The Fine Art of Selling Real Estate
Selling real estate is usually a decision making process that is generally more emotional than logical. Saying “you are too close to the transaction” is an understatement. The reality is that selling your home is a business decision and you need to treat it as such. The entire transaction will then work smoothly and you will end up with the best sale price, in the best timeframe.
The Fine Art of Selling Real Estate is a roadmap that will take you through the selling process without unnecessary detours or dead ends. There is always more than one way to reach your destination and selling your home is no different. We are going to detail three different routes to get you there.
1. Using a traditional real estate broker
2. Doing it on your own
3. Using the services of Shelter Rock Mortgage Corporation.
You can then decide which route is best for you.
Deciding to sell
Before you do anything else you should analyze why you are selling. Some reasons are better than others. The real reason for selling will then determine the timeframe you have to work with. Let’s look at some of the more common reasons to sell your home.
- Your company is relocating you. The start date at the new location is going to determine how long you have to market your home. Your relocation package may contain an option for a relocation company working with your employer, to purchase your home. You may have tax consequences if you’ve been in your home for a short period of time or you may have prepayment penalties on your current mortgage that will need to be addressed. How permanent is the relocation? If you anticipate that you will be moving back into the community in a short period of time then selling may not be the best option. All issues need to be weighed before you decide to sell.
- You are relocating to another city for a new job. In addition to the issues noted above you also need to consider if you are going to like your new job. Do you want to try it out for a period of time prior to committing to selling your house? How permanent is the new position? Again, you need to objectively analyze the situation and make your decisions based on weighing the facts.
- Your family has outgrown your current home. Here you need to investigate the option of expanding your current residence to meet you family’s needs versus buying a larger home. You will need to compare the construction costs and inconvenience to the cost of a new home as well as the higher interest costs on a new mortgage. The advantages of staying in or moving out of the community also needs to be examined. Finally you need to consider the impact this decision will have on your finances.
- Housing prices have gone up so much in my neighborhood I want to cash out now. Do you plan on staying in the same community? Do you plan on buying another home to live in? If you plan on selling your home and moving into a rental, you better have absolute confidence in your analysis of the market conditions in your neighborhood. If your prediction proves to be incorrect, you may end up being priced out of the market should the time come that you decide to buy a house. The tax implications need to be reviewed. If you plan on buying another house in the same community, you need to question what you are accomplishing. Aren’t you selling and buying in the same market? Isn’t the home you are purchasing just as overpriced as the home you are selling? If you are considering buying in a different community, are you confident that the new community you are
considering isn’t having the same value issue as the community you are currently living in? What, if any, impact will the change of address have on your family?
- My current home is too large and I want to downsize. Do you plan on staying in the same community or not? What do you anticipate the saving to be after you move into a smaller home or apartment? Are the savings realistic? Will there be any tax consequences? Have you looked at secondary issues like a potential reduction in privacy or convenience to work, shopping, etc?
- I can’t afford to live here anymore. How pressed for time are you? Are creditors chasing you or is your mortgage in default? Do you owe more on your home than it’s worth? Are your financial difficulties temporary or permanent? This situation has the highest emotional component of any of the reasons to sell. It needs to be addressed with the help of a professional; your accountant or attorney would be the obvious people to consult.
- I’m tired of this house and just want to make a change. Do I want to move to a more expensive home? How much more can I afford? Does the overall expense of the change make sense?
These are a few reasons that a person has for selling their current home. Sometimes more than one reason will apply. It is imperative to do a complete analysis because the reasons and their associated restrictions will influence the transaction. For example, selling your home because you can’t afford to live in it anymore demands a tighter time constraint than selling your home because you’re tired of living in it and want to make a change. Once you have a clear understanding of the conditions you are working with, you can then move to the next step.
Selling Privately or using a real estate broker?
In mapping out a trip you have at least two routes you can take. You can take the scenic route or you can take the fastest route. The same applies in selling your home. You can hire a real estate broker to sell your home or you can do it yourself. In order to make this decision you need to do another analysis. The price you pay to hire a broker gives you a bundle of services. We first need to identify these services and then you can decide if you have the ability to do the job yourself.
Before we begin to look at what the broker provides, let’s take a look at how a broker is chosen. Choosing a broker, like deciding to sell your home, also has an emotional component. Most people don’t choose a broker based on a broker’s talent, experience, reputation, etc. Most people choose a broker based on friendship or family relations. “I used my cousin to list my house, because she just got her license and I’m helping her out by giving her the listing”, or, “my neighbor is an agent and if I didn’t give the listing to her, she’d never talk to me again” are some typical responses. It’s amazing how many people are spending a great deal of money for professional services but yet are choosing that professional, emotionally. Selling your home is a major business decision and should you decide to hire a professional, you better be sure you are getting professional services in return. You’re not hiring a kid to mow your
lawn; you’re giving someone the responsibility to sell the largest asset you own. Never lose sight of that.
