1) How Do I know if My Home is Priced Accurately?
Pricing your home correctly is the single most important factor in selling your home. Contrary to popular belief, buyers rarely, if ever, write offers on overpriced homes. In order to price your home accurately, you must have a comprehensive understanding of the sales volume in your area. The key word here is “sales.” It is critical to understand that the price of Active Listings (homes currently on the market) tell you very little about pricing. The information you need to price a home accurately includes, but is not limited to, the actual net sales price of comparable homes (contract price minus seller paid closing costs and repairs), structural condition, cosmetic condition including updates (particularly flooring, kitchen, and baths), and lot size of the respective comparable properties.
Overpricing pretty much guarantees your home will sit without offers, meaning extra mortgage payments, and ultimately holding up your life plans. Even worse, a seller gets a very reasonable and fair offer, but rejects the offer because her/his opinion of their home’s value is based on incomplete market information.
2) What is the supply and demand for homes in my subdivision, MLS area, and Zip Code?
Understanding supply and demand is essential when evaluating and negotiating offers. Supply and demand is measured by the absorption rate or “months of inventory”. To calculate the months of inventory, you take the number of homes sold in the past 90 days and divide by 3. This gives you the average number of homes sold per month. You then divide the number of active homes on the market by the average number of homes sold per month. For example, if 18 homes sold in the past 3 months, and there are currently 30 homes on the market, the months of inventory equals 5 (18/3=6 and 30/6=5).
1-4 months of inventory is a seller’s market 4-6 months of inventory is a neutral market6 months or more of inventory is a buyer’s market.
3) What are the “silver bullets” in residential real estate contracts that can get most buyers out of a contract outside of the option period?
Residential Sales Contracts offer buyers several ways to get out of the contract. For the most part, buyers can get out of a sales contract all the way up to the day of closing without risking more than their earnest money. The reason for this is that for most people, it would costs more money to sue a buyer that walks on the contract than it’s worth. But here is the kicker. Really good agents can get a buyer out of a contract AND get the buyer’s earnest money back outside the option period by using “silver bullets” in the contract. There are clauses in the residential contract relating to Surveys, Deed Restrictions, Covenants, and HOA by laws that all give a buyer the right to object in writing and exit a contract without forfeiting their earnest money. I strongly encourage sellers to seek the counsel of an attorney to protect their interests with regard to the terms and conditions in a sales contract. Or if you decide to hire an agent, make sure they explain how they will negotiate terms with regard to these various provisions that are favorable to your interests as a seller.
4) What is an acceptable timeframe for a Third Party Financing Addendum?
Unless a buyer is paying cash, their contract is likely to include a Financing Addendum. A good buyer’s agent will include terms in the Financing Addendum so favorable to the buyer that the addendum becomes, in effect, a secondary option period that allows the buyer to exit the contract weeks after the option period has expired. First, you need to understand the purpose of the addendum and the terms. I recommend seeking the legal guidance of an experienced real estate attorney if you are not familiar with a Financing Addendum. And lastly, you need to have a good relationship with an established lender who keeps you abreast of current interest rates, origination fees, buy-down fees, and underwriting timeframes. The terms of the Finance Addendum are based on current rates and fees.
5) What is my Internet Strategy?
National Association of Realtors® research shows that 87% of buyers begin searching for their home on the Internet. Below is a list of some of the most popular sites for real estate. However, exposure is only a part of the strategy. Once buyers find your property on the Internet, you need to ensure that photos, lighting, furniture placement, and staging all make your home stand out from the crowd.