| Buying your first home.
Choosing your real estate professional is, perhaps, the most important decision you will make when buying property. I believe the more you look around, the more you will see the value of working with me.
Preparing Your Property "For Sale"
Make first impressions count.
Without a doubt, a visually appealing house will attract buyers, who can't help but respond to the look and "feel" of a home. Take time to carefully prepare for showings. Don't forget the following:
Scrub, dust and fix up the works
- Cut the grass
- Remove any clutter from the yard
- Trim hedges Weed gardens
- Wash steps, windows, railings, doors, etc
- Paint if needed
- Remove unnecessary clutter from garages
Buyers will notice details. Get rid of the clutter, repair leaky faucets, wage war on dust and clean until your home shines. Small things can make a potential buyer walk away. When you prepare your house for showing, remember to:
Listen to suggestions.
- Shampoo carpets
- Clean tubs, toilets and showers and hang fresh towels
- Oil squeaky doors
- Fix things like broken hinges and light switches
As you prepare your home, don't rely solely on your own judgement. It's hard to be objective when you're the owner. Your realtor will have helpful, professional tips on how to make your home more marketable.
Take a whiff.
Nothing will turn a buyer away faster than an odd smell. Try to eliminate smoking, food and pet odors. And don't leave any clues. If potential buyers see a dog or an ashtray, they'll be on the lookout for smells and stains.
Turn on the lights.
Open shades and draperies before a viewing. Open all doors inside home. Turn on inside and outside lights.
Let potential buyers "see" themselves in your home. Too many personal items can make viewers feel like they're intruding in someone else's home. Keep things clean and simple. Decorate in neutral colors.
Get out of the house.
When buyers view your home, they'll be more comfortable and spend more time if you're not there. If you must be present, be as unobtrusive as possible. Let your agent do the work.
Stay unemotional during negotiations.
Selling your home can be emotionally charged, but don't let that stand in the way of making a deal. Have a business-like attitude during the process.
Choose a REALTORŪ you like and trust.
Meeting With Real Estate Professionals and Pricing Your Property
So you've decided to sell your property and have a fairly good idea of what you think it is worth. Being a sensible seller, you schedule appointments with three local listing agents who've been hanging stuff on your front doorknob for years. Each Real Estate Professional comes prepared with a "Competitive Market Analysis" on fancy paper and they each recommend a specific sales price.
Amazingly, a couple of the Real Estate Professionals have come up with prices that are lower than you expected. Although they back up their recommendations with recent sales data of similar properties, you remain convinced your property is worth more. When you interview the third agent's figures, they are much more in line with your own anticipated value, or maybe even higher. Suddenly, you are a happy and excited seller, already counting the money.
Which Real Estate Professional do you choose?
If you're like many people, you pick Real Estate Professional number three. This is an agent who seems willing to listen to your input and work with you. This is an agent that cares about putting the most money in your pocket. This is an agent that is willing to start out at your price and if you need to drop the price later, you can do that easily, right? After all, everyone else does it!
The truth is that you may have just met an agent engaging in a questionable sales practice called "buying a listing." He "bought" the listing by suggesting you might be able to get a higher sales price than the other agents recommended. Most likely, he is quite doubtful that your home will actually sell at that price. The intention from the beginning is to eventually talk you into lowering the price.
Why do agents "buy" listings? There are basically two reasons. A well-meaning and hard working agent can feel pressure from an owner who has an inflated perception of his home's value. On the other hand, there are some agents who engage in this sales practice routinely.
What Happens Behind the Scenes?
Whichever the case, if you start out with too high a price on your property, you may have just added to your stress level, and selling is stressful enough. There will be a lot of "behind the scenes" action taking place that you don't know about.
Contrary to popular opinion, the listing agent does not usually attempt to sell your property to a homebuyer. That isn't very efficient. Listing agents market and promote your home to the hordes of other local agents who do work with homebuyers, dramatically increasing your personal sales force. During the first couple of weeks your home should be a flurry of activity with buyer's agents coming to preview your home so they can sell it to their clients.