The services that you are entitled to get from a real estate broker are:
- Calculate the market value of your home
- Make recommendations as to what you should do to the home to make it more marketable
- Develop a marketing strategy
- Execute the strategy
- Absorb all marketing expenses
- Verify any potential buyers are qualified for financing
- Explain the details of any offers to you
- In the case of multiple offers, recommend the best course of action
- Be the impartial third party that advises you to make all decisions based on facts not emotion
The cost for this service will range from 3.0% to 6.0% of the sales price of your home depending on where the property is located. So, if you are selling your home for $500,000 you can expect to pay anywhere from $15,000 to $30,000.
The reason homeowners decide to sell their home without utilizing the services of a real estate broker stems from the observation that there is little or no correlation between the quality of service being provided by the broker and the cost of those services. Why is this? The ever increasing number of people working as real estate brokers and agents. Only a small percentage of those in the business are experienced enough to do their jobs properly. The rest are the cousins and neighbors that we spoke about earlier, people in the business but not in the business professionally.
Let’s take a detailed look at each service that is provided by a broker. From there you can see what’s really involved and decide if you’re willing to do it yourself.
After you’ve decided to sell your home and have an idea as to when you would like to complete the transaction your next step will be to determine an asking price. In a sellers market, such as has existed for the last 5 years, this wasn’t a difficult task. If you priced the home too low, a bidding war would start and drive the price up to, and sometimes even over, market price. If your price was too high, you simply waited for the market price to catch up to your asking price. Offers would then come in and the house got sold. It may have taken a few weeks longer than you wanted, but it still got sold. We are no longer in a sellers market. Things have returned to normal. If a property isn’t priced right, it is not going to attract offers.
You would think that from a broker’s standpoint pricing your home should be an easy task. He has all the sales data at his fingertips and it is his business is to know what’s on the market at any given time. Remember, selling your home is an emotional decision so data presented to a homeowner isn’t looked at objectively. Pride makes homeowners feel their house is more valuable than other houses on the block. This attribute of human nature leads the homeowner to ignore the facts that are presented by an experienced, honest broker and gravitate to the broker that tells him what he wants to hear. What he wants to hear is a high asking price. After all, he does own the nicest home on the block!
This forces, even the most professional broker, to estimate high in order the get the homeowners attention and then get the contract to market the home (the listing), signed. The broker knows that as time passes the seller will be forced to become more realistic in the asking price and lower it to reflect a price closer to market value. All the broker needs to do is to get the homeowner to sign a contract that is effective for a long enough period of time for this to occur. This is why most brokers look for at least a 6-month contract.
What you anticipate the selling price for your property will be, will have a major impact on your plan. Besides the obvious point of basing other decisions on an incorrect cash position, starting at an asking price that’s too high will also negatively impact the timing of your plans.
There is certainly more than enough real estate data available to the public. A homeowner can easily develop a market price for his property based on this data as long as his personal attachment to the property is kept in check.
The lesson here is that utilizing the services of a real estate broker does not guarantee that your property will be priced right. Although you have the necessary data available to do it yourself, you may be too personally involved with the property to be objective. By taking advantage of the consulting services of Shelter Rock Mortgage Corporation you will have all the pertinent data necessary to make an informed decision as well as the impartial advice only we can provide. Our fee is not dependent on the sale of your home; there is no reason for us to “tell you what you want to hear”.
The next service you would expect to get from a traditional real estate broker are recommendations as to what you should do to make your home more marketable. The basic recommendations here are straightforward. They will be the same things you would do if you were inviting a guest into your home. The only difference is that this guest will see all of the house not just the living room and entertainment areas. The same common sense things you would do in the living room (get rid of the clutter of everyday life, make sure the furniture is in its proper place, get the dirty dishes out of the sink, etc) you also need to do in the bedrooms, basement and all the bathrooms. They will also suggest that you are not around while they are conducting open houses or showing the home by appointment.
If you are selling your home on your own, you may overlook some of the less obvious things that can improve the presentation of your home. You may have too much furniture in the living room, making it look smaller than it is. You may make the assumption that all people are pet lovers and forget that things a pet lover takes for granted can be offensive to some people. While you are taking potential buyers through your home you will probably talk too much. This is why most real estate professionals don’t want you around while they are working.
Talking too much doesn’t mean you are going to say something you shouldn’t. It simply means that when you are talking it prevents the potential buyer from thinking and making a complete inspection. Remember, in a short period of time the buyer needs to gain a feel for the home, decide if his furniture will fit in the rooms etc. The downside of your absence during the showing is significant. You know more about the property than any one else does. You have lived in the home. You know all its little quirks; you add a personality to the home.
