The following is a summary of tips originally posted to a mailing list about For Sale By Owner and Buying/Selling your Home.
Working with Realtors
- Get a lockbox. It will save you countless hours if the house is unoccupied. As a general rule as well, if someone calls, make sure they are actually a Realtor by asking a few qualifying questions. (Like, which office are you out of, etc.)
- (Almost) Every Realtor who comes to you will try to bump up the commission percent if it is below 3%. They will try to beat you up; and they will all claim to have a “buyer” in waiting. While mostly FUD (Fear Uncertainty Doubt), you should know that giving 2% will probably get you fewer leads than 3%, but balance this with the fact that those Realtors who make the distinction are probably more interested in their own commission than helping their “clients” find the right home.
- The “seller-paid” commission to a buyer’s agent is the most backwards relationship I have experienced.
- We started at 2% and moved up to 2.5% by the end, ultimately a mistake because we ended up with the same agent who brought us an offer at 2%. And she was as dumb as dirt.
Advertising and Follow-up
The best way to advertise any home is a lawn sign; we received as many leads from both FSBO’s (Vermont and Ardmore) from the sign than
anywhere else. Most people interested in an area will drive around looking at available signs. Get a good sign and dedicate a number (cell
phone is preferable) to it. Expect to spend about 20-40 hours showing the home to non-Realtor buyers; and consider your time vs. the commission you would be saving.
For everyone (including realtors) who comes to your home:
- Follow up to get an idea of whether they are interested or not. Get feedback about what they liked or didn’t like. This can guide pricing and how the home is set up. (e.g. Four people say “it’s a little too expensive” then your price is too high.)
- For those who are “slightly interested”, ask “Would you like me to call you if we receive an offer?” (This is a litmus test to see if they care about the home). For those who say, “Yes”, put them on a list.
- If you receive no offers after 30 days, drop your price.
It is far better to price low and get asking than to price high and get nothing.
Receiving offers
In my opinion, the only power you have as a seller is to have two buyers. If you receive an offer, call your “list” and see if you can get two offers on the table. Do not do this until you have paper (or fax) in hand. Doing this prematurely can ruin this option.
Otherwise, you have a “need to sell”, and someone with a big check for you, and you are not in power. Because buying/selling is so stressful, most sellers will take less money to just “get it over with”. Hence your need to get two buyers to push that sell amount up as high as possible.
Everyone offers lower than asking, and everyone can always pay a little more.
Typically, the first offer you receive is the best offer you’ll get. In our case our first buyer made an offer, we countered, and then they “went quiet.” Their issue was timing (June vs. March) and we wouldn’t accept a long closing date without cash to cover the difference. They ended up coming back later with a mid-way offer which we then accepted.
Contingencies
When selling (or buying), the date you sign the agreement, get a calendar and mark every due date for inspection and mortgage contingencies. Be sure you are clear with the Realtor/lawyer about what “5 days” means; whether you count from the signing date, or the day
after.
Also recall that most contingencies require mutual agreement by both parties meaning both sets of signatures on a document.
We had responded to a buyer’s home inspection with a “credit” letter ($1K), but didn’t receive an addendum until a week
later with the buyer’s signatures on it. Technically, the dates were past and we could have paid nothing as it wasn’t mutually agreed. But we still did out of good faith …The buyer’s Radon inspection was due by Friday and I received a call from the agent saying it was high (over 4). I said, OK, please fax over the radon inspection documents as proof. I didn’t hear anything until Monday afternoon. At this point, they were too late. I ended up deducting half of the radon mitigation fees from the agent’s commission, mostly out of respect for the buyer, and as a slight “dis” to the agent, who, as I mentioned, was dumb as dirt.
New home
It’s a great time to do extremely messy work prior to moving in. In general, here’s what we’ve done before moving in:
- Refinished all of the floors
- Painted the interior
- Replaced insulation in the attic
Mortgage
Call at least two or three mortgage companies to get rate and points quotes; but always within 30 days of closing (45 day locks are more expensive).
When you get a rate quote, ask for it in writing. (You can then fax this to other brokers) If they won’t, then you’ve got a bad broker.
Pit them against each other and see if they can meet or beat each other’s offers. It’s the American way! (At least when there’s competition…)
In the end, almost every mortgage/broker company will sell your mortgage to a big bank later so just get the best rates you can, and skip on “who’s” getting it for you.
Most mortgage brokers make between $1200 – $2000 per transaction so keep this in mind. I have found that brokers and banks have pretty competitive rates with each other; and have so far opted once for a broker, and once for a firm which loans the money from their coffers, then sells the loan almost immediately.
I’m sure as well there are a lot of tidbits I missed … I have a great book called “Games real estate people play” which is a little dated, but has some good tips in it as well if anyone wants to borrow it. Best of luck to everyone going through the 2nd most stressful thing in life! (The first is divorce, which I am happy to report I know nothing about.)