Over the last few weeks there have been a lot of stories about folks going a little crazy. First was the filmmaker of “KONY 2012″ – Jason Russell, who was running up and down the sidewalk in San Diego naked, cursing at cars passing by. Then there was the soldier in Afghanistan who went on a shooting rampage, allegedly killing 16 civilians.
This week, a JetBlue pilot flying from New York to Las Vegas had a meltdown during the flight and scared the heck out of everyone, running up and down the aisle saying pretty alarming things until he was tackled to the ground by the passengers. This is the same airline where the flight attendant took an early exit out of the plane on the emergency ramp, back in 2010.
Celebrities losing it? The list is very long including Britney Spears, Charlie Sheen and a host of others. These are all very extreme, public examples of what happens to people under pressure.
When you’re in a real estate transaction, you might be surprised how emotional buyers and sellers can get. After all, this is usually the largest financial transaction they’ll experience and because time is of the essence, nerves can be easily frayed. I’ve been yelled at and threatened from folks you’d least expect. Do I take it personally? No, it’s an occupational hazard and it comes with the territory. I’m always thanked after the sale is closed.
While buyers get more frustrated by the process of finding a home and getting an offer accepted – sellers have twice the pressure put on them.
To help alleviate some of the stress involved, here is the unvarnished truth if you’re going to sell your home in today’s market.
Price it right - The hardest part of selling a property is determining the sales price. The majority of sellers want to overprice their listing, to give a “cushion” for negotiating. By researching the recent, comparable sold homes that most closely match the property, we can accurately determine what the home should sell for and justify the asking price during negotiations.
Sell it fast – There is no time to “test” the market. The goal is to get in and out as quickly as possible. Why? We don’t know what’s going to happen tomorrow. Will a house on your block go into foreclosure or be listed as a short sale? If an identical home is priced $10,000 less than yours as a short sale or bank-owned – whether it ultimately sells for that price or $10,000 more – your house is tainted until the sale is closed. Buyers are going to say “the same house down the street sold for $10,000 less” before it ever closes. It’s all about perception.
Stick to your price – Whatever price you start at, stay at. When you’re confident that the home is priced correctly and you can substantiate it, don’t move off the price. The minute you lower the price, it becomes part of the property’s history in the MLS and it opens the door to more reductions.
Trust your agent to negotiate for you – When you interviewed your agent, were you able to negotiate terms other than what they proposed to you? How easy was it? An agent who buckles in to your requests might not be the right agent for you. If they’re weak negotiating for their own money based on their upcoming performance, how well will they protect your money from a potential buyer? Just as you value and can justify the price for your home, the agent should be able to do the same for their services.
The power of “no” – Buyers are still in the mindset that they can ask for lots of concessions in our low inventory market. Sellers are asked to pay 3% of the buyer’s closing costs, the appraisal, repairs, a home warranty and a lowered sales price. When your home is on the market for less than 30 days, there is no reason to concede.
If you’ve priced the home correctly based on condition, location, sold comps and the market inventory, stay strong. Unless you’re in a desperate situation, expect your home to sell in three months or less (for a fair market sale.) Short sales take longer based on the unknowns the buyers have to face. Do homes sell in the first week? All the time. Did you underprice it? Check the comps, then take the money and run!
Know the implications of financing – Cash is king (click HERE for the story) and makes closing very quick and easy. The problem is that you have to find a buyer who wants your home and has cash. Based on your timeline, cash buyers are worth the wait.
Conventional loan buyers are your next best choice as they are putting more money down and usually have stronger financial backing. FHA buyers can put down as little as 3.5% and their finances could be shaky. Make sure your agent finds out the credit-worthiness of all financed buyers, including money for closing costs and credit scores. VA loans are no money down and the seller must pay some closing costs that are not required with conventional or FHA loans.
Another important aspect is the lender that the buyer chooses. Unknown lenders may not be able to perform in a timely manner, putting your closing at risk.
You can offer to accept all kinds of financing or limit your options to cash and conventional – the choice is yours. Any kind of financing requires an appraisal.
The inspection – It should be expected that every buyer will want to conduct a home inspection. If you’re aware of issues with your property, correct them before putting the home up for sale. Crossing your fingers and hoping they won’t be discovered is not a reasonable plan. Even if the buyer doesn’t ask for repair costs in the purchase agreement – they’re going to ask you to fix what is found during the inspection. Are you going to cancel a deal over $500? Probably not.
Get it closed – The longer your home stays on the market, the more things can happen. As homes around you close, if the prices are lower than yours, this too can impact an appraisal. This is another reason to appreciate a cash offer.
The deal killer - Statistically, 33% of home sales were cancelled in January of this year because the appraisal came in lower than the sale price (and the buyer wouldn’t/couldn’t pay the difference or the seller would not lower the purchase price.) Click HERE and HERE for some insight on appraisals. Out of the entire transaction, the appraisal can take up to two weeks to find out the results and is most likely to cause you the most stress and sleepless nights.
The beauty of short sales - From a seller’s perspective, while you won’t profit from a short sale (unless you qualify under HAFA for a $3,000 relocation allowance), the selling process is much easier. You can rely on your agent to set the price and not worry about contributing to any of the sales costs (except a few hundred dollars for the HOA package.)
If the home doesn’t appraise, your bank is going to lower the price. The big stress factor is selling your home before the bank forecloses. Again, pick your agent carefully – making sure they’re experienced in short sales and can find you a buyer and negotiate the sale with the bank in your favor.
Our mutual goal – Sell your home for the most money, in the least amount of time. This is a team effort and you need to make sure there’s a plan in place from start to finish.
While selling your home (fair market or short sale) can cause you to run, screaming into the night – if you know what challenges could come up, you’ll be much better prepared to handle them when they happen.
If you’re considering selling your home, give me a call and let me walk you through exactly what to expect in your unique situation.
Mark Karten writes a weekly newsletter every Sunday. Sign up for your free subscription at TKGLasVegas.com.