Your presence during the showing of the home is extremely valuable; it helps form an emotional connection between the potential buyer and the home. We will show you how to give the buyer the freedom from verbal distractions so he can do what he needs to do and at the same time develop a comfort level to conduct business with you. The best of both worlds.
Developing and executing a marketing strategy sounds more impressive than it really is. From a broker’s prospective, he will follow the same formula he does with all his listings. A standard pattern of open houses, advertise in the local papers, include your home on his web site and submit it into the local Multiple Listing Service (MLS). There is no question that if done correctly, this gives your home maximum exposure.
Going it on your own will not get this exposure. The question you need to ask yourself is, “Is the exposure I’m getting worth what it’s costing me?” Buyers today are utilizing all avenues available to them in their search for their perfect house. They use the Internet, look in newspapers, contact real estate brokers and travel around neighborhoods dropping in on open houses. What percentage of this maximum exposure you get by self-promoting is an open question. One that can’t be answered with hard data since it’s not available. What you do know is the ongoing cost of promotion is absorbed by the broker when you list with him. When you go it on your own, you are paying for it as you go.
The frequency of advertising and where the ads are placed is dependant on the time of year you are selling your home and where your home is located. We will develop a plan with you that targets promoting your home to the people most likely interested in purchasing it. This is the proven cost effective method of selling.
The most valuable service provided by the real estate broker is the screening of all potential buyers. When an offer is presented you can be confident in the fact that the buyers are financially strong enough to complete the transaction. You can also expect a detailed explanation of the offer and in the case of multiple bids, a comparison of the strengths and weaknesses of each offer. Doing it on your own, you would be relying on your personal knowledge of the mortgage market and your ability to ask the right questions of the buyer. With a little detective work, you will be able to get a working understanding of the details of the transaction and the financial strength of the buyer. You just need to be careful that you keep your emotions out of the analysis and keep in mind that this is not
something you do everyday so it could be easy to miss something.
Shelter Rock Mortgage Corporation has been in business for over 20 years. Our business is based on developing long term relationships with our clients. We’ve helped them with real estate investments, put their children through college, buy second homes even helped them with estate planning. We’ve advised them not to get involved in exotic mortgage products, talked them out of taking on more debt than they can handle.
Shelter Rock Mortgage Corporation arranges finances for its clients in the regular course of business. Real Estate brokers send their clients to us in order to confirm they are qualified for financing prior to presenting a purchase offer. We will not recommend you enter into a contract with any buyer that we feel is not capable of obtaining financing.
Based on discussions with our clients over the years, several weaknesses became apparent in the real estate market. The turnover of personnel in the real estate industry is surprisingly high, leaving only a small percentage of real estate brokers and agents with any experience. Add this to the fact that the number of people holding real estate licenses increases every day as more and more people enter the business.
The stress level when selling a home should be lowered when professionals are involved in the transaction. In reality, however, my clients are telling me that the source of their headaches in selling are the real estate people they’re dealing with. Instead of preventing problems they seem to be creating them.
Those clients that have sold on their own had high anxiety during the process. This is expected. They are doing something they’ve never done before. They are not just selling a house, they are selling their home, and to make matters worse, they are dealing with numbers that are typically larger than they are accustomed to working with.
What we’ve done is designed a service that provides the seller with the knowledge he needs, leaving him in control of the transaction, at a predetermined price.
Here’s how it works. We start with a meeting at your home. Based on data supplied to us by our appraisers, our insight into the current state of the real estate market and your opinions as to the market values of homes in the area, we determine an asking price for your house. Then we design a marketing plan. Where to advertise, when to hold an open house, create a fact sheet for the house along with multiple financial scenarios, decide if any cosmetic improvements should be made before showing, etc. All appointments are made directly with you, all advertising and printing costs are paid by you. All offers are handled through us, so we can confirm the buyers are qualified and finally, after all the details of the transaction are agreed to by both you and the buyer, the data is given to your attorney so he can draft a formal contract for signature.
For a flat fee of $4,000.00, we take you from the sales process right through to contract. We are the source of information that you need to be able to negotiate the best possible deal. If a real estate broker has a buyer interested in your home, no problem. We will work with you and the broker to see that you are satisfied with the offer and your costs are reasonable. Once the details of the transaction are given to your attorney, our job is done and your attorney takes over as your advisor through the closing of the sale. Our efforts at this point are as a support position to your attorney. We’ll work with your attorney any way we can to assist him in bringing your transaction to closure.
Transactions that have been put together using this alternative have gone smoothly. Both the seller and buyer were more relaxed through the process since they were in contact with each other from the beginning. This minimized surprises and increased the comfort level for both parties.
If you are serious about selling your home, you need to contact us and discover what we can do to help. We will show you that you can save thousands of dollars in brokerage commissions, have less anxiety and have better control of your sales transaction.
Call us for a no cost, no obligation consultation. We will prove to you that we can provide the service you need to sell your home in a reasonable timeframe at a reasonable cost!
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