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5 Things to Do Before You Sell
1.
Get estimates from a
reliable repairperson on items that need to be replaced soon, such as a roof or
worn carpeting, for example. In this way, buyers will have a better sense of
how much these needed repairs will affect their costs.
2.
Have a termite
inspection to prove to buyers that the property is not infested.
3.
Get a pre-sale home
inspection so you’ll be able to make repairs before buyers become concerned and
cancel a contract.
4.
Gather together
warranties and guarantees on the furnace, appliances, and other items that will
remain with the house.
5.
Fill out a disclosure
form provided by your sales associate. Take the time to be sure that you don’t
forget problems, however minor, that might create liability for you after the
sale.
Answer these questions to help you decide whether moving up makes sense.
1. How much equity do you have in your home? Look at your annual mortgage statement or call your lender to find out. Usually, you don’t build up much equity in the first few years of paying a mortgage, but if you’ve owned your home for a number of years, you may have significant unrealized gains.
2. Has your income increased enough to cover the extra mortgage costs and the costs of moving?
3. Does your neighborhood still meet your needs? For example, if you’ve had children, the quality of the schools may be more of a concern now than when you first purchased.
4. Can you add on or remodel? If you have a large yard, there might be room to expand your home. If not, your options may be limited. Also, do you want to undertake the headaches of remodeling?
5. How is the home market? If it’s good, you may get top dollar for your home.
6. How are interest rates? A low rate not only helps you buy more home, but also makes it easier to find a buyer.
Tips for Holding a Yard Sale
Hold a yard sale to reduce the clutter in your home and get rid of
items you don’t want to move.
1.
Check with your city
government to see if you need a permit or license.
2.
See if neighbors want to
participate and have a “block” sale to attract more visitors.
3.
Advertise. Put an ad in
free classified papers, and put up signs and balloons at major intersections
and in stores near your home.
4.
Price items ahead and
attach prices with removable stickers. Remember, yard sales are supposed to be
bargains, so don’t try to sell anything of significant value this way.
5.
Check items before the
sale to be sure you haven’t including something you want by mistake.
6.
Keep pets away from the
sale.
7.
Display everything
neatly and individually so customers don’t have to dig through boxes.
8.
Have an electrical outlet
so buyers can test appliances.
9.
Have plenty of bags and
newspaper for wrapping fragile items.
10.
Get enough change, and keep a close eye on your cash.
10 Ways to Make Your House
More Salable
1.
Get rid of clutter.
Throw out or file stacks of newspapers and magazines. Pack away most of your
small decorative items. Store out-of-season clothing to make closets seem
roomier. Clean out the garage.
2.
Wash your windows and
screens to let more light into the interior.
3.
Keep everything extra
clean. Wash fingerprints from light switch plates. Mop and wax floors. Clean
the stove and refrigerator. A clean house makes a better first impression and
convinces buyers that the home has been well cared for.
4.
Get rid of smells. Clean
carpeting and drapes to eliminate cooking odors, smoke, and pet smells. Open
the windows.
5.
Put higher wattage bulbs
in light sockets to make rooms seem brighter, especially basements and other
dark rooms. Replace any burnt-out bulbs.
6.
Make minor repairs that can
create a bad impression. Small problems, such as sticky doors, torn screens,
cracked caulking, or a dripping faucet, may seem trivial, but they’ll give
buyers the impression that the house isn’t well maintained.
7.
Tidy your yard. Cut the
grass, rake the leaves, trim the bushes, and edge the walks. Put a pot or two
of bright flowers near the entryway.
8.
Patch holes in your
driveway and reapply sealant, if applicable.
9.
Clean your gutters.
10.
Polish your front doorknob and door numbers.
REALTORSÒ are members of the NATIONAL ASSOCIATION OF
REALTORSÒ,
a trade organization of more than 1 million members nationwide. REALTORSÒ
subscribe to a stringent code of ethics that helps guarantee the highest level
of service and integrity.
