Advise for Buyers
They're here today and gone tomorrow. Relationship builders they're not, and you'll find one around every corner. They are here to cash in on the real estate boom and will do whatever it takes to maximize their investment. They are real estate speculators. They can tell whatever you want to hear to convince you that their home is a good buy, and don't have to answer to anybody. It's up to you, the buyer to do your own due diligence to protect yourself. More often than not, the seller will be asking too much for their home in the hopes that they can find someone who is not very sophisticated. They feel they are more knowledgeable than a real estate professional, and many of them are. I know of a few agents who have received a life-time ban from practicing real estate professionally, but it doesn't stop them from marketing their own properties. (There are a few bad apples in every profession)
One common tactic that they use is to purchase a home, then slap a large mortgage on it and resell it for way more than it's worth, duping an unsuspecting and unsophisticated buyer for an easy $100,000 or more over the market price. The bait they use is a low down or zero down incentive, and the victim is almost always desperate to buy. Often they'll offer vendor financing as a "2nd Mortgage" to make up the difference. They hope that you will be late on a payment at some point in future at which time they'll note you in default and repossess the home. You walk away with nothing. You won't be able to sell the home, since you have a huge negative equity position, so you''ll be locked in for years and years to come. Many times, your name doesn't even go on title as the registered owner until the mortgage is paid off, so you have no legal right to sell, until such time as all loans have been completely paid off! The vendor will also make a great deal of interest on the vendor finance, which will take you forever to pay off. You're only alternative is to walk away from it, ruining your credit, at which time the vendor will repeat this tactic on the next "sucker".
Since my services are free to any buyer, I can't imagine why you'd want to take the risk of buying privately without seeing enough competing properties to make an informed decision, or having a price evaluation done. Even when you have seen some properties, you can't be expected to know how to write a proper contract which covers nearly every contingency. This knowledge takes years to accumulate, and barely a day goes by that I don't learn something new! In fact, the more real estate I sell, the more I wonder how I ever managed to escape the pitfalls of the business early on in my career! Do you want to take that kind of risk when considering what quite possibly be the largest purchase of your lifetime?
If after reading the above, you still want to put an offer on one of these homes, you should firstly decide what their very best offer on these homes would be based on your knowledge of homes which have recently sold in the area. Most often, the only comparables you'll have are the other over priced listings which have not sold. (Don't confuse this with the selling price!) Once you've established a fair market value, you should then deduct from that price, an amount approximately equal to the amount the seller would have to pay, if the home was listed with a licensed real estate brokerage. Usually that is in the neighborhood of about $15,000 for the average home, and can be as much as $25,000 for very high end properties.
Under no circumstances should you pay a penny more than that. That's because the seller is not paying one cent to anyone to market their property, and they have no overhead to speak of. If you pay more than that, you are making a big mistake, and the seller will benefit from your naïveté. You see, the market price already has an amount built in, to cover any commissions payable.
The price has been established over many years and many thousands of transactions which have benefited from the exposure of the MLS® system & the hundreds of transactions accumulated. More importantly, you should have some insurance built into the price just in case. Most for sale by owners wouldn't think twice about calling up a REALTOR® to get a home evaluation, when they have absolutely no intention of listing their property. In fact, many of the company's that promote these private sales actually encourage their customers to do that, and think nothing of lining their pockets on the backs of hard working agents everywhere!
When I was growing up, my Dad tried to teach me the difference between right and wrong. He would be horrified to hear if I had used false pretences to obtain information from someone that I had no intention of doing business with. What does that say about their ethics? Is that the kind of person that you want to do business with?
FSBO's don't like REALTORS® very much. Some of them are involved in schemes such as mortgage fraud or misrepresentation designed to draw in the unsuspecting or inexperienced buyer. They can be unscrupulous, calculating and deceitful. Some of their tricks are horrifying and you may not find out until several years later when they take the house back that you've been duped!
Organized crime is taking a firm foot-hold in Canada and real estate is one of the preferred methods of laundering fortunes in crime proceeds. Their "front-men" are not the stereotypical glassy eyed, long haired crack-heads that one might expect. They are often sophisticated, well-spoken "psychopaths" chosen for their suave mannerism and charm.
I'm not trying to suggest that all "For Sale By Owners" are involved in terrorism or money laundering or are mentally unstable. That would be silly. Indeed, a good majority of them advertised by outstanding folks with a conscience, just like you, or me, but you should be aware of the risks. Will you be able to tell the difference?
It is true that real estate is one of the preferred methods for laundering the proceeds of crime. Enough so that FINTRAC (Financial Transactions and Reports Analysis Centre of Canada) has identified them and is making a concerted effort to thwart their activities. Criminals don't like to have to deal with REALTOR's® who are well-connected, trained, and obligated by law to report any suspicious activity.
With the proliferation of grow operations, methamphetamine labs and the like, its down right scary to think that any buyer might even consider this option. Most grow operations can be cleaned up quite nicely and no one would even suspect that they are buying into a future nightmare. Judges generally do not have too much sympathy towards those who choose to go it alone, and get raked over the coals in the process.
