How to get top dollar
for your real estate
Have you
been following the almost daily reports of continually
rising home sales prices and near-record-high sales volume
for both new and resale homes in the last few weeks? The
2004 spring and summer home sales season is proving to be
stronger than most experts predicted.
The
recent comments of David Lereah, chief economist for the
National Association of Realtors were especially
fascinating. Although he predicts 6.9 percent,
fixed-interest home loan rates by 2004 year-end, he doesn't
expect new or resale home sales volume to be hurt unless
mortgage interest rates get close to 8 percent (which he
doesn't think will happen any time soon).
The
recent small rise in mortgage interest rates seems to have
motivated first-time and move-up buyers to purchase now
before rates go higher.
Another
interesting trend, in most cities, is the greatly increased
volume of houses and condos listed for sale, compared to a
few months ago. As the U.S. economy strengthens, these new
listings are selling extremely well in most communities.
Although
mortgage interest rates are up from their all-time lows a
few months ago, today's fixed rate mortgages around 6
percent are still a bargain. Two years ago, they were about
7 percent. A year ago, they were approximately the same as
today.
TODAY
CAN BE AN EXCELLENT TIME TO SELL YOUR HOME.
If you are thinking of selling your house or condo, it's not
too late to take advantage of the current very strong market
for homes. To earn top dollar, it pays to get your residence
into tip-top condition before listing it for sale.
The most
profitable improvement of all is a fresh coat of interior
and exterior paint. Other profitable improvements include
new light fixtures, fresh landscaping, either new
wall-to-wall carpets or hardwood floor refinishing, plus
general cleaning and repairs.
Experienced real estate agents generally recommend major
kitchen and bathroom remodels usually don't return as much
in additional sales price as they cost. But they can add to
the marketability of an older home.
INTERVIEW AT LEAST THREE SUCCESSFUL REALTY AGENTS.
Although statistics show most home sellers list their
residences for sale with the first agent interviewed, the
smartest home sellers interview at least three successful
realty agents who sell homes in the vicinity.
Here's
why: By comparing the opinions of three savvy local agents,
the home seller is likely to list with the best agent at an
asking price which is neither too high nor too low.
Interviewing just one agent can be misleading if that agent
estimates too high or too low a market value for the home.
That's why each of the three agents interviewed should
prepare a written CMA (comparative market analysis) for the
home seller.
Each CMA
shows recent sales (not asking) prices of comparable homes,
the asking prices of similar neighborhood homes (your
competition), and the asking prices of recently expired
listings (the most common reason a home doesn't sell is it
was overpriced).
Even if
you plan to sell "for sale by owner," interview at least
three local agents. They won't mind. The reason is you will
get the benefits of their information and they know you are
likely to list your home for sale within 30 to 60 days with
one of the agents interviewed.
CONSIDER THE DIFFERENT TYPES OF LISTINGS.
Even if you think you can sell your home without a
professional agent, it pays to understand the different
types of listings:
1—OPEN
LISTING. An open listing is a "for sale by owner" listing
with no specific realty agent. It is not eligible for
placement in the local multiple listing service (MLS), the
most powerful sales tool available to realty agents.
Most open
listing sellers will pay a real estate buyer's agent who
obtains an acceptable purchase offer 50 percent of a
customary sales commission, usually around 3 percent.
However,
as most do-it-yourself home sellers discover within 30 to 60
days, without a professional agent marketing the home, it is
unlikely to sell. That's why most open listing home sellers
eventually list their properties with a professional agent
within a month or two.
2—EXCLUSIVE AGENCY LISTING. Although most realty agents
won't tell home sellers about this type of listing, when
this listing type is used, if the home is sold by the seller
without the involvement of any licensed agent, no sales
commission is owed.
However,
if the listing agent, or a cooperating buyer's agent,
produces an acceptable purchase offer, then the seller owes
a full sales commission. Exclusive agency listings are
eligible to be included in the local MLS.
A few
so-called "discount agents" will take exclusive agency
listings and place them in the local MLS for a flat fee,
such as $500 or $1,000. But such agents usually charge
additional fees for more services, such as marketing,
preparing a purchase contract, holding open houses,
arranging financing, and handling the sales closing.
3—EXCLUSIVE RIGHT TO SELL LISTING. This most popular listing
type gives the listing agent maximum control over the
listing and maximum financial incentive to produce a buyer.
Even if the seller finds a buyer without the help of the
listing agent, a full sales commission is owed to the
exclusive right to sell listing agent.
This type
of listing is also eligible for submission to the local MLS.
In addition, most MLS listings are now available on the
Internet.
Because
over 70 percent of today's home buyers begin their quest on
the Internet, especially out-of-town buyers, the Internet
has become an additional powerful sales tool for MLS home
sales.
BE
AWARE OF THE NET LISTING PITFALLS.
A few naive home sellers think a so-called "net listing"
would be ideal for them. A net listing is really just a
variation of an exclusive listing. But it should be avoided
by sellers and realty agents.
Illegal
in several states because it is so dangerous for property
sellers, a net listing means the seller wants to net a
specified price and any amount the listing agent can get a
buyer to pay above the net price is the agent's sales
commission.
At first,
that arrangement might seem attractive to home sellers.
For
example, suppose you tell your listing agent you want to net
$200,000 for your home and anything the agent can get a
buyer to pay above $200,000 is the agent's commission. If
that agent obtains a $220,000 purchase offer, you probably
will feel the agent misled you by not telling you how much
your home is really worth. You probably won't agree to pay
the agent a very high 10 percent commission of $20,000.
Worse,
suppose the agent obtains a legitimate all-cash purchase
offer for $200,000 or even $205,000. Unless that agent is
100 percent honest and enjoys working for a zero or very low
commission, he or she might be tempted to "lose" that
purchase offer and never present it to you.
A better
alternative to a net listing is an exclusive right to sell
listing at the seller's desired net sales price, plus a
customary sales commission.
CONCLUSION.
During this best season of the year to sell homes, it's not
too late to take advantage of the still-strong home sales
market when the largest number of prospective buyers are in
the market.
To earn
top dollar, home sellers should get their houses and condos
into tip-top condition, interview at least three realty
agents before listing with the best one, and set the asking
price correctly based on recent sales prices of comparable
nearby homes.