Understanding Agency
It’s important to understand what legal
responsibilities your real estate salesperson has to you and to other parties in
the transactions. Ask your salesperson to explain what type of agency
relationship you have with him or her and with the brokerage company.
1. Seller's representative
(also known as a listing agent or seller's agent). A seller's agent is hired by
and represents the seller. All fiduciary duties are owed to the seller. The
agency relationship usually is created by a listing contract.
2. Subagent. A subagent owes the same fiduciary duties to the agent's
principal as the agent does. Subagency usually arises when a cooperating sales
associate from another brokerage, who is not representing the buyer as a
buyer’s representative or operating in a nonagency relationship, shows property
to a buyer. In such a case, the subagent works with the buyer as a
customer but owes fiduciary duties to the listing broker and the seller.
Although a subagent cannot assist the buyer in any way that would be
detrimental to the seller, a buyer-customer can expect to be treated honestly
by the subagent. It is important that subagents fully explain their duties to
buyers.
3. Buyer's representative (also known as a buyer’s agent). A
real estate licensee who is hired by prospective buyers to represent them in a
real estate transaction. The buyer's rep works in the buyer's best interest
throughout the transaction and owes fiduciary duties to the buyer. The buyer
can pay the licensee directly through a negotiated fee, or the buyer's rep may
be paid by the seller or by a commission split with the listing broker.
4. Disclosed dual agent. Dual agency is a relationship in which
the brokerage firm represents both the buyer and the seller in the same real
estate transaction. Dual agency relationships do not carry with them all of the
traditional fiduciary duties to the clients. Instead, dual agents owe limited
fiduciary duties. Because of the potential for conflicts of interest in a
dual-agency relationship, it's vital that all parties give their informed
consent. In many states, this consent must be in writing. Disclosed dual
agency, in which both the buyer and the seller are told that the agent is
representing both of them, is legal in most states.
5. Designated agent (also called, among other things, appointed agency).
This is a brokerage practice that allows the managing broker to designate which
licensees in the brokerage will act as an agent of the seller and which will
act as an agent of the buyer. Designated agency avoids the problem of creating
a dual-agency relationship for licensees at the brokerage. The designated
agents give their clients full representation, with all of the attendant
fiduciary duties. The broker still has the responsibility of supervising both
groups of licensees.
6. Nonagency relationship (called, among other things, a transaction
broker or facilitator). Some states permit a real estate licensee to have a
type of nonagency relationship with a consumer. These relationships vary
considerably from state to state, both as to the duties owed to the consumer
and the name used to describe them. Very generally, the duties owed to the
consumer in a nonagency relationship are less than the complete, traditional
fiduciary duties of an agency relationship.
5 Ways to Speed Up Your Sale
1.
Price it right. Set a price at the lower end of your
property’s realistic price range.
2.
Get your house market-ready for at least two weeks
before you begin showing it.
3.
Be flexible about showings. It’s often disruptive to
have a house ready to show on the spur of the moment, but the more often
someone can see your home, the sooner you’ll find a seller.
4.
Be ready for the offers. Decide in advance what price
and terms you’ll find acceptable.
5.
Don’t refuse to drop the
price. If your home has been on the market for more than 30 days without an
offer, be prepared to lower your asking price.
7 Steps to Preparing for an Open House
1.
Hire a cleaning service.
A spotlessly clean home is essential; dirt will turn off a prospect faster than
anything.
2.
Mow your lawn, and be
sure toys and yard equipment are put away.
3.
Serve cookies, coffee,
and soft drinks. It creates a welcoming touch. But be sure the kitchen has been
cleaned up; use disposable cups so the sink doesn’t fill up.
4.
Lock up your valuables,
jewelry, and money. Although the real estate salesperson will be on site during
the open house, it’s impossible to watch everyone all the time.
5.
Turn on all the lights.
