Warning: 4 Things you Must Know when Selling a House
Thinking of selling your house? There are a few items you must know to navigate the sometimes unknown road when selling a house. Four of the most important are Real Estate agents, Appraisers, Home Buying companies, and Real Estate Valuation web sites.
Real Estate Agents:
Just like any industry, there are good agents and not so good agents. When an agent is competing for your listing, ensure that they are giving you realistic numbers of what your house can sell for. Some agents tend to provide inflated values for your house in an attempt to secure a listing.
Make sure agents are showing you good comparables from your neighborhood. As importantly, make sure the agents are showing you pictures so that you can see the quality of interior and exterior of the comps compared to your house. Know that buyers are not going to place as much value for your house if kitchens and bathrooms have not been updated recently, especially if the comps in your area have been.
Also, know that the price the agent says they can List your house for is a much different number than what you will Net from the sale of the house, if the house sells. A seller will typically Net only 75% to 85% of the sale price of the house and the final sales price will typically be lower than the original asking price.
One important question to ask an Agent..........
Will you Guarantee what I will NET from the sale of my house?
When you have your house appraised, it may or may not be accurate. An appraiser should get the comparable properties for their appraisal from the same Multiple Listing Service that an agent accesses, but not always.
Ensure that the comparables that the appraiser is using are good comparables from your neighborhood, and not from a neighborhood that would artificially inflate the value of your house.
Also ensure that you understand if the appraiser is valuing your house in its “as is” condition or if they are valuing your house as if it were updated like some of the comparables they are using are updated. If the comparables have updated kitchens and baths with granite countertops, new appliances, etc. but you do not, you cannot expect a potential buyer to think they are of the same value. A potential buyer will most certainly not place as much value on your house as the others.
Knowing the true value of your house is critical so that you do not have unrealistic expectations when selling. I have seen countless examples of a seller being told by agents and appraisers that their house is worth a certain amount only to be “taught by the market” that the real value in the “as is” condition was much less.
Knowing the difference between “Gross” and “Net” is also critical. Many sellers have unrealistic expectations of what they will receive from the sale of their house because agents and appraisers talk in “gross” terms.
An agent will say that they can list a house for $100,000 for example. Or an appraiser will say a house is worth $100,000. However, if a person wants to sell a house, there are the Transaction Costs that have to be taken into account.
Know that no matter how you sell a house, the Net amount that you “put in your pocket” from the sale of the house will typically be 75% to 85% of the actual sales price. This is a reality that you need to be aware of when selling.
Just like above, one question you will want to ask an Appraiser..........
Will you Guarantee what I will NET from the sale of my house?
Home Buying Companies:
As above, there are good companies and not so good companies. Ensure that the price a company gives you is the real price, and not a number they start subtracting fees and expenses from.
Ensure the company actually has funds to purchase your house and doesn’t have to secure funding in order to purchase the house. You don’t want to be told you can sell your house when you want to sell only to find out that the purchase of your house is subject to the buying company having to secure financing, like a typical other buyer would. You should ask the question “If I wanted to sell, do you have funds that you can wire today?”
Also be cautious about companies that want to make offers for your house without seeing the house. There are companies that try to purchase houses and make offers without seeing the house. Their “offer” is likely to change, most likely not to your advantage, when they actually do see the house and any deficiencies that they were not aware of without actually inspecting the house.
Has the company been in business for years, or did they just start “buying houses” recently? Do they really know what they are doing? Can they actually do what they say they can do? Are they a member of the Better Business Bureau with a great rating? Do they have excellent references?
Some companies even offer to assist with moving and related expenses.
Is the company willing to be flexible with closing and possession dates to make the sale and your move as easy and stress free as possible?
If you decide to sell your house to a house buying company to provide you the benefits that a fast, stress free sale should give you, make sure you are working with a company that can perform as you should expect them to.
Real Estate Valuation Web Sites:
There are a several web sites that people sometimes use in an attempt to check the value of their home. A couple of the most common sites are Zillow and Trulia. Although these sites attempt to compile the most accurate information they can, a seller needs to realize this is all automated information. It may or may not be accurate. There is virtually no way for these sites to know and compare the quality of finish and upgrades one house has to another, and how that compares with your house.
I have spoke to numerous sellers that say something like “I checked Zillow and my house is worth $”x”. This is often meaningless and unrealistic values that create unrealistic expectations for a seller.
The only realistic and most accurate way to determine valuation is to have recent comparables with pictures (from the last 6 to 12 months) from your neighborhood, of similar houses, to determine how a potential buyer would compare your house with those comparables. Remember to put yourself in a potential buyer’s shoes, and how they would see and value your house.
For more details of what you must know if you are considering selling a house, go to www.DownsizeMyHouseBook.com.