Have you been properly trained to properly measure square footage, or will you just take the sellers word for it? For listed properties, the onus falls on the listing agent to ensure that the listing is accurate in every respect. That's why we have errors and omissions insurance! You can't possibly hope to have the knowledge and expertise that an experienced REALTOR® acquires in the process negotiating and following through on hundreds of transactions. Most of the sellers I've met have absolutely no idea what it is they are selling and are vague or just don't know the answers to my questions.
Most "For Sale By Owners" do however, offer the prevailing rate of commission to any agent bringing a buyer. Therefore, all things considered, it begs the question - "If it's not the money, what is their real motive for not using a REALTOR®
Let me tell you this if you don't already know it. In life, when it sounds too good to be true, it usually is. While most people are honest there are hundreds of properties that were privately sold, right here in Calgary in the last year, that involved some form of fraud, misrepresentation or deceit by either the buyer or the seller. Many of the victims will never be able to recover their losses. The majority of legitimate sellers end up listing with a REALTOR® at some point.
A few words of caution
People are not always who they seem, and you can never be too careful. One look at the newspaper or evening news is proof enough.
I recommend that you ask for identification and the license number of their car prior to letting complete strangers into your home. Serious buyers won't mind, especially when you cheerfully tell them that it is simply a security precaution that was recommended to you. It's dangerous to let strangers into your home, and frankly, I've never been able to understand why anyone would put the safety of their family at risk.
In any case, prior to showing, stash all small valuables out of sight. Even though you will try to stay with the buyers as they tour your home, you never can watch them completely. It is probably a wise idea for women to avoid showing the home without someone else present. This is not intended to be sexist, just cautious. You decide for yourself.
Advise for Sellers
That being said, there will be those that are swayed by the promises of mega-savings offered by the many private websites asking for a substantial amount of cash up front to advertise your property.
If you are one of those honest individuals, who really believes that you can get as much for your home as a licensed, trained professional, you may also decide that you'd like to represent yourself in court and take care of all the title transfers etc. You may also be one of those folks that brings their own dinner to your favorite restaurant and cook it yourself, or even operate on yourself when you have a serious medical problem. In any case here's a general outline of what you need to do. But please give me a call when things don't turn out the way you thought they would.
Sellers who utilize my services do so because they know that I will be able to sell the home for more than they could get themselves, thereby covering their fee and probably a little extra. This is because I have a huge network of associates nationwide. I have motivated buyers who are relocating and wouldn't dream of purchasing a home without the protection and expertise that I bring to the table. Moreover, I am skilled in writing enforceable contracts that protect the best interest my clients. In addition, in today's overheated market, the chance of getting competing offers is almost non-existent in the case of a private sales.
A real estate professional will almost always sell for more because they have the volume and the demand. My clients come in from all over the world, and most are referred to me because of my reputation for getting things done. Many of these buyers are in town just for a day or two while they purchase a home, and then they head back to their jobs, awaiting their transfer date. They are very often professionals haven't got the time or inclination to look on the internet or the newspaper. They are motivated, qualified and decisive. They come with references, and I know exactly who they are. They understand the value of a good agent. We will have their appointments set up for them and before they go home, they will have purchased a property.
Regardless of the common sense aspect of listing with a professional, many sellers are still convinced otherwise. They've heard radio ads that are designed to divert income to themselves, while encouraging their customers to use information provided by a REALTOR® to their own benefit. The ads try to trivialize the value that a REALTOR® provides while at the same time making themselves sound like super heroes!
What the ads don't tell you is that almost all of the thousands of "For Sale By Owner" web sites are used for harvesting leads. The majority of them will earn a referral fee when you finally sell through one of their own hand-picked licensed agents. More and more of these web sites are popping up every day, and from a sellers point of view that's bad news. Not one of these sites can offer the selection, scope or volumes of traffic and exposure that the MLS®® offers. There are more of them popping up every week and each one promises to have the ultimate panacea for home sellers. As more of these sites are created, their effectiveness is reduced. Many take credit for home sales, when in fact the home was subsequently listed and sold through a licensed agent.
I have heard over and over again from customers who have thrown their money away advertising on these web sites. The stories go something like this.
- "If we ever sell another home again, we'll will never try and sell it privately"
- "It was my husbands idea. He thought he could get more this way".
- "I never imagined that we would get this much for our home by selling through a REALTOR®".
- "It was a complete waste of our time. Next time we'll do it right, from the start".
- "It was a nightmare, from start to finish!
"Buyers Agency" is becoming more and more popular these days. This is a written agreement between the buyer and a the buyer's agent, and more and more buyers are starting to request it. It ensures that both parties are equally committed to working together towards a successful home purchase. It also creates a binding mechanism for a REALTOR® to represent the buyer in ANY transaction, regardless of whether the property is listed on the MLS®®.
More buyers are requesting this type of arrangement as they feel they could easily be taken advantage of, in a sellers market, and they have no interest in buying privately. The buyers agency offers the buyer a great deal of comfort. If they subsequently purchase an MLS®® listed property, and a commission is being offered via the sellers brokerage, everything proceeds as usual.