If you and your agent have overpriced, fewer agents will preview your property. After all, they are Real Estate Professionals, and it is their job to know local market conditions and property values. If your property is dramatically above market, why waste time? Their time is better spent previewing listings that are priced realistically.
There are many ways to lose a home but signing away ownership in a manner that destroys credit, embarrasses the family and strips an owner of dignity is one of the hardest. For owners who can no longer afford to keep mortgage payments current, there are alternatives to bankruptcy or foreclosure proceedings. One of those options is called a "short sale."
When lenders agree to do a short sale in real estate, it means the lender is accepting less than the total amount due. Not all lenders will accept short sales or discounted payoffs, especially if it would make more financial sense to foreclose.
If you are considering buying a short sale, there could be drawbacks. For your protection, I suggest that all borrowers:
As a real estate agent, I am not licensed as a lawyer nor a CPA and cannot advise on those consequences. Be aware the I.R.S. will consider debt forgiveness as income, and there is no guarantee that a lender who accepts a short sale will not legally pursue a borrower for the difference between the amount owed and the amount paid. In some states, this amount is known as a deficiency. A lawyer can determine whether your loan qualifies for a deficiency judgment or claim.
- Obtain legal advice from a competent real estate lawyer
- Call an accountant to discuss short sale tax ramifications
Although all lenders have varying requirements and may demand that a borrower submit a wide array of documentation, the following steps will give you a pretty good idea of what to expect.
- Call the Lender
You may need to make a half dozen phone calls before you find the person responsible for handling short sales. You do not want to talk to the "real estate short sale" or "work out" department, you want the supervisor's name, the name of the individual capable of making a decision.
- Submit Letter of Authorization
Lenders typically do not want to disclose any of your personal information without written authorization to do so. If you are working with a real estate agent, closing agent, title company or lawyer, you will receive better cooperation if you write a letter to the lender giving the lender permission to talk with those specific interested parties about your loan. The letter should include the following:
- Property Address
- Loan Reference Number
- Your Name
- The Date
- Your Agent's Name & Contact Information
- Preliminary Net Sheet
This is an estimated closing statement that shows the sales price you expect to receive and all the costs of sale, unpaid loan balances, outstanding payments due and late fees, including real estate commissions, if any. Your closing agent or lawyer should be able to prepare this for you, if you do not know how to calculate any of these fees. If the bottom line shows cash to the seller, you will probably not need a short sale.
- Hardship Letter
The sadder, the better. This statement of facts describes how you got into this financial bind and makes a plea to the lender to accept less than full payment. Lenders are not inhumane and can understand if you lost your job, were hospitalized or a truck ran over your entire family, but lenders are not particularly empathetic to situations involving dishonesty or criminal behavior.
- Proof of Income and Assets
It is best to be truthful and honest about your financial situation and disclose assets. Lenders will want to know if you have savings accounts, money market accounts, stocks or bonds, negotiable instruments, cash or other real estate or anything of tangible value. Lenders are not in the charity business and often require assurance that the debtor cannot pay back any of the debt that it is forgiving.
- Copies of Bank Statements
If your bank statements reflect unaccountable deposits, large cash withdrawals or an unusual number of checks, it's probably a good idea to explain each of those line items to the lender. In addition, the lender might want you to account for each and every deposit so it can determine whether deposits will continue.
- Comparative Market Analysis
Sometimes markets decline and property values fall. If this is part of the reason that you cannot sell your home for enough to pay off the lender, this fact should be substantiated for the lender through a comparative market analysis (CMA). Your real estate agent can prepare a CMA for you, which will show prices of similar homes:
o Active on the market
o Pending sales
o Solds from the past six months.
- Purchase Agreement & Listing Agreement
When you reach an agreement to sell with a prospective purchaser, the lender will want a copy of the offer, along with a copy of your listing agreement. Be prepared for the lender to renegotiate commissions and to refuse to allow payment of certain items such as home protection plans or termite inspections.
Now, if everything goes well, the lender will approve your short sale. As part of the negotiation, you might ask that the lender not report adverse credit to the credit reporting agencies, but realize that the lender is under no obligation to accommodate this request.