotionally freeing” for the home owner. The auction has one date for prospective home buyers to present their “offers” to you via the bidding process.

He continues to explain that if sell your home through a Realtor, you must maintain your home in “showing” condition and be prepared for home buyers to come by at any time. Many times, home buyers will come when it is inconvenient such as dinner time and your kid’s bed time. The auction process helps you maintain your privacy until the date of the auction, when all registered participants can preview your home.

Another benefit of the auction process is that the home is sold “as-is;” the home buyer purchases the home without a home inspection. The home owner does not have to worry about a home inspection killing the deal, or about making repairs to the home.

Getting a “cash” offer is a basic part of the auction process, which means there are no contingencies and you can count on closing in thirty days. This is to the home owner’s advantage as the home buyer has no way out of the contract.

For more information on real estate auctions and to see if it right for you, visit the National Auctioneers Association (auctioneers.org) and the Auctioneers Association of Maryland (mdauctioneers.org).

This column is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of May 7, 2007. Copyright © 2007 Dan Krell.

April 6, 2007November 23, 2021

The Art of Pricing Your Home

by Dan Krell © 2007
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As February gives way to March home buyers make their way out of hibernation, while many home owners are preparing their homes for sale. Some home sellers will list their home with a Realtor, while others will attempt to sell by owner. As the home sellers are making their preparations, one item is still undecided-the list price.

Pricing your home correctly is the key to having a successful sale and will make the difference in going to settlement in a reasonable time or having your home languish on the market for weeks and months.

Although it is true that selling a home is not rocket science; however, home pricing is a science to some and an art form to others. There is a certain knowledge and technique in home pricing as well as requiring a lot of work in the form of research.

If you are presently selling your home, (if you haven’t realized it yet) market conditions are no where near the market conditions of several years ago. Don’t expect your home to sell fast at a higher price and/or in poor condition than other homes in your neighborhood-those days are over.

The first step in pricing your home is to see what is happening in the local market and neighborhood. You can see this by getting a comparative market analysis (CMA) from a Realtor. I would ask several Realtors for a CMA as there may be differences in approach and presentation. A CMA is not an appraisal; however it is a comparison of your home to similar homes. It is important to compare your home to homes of similar style and size. Dissecting the analysis in six, three, and one month segments will show you any market trends.

When looking at the analysis, compare recent sales to currently active homes. Are the current listing prices consistent to recent sale prices and days on market? Is your competition is over priced for present market conditions, or is the market slowing down?

Look at the expired and withdrawn listings too. Try to find out why these homes did not sell and avoid doing the same mistakes. Also, look any pending sales for price reductions and seller concession as these may give you a hint to where you need to be in pricing your home.

Now that you have the analysis, it is important to know your competition first hand. Go visit your competition when they hold an open house. Compare active listings’ condition and amenities to your own home. Does your home compare; is the price reasonable; would you consider buying this home?

Be honest with yourself about your home’s condition and features. Are there amenities that will attract home buyers? Are there any problems or shortcomings that will turnoff home buyers? You will need to adjust for these items accordingly.

Home buyers in today’s market are looking for homes that show well and are reasonably priced. Additionally, many home buyers are in need of closing cost assistance. Don’t expect home buyers to make an offer just because the home is on the market-they won’t. Be realistic, as there are lots of other homes on the market that show well and are competitively priced.

April 6, 2007November 23, 2021

Does a Vacant Home Sell Faster?

by Dan Krell © 2007
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When I list a home I invariably get the question, “Don’t vacant homes sell faster than occupied homes?”

It is an interesting debate in the real estate industry. Well, not so much a debate as it is a difference of professional opinion and culture. The rationale for vacating the home prior to listing it includes ease and convenience, for both the home seller and the prospective home buyer. After all, the home seller will not have to be bothered with keeping the home clean on a daily basis anticipating home buyers coming to see the home. Additionally, strangers won’t be traipsing through the home at odd times or while the home seller is taking a shower (which does happen).

For the prospective home buyer, viewing a vacant home can’t get any easier. There are no restrictions on showings; there aren’t any worries on going too late in the evening or too early in the morning. Also, there aren’t any worries on letting out pets because there are none in the home.

When the real estate market was on a run away pace, the advice of vacating a home may have been harmless as well as making some sense. The thought was, “Why not move out before listing? Some one will be moving in the home in several weeks.”

Now that the real estate market has become (or becoming) more realistic, the reality selling a vacant home is setting in. An empirical study conducted by Chien-Chih Peng and published in the June 22nd 2004 issue of the Appraisal Journal concluded that vacant homes take longer to sell as well as selling for less than occupied homes.

While viewing a vacant home, you notice traffic patterns as well as furniture footprints. If you have ever moved furniture out of a room, you probably noticed that the room looked a bit shabbier empty than with furniture because of the marks left behind from furniture and traffic through the room. You tend to notice more imperfections than if the home was furnished. Additionally, if the home is on the market for an extended period, dust buildup and an overgrown lawn becomes unsightly. Sometimes an unused toilet gets a ring that will become a home buying deterrent. If the home is not maintained on a regular basis, the vacant home looks as if it is an abandoned home that has no appeal.

Why do home builders fully furnish their models? It’s not because they want to advertise someone’s furniture, it is because they want to give you an idea of how the space can be used. Home builders know that selling a home is much more than a financial investment, it’s an emotional investment. Vacant homes are bleak and sterile, whereas a furnished home can show its warmth and connect emotionally with the potential home buyer.

Finally, savvy home buyers may look at a vacant home as a sign of a desperate home buyer in need of a quick sale. A vacant home may be an invitation to lower offers because it is thought to be a financial waste or strain on the home seller.

The message is clear. Whether or not you plan to live in your home during the sale, keep your home furnished modestly, clutter free, and clean.

This column is not intended to provide nor should it be relied upon for legal and financial advice. This column was originally published in the Montgomery County Sentinel the week of 2/5/2007. Dan Krell © 2007.