If however the buyer chooses to put on offer on a privately listed property, where a commission is not being offered, they can simply deduct the equivalent amount from their offer price and take comfort in the fact that they can still have 100% representation and won't have to negotiate directly with the seller. They also take comfort in knowing their REALTOR® will be paid for their hard work and efforts, regardless of the outcome. Most buyers simply will not buy a home without a REALTOR®, period!
In spite of this, many do buy into the stories, and decide that they are quite capable of handling their own sale, or purchase, and may even save a few dollars on occasion. It is for the benefit of those people that I have prepared this checklist and sellers guide, which, is the least I can do for them at this time. The techniques and suggestions in this report are not just some random ideas thrown together. They have been tested and proven over many years and hundreds of successful sales, and I'm not going to charge anyone a dime for it. I think it's important to know.
Calculating Your Bottom Line
Preparing Your Home
Marketing & Showing
Negotiating and Contract
Closing & Moving
This report is organized, and right to the point. Everything you need to know is here. There's not a lot of fluff thrown in that would waste your time. (You'll need to utilize your time wisely to work on the sale)! I
Before we get started, I know you're probably thinking: "Gee, why in the world would a real estate agent want to show me how to sell my home myself?"
It does seem a little odd, and there is a perfectly logical explanation.
Here's the answer. I am not like most other agents you'll meet. I know that what goes around comes around. I will do everything I can to assist you so that you can achieve your goal of selling your home yourself. There is absolutely no obligation. I will try and protect you from yourself the best I can!
Here's why:
First off, I really care about you. I don't like to see people lose equity that they have built up for years. I want to see you happy and successful and you deserve it. The other reason is perhaps a little less selfless on my part. I know that nearly everyone that tries to sell their own home eventually end up listing with an agent. If your situation changes and you decide to list with an agent, I'd hope that you'd allow me an opportunity to meet with you and show you how I work. Then you might at least consider me for the job.
If you ARE successful selling your home yourself (and your chances are excellent with the tips in this report), experience has proven to me that you may remember the help that I provided and give my name to others who might need my services. In fact, I get many referrals from people who were successful selling on their own. So I actually hope that you do achieve your goal and sell it!
No matter what happens, though, it's OK with me. I know that in the long run if I help enough people to get what they want, I will get what I want... That is, to make a decent living providing top-notch service to my clients. So there you have it, pure and simple. Now let's move on to the real task at hand... getting your home sold!!
You can sell your home yourself, without listing it with a real estate agent!
PREPARATION
Lots of work needs to be done. This means that you will need to do the work that an agent normally performs. If you're willing to put in the effort and learn the process that top agents use, your chances of success will increase greatly. Firstly, you need to adopt a business attitude about the entire situation.
Homeowners are often quite emotional about their homes, and it can prevent them from making rational decisions when selling. They reminisce about all of the holiday get-together's, back yard barbecues, and how the family grew together in the home. Potential buyers are not interested in, nor effected by your emotional attachments.
Brush up on all the different financing options that may be available to the buyer. This can be a crucial step in getting your home sold. Your bank manager can help you understand all the options. Maybe he will even assist you in providing a payment schedule based on the various rates and amounts down. This can be put on display for your buyers. Don't forget to have him calculate the total interest payable for each option. Your buyers will want to know that too. Ask him about 1st time home buyers programs.
UNDERSTANDING YOUR BUYERS
Potential buyers are not looking to buy your home. They are looking to buy a house that they can make into their home, or for investment purposes. You must put your emotions aside and realize that you're going to have to make a "dollars and cents" business transaction.
Studies have shown that home sellers have three priorities:
- Sell for the highest possible price,
- Sell in the time frame they need,
- Have the least amount of hassle and inconvenience.
If you're like most sellers, you probably have the same objectives. Since you are selling it yourself, however, you are willing to give up some on number three, because you're going to have to take on the work that a real estate agent would normally do. Yes, that's right.
YOU MUST DO THE JOB OF THE REAL ESTATE AGENT!
It can be a very daunting task, so the best way to tackle it is to learn and understand the six-step home selling process. Here it is:- Understand Market Conditions And Pricing Your Home
- Calculate Your Bottom Line
- Prepare Your Home For Sale
- Marketing And Showing Your Home
- Negotiation And Contract
- Closing And Moving
Let's get right to it, and examine the six steps in closer detail!
Step 1 - Understanding Market Conditions And Pricing Your Home.
This is by far the most important, yet most often misunderstood step.
Failure to understand the market and properly pricing ones home is the single biggest factor that will prevent the home from selling for top dollar while it sits unsold for months on end! Failure to price your home high enough can cost you far more than what you might have saved on commissions! Another very important thing to consider is this; Astute buyers will seldom pay market value on a private sale. The reason their even considering a private purchase is so that they can cash in on the same commissions you don't have to pay. Otherwise they'd be utilizing the services of a licensed REALTOR®. A REALTOR® never charges a fee to buyers, except under buyer agency, by request, and is infinitely more experienced in these matters.
To make sure that your home is not over priced, let's focus on two main areas:
- CURRENT MARKET CONDITIONS
- YOUR TIME REQUIREMENTS
Let's examine how current market conditions can effect selling and pricing. Suppose that there were very few homes on the market, but large amounts of eager buyers. What would that do to prices? That's right, they would go up. This is referred to as a sellers market. Conversely, if there were few buyers and lots of eager sellers, what would that do to prices? Sure, they would go down. That would be a buyer's market. It is the basic laws of supply and demand.
