There are key strategies for homeseller success. What are these strategies and as an Oregon homeseller, what is it that you might need to know? As an Oregon homebuyer, you may find it helpful to understand the following insights on homeselling for an ‘inside’ view.
Strategies that Benefit Homesellers
There are some proven strategies that benefit homesellers. Chief among these is the appropriate mindset, even before implementing a well thought out ‘plan of attack.‘ Experienced Realtors routinely guide homesellers through a ‘minefield’ of common and avoidable missteps in their many forms.
Proactive awareness is one mindset that can significantly benefit homesellers. Examples of proactive awareness include addressing potential problems before they disrupt a home sale. Some specific examples might include:
1. Making sure required permits for any prior remodeling are ‘finaled,’
2. Replacing leaky gutters,
3. Trimming shrubs that touch the house,
4. Confirming there is no obvious peeling paint, or
5. Replacing windows that have broken seals.
Besides removing such items as a possible source of contention, proactively addressing relatively simple maintenance items helps to alleviate buyer concern. That’s because if a house has numerous obvious signs of deferred maintenance, buyers may wonder about other, less obvious repairs.
Proactive awareness can also mean that you understand homebuyers have options and that as lovely as your home is, some homebuyers may prefer to live elsewhere. This mindset provides a homeseller with fortitude and the advantage of not being crestfallen when their home doesn’t sell the first week on the market.
Homesellers also benefit from strategic thinking. Based on your needs and pricing strategy, for example, this might mean setting up alternative schedule scenarios for homebuying, moving and budgeting, depending upon whether your home sells in 10 days or 100 days.
Combining proactive awareness with strategic thinking provides the kind of forethought that allows fewer surprises throughout the already stressful process of selling a home. Then, given the reduced stress that comes with having to react to negative news, you’re (1). able to focus on those issues that matter most, (2). spend less time worrying and (3). possibly even enjoy the homeselling process.
The word ‘strategy’ is derived from the Greek word strategia, meaning the ‘office of general, command, or generalship’ and as such is considered to be a high level plan to achieve one or more goals under conditions of uncertainty.
The Certainty of Uncertainty
As we saw in the Oregon Real Estate Podcast program titled ‘The Art of War for Homesellers,’ selling a home is frequently conducted under conditions of uncertainty. Awareness and anticipation helps homesellers to better predict and influence their real estate outcome, as situations dictate, often in ‘real time.’
Goals can come in many forms. A primary goal for homesellers is often a prompt, uncomplicated transaction. Reasons cited by sellers for wanting a fast and easy sale include feeling like ‘living in a fishbowl,’ or the need to constantly be ‘picking up’ to keep the home ‘show-ready.’ Other reasons might be a time-sensitive job transfer, or a firm deadline to purchase the next home before a favorable interest rate lock expires. Whatever your goals, some homesellers benefit by prioritizing them early in the process on a sheet of paper or computer printout. This roadmap can help to track progress and maintain focus on the desired outcome.
Missions, Strategies & Tactics
First, it’s helpful to know how missions vary from strategies and tactics. If the overarching mission is to move in a timely manner while selling your home for the most money possible, then a variety of planned strategies to sell your property faster and for top dollar could employ numerous, effective and specific tactics.
One If By Land, Two If By Sea
Think of it this way: Tactics are specific, detailed actions that often use diverse, pre-planned strategies to accomplish your mission. For purposes of this article, we already know the mission: Selling your home without needless delay at the highest price. This means that in order to enumerate tactics to sell your house sooner and for the most money, it’s helpful to first arrive at appropriate and achievable strategies to accomplish such a mission. Let’s begin with the immutable real estate characteristic of location.
Strategy #1: Address Your Home’s Location
Your property’s location is a key factor to consider when you sell your home. It is also the one element which cannot be changed. To properly determine real estate value, location must be considered and accounted for with respect to what buyers are willing to pay for like homes in similar locations.
Mission: Sell your property faster, for the highest price.
Strategy: Maximize your property’s locational advantages.
Tactic: It’s helpful to know that many buyers for your property may not be far away. Ensure awareness among local or even hyper-local buyers, who may either have relatives already living in the area, or existing residents who may sell and wish to remain in the neighborhood. While it’s true that buyers frequently appear from outside the area, some neighborhoods have an inordinately high ‘retention factor.’ Such homebuyers know the area and are already living there ostensibly because they like it. They may want a larger or smaller home, but don’t wish to move away from their family, friends or desirable commute. Generating a ‘bidding war’ among buyers likely to strongly desire your property can be very successful.