Even in the daytime, incandescent lights add sparkle.
6.
Send your pets to a
neighbor or take them outside. If that’s not possible, crate them or confine
them to one room (a basement or bath), and let the salesperson know where to
find them.
7.
Leave. It’s awkward for
prospective buyers to look in your closets and express their opinions of your
home with you there.
10 Ways to Make Your Home Irresistible at an Open
House
1.
Put fresh or silk flowers
in principal rooms for a touch of color.
2.
Add a new shower
curtain, fresh towels, and new guest soaps to every bath.
3.
Set out potpourri or
fresh baked goods for a homey smell.
4.
Set the table with
pretty dishes and candles.
5.
Buy a fresh doormat with
a clever saying.
6.
Take one or two major
pieces of furniture out of every room to create a sense of spaciousness.
7.
Put away kitchen
appliances and personal bathroom items to give the illusion of more counter
space.
8.
Lay a fire in the
fireplace. Or put a basket of flowers there if it’s not in use.
9.
Depersonalize the rooms
by putting away family photos, mementos, and distinctive artwork.
10.
Turn on the sprinklers for 30 minutes to make the lawn
sparkle.
7 Terms to Watch for in a Purchase Contract
1.
The closing date. See if the date the buyer wants to take title is
reasonable for you.
2.
Date of possession. See if the date the buyer wants to move in is
reasonable for you.
3.
The earnest money. Look for the largest earnest-money deposit possible;
since it is forfeited if the buyer backs out, a large deposit is usually a good
indication of a sincere buyer.
4.
Fixtures and personal
property. Check the list of items
that the buyer expects to remain with the property and be sure it’s acceptable.
5.
Repairs. Determine what the requested repairs will cost and
whether you’re willing to do the work or would rather lower the price by that
amount.
6.
Contingencies. See what other factors the buyer wants met before
the contract is final—inspections, selling a home, obtaining a mortgage, review
of the contract by an attorney. Set time limits on contingencies so that they
won’t drag on and keep your sale from becoming final.
7.
The contract
expiration date. See how long you
have to make a decision on the offer.
What You’ll Net at Closing
To find out how much money you’ll net from your house,
add up your closing costs and subtract them from the sale price of the house.
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Closing Costs for Sellers |
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Mortgage payoff and outstanding interest |
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Prorations for real estate taxes |
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Prorations for utility bills, condo dues, and other
items paid in arrears |
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Closing fees charged by closing specialist |
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Title policy fees |
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Home inspections |
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Attorney’s fees |
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Survey charge |
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Transfer tax or other government registration fees |
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Brokerage commission |
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Total |
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Tips for Packing Like a Pro
1.
Develop a master “to do”
list so you won’t forget something critical.
2.
Sort and get rid of things
you no longer want or need. Have a garage sale, donate to a charity, or
recycle.
3.
Don’t throw out
everything. If your inclination is to just toss it, ask yourself how frequently
you use an item and how you’d feel if you no longer had it.
4.
Pack like items
together. Put toys with toys, kitchen utensils with kitchen utensils.
5.
Decide what if anything
you plan to move yourself. Precious items, such as family photos, valuable
breakables, or must-haves during the move, should probably stay with you.
6.
Use the right box for
the item. Loose items encourage breakage.
7.
Put heavy items in small
boxes so they’re easier to lift. Keep weight under 50 lbs. if possible.
8.
Don’t over-pack boxes
and increase the chances they will break.
9.
Wrap every fragile item
separately and pad bottom and sides of boxes.
10.
Label every box on all sides. You never know how
they’ll be stacked and you don’t want to have to move other boxes aside to find
out what’s there.
11.
Use color-coded labels to indicate which room each
item should go in. Color-code a floor plan for your new house to help movers.
12.
Keep your moving documents together, including phone
numbers, driver’s name, and van number. Also keep your address book handy.
13.
Back up your computer files before moving your
computer.
14.