Of course, that's a very simple example. Our market may be at one of the extremes, or anywhere in between. You must consider things like interest rates, new home sales, and local economic factors and site influences such as large businesses opening or closing, etc.
To properly analyze the current market conditions, you'll need to research homes currently available, under contract, and recently sold in your area.
There are several ways to get information on homes that have sold.
One way is to do the research your self. The sales prices of homes that have sold and closed are public record. You can go to any land titles or registry office and dig for all of the information. I don't know exactly how long it would take, or how much it will cost, but don't make any other plans that day!
Once you've got the market information on homes in your area, take some time and drive around the area. Stop in front of the homes on your list. Make notes about the appearance and other details of the homes. If any of these homes are having an open house, take a look inside. This driving around process is an important step, because it makes you more familiar with the market. It will also help you make a more objective decision about the price of your home. It's very often not what's on the outside that counts, it's what's on the inside!
Next, sit down at the table and review the data and make honest, unbiased comparisons based on criteria such as:
SIZE
AGE BEDROOMS
BATHS POOL/SPA
BASEMENT
GARAGE
VIEW
LOT SIZE
OTHER FEATURES AND UPGRADES
Start by taking a brief look at the homes that are currently available for sale. The purpose of looking at those available is so that you can get a better feel for what other people in your area are asking, NOT to use the information to base your price on.
A seller can ask any price for their home, regardless of what it's really worth. Many of the available homes are priced in "dreamland". These prices DO NOT reflect the realities of the market. In fact, professional real estate appraisers can't use available prices at all when appraising a house, only sales that have closed within the past six months.
Now move on to the pending and closed sales. This is the real bottom line, where the "rubber meets the road". It's the hard reality - what buyer's were willing to pay and what sellers were willing to sell for in a free, open market. Study the closed sales. The first thing you may discover is that the actual sales price of the neighbor's home that sold 2 months ago is less than what they told you when you saw them out in the driveway. Imagine that!
Identify the homes that are similar to yours, ones that are nearly the same size, style, etc. Then look for items that are different like a remodeled kitchen, pool, finished basement, etc. and make adjustments. DO NOT make the mistake of thinking that maintenance items can be considered as improvements that increase value. Things such as a new roof or new heating/cooling unit are really maintenance items. While these items may make your home sell faster, they typically do not add much to the potential asking price of the home. After all, a buyer will expect a home to have a roof that doesn't leak and a properly functioning heating/cooling unit.
For example, let's say that there are 4 homes like yours that have recently sold, priced at $466,500, $469,900, $479,000, and $483,900. The home at $483,900 has some extra features that yours doesn't, but yours is superior to the one that sold for $466,500. Overall, the two other homes are pretty close to yours. This gives you a current price range of $469,900 to $479,000. Now all you have to do is pick a price within this range!
Once you determine the proper price range for your home, decide how quickly you want to sell. This will dictate whether you price at the lower or higher ends of the price range. This is where your own time requirements come into play. Your own personal situation will have some effect on the price you ask for your home. It's easy to see that if you needed to sell your home within 4 days, you would have to price it lower than if you had 4 months to sell it.
If you are not in a major rush, but still want a sale in a reasonable amount of time, you might decide on an asking price of $475,000. Alternately, you could hire an appraiser that you can find listed in the phone book.
It is natural for every homeowner to have a certain "pride of ownership" and to think that their home should be worth more than the one down the street. This is where you must be objective, and try to take your emotional attachments to your home out of the equation.
You must be reasonable. Unless you are in a total sellers market, if you price your home too high IT WILL NOT SELL!! It will sit on the market for months on end, getting the reputation of a "problem property". People will assume that since the home has not sold, there must be something wrong with it. They will start to avoid it like the plague! Even if you then drop the price, the damage is already done. The stigma is there, and you might need to drop the price even further to entice skeptical buyers.
DO NOT FALL INTO THIS TRAP!
Improper pricing is by far, the single biggest mistake that sellers make. Don't let this happen to you. Make sure that you set a reasonable price for your home right from the start.
Step 2 - Calculating Your Bottom Line
Once you have determined a fair market price for your home, you can calculate your bottom line. This is the amount that you will net (get a check for) after paying all of the expenses associated with the sale. Remember, by selling your home yourself, the only cost you avoid is the real estate agent's commission. You will still have to pay all of the other closing costs, just like any other seller.
Closing costs vary from area to area and also depend on how each individual contract is structured. The following are items that you may need to deduct from your sales price to determine your net proceeds:
- MORTGAGES OR LOANS - Any first, second, etc. loans, or mortgages. Consider any liens that are registered on title if you used your home as collateral. Call or write your lender and ask for the amount to pay the loan in full (often not the same as the principal balance). Determine if there will be an interest differential or other pay-out penalty.
- CASH BACK's - In some cases, a seller may have received cash from the finance company, as an inducement to get your business. It is usually customary for the seller to have to pay this back if the loan is not assumed. This may be negotiable.