The good news is that even homes in areas generally considered to be sub-optimal (near loud factories or industrial parks) sell. The market for these buyers may be skewed toward a particular price bracket or the hard-of-hearing, but when the locational aspects are acknowledged and adjusted for, buyer resistance to a poor location can be overcome.
If location is a major objection, it becomes especially critical to match the home to what the market will accept. Otherwise, sluggish showing activity, low offers, low appraisals and potential sale-fails are common outcomes.
Similarly, a property on a busy street may have less demand from parents with young children. However, to a disabled person whose requirements include close access to public transportation, this same property could be ideal. Some locations are more challenging than others. When dealing with high power lines, nuclear waste contamination or crime infested areas, location is more of a major limiting factor.
Secret #1: To determine an accurate list price, review comparable properties with locations that closely match the subject property. Make certain that the location of each comparable is truly similar. When performing a market analysis on your property, your real estate professional should compile a list of comparable sales that take location into account.
Specific criteria among similar homes assist in evaluating exactly what constitutes a comparable location to the subject property. This is accomplished by determining whether these residences share the same neighborhood, school district, zoning/land use restrictions, view, commute time, park proximity, street condition and volume. Only by utilizing accurate comparable sales information can maximum accuracy be achieved to understand how locational issues affect your property.
Recent, accurate and supportable market evidence is therefore essential. Real estate is unique in that it is considered “non-fungible.” Unlike a textbook, no two homes or properties are considered identical. This being the case, a degree of professional judgment must be exercised when establishing real estate values. Once determined, you can then proceed to maximize your advantages through the remaining “7 Strategies to Sell Your House Sooner.”
Strategy #2: Address Your Home’s Condition
The condition of your home greatly affects how fast it will sell. One reason for this is that many buyers lack the “vision” required to imagine what a minimally maintained home could look like in its improved state. Another reason is that bargain hunters are always eager to point out deficiencies to justify their “low-ball” offers. Don’t give the bargain hunters ammunition!
Mission: Sell your property faster, for the highest price
Strategy: Minimize negatives of your home’s condition and enhance the positive features.
Tactic: Address all significant and obvious needed repairs. Consider paint, if needed.
You can sell sooner and avoid headaches if you take the following steps:
- Focus on “curb appeal” – Step out to the street and take a long look at your home. Try to view the home through a buyer’s eyes. Are bushes overgrown? Does the lawn need mowing? How’s the roof? Are the gutters drooping? Is there an old car up on blocks in the driveway? Your initial task is to enhance the appearance of the home’s exterior, including the yard. Secret #2: Realtor studies confirm you won’t get the buyers inside your home if they don’t like it from outside.
- Clean & uncluttered inside – Everyone prefers a clean home. Buyers will forgive clutter before they’ll forgive dirt. A thorough housecleaning is advisable prior to putting your home on the market. Be sensitive to odors in the home and neutralize them. Get rid of the clutter by storing any non-essential items which do not enhance the appearance of your home’s interior. One helpful ‘trick’ is to remove half of the items in your closets to make them look bigger. If you lack storage space, consider renting a mini-storage unit on a short-term basis. It could be a great investment!
- Light and bright – Dim lighting and dark colors can dissuade buyers from considering your home. If you decide to re-paint and re-carpet the interior prior to selling, choose light colors. Off white paint and light, neutral-colored carpeting have the broadest appeal. Avoid white carpet, as dirt shows more readily.
- Remedy deferred maintenance – Almost every home that’s more than a few years old needs a repair or two. Fortunately, many home repairs are minor and require little time and effort. Those little jobs around the house that you’ve been meaning to get to – the leaky faucet, the loose handrail, the cracked light switch cover – all could be seen as “trivial” items by a seller. Yet to buyers, these may be viewed as signs of neglect and symptomatic of larger, unseen problems.
- Disclose all known property defects – Don’t try to hide your home’s defects from the buyers — It could come back to haunt you.
Strategy #3: Address Your Home’s Price
You don’t determine the sale price.
Your Realtor doesn’t determine the sale price.
Your well-intentioned relatives don’t determine the sale price.
Sentimental value doesn’t determine the sale price.
Your financial needs don’t determine the sale price.
Your investment in the property doesn’t determine the sale price.
You get the point.
Mission: Sell your property faster, for the highest price.
Strategy: Maximize your seller’s net proceeds at closing by provoking a bidding war.
Tactic: Aggressive pricing at, or barely under, the current market value.
Secret #3: The market determines the sale price. Your home is worth what buyers are willing to pay. Listen to the market. The strategy of aggressive pricing is one method to provoke a ‘bidding war’ and make buyers compete for your property. Banks sometimes use this tactic and it sometimes means not taking the first offer that comes in. What you want are clean offers, preferably cash if possible, with minimal offer conditions and a short closing timeframe.