Inspect each box and all furniture for damage as soon
as it arrives.
15.
Remember, most movers won’t take plants.
Moving Tips for Sellers
1.
Give your forwarding
address to the post office, usually two to four weeks ahead of the move.
2.
Notify your credit card
companies, magazine subscriptions, and bank of the change of address.
3.
Develop a list of
friends, relatives, and business colleagues who need to be notified of the
move.
4.
Arrange to have
utilities disconnected at your old home and connected at your new one.
5.
Cancel the newspaper.
6.
Check insurance coverage
for moved items. Usually movers only cover what they pack.
7.
Clean out appliances and
prepare them for moving, if applicable.
8.
Note the weight of the
goods you’ll have moved, since long-distance moves are usually billed according
to weight. Watch for movers that use excessive padding to add weight.
9.
Check with your condo or
co-op about restrictions on using the elevator or particular exits.
10.
Have a “first open” box with the things you’ll need
most—toilet paper, soap, trash bags, scissors, hammer, screwdriver, pencils and
paper, cups and plates, water, snacks, and toothpaste.
Plus, if you’re moving out of town:
1.
Get copies of medical
and dental records and prescriptions for your family and your pets.
2.
Get copies of children’s
school records for transfer.
3.
Ask friends for
introductions to anyone they know in your new neighborhood.
4.
Consider special car
needs for pets when traveling.
5.
Let a friend or relative
know your route.
6.
Carry traveler’s checks
or an ATM card for ready cash until you can open a bank account.
7.
Empty your safety
deposit box.
8.
Put plants in boxes with
holes for air circulation if you’re moving in cold weather.
6 Items to Have on Hand for the New Owners
1.
Owner’s manuals for items left in the house.
2.
Warranties for any items left in the house.
3.
A list of local service providers—the best dry
cleaner, yard service, etc.
4.
Garage door opener.
5.
Extra sets of house keys.
6.
Code to burglar alarm and phone number of monitoring
service if not discontinued.
Make your home more appealing for potential buyers with these quick and easy tips.
It’s an objective opinion of value, but it’s not an exact science so appraisals may differ.
For buying and selling purposes, appraisals are usually based on market value—what the property could probably be sold for. Other types of value include insurance value, replacement value, and assessed value for property tax purposes.
Appraised value is not a constant number. Changes in market conditions can dramatically alter appraised value.
Appraised value doesn’t consider special considerations, like the need to sell rapidly.
Lenders usually use either the appraised value or the sale price, whichever is less, to determine the amount of the mortgage they will offer.
Used with permission from Kim Daugherty, Real Estate
Checklists and Systems (http://www.realestatechecklists.com).
Understanding
Capital Gains in Real Estate
When
you sell a stock, you owe taxes on your gain—the difference between what you paid
for the stock and what you sold it for. The same is true with selling a home
(or a second home), but there are some special considerations.
In real estate, capital gains are based not on what you paid for the home, but on its adjusted cost basis. To calculate this:
1. Take the purchase price of the home: This is the sale price, not the amount of money you actually contributed at closing.
2. Add adjustments:
§
Cost
of the purchase—including transfer fees, attorney fees, inspections, but not
points you paid on your mortgage.
3. The total of this is the adjusted cost basis of your home.
4. Subtract this adjusted cost basis from the amount you sell your home for. This is your capital gain.
Since 1997, up to $250,000 in capital gains ($500,000 for a married couple) on the sale of a home is exempt from taxation if you meet the following criteria:
Also note that as of 2003, you also may qualify for this exemption if you meet what the IRS calls “unforeseen circumstances,” such as job loss, divorce, or family medical emergency.
Upgrading your home is always appealing, but which enhancements really get you a good return for your money when it’s time to sell? The 2003 Cost vs. Value Report by Remodeling magazine and REALTORÒ Magazine has the answer.
To see the complete article, visit http://www.realtor.org/rmomag.NSF/pages/costvaluedec03.