- PRORATED INTEREST - Mortgage interest is generally charged in arrears. This means that when you make your July payment, you are actually paying interest for June. So if your home sale closes on July 26th, you will still owe interest for 26 days even though you already made your payment on July 1st.
- BUYERS CLOSING COSTS - Many buyers will ask the seller to pay part or all of their closing costs. These costs can include, but are not limited to: loan application fees, credit report, title transfer, and lawyer's fees, funding fees, tax service, mortgage insurance premiums, and impounds for taxes, insurance, and interest.
- LAWYER FEES - Everyone loves lawyers, almost as much as they do REALTORS®, but they do play a vital role. Be prepared to give them advise as to fees, etc. It is not usually recommended to use the same lawyer for both sides.
- TRANSFER TAXES/CHARGES - Transfer fees are often charged by state or local governments as a way to increase revenue. They vary widely, and are often based on a percentage of the sales price.
- APPRAISAL FEES - If the buyer is obtaining new financing for the purchase, the lender will require a professional appraisal on the house. This is another negotiable item, but may be paid by the seller in some areas. /p>
- HOME INSPECTIONS - Professional independent inspection services are often requested by buyers to make them more confident about the purchase.
- TITLE INSURANCE FEES - Title insurance protects the buyer and lender against issues of improper ownership or transfer. The title insurance company will research the title to make sure there are no liens, judgments, or clouds on the title that would affect the ownership rights.
- HOMEOWNER ASSOCIATION FEES - If the area has a HOA, chances are that there will be a fee to transfer from one owner to the next.
- PREPAYMENT PENALTIES - Many private and some conventional loans have specific monetary penalties if the loan is paid off prior to a certain date.
- CONVEYANCING FEES - This fee may be charged by your solicitor to clear off the lien on the title when your existing loan is paid off at closing.
- FAILURE TO NOTIFY PENALTIES - Some government lenders can charge one extra months interest if you fail to notify them at least 30 days in advance of your intent to pay off the loan.
- ASSUMPTION FEES - Loans that are being assumed by the buyer may have an assumption fee charged by the lender.
- HOME WARRANTY COVERAGE - Depending on the plan, a home warranty covers items in the house (plumbing, electrical, appliances, etc.) for a period of usually one year.
For a list of specific charges, you can contact a title office, mortgage lender, or a real estate solicitor.
After completing the first two steps in the process, it is entirely possible that you may decide not to sell after all. Perhaps the market values are not what you had thought, and you won't be able to net enough money on the sale to be able to accomplish your next goal. The important thing is to accept the realities of the market. If the timing isn't right for you, it isn't right!
Step 3 - Preparing Your Home For Sale
Properly preparing your home for sale can make the difference between a quick sale at full price, and a home that sits unsold for months... even after several price reductions. The first order of business is to forget your emotional attachment to your home and look at it through the eyes of a potential buyer. Be objective, and recognize the weaknesses of your home. How does it measure up?
Remember, potential buyers are going to be viewing lots of other homes, and if yours doesn't stand out, it will be much more difficult to sell. Buyers buy what they see. If what they see is dirty, messy, and worn looking, you don't stand a chance, unless the condition is reflected in the price.
With a mental picture of a model home in your mind, make a "to-do list" of items to be completed on your home. It may be a short or long list, depending on the condition of your home, but keep in mind that all your efforts now will pay off big on closing day.
The objective is to make your home appear well maintained, spacious, organized and clean. Many factors such as how light it is, the colors, sounds and smell, subtly effect the buyers impression of your home. Start by walking out to the middle of the street and take a good, focused look at the overall appearance of the exterior of your home. Good "curb appeal" will make the critical proper first impression. Remember, if a home is unattractive from the outside, buyers won't bother to see the inside!
This means well groomed, healthy looking lawn, trees, shrubs, and flower beds. Check your driveway and clean any oil stains with cleaning solutions, and move any old vehicles, trailers, or boats off the premises to a storage facility.
- Replace or repair any loose or missing roof shingles or tiles. If needed, replace or repaint the mailbox. Your front door is a focal point of potential buyers. Make sure it is scrubbed clean or completely refinished if necessary.
- Fix any broken windows or screens.
- Completely repainting the exterior of your home may be necessary if it is peeling or blistering, but often simply doing the trim, window sashes, shutters, and garage door is sufficient.
- Remove any political or other signs.
- Now do the same to the side and rear yards. Remove all debris, junk, and clutter. Clean and neatly arrange any lawn furniture, barbecues, etc.
- Next move to the inside of your home.
- Begin with a complete, top to bottom, military-style scrubbing of every room, nook and cranny. Be especially diligent in the kitchen and bathrooms that should pass the white glove test. Clean houses sell!
- Attack the garage and basement, if you have them. Now is the time to get rid of any old junk, and clean and organize everything else.
- If the interior hasn't been painted in several years, you should probably go ahead and do it. A fresh coat of white or off-white paint will make the place look bigger and lighter, and give it a "new" smell. It doesn't cost that much, and makes a big difference in buyer perception. If not, do a thorough job of touch-up painting.