Strategy #4: Address the Marketing of Your Property
The maximally effective marketing of your home requires a multi-pronged approach. This includes not only featuring your home in the local multiple listing system, but how it is featured, including quality photos and compelling remarks in both the ‘public’ and ‘Realtor only’ versions. In addition, even if the property is correctly entered in the MLS, if showing access is limited, expect a damper on showing activity. For example, if you require 24 hour notice to show the property, then some agents working on short notice simply won’t be able to comply and there will be a missed opportunity.
Secret #4: Put the ‘Multiplier Effect’ to work for you. This means ensuring your property is promoted in the most effective venues and to the most logical buyer groups for your property type. For residential homes, this includes professional signage, flyers, plus at least one multiple listing system along with an advanced web presence. Each marketing ‘mix’ can vary, depending on factors like property type, price range and location.
Mission: Sell your property faster, for the highest price.
Strategy: Maximize your home’s marketing advantage to make it more attractive to buyers.
Tactic: The larger your ‘buyer pool,’ the faster your home will sell and for the most money. To accomplish this, have your Realtor include the use of key ‘searchable’ phrases referencing your neighborhood, district or other recognizable words denoting where you live in the remarks section of your property’s listing. If seller financing is an option for you, consider offering ‘seller terms’ to further broaden your buyer base. Also helpful are yard signs and directional signs.
Strategy #5: Address the Buyer Pool of Your Property
Mission: Sell your property faster, for the highest price.
Strategy: Increase the buyer pool of qualified buyers for your property in order to potentially increase your net proceeds at closing and sell your property faster.
Tactic: Offer as many terms as possible; The more terms a seller offers, typically the faster the sale and higher the price
“Terms” in real estate parlance refers to the form in which consideration or payment is made. Common terms include cash, conventional loan, seller financing, 1031 exchange and other trade methods, a government insured loan, non-conforming loan or private investor and assumptions. Below are explanations for a few of the most commonly used terms in real estate transactions. Secret #5: Higher sales prices and shorter marketing times are benefits of offering the greatest variety of terms.
TRUE CASH BUYERS are able to close transactions rapidly without the usual lender requirements such as loan underwriting or an appraisal. Buyers also have no loan fees. Cash buyers may expect price flexibility in their negotiations with home sellers. Cash purchasers are a minority of buyer types.
CONVENTIONAL LENDERS are the most common source of residential real estate loans. Lenders assess purchaser qualifications through income, credit history and tangible assets. They also routinely require appraisals, a pest & dry rot report and other inspections, depending on the property. Most conventional loans are 80-95% loan to value, which means the buyer has a 5-20% down payment. The majority of home sales involve conventional loans.
SELLER FINANCING involves sellers willing to act as the “bank” when selling their property. Payments can be made directly to the seller, or through an intermediary, such as a collection escrow account. Often a substantial down payment is expected with a balloon payment due on the remaining balance at a pre-determined date. Because of the seller’s willingness to assume a degree of risk while also offering serious savings (buyers have no loan fee or appraisal to pay), seller financing tends to deliver higher sales prices. Interest rates vary depending upon the motivation of the parties involved and other negotiated factors. Typically, seller financing is secured with a trust deed or land sales contract. Unless the property being purchased has either no loan remaining or little owed on it, a current lender’s “due on sale” clause may prevent seller financing as an option.
NON-CONFORMING LENDERS are a financing option for those unable to secure financing under conventional guidelines. Many are willing to waive a purchaser’s debt rations if net assets are considerable. Home equity loans are a popular market for these lenders. Interest rates tend to be higher than conventional loans, plus various up-front fees and points are often required.
PRIVATE INVESTORS assist in financing real estate transactions to receive greater returns on their investment. For instance, most lenders will not loan on homes lacking a foundation. Private investors are often eager to fill this gap and loan the money to the purchaser, thereby “cashing out” the seller. Payments from the purchaser are then made to the investor. To ensure an attractive return, significant penalties for prepayment are common.
GOVERNMENT INSURED LOANS (FHA/VA) are government-backed loans requiring additional paperwork and documentation. These programs frequently offer significantly lower loan limits, longer processing times and more stringent home condition requirements than conventional loans but by agreeing to sell your home under these conditions can be helpful in enlarging your pool of potential buyers.
ASSUMPTIONS involve a buyer taking over the seller’s prior obligation by making a payment or securing financing for the difference between the selling price and the assumed amount. “Qualified” assumptions typically require that a buyer who assumes an existing loan first be qualified by the existing lender. “Blind” assumptions require few qualifications, sometimes necessitating only that the purchaser pay a set fee.
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