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2003 |
2002 |
Variance |
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Bathroom
Remodel
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|||
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Midrange |
89.3% |
87.5% |
1.8% |
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Upscale |
92.6 |
91.0 |
1.6 |
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Bathroom
Addition |
|||
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Midrange |
95.0 |
94.2 |
0.08 |
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Upscale |
84.3 |
81.4 |
2.9 |
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Major
Kitchen Remodel |
|||
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Midrange |
74.9 |
66.6 |
8.3 |
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Upscale |
79.6 |
79.8 |
-0.2 |
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Master
Suite |
|||
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Midrange |
76.4 |
75.1 |
1.3 |
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Upscale |
76.9 |
76.8 |
0.1 |
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Family
Room |
|||
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Midrange |
80.6 |
79.5 |
1.1 |
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Deck |
|||
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Midrange |
104.2 |
N/A* |
N/A* |
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Basement
Remodel |
|||
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Midrange |
79.3 |
78.7 |
0.6 |
|
Siding
Replacement |
|||
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Midrange |
98.1 |
79.1 |
19.0 |
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Window
Replacement |
|||
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Midrange |
84.8 |
73.8 |
11 |
|
Upscale |
87.0 |
77.0 |
10 |
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Attic
Bedroom |
|||
|
Midrange |
92.8 |
N/A* |
N/A* |
12 Tips for Hiring a Remodeling Contractor
1.
Get at least three
written estimates.
2.
Get references and call
to check on the work. If possible, go by and visit earlier jobs.
3.
Check with the local
Chamber of Commerce or Better Business Bureau for complaints.
4.
Be sure that the
contract states exactly what is to be done and how change orders will be
handled.
5.
Make as small a
downpayment as possible so you won’t lose a lot if the contractor fails to
complete the job.
6.
Be sure that the
contractor has the necessary permits, licenses, and insurance.
7.
Be sure that the
contract states when the work will be completed and what recourse you have if
it isn’t. Also remember that in many instances you can cancel a contract within
three business days of signing it.
8.
Ask if the contractor’s
workers will do the entire job or whether subcontractors will do parts.
9.
Get the contractor to
indemnify you if work does not meet local building codes or regulations.
10.
Be sure that the contract specifies the contractor
will clean up after the job and be responsible for any damage.
11.
Guarantee that materials used meet your
specifications.
12.
Don’t make the final payment until you’re satisfied
with the work.
Web Site Resources for Consumers
Credit Union Consumer Facts, http://www.cuna.org/data/consumer/advice/retire_home/hometoc.html
Provides an easy way to assess energy use and get quick tips on saving energy.
Environmental Protection Agency, www.epa.gov
A one-stop shop for advice on testing for and mitigating pollutants, from lead paint to radon to mold.
Equifax, www.eqifax.com
A source of credit reports.
Experian (formerly TRW), www.experian.com
A source of credit reports.
Federal Citizen Information Center, http://www.pueblo.gsa.gov/results.tpl?id1=17&startat=1&--woSECTIONSdatarq=17&--SECTIONSword=ww
Offers a list of consumer articles about home sales, financing, and maintenance.
Ginnie Mae, http://www.ginniemae.gov
Provides advice to buyers on affordability and homeownership, including calculators.
ImproveNet, www.improvenet.com
Provides links to contractors and architects for remodeling projects for buyers and repair services for sellers. For a small charge, buyers can use the site’s Estimators to determine how much renovating a property they’re considering would cost.
Helps buyers and sellers with packing tips and timetables, online mover links, and places to store belongings so that homes look less cluttered.
Offers consumer information for buyers and sellers as well as home listings and links to service providers.
Real Estate Buyer’s Agent Council (REBAC), http://www.rebac.net/hbk.html
Offers a homebuyer’s kit with useful information and checklists.
Trans
Union Corporation,
www.transunion.com
A source of credit reports.