- Have the carpet cleaned. If it is worn, replace it. This is a fairly big cost, but it makes a huge difference in how the home shows. You should more than make up for the expense with a faster sale at a higher price.
- Install the highest intensity bulbs allowable in all the light fixtures. This will make the rooms appear larger, brighter, and more cheerful. Clean all windows and curtains/blinds.
- Clean out the closets to make them look bigger. Store out of season clothes elsewhere and neatly arrange what's left.
- Too much clutter will make a home feel small and disorganized. Move out excess furniture, especially worn or outdated items, and take down pictures that hide the walls. Clean off the magnets from the refrigerator, and box up any other clutter-causing nick knacks.
- Clean all the heating/cooling system vents, and replace the filters.
- Fix or replace all of the little things that you have been meaning to get to. Make sure that everything is working properly (toilets, appliances, doorbell, etc.)
- If you have lived in your home for a while, by the time you finish with your to-do list you'll probably have truckload's of stuff to sell, give to charity, or take to the dump. Your motto should be: "If in doubt, move it out"!!
- Consider having a garage sale. Not only will you reduce the clutter in your home, but also you can use the proceeds to pay for some of your touch-ups and repairs. Movers charge by the pound, so you'll save there too!
- Make sure that your cars are clean as well. It all adds to the impression that you are people that take good care of your things. Try not to park your car in front, especially if there are many other vehicles there.
- If you smoke, DO NOT SMOKE IN THE HOUSE!! A smoky smelling house turns buyers off faster than nuclear waste, even buyers who smoke themselves!
- If you have smoked in the house much, you'll probably need to paint the interior, and have the carpets, ceilings, drapes, and furniture deep cleaned.
- This brings us to pets. While household pets may be nice for everyday living, they are one of your worst enemies when it's time to sell.
- If you have pets, you'll have pet odors, whether you notice them or not. About 25% of prospective buyers will not consider a home with pets in it. The may have allergies, or simply think it is dirty. A dog barking, sniffing, and scratching hardly makes potential buyers feel relaxed or comfortable.
If at all possible, see if a neighbor, friend, or relative will take the animal until the home is sold. I know you're attached to your pet and this may be a touchy subject, but it's up to you if you want to sell for top dollar. It can be a lot of work, but it will be worth it, in the end. Clean, organized, clutter-free homes are always the first to sell!
Step 4 - Marketing And Showing Your Home
Now that your home is ready, it's time to find some interested buyers to show it to. The effort required to attract potential purchasers depends on the current market conditions in your area. If you are in the midst of a sellers market where there is a shortage of homes for sale, simply throwing a FOR SALE sign out in the yard can produce a frenzy of activity.
Unfortunately, most markets are nowhere near that good, so you better plan on putting in some long hours. You are competing with all of the other homes for sale, and the competition is often fierce.
The first step in your marketing plan is to put up a for sale sign in the front yard. Before you run down to the corner drug store, keep in mind that a cheap, flimsy looking sign does not convey the quality image that you want. Invest some money in a nice looking, quality sign that will last longer than the first rainstorm. I would budget on at least a couple hundred dollars.
It should be at least as nice as the ones that we real estate agents use. Call some sign painters and get some bids. Planning an open house? I will even lend you my directional signs! It just doesn't get any easier does it? I even have some nice signs you can put in the window with your own telephone number.
Next, put together a professional looking brochure that communicates all of the features and benefits of your home. Include a nice picture of your home and touch on such items as proximity to schools, shopping, major transportation routes, major employers, and recreation areas.
Also cover neighborhood amenities, site influences, age, appearance, condition, bedrooms, bathrooms, type and style, landscaping, garage, kitchen, family room, laundry, pool/spa, basement, etc.
Don't forget financial information such as the price, down payment, monthly payment, property taxes, what items are included in the sale (such as appliances, etc.), and of course, directions to the house along with your name, address, and phone number. Look into the cancellation clauses of any chattels that may be under contract. Make sure that the appliances are yours to sell!
A representative from a local mortgage company should be willing to provide you with all of the information you'll need regarding loan programs, down payments, interest rates, monthly payments, etc, and would probably be delighted to work them all out for you, calculating the net payment amount for any given scenario. After all, that's what they're there for, right?
With personal computers, desktop publishing is much easier than ever before. If you have access to a computer, you should be able to put together a nice looking brochure if you take your time and think it through. Please... no junky looking flyers!
If you can't do it yourself, sketch out a rough draft by hand and take it along with a picture of your home to a quick-print shop. They should be able to fix you up fairly reasonably. Once you have your brochures, you'll need to distribute them. Often your children will be eager to help out with this task. You'll be surprised to learn that you can easily distribute a hundred flyers in just an hour or so. If the weather cooperates this should be a breeze.
Pass out the brochures to all of your friends and neighbors, pass them out at area businesses, drop some off at the relocation office of any large employers in the area, and put them up on bulletin boards wherever possible.
