1st Dominion Realty

Selling a Home

Thoughts and considerations about selling a home, listing services, receiving a purchase offer, the process of getting from purchase contract signing to settlement

If lately you have applied for a mortgage loan, or know someone who has, you’ll be aware that getting a loan has become a lot more challenging than it was in the past.  In some respects, that is good, as a big problem that helped bring on the big economic crash of several years ago (and that we still live with today) was lenders making home loans to people who did not have the ability to make their loan payments.
 
Starting sometime in 2013 getting a home loan will become even more difficult.  Stricter lending guidelines called Qualified Mortgage (QM) and Qualified Residential Mortgage (QRM) will come into effect.  The idea is to set standard guidelines to be followed by lenders and to be met by borrowers in order for the loan to be warranted and/or sold to Fannie Mae and Freddie Mac.  In other words almost all lenders will follow the QM and QRM guidelines as they will not want to ‘eat’ the loan in the event the borrower fails to make payment.
 
In a follow up email I’ll try to explain the issues surrounding QM and QRM, but perhaps the main one for home owners hoping to sell their current home is that borrowers are going to have a harder time getting a loan. 
 
How will this affect the just beginning economic recovery?  How will the shadow inventory of ‘foreclosed’ homes the banking industry has not released to the market yet, but eventually will, affect recovery?  We’ll find out. 

Below is a copy of a blog entry by LeRoy Houser, area Real Estate guru.  This info below is just plain common sense, but pay attention anyway!

Avoid These Blunders

1. Not Negotiating. Regardless of how ridiculous an offer may be, it’s never a good idea to reject it. You can’t move forward with a REJECTED contract! If the buyer prospect took the time to make an offer, the least the seller can do is to make a counteroffer. All sales begin with an offer of some kind, and negotiating is the rule of the day, so sellers should be prepared for this at the outset. They can’t take a low offer personally. It’s an honor to get an offer in a Buyers’ Market!

2. Not Keeping the House in Top-Notch Condition. Yes, it’s inconvenient and stressful to live in a home that’s for sale and/or staged because privacy is interrupted and lifestyle is compromised, but it’s all part of selling a house. There aren’t usually an abundance of buyers for every property, and the “buyer of a lifetime” may just show up to see the home on a 30-minute notice (and usually does). The longer a property is on the market, the less exciting the process becomes for the seller, so you must work with them to prevent it from becoming “Listing Impossible.” This is accomplished by having an open discussion in the beginning and reinforcing it on a continuous basis.

3. Unrealistic Restrictions. No Open Houses, No Yard Sign, No Brochure Box, Not On the Internet, Listing Agent Must Be Present for All Showings (sometimes necessary but rare), Cannot Show the Garage Because That is Where the Attack Dog Lives…these restrictions are workable when there are ten buyers for every home, but those markets are few and far between.

4. Waiting Too Long to Allow Changes. This one is SOOOO frustrating. Typically this relates to cutting the price, so it’s crucial that goals for showing are established in the beginning. Since most buyers shop online for a house to buy without the services of an agent, it’s extremely important to evaluate showings, inquiries, and open house visitors and make adjustments if there is not sufficient traffic. If comparable properties are selling or being shown and your listing is not, something is wrong—and the “something” is usually price or condition.

Just a few thoughts on the home buying process. 

I’ve helped a number of people purchase homes this year.  In almost every case there were delays in closing caused by the lender, even though my purchasers were well qualified to borrow.  I think this is the situation with virtually all lenders.  They are being very careful and plodding in closing the loan, verifying, reverifying, asking for the same information over and over again.  I do not blame them for being careful, but the delays cause anxiety for both purchasers and sellers.  Some of my purchasers came to believe they were not going to be granted a loan and started calling other lenders.  Some of the sellers came to believe the purchaser’s loan was being denied, even after provisional approval, and were getting pretty angry that their property had been off the market for a month or more waiting for a settlement they no longer believed would happen.  In every case, after a good deal of anxiety and stress, the loans did close and the property did transfer ownership.  The delays in closing spanned from a couple days to more than a month.  Fortunately none of these purchasers had a moving truck parked outside their intended home, and none of the sellers were buying another property that they needed to close on in order to move out of their current home.  My point:  plan for delay.  With luck you will close as scheduled or at least close to your planned settlement date.  But if not planned for, delays can cause you big problems and cost real money.  Hang in there!

