5 Mistakes That are Costing Sellers Money in Today’s Market
- Not Preparing
- Skipping Easy Upgrades
- Not Compensating for Negatives
- Selling Off Market
Prepare For the Worst, Hope For the Best
In today’s sellers market, it’s easy to fall into the trap of thinking that you don’t really have to do much to prepare your home for sale, because there will be plenty of buyers. In reality, while buyer demand exceeds supply, there are no guarantees that your home is going to sell instantly or for the price that you want without proper preparation.
Your home may never be a 10/10 and that’s OK, but you should put some time and effort into making sure that it shows its best. The little things can add up and impact a buyers impression of your home, don’t skip on repairing anything not in normal working order, thorough cleaning, de-cluttering and de-personalizing and staging — these can all make a difference.
This time of year it is especially easy for sellers to look at similar homes in their neighborhood that have sold and think they can sell for more.
It’s true that prices have been going up, but a solid pricing strategy includes pricing at the market value, not above. It is important to be honest about property condition. If your kitchen is 10 years old, it does not have the same appeal to buyers as a newly renovated kitchen.
Similarly, a 1st floor location in a building is not going to sell for the same price as the 5th. It’s as important as ever to really analyze the differences between your home and the other homes that have sold recently, and price accordingly.
Overpricing can have dramatic effects on the end sales price, in as little as 14-21 days a buyers mindset is likely to shift to thinking that your home is overpriced (which it probably is if its under $1m and sits on the market for that long) and offers will reflect this. Pricing appropriately for the market value is the surest way to get the highest possible sales price.
We’ve been flying through the homebuying process and we’re finally on the final step — settlement! If you’ve made it this far, you’re on the fast track to homeownership.
To some buyers, I think that settlement seems like it is going to be more of a grand finale than it usually ends up to be, spoiler alert — there are no balloons or confetti. In exchange for what is likely the largest check you’ve ever written, you uneventfully get a few sets of keys and to sign your name hundreds of times.
But what actually happens at settlement? How should a buyer prepare? Let’s look at the final steps of the homebuying process in detail:
Preparing for settlement: Most importantly, a buyer’s #1 priority is making sure that the funds necessary to complete the transaction are received by the settlement date. This includes the loan (which is sent directly to the title company by the mortgage provider) and any funds that the buyer is responsible for (including down payment and closing costs).
It is important to note that most title companies do not accept cash or personal checks — it is recommended that a buyer work on getting their funds to the title company no later than the day before settlement to ensure no delays or issues.
Other things that you will want to have completed include setting up utilities, scheduling a move (in a condo building) and preparing any last minute questions for the seller.
The pre-settlement walkthrough: This is typically the last visit to the property before taking ownership, the purpose is to either ensure that any agreed upon property condition requirements are completed (ie. home inspection repairs) or that there have been no changes to the condition of the home. It’s your final opportunity as a buyer to see that the basement has not flooded, a tree branch hasn’t fallen through the roof and that what you are about to buy is in fact what you are expecting. (more…)
We’re flying through the steps of the home-buying process with just a few more to go. If you have missed any or want to start at the beginning, you can do that here.
Now that you’ve made it through the home inspection, and have a ratified contract on a home, we’re on to part 2 of the financing process. Financing part 1 was choosing a lender and pre-approval. Now that you have a home lined up to purchase, it’s time for part 2, the loan application and other steps needed to receive your financing on the settlement day.
The loan approval process is in many ways very similar to the loan pre-approval process. In addition to filling out a loan application you will be requested to submit documents. Depending on your financial situation this may be the same documents requested for pre-approval or many more.
Expect your entire financial (and tax) situation to be examined under a microscope with numerous requests for documentation. During this time it is important that there are no substantial changes to your financial situation, in particular:
- Don’t move any funds without discussing with your lender.
- Don’t make any large deposits unless you are able to document the source of the funds.
- Receiving gift funds? These need to be properly documented. Do not accept or deposit gift funds without speaking to your lender.
- Do not apply for new debt of any kind. This includes credit cards, car loans, or refinancing any of your existing loans (unless recommended by your lender).
- Consider credit monitoring (during your search and through settlement) to make sure that there are no unauthorized changes to your credit score.
While the the information that you provide your lender will confirm that you qualify for your loan, the other part of the equation is making sure that the property that you are purchasing qualifies.