Now write a good, enthusiastic sounding ad to run in the newspaper. Try to make your ad stand out from the others. It is important to have an attention-getting HEADLINE such as:
"MOVING TO VANCOUVER" "OUR LOSS, YOUR GAIN""DIVORCE FORCES SALE" "YOU WON'T BELIEVE THIS"
"MUST SELL QUICK" "SPACIOUS HOME NEEDS LOVING FAMILY"
"WALK TO SCHOOL" "ENJOY PRIVACY"
Test different ads and see what the responses are. You can try running a different ad each week, or a different one in separate publications. You'll find the newsprint ads are quite competitive with any other form of media. You can easily run a small ad in the homes section of the Calgary Herald, or Sun for only about $100.00 a day. Don't get too wordy though or you could easily double that amount.
Focus on the benefits of your home. Don't write a boring ad that sounds like all the others and will get lost in the crowd. Stress all the items which you think are important such as views, quiet street, landscaping, master bedroom, kitchen, and family room. Careful how you word your ad. I should start a scrap book with some of the hilarious ads that I've seen.
THAT MEANS THAT SOMEONE NEEDS TO ANSWER IT!!
The biggest complaint that buyers have with for sale by owners is that no one answers the phone when they call... or they get a child or babysitter that is not prepared to handle the call properly. You are competing against professionals. You need to be home, or utilize a cellular phone, call forwarding, or pager. If a buyer can't get through to you, they often just go on to the next ad or call a real estate agent.
Keep a copy of your brochure next to the phone, it can help you stay organized and not miss any features when callers inquire. If callers don't want to set an appointment yet, offer to mail them a brochure.
Keep a call log handy, so you will know how many calls you are getting from which ads, and to keep track of names and phone numbers, and don't forget to follow up with them afterwards!
Be prepared for a barrage of calls from many a hard working REALTOR®. Most REALTORS®' find that prospecting "For Sale by Owners" can be their best source of new business. Terms such as "REALTOR®Chosen" or "No Agents" usually only serve to pique their interest. They are not going to let a little thing like that stop them from bringing home the bacon! It's what we do!
Next, you need to look into all other possible avenues to market your home. There are literally thousands of "For Sale by Owner" web sites around, all of which, are very happy to take your money. They are very good at attracting new business.
An Open House can help get your home exposed to the market. Get some directional Open House signs and place them at corners leading to your home from major streets, and one in front of your house. Make sure to check our bylaws-law regulations before placing signs; otherwise the city may confiscate them. Try and get the names and phone numbers of everyone who comes through. Keep an eye on any kids that come through. They tend to get excited and wander off on their own. Be sure and check in with someone at least every hour for safety reasons. There have been far too many instances of people getting injured at open houses as of late.
I'm now going to suggest an option that can add a additional interest in your home and still save you money. It's really up to you to see if you are comfortable with it. but in most markets it makes a lot of sense. Before you have a heart attack, I am not talking about listing it with an agent.
On your sign and in all of your ads, insert the words "Agents Welcome". When agents call, tell them that you are NOT listing with an agent, but that you will be happy to pay them a commission if they bring you a buyer that successfully buys your home. Offer a commission about equivalent to what an agent would make if they sold a regular MLS®® listing. If an agent does end up selling it, you still may have saved some, compared to a full commission.
Keep in mind that the agent is acting only in the best interest of the buyer in this case, since you are choosing to represent yourself. Also, most of the agents calling are primarily "Listing Agents". Their primary duty is to market homes to other agents, and seldom will actually bring in a buyer. The buyers agents do not traditionally look to ads to find properties to sell. They rely on information provided by listing agents.
Once you have attracted interested buyers, it's time to show your home. This is where all your time and effort in preparing your home will really pay off! Before you set an appointment, make sure that the buyer is looking for what you have. If they need six bedrooms and you only have three, they probably won't be serious about your home.
Take a few minutes to politely "qualify" the buyer by asking questions about how long they have been on the job, do they own a home currently, have they been pre-approved for a loan by a lender, etc. You don't want to waste time showing your home to prospects that can't afford to buy it!
OK, it's Show Time!
To get the most out of every showing, there are certain procedures you should follow, prior to the buyers' arrival. Shortly before the appointment, open all of the drapes and blinds and turn on all the lights, ... even in the daytime. Turn off the TV and put some soft music on low volume. Set the thermostats so that it is not too hot or cold. If you have children, send them to a friend's house, or put them on their best behavior.
If you still have pets in the house, get them out and freshen the air. Make sure all of the beds are made and do a quick pick-up throughout. When the buyers arrive, your home should sell itself. Be friendly and cheerful, and try to make them feel comfortable. Hand them your brochure, and take them on a tour of the property. Show the most appealing parts of your home first. Casually point out all of the features and benefits of your home, but don't oversell or say obvious things like "this is the kitchen".
They will probably tell you your home is overpriced and leave. If they are not interested, they will politely thank you and head for the door. Don't take it personally, the layout or something else about the house probably just doesn't fit their needs. If the buyers are interested, you will know it. They will stay longer, and ask lots of questions.
If they show serious interest, don't be afraid to suggest that they buy it! It's time to get a contract signed!
Step 5 - Negotiation And Contract
Being familiar with the market conditions and knowing your personal motivation to sell will guide you in the negotiations. Get a standard real estate purchase contract from your lawyer and make sure that you are completely familiar with it and how to fill it out. Review it with your solicitor if you are not fully comfortable with it. Generally, the buyer will present you with an offer for you to consider. In Alberta, only written contracts for the purchase of real estate are enforceable, so make sure it is in writing, not merely verbal.