“Under Contract”
 
 

 

Everything signed. All changes agreed to and initialed. The ratified purchase contract is a blueprint for what happens between the time of that final agreement and settlement. It is a process that has to be monitored and managed because there are so many other entities involved: the different settlement agent/attorneys for the buyer and seller; the lender (originator, processor, underwriter); the home inspector, the pest control and the water/septic inspectors; the appraiser; the surveyor if necessary; and possibly others (environmental inspectors, contractors, repair people, landscapers/grounds keepers, county or city officials, etc.). All these forces have to perform their function in order for the closing to take place. You hope the purchaser’s agent, if one is involved, is doing their part in keeping the purchaser on track with what they need to do to close. You, the seller, need your agent to keep your process on track too and to monitor the purchaser’s progress. This requires a lot of phone calls and a lot of running around and physically seeing that something that was supposed to be done actually got done. It is scut work. You would not consider it such as you have so much riding on it. Does it matter? What does it mean if your home doesn’t close on time? Maybe just some inconvenience. But it could amount to hundreds, even thousands of dollars if: the purchaser’s lock-in for their interest rate expires prior to closing; if moving vans and their crews are now parked on some side street waiting to unload; if you yourself are buying a new home and waiting for the proceeds of the sale of your current home to do so; and on and on.

You want to work with a real estate agent whose sense of professionalism comes from doing the right thing whether that thing is great or small. For the person relying on that professional’s service, no ‘thing’ is too small.

When an offer is made: 

The offer is more than just a price. There are a number of criteria, conditions, and warranties contained in the purchase contract plus what the purchaser may be adding. We need to go over all of that to make certain it all works for you. In a very real sense the offer is like a formula, and the so-called give & take of negotiating is balancing out the elements of the formula so that both parties can feel satisfied with the final result.

Some important considerations to keep in mind:

  1. Is the price being offered all cash or mostly financed, and is the purchaser asking for some contribution from you towards his/her financing?
  2. How much earnest money is the purchaser putting down?
  3. Does the closing date work for you?
  4. Does the purchaser have to sell his/her home or sublet a rental in order to purchase your home?
  5. Did they submit with their offer a loan qualifying letter from a reputable lender stating their ability to make the purchase?

 

There are many other considerations to keep in mind when reviewing a purchase offer on your home. Do so carefully. The final result is a ratified contract.

 

When an offer is made:

Product, Price, Place, Promotion:

 

Your home is your product and understanding its unique selling benefits is critical. This is more than just ‘3 bedrooms, 2 bathroom, 1800 fin.sq.ft., move in condition, a must see!’or any of the other euphemisms you see in home-for-sale advertising. Price has to fit the product and the location. What did other homes in your area sell for? How long on market? Were there price reductions? How do those homes compare to your home? What is the real estate market trend in your area, up or down? What is the condition of your home and how should that be reflected in the price? Did you spend a whole lot of money renovating your home way beyond the value of your neighborhood? A good real estate agent has access to recorded information in the MLS database, tax records, and other sources to help you answer these important questions.

Promotion is key. It is advertising, but remember that advertising is ‘information’. Expressing the unique selling benefits of your home and its location will ‘tickle’ the curiosity of potential buyers, maybe just several people out of hundreds, and inspire them to come look at your home. Words count! Realtor euphemisms don’t, as purchasers looking at properties quickly become jaded about homes described as: ‘must see, best buy, like new, move-in condition, honey pull over I found it, exclusive, great neighborhood, handiman special (maybe ‘knock down special’ should be used here)’, etc.

Your neighborhood or the general location of your home has unique selling benefits too. Purchasers who are not familiar with the area want some hint of what it is like. Those who are familiar may be pleased if you tell them something new

Listing Services: 

The internet has made information about homes for sale available to anyone who has use of a computer. There are many internet-based ‘homes for sale’ listing services, however, the best service is still Realtor Associations Multiple Listing Service. Most of these have a public access so anyone can enter search criteria and see corresponding homes for sale. If your home is listed there, it has the potential to be seen by many hundreds, maybe thousands, of home seekers.