Ok, it's been a long time coming, but here is the counterpart to Part One which gave some insights into the basics of buying real estate for first timers. It's my hope that Part Two can offer some information for those that might be selling for the first time.
Why Pick An Agent:
In this sluggish new "buyer's" market, using a good agent can make all the difference in getting your home sold. When the market was booming, homes sold quickly, sometimes in a matter of weeks if not days. And many folks ventured to sell their homes on their own. But these days, you really should have a professional on your side who can guide you through the ins and outs of selling, someone who is on top of market changes and who will be aggressive in getting your home to stand out against the swarm of competition.
Major Factors in Selling Your Home:
Homes can still sell today in a reasonable amount of time (often 2-3 months is normal). The three most important factors in getting your home sold are inclusion in the MLS, the right pricing and the condition of the home. A good agent will offer you advice on all of these things as well as marketing your home, showing your home and more.
#1 The MLS:
Let's talk about the MLS first. This, along with good pricing, could be the most important thing in getting your home sold. Only your agent can put your home into the Multiple Listing Service which is the database of all active listings on the market for a given area. This is important because every other agent out there can then access this information. And let's face it, who do most buyer's eventually go to for help in finding their home? An agent! So you want those buyer's agents to find your home easily with the most up-to-date information on your listing possible.
#2 Pricing:
Pricing is, of course, the other major factor in selling your home. A good agent will take considerable time looking at the comparables in your neighborhood that have recently sold. They should also be looking at what similar homes are actively being listed for since they are your main competition. Your agent should be willing to explain all this to you and show you the data. Your agent should always be willing to answer your questions and explain how they arrived at their suggested list price.
Unfortunately, many home sellers are unpleasantly surprised by the findings, especially in this declining market. If you are not convinced of an agent's advice on price after looking at their comps, it doesn't hurt to get a second or third opinion. But if each agent is using good comps, the suggested pricing should be similar. Just be reasonable in your expectations and beware of those agents who just "yes" you on your desired price to secure the listing. Study the data being offered for yourself. Make sure that the comps being used are homes of similar age, size, # of bedrooms/baths and have similar features as your own home. Of course, most comps will not be exactly the same, but they should be as close as possible and within your neighborhood if possible.
Many people also make the mistake of seeing what neighbors have asked for their homes and assume that the homes have actually sold for that amount. And be careful too about listening to the neighborhood gossip of who sold which home for what price. While well intentioned, neighbors can sometimes be misinformed. Your agent will have the correct information from the MLS. It's also important to realize that every seller's situation is different and can effect the selling price. Some may need to get out quickly and so start with a low price. Others might sell for what seems like a great price, but there are buyer closing costs built in to the amount or perhaps the need for major repairs reduced their net amount.
Without a competitive price, you won't get buyers in to look at your home. There is so much inventory out there, that if they can find a similar home at a lower price, they won't even bother looking at yours. Your agent should also be getting feedback from buyer's agents after you've had a showing and relaying that information to you. That information can be vital to tweaking your home and getting it to stand out from the competition.
Most importantly, if you price your home too high and get an offer that matches or comes close, your home must still appraise for that amount. And what do appraisers use in making their determination on the value of your home? You guessed it...those comps! So you really do need to pay attention to those and a good agent knows it.
#3 Home Condition:
Which brings us to number three on my list...the condition of your home. If you expect to ask top dollar and your home is in move in condition, you'll have little to worry about. If not, be prepared to either make repairs and upgrades or price your house accordingly. But again, here's another area where you need to beware...the amount of money you spend on repairs and upgrades is NOT always equal to the amount of money you can expect to get back at the time of sale. Many people sink tons of money into top of the line items thinking they will recoup 100% or more of the money they've invested. This is just not the case. So choose wisely and don't go overboard. A good agent should be willing and able to tell you were to put your money and what kind of return you can expect.
The Seller's Net Sheet
One of the best services an agent can offer is one that I think is not used as often as it should be...the seller's net sheet. While some folks might be a little leary of sharing personal financial information, this is a great tool that will help you decide if now is the time for you to sell. Your agent will need to know what your property taxes are and what the balance is on your mortgage and if you have any second mortgages or home equity lines that will also need to be paid off. The seller's net should break down and show you how much you can expect to pay in closing costs which would include the agent's commission, legal fees, etc. Some will even factor in items such as possible repairs, purchasing a home warranty for your buyers, transferring termite bonds and other items. After these are figured in, you will see an approximation of how much money is left that you will actually take home with you from the closing table. Keep in mind that it is only an estimate, but one that could effect your decision on whether or not to sell.
A Few Words About Those Commissions
Here's another thing that many seller's don't realize which can also effect your bottom line...an agent's commission is always negotiable! If the agent who is listing your home is also helping you purchase another, they may be willing to give you a discount since they will be working with you through two transactions. Even if they are only your listing agent, don't be afraid to discuss this subject. Ask what kind of service you can expect for the money you are paying them.
Keep in mind that your agent will be encurring expenses up front to market your home and get it sold. There might be costs for advertising in local papers and home magazines, open houses, "just listed" postcards, flyers, etc. In addition, the commission is typically split between the buyer's agent and your listing agent. A percentage often then goes to the agent's company, some is kept out for taxes and to pay those marketing costs. So while it may seem like your agent is getting a huge commission, after the breakdown of all those things, they don't net as much as you would expect.
Having said that, however, make sure that your agent is willing to earn every penny of their commission in the process! Try to determine if they will be available to you after you've listed your home. How easily can you get hold of them to ask questions, get feedback, etc. Do they seem irritated by your questions or do they take the time to listen and answer to your satisfaction? Can they and will they help you find closing attorneys, termite inspectors, contractors and other professionals you might need along the way. Will they help you negotiate once an offer is made, be there to help oversee inspections and sit with you at the closing table? The process is far from over once an offer is accepted. With many "fee for service" agents out there now, be sure you know exactly what you are getting.
Summary
In summary, you CAN still get your home sold in this market. Don't rush in choosing an agent. Interview several and find the one that suits you and will work hard for you, not just stick a sign in the ground and leave. Be realistic about pricing your home. With all the other homes out there now, if you can price your home competitively you have a good chance of getting buyers in to look and ultimately make an offer. And be willing to make repairs and basic upgrades. Your home has to stand out from the rest, so be sure it is neat, clean and up to date.
Just like with any other professional, an agent should be concerned about providing quality service. This means keeping the lines of communication open between themselves and the seller. It means being attentive and hardworking and answering lots of questions. Having a good agent on your side can make all the difference in the world in getting through the selling process successfully.
As always, if I can answer any questions that were not addressed in this blog, do not hesitate to contact me either via email at maria@otrhomes.com or by phone at (843) 860-3901. No strings attached.
Kind Regards,
Maria Pettis, Realtor