By this time you complete all of the steps outlined in the previous section, you should have:
Ï an accurate picture of the market value of your property from your appraisal Ï a list of the legal responsibilities when a home owner sells their own property Ï an understanding of how a buyer can purchase your property from your banker Ï a detailed report on the structural condition of your property from your home
inspection
Ï a list of repairs that you completed as a result of the home inspectors report Ï a list of any major problems that a buyers will be told in the disclosure Ï a list of the items that you want to exclude from the sale of the house for your sales
contract
Ï the base purchase price to advertise
Ï a complete description of your property for the advertising to attract buyers from
Take some time and carefully review all of the information you have received to date, because now you have to make the decision of how much can you ask a buyer to pay for your house? In other words, what is the "right price"?
Determining what your home is worth from an appraiser’s perspective is different than how you as the homeowner evaluate your property. While lawyers and bankers can speak in an objective manner about your property, this helps you see your property and all its details. To these facts you have to add several pieces of information:
Ï Is there a major difference between the condition of your home when you started this process and now?Determining the right price to ask for your property is affected by the market:
Ï economic factors like interest rates,
Ï how much your property is worth,
Ï how many properties are on the market in your price range Ï the attractiveness of your location
From the starting point you had a good idea of how much your home was worth from your homeowners insurance and property taxes. Adding to this basic information is the figure given to you by the appraiser, who usually incorporates the change in value if outstanding repairs are made to the property within 3 months (the general period of time where an appraisal is valid).
You should have 2 sets of figures now you should calculate how many repairs, if any, you had to make as a result of the home inspectors' report, plus the amount of time and expense you incurred to accomplish these repairs.
Now you should be able to list the following as your costs and expenses to date for:Ï The appraisal
Ï The legal consultation
Ï The home inspection
Ï The repairs; time, labor and materials Ï The legal documentation for the sale
Property Value as of July 15th: $200,000 Appraisal Value as of August 15th: $225,000 Cost and Expenses: $3,500
Adding the appraisal value to your costs and expenses gives us a total of $228,500, which will serve as your base to compare your property with other properties on the market. Now the focus shifts from you to your buyer market and seller competition.
KNOW YOUR MARKETThe market as a whole is a combination the economic factors in the world, how many people are looking to buy your type of property and how many owners are selling properties like yours.
Economic FactorsFrom your discussions with your lawyer and banker, you should have a good idea of the current interest rates for home loans and what types of financing options your buyer available for your property. For the past few years the Federal Reserve has kept long term interest rates low to encourage productivity. As long as this policy continues, the general real estate market will be attractive to buyers. If you are in the process of selling your home while the interest rates are low, qualified buyers will be able to secure financing easier and the sale should move forward quickly.
On the other hand, if the interest rates are on the rise, you will face a thinner field of buyers; high interest rates on home loans automatically raises the criteria that buyers have to satisfy in order to qualify for the loan.
What is the profile of the person who could purchase your property? Depending on what type of house you have and its condition, your prospective buyer could be an individual who wants to buy a property for themselves or for their family.
Today, there are many people who choose to invest in real estate instead of the stock market. Many of these individual purchase the property to produce income in the same way that people purchase stocks for the dividends.
Whatever their reasons for the purchase, you know that they must receive a property disclosure and should be prepared to provide a valid pre-approval letter from bona-fide lender for a home loan.
SellersYou need to begin looking at how real estate agents list properties. Search online for any major real estate website and make note of the description components. This is the type of information you will have to supply for your own property online listing.
KNOW YOUR COMPETITIONCompare the way a real estate agent would categorize your property with other listings in the same price range. Specifically look for properties similar to yours within the same zip code and vicinity. If you have a 2 bedroom, 1 bath traditional style home of 1,000 square feet, search for homes with that criterion and make note of the purchase.
When you start this process you may be surprised at the wide range of properties within your price range as well as how many properties in your category are on the market for sale. The whole purpose of this exercise is to give you all the information you need so that you can negotiate the sale of your house for a price that satisfies both the buyer and the seller.