Since the property you are purchasing will be collateral for your loan, the bank wants to make sure that your loan is based on the market value and that there are no conditions that would have a substantial impact on their ability to sell the property in the event of foreclosure.
How does a bank know what the home your buying is worth? This is where the appraisal comes in. Your lender will order your appraisal, and it will be conducted by a third party service provider. The appraiser will have a copy of the sale contract. They will visit the home to take measurements, document the size and condition, and note any adverse conditions. (more…)
The next stop on the home buying journey is often a home inspection. Today I’ll be going over the ins and outs of inspections, the different types, who to hire and what to expect. Not everyone has a home inspection, but for most buyers, the information gained is very helpful.
Let’s start with what a home inspection is and what it isn’t. A home inspection is a visual inspection of the structure and components of a home to identify items that are not performing correctly or are unsafe. A home inspector will recommend further evaluation by a licensed professional if they suspect an issue that requires further diagnosis. Home inspectors also can provide valuable preventative maintenance recommendations.
A home inspection is not a 100% examination of every inch of a home, and is limited to what is visible, accessible and testable. The overall objective of a home inspection isn’t to find every possible issue, it is to provide a buyer with an understanding of the condition of the home, identify issues that need to be corrected (and potentially negotiated) so that the buyer can proceed with their purchase with a level of comfort.
There are two times in a transaction when a buyer may decide to have a home inspection, one is before an offer is submitted (aka a pre-offer inspection) or more traditionally after an offer is accepted and a contract is ratified. (more…)
Today we’re moving on to the next step of the homebuying process!
For some buyers, this is when the thrill and excitement of touring houses (which I discussed in my last column) turns to panic and fear, understandably so since things get very real when you sign a contract for a large sum of money.
Once you find a home that you want to buy, the next step is to submit a written offer to the seller of that home, letting them know what you are offering in exchange for their property. We have a fairly standardized well established offer process here in the DC area, but I can’t say enough that every transaction is different and it’s challenging to accurately generalize.
The offer terms that you submit become part of the legally binding written contract between you and the seller, so it’s important to carefully think through what you are offering to ensure that you will be able to follow through with your contractual obligations.
Here are some of the different offer terms to be thinking about as you look at homes and prepare to submit an offer:
Price: On the surface, price is the most straightforward of the offer terms, but often one of the most difficult to decide on. The price you decide to offer should be based on an overall offer strategy, and your decision of what the home is worth to you. (more…)
This week we are moving on to one of my personal favorite parts of the homebuying process, the actual home search!
Now that you’ve lined up your team of professionals (including your agent and lender) and decided what you are looking for and where, it’s finally time to hit the ground running and check out some properties.
For some buyers this part of the process is fun and enjoyable, for others, it can be understandably stressful. While no two buyers home searches are the same, there are some recommendations that I can offer to help make sure that your time spent looking at houses is productive and beneficial:
Shop before you buy
- For buyers with a flexible or extended timeframe, I recommend casually starting your home search a little early, 4-6 months from when you want to move.
- If you are someone who thinks you will fall in love with a house right away and then be devastated that you can’t buy it, this strategy is not for you.
- This allows time for a less focused, more casual exploration phase – think “window shopping” but not looking to purchase, where you can look at houses that may not be 100% what you are looking for, but can be valuable for helping define what you want as well as what you don’t want
In part 4 of my “Buying in 2018” series, I will explore how to choose a real estate agent. The order of these first four steps isn’t that important, you may choose to work on them simultaneously or in whatever order works best for you. If you missed the first 3 columns, here they are:
One of the most important yet underrated steps in the homebuying process is choosing who you plan to work with. This is, and should be, an intentional choice. The person you choose will be responsible for helping you make one of the biggest investment decisions of your life, a decision that will impact your financial future, day to day happiness and overall life trajectory. I can’t emphasize this enough, choosing the right agent matters.
Tips for finding a real estate agent:
- Start the process before you find the house you want to buy. You may notice a common theme with my last few columns, one which I cannot emphasize enough, do not start your home search by looking at properties. Please do not go to an open house, with the intent to submit an offer on that house, before you have an agent. Don’t get me wrong, I love DIY, but not when it comes to a major financial investment.