Here is a list of forms you may require to complete the transaction
Residential Purchase Contract
Addendum to the Real Estate Purchase Contract
Amendment to the Real Estate Purchase Contract
Property Schedule
Property Inspection Schedule
Condominium Seller's Property Disclosure Statement
Condominium Property Schedule
Sale of Buyer's Home Schedule
Customer Status Disclosure Acknowledgment
Seller's Notice
Buyer's Notice
Dower Schedule
The Notice
Financing Schedule
Urban Residential Seller's Property Disclosure Statement.
Additional forms are available for commercial & rural properties
In addition, you may require these forms
Addendum "A" - Subject to Building Inspection
Consent of Spouse
Late Deposit Acknowledgement
Unconditional Termination Agreement
Mortgage Verification Form
Seller Acknowledgement
Tenancy at Will Agreement
The buyer may not have the proper forms, so always make sure to have several, ready to go. If you would like me to go over any of these forms with you, be sure and give me a call. I'll be happy to review them with you. Starting to negotiate face to face with the buyer with both of you staring at a blank page can be a bit awkward, but just keep your objectives in mind and forge ahead. Politely but firmly take control of the situation.
This is where things can get a little sticky, and you will need to have done your homework. Having a contract that is not worded properly can put you into a real hornet's nest. Make sure to spell out every little detail in the contract, and ensure that your contract was designed for use specifically in Alberta. A misunderstanding (honest or otherwise), could end up costing you thousands of dollars or even tying your home up for months! Real estate laws vary from province to province.
When you are presented with an offer from a buyer, you have three basic options:
- 1) Accept the offer
- 2) Reject the offer
- 3) Make a counter offer
Here is some items that you should consider when structuring an offer or deciding how to respond to an offer that is presented to you.
* PRICE* DOWN PAYMENT
* CONDITIONS
* DEPOSIT - MAKE SURE IT'S ENOUGH
* IS THE BUYER PRE-APPROVED
* IS THE INTEREST RATE THEY WANT AVAILABLE
* CLOSING/POSSESSION DATES
* CLOSING COSTS - WHO PAYS WHAT
* APPRAISAL - WHO PAYS
* HOME PROTECTION PLAN - WHO PAYS
* INSPECTIONS - WHAT TYPE AND WHO PAYS
* ITEMS INCLUDED (WASHER/DRYER, REFRIGERATOR, ETC.)
* TITLE - LAWYER (You can do this yourself too, but that's another chapter altogether)!
* CONDITIONS - WHAT AND HOW LONG
* SPECIAL CLAUSE TRANSACTIONS
Conditions may seem like a minor issue, but they can be a major stumbling block. A condition means that something else must happen in order for the deal to go through. A purchase may be contingent on the buyer getting approved for financing, selling the home that they already own, getting a favorable inspection report, or any number of other things.
Make the conditions as specific as possible, and spell out exactly what will happen if the condition is or isn't met. Also try to make them self-canceling. For example: "If buyer does not object in writing within 14 days from acceptance of this offer, condition shall be considered removed".
Spending some extra time to make sure that the contract is "clean"and enforceable can save you enormous headaches down the road! Once you have a contract mutually agreed upon and signed by all parties, take it with the buyers deposit to a real estate lawyer.
Closing And Moving
You are on the home stretch, almost there!! Now is not the time to get lazy or drop the ball.
Once all of the terms and conditions of the contract are agreed upon, you will really need to stay on top of things on a daily basis. There are at least a hundred things that can go wrong and foul up the sale. You will probably be dealing with a mortgage company, land titles, lawyer, appraiser, and inspector, among others. Make certain that the buyers deposit check clears the bank, that their credit report and other financial information is O.K., and that all deadlines and conditions are met.
Make absolutely sure that everything is in order BEFORE you start loading things into the moving truck. You don't want to have to put the house back on the market after you have moved out! In addition, once you move out, the buyer has a lot more leverage to get you to alter the contract in their favor.
Don't forget the little details like transferring the utilities out of your name, and change of address for Canada Post and newspapers.
There you have it. If you have taken the time and energy to handle your sale properly, you will be rewarded with a nice proceeds check from the lawyer's office! (Another professional who charges a fee) Be sure that you don't be penny wise and pound foolish however. I know many a homeowner who has sold their home for far less than what they could have got had they listed it with a REALTOR®.
I hope you have found this report to be a valuable source of information to aid you in selling your home yourself. If you follow the tips and recommendations outlined here, you will be way ahead of most others attempting to sell their own homes, even without the help of a trained professional who has invested thousands, and has years of real estate education, experience, and also devotes the majority of his time to the task.
Every home sale is unique. If you have any questions that I can help you with, please don't hesitate to call me. As I mentioned before, I am unlike most other agents! Any time you call me you can count on knowledgeable assistance without any obligation, pressure, gimmicks, or sales pitches.
Good luck and happy selling,
P.S. My direct phone number is 403-204-1111, in case you need to reach me in the evening or on weekends.