How these three parts work together results in how long properties remain on the market for sale. If you are fortunate to find a real estate website that displays the date the property was listed for sale, count the number of months from the initial listing date to the current one. If most of the properties in your category and area have been on the market under 3 months that is a very brisk market. In the case where the properties have been on the market over 6 months, you might have to consider how this situation will impact your plans.
If you want to sell your property quickly for a specific reason, such as relocation for employment or family, you will have to decide how to resolve the two issues. Hopefully, you will be able to budget money for your advertising for at least 6 months consistently. The amount of time a property remains on the market is not always because there are no buyers to be found, sometimes it is due to owners refusing to budge from their purchase price.
Whether the real estate sales market is moving fast or in a slow period, properties get sold, it is all about finding the right strategy and the right buyer. You have to decide what compromises you are willing to take to sell your property and how those compromises will affect your plans.
TALK TO A REAL ESTATE BROKEREven though you have decided to sell your own property, it would be beneficial for you to talk about selling your property to understand the market conditions you are facing. This is a fact-gathering exercise, not a competition; there is no need for the real estate broker to be told that you are going to sell your property.
Take photographs of your property with you to show the broker to get their opinion of how much the property could bring on the market. Then find out how many interest buyers the broker currently has that is looking for your type of property.
It would also be helpful to find out when was their last sale of your type of property, how long it was on the market and what was the purchase price. When you have all the information you need, you are ready to create your listing to put your property on the market.
USE ONLINE SERVICESFrom your online real estate research and your real estate broker interview you review and revise your base purchase price. The "right price" is always affected by the price the market will bear. In other words, our model property base purchase price is $228,500, but what if the real estate broker told you that your type of property is in high demand, selling for $300,000 and they have 10 buyers who have pre-approval letters from a bank waiting? Remember to factor in the amount of commission you would have to pay a real estate agent if you listed your property with them. The 6% commission on $228,500 is $13,710, that makes your total possible purchase price $242,410. With that figure to use, now it's a whole new ballgame.
This scenario gives you more bargaining room, if price is the top consideration, listing your property toward the high end of the buyer field, you can adjust the price if you see it is not selling after a few weeks. Depending again on how much time you have to sell your property, by listing the property toward the low high of the buyer market will make it more attractive to a larger group.
In the first section we discussed creating your advertising budget. From your initial calls to the real estate publications that serve your area, hopefully you have at least three that are associated with real estate websites that have a good track record in home sales. Now you just have to decide how extensively you want to advertise your property.
Keep in mind that if you decide to advertise in a print publication and online, the majority of the buyers who contact you will find your property online. The listings on the most popular real estate websites such as http://www. zillow.com or http://www.realtytrac.com are visited by millions of people everyday.
Start by performing a search for the websites that serve your local area that have information that help buyers through the home-buying process. Listing your property on this type of website ensures you that your listing will be seen by a large number of buyers. Using a real estate website that concentrates on your area in combination with a website that has a national reach will bring you a good cross section of buyers from investors looking for an income property to the young couple with small children.
There are also "for sale by owner" real estate websites that cater specifically to the buyers and sellers in this market. You will see hundreds of listings for real estate websites but even with these websites it is in your best interests to choose one that is most popular. Remember you only need 1 buyer and if there will be thousands of buyers searching the site for your type of property. You should begin to receive contacts from interested buyers within a day.
Many of the websites where you can post your property listing charge a fee, while there are many others that are free to use. When you register at these sites, you are assigned an email inbox where interested buyers messages will forwarded to your personal email or you can login to the website to retrieve the messages.
Whichever site you consider, works through the site as if you were a buyer looking for your property and see how many results are returned. If there are many listings that gives your property the room it needs to get good exposure and for its features to stand out from the crowd.
Now that you have your real estate websites selected, the next step is to prepare your listing. In the next section we will put the property listing together and get ready to greet buyers.