- Accept that you may not fully understand why who you decide to work with is so important before you begin the homebuying process. You will understand by the end of the process. The majority of horror stories that I hear from buyers are a result of working with the wrong person (or with no one). Working with a good agent does not guarantee that you will have a smooth transaction, but it does guarantee that you have someone representing your interests and have the best possible chance for success. Real estate transactions, more often than not, will come with challenges, overcoming these challenges requires skill and experience.
Hello February! It’s so hard to believe that we are already 1 month into this year. If you’re thinking about buying in 2018 you have plenty of time, and this week were moving on to Step #3 in this series. If you missed the first 2 columns, you can find them here:
After you’ve decided what you want to buy (and why) and how you plan to buy (and how much you want to spend) the next thing to figure out is where. I completely understand if you’re thinking “Do we really need to spend time on this topic? I already know where I want to live.” The answer is, yes. To make an informed decision you should know what your options are in a variety of different locations.
When you think about location for renting, the typical mindset is what can I get for my money where. When you think about location for buying the decision is magnified by the fact that you will be investing money in you and your future life, money that you hope will grow into more, and you will need to consider your future happiness and needs along with your present.
I’m not suggesting that you include the entire DC area in your home search, but I do recommend considering a few different neighborhoods, with different price points and offerings, so that you can compare what you get within your budget in each. Here are a few things that I think are helpful consider when exploring different locations for your home purchase: (more…)
In part 2 of my “Buying a home in 2018” series, I will discuss financing — How to explore your loan options and why this is an important preliminary step of the homebuying process. If you missed part 1 of this series where I went over defining home purchase objectives, you can find it here.
Unless you are planning to purchase a home without financing, a nice luxury that many of us don’t have, then you are likely planning to get a mortgage. Figuring out how you plan to pay for the house that you want to buy is equally as important as figuring out which house you want to buy.
It is important that the loan option you choose is a good fit for your financial objectives. With interest rates expected to rise, refinancing isn’t likely to be an advantageous option and a mortgage will be a long term commitment to a payment plan. Exploring the full range of mortgage options will help to ensure that the payment plan you go with is the best fit for your personal financial situation.
Now you might be thinking that by exploring financing options I mean shopping around for the lowest interest rate, but this is not the case. Interest rates are just one factor and, in my opinion, by far not the most important factor in choosing a loan and lender for most buyers. For more on this topic, check out my column from last year on choosing a lender.
Step 1: Research lender recommendations. Ask friends or neighbors who they used as their lender and if they would highly recommend them. Ask your trusted real estate professional for their recommendations based on the type of loans you are considering. There are a lot of lenders out there, only consider those with raving fans. I strongly recommend using a direct local lender who will serve as your knowledgeable financing guide on your journey to homeownership. Here is my list of questions to ask when interviewing lenders. (more…)
Whether you are planning to buy a house in 2018 or 5 years from now, it’s never too early to start planning. I’m sure that I sound like a broken record when I say that buying any kind of real estate is one of the biggest financial investments you will ever make, and that careful planning and preparation will help to ensure that your investment fits your objectives.
Knowing where to start when you are thinking about buying a home can be more than a little overwhelming, but let’s take it one step at a time. Like many aspects of buying a home, I can’t promise that it will be fun, but I can promise that it will be worthwhile.
Over the next few weeks I’ll be sharing with you my recommendations on each step of the home buying process, from planning and figuring out how you will pay for the house to the actual search.
Step 1: Define your objectives
I know that those email alerts that you get from Zillow or Redfin are super tempting, but I would caution that until you have a clear outline of your objectives it’s really easy to get off track and distracted before you ever even begin your search (If you’ve already done this, thats OK too, we can always work backwards if you’ve gotten ahead of yourself).
It’s completely natural to be excited and want to jump right into a home search, but I can’t caution strongly enough that in order to have a successful experience and outcome, planning is needed. (note: for the purposes of this post, and all of my posts, a house or home is not defined by a specific type of physical structure, whether its a condo, tiny house, McMansion or anything in-between).
The number one mistake that I see buyers make is getting ahead of themselves, finding a home that they think they want to buy before they have clearly defined their objectives. I definitely understand that the charm and character are irresistible, or the location is amazing, and that you will feel like you have found a once in a lifetime opportunity. (more…)