18 Questions For Every Home Seller (Part 17) e-book

17.               How does the auction work?

Potential bidders are required to verify their identity and provide credit card information to guarantee a basic deposit; this discourages frivolous bids. Bidders are next briefed on what they are expected to do: thoroughly research the property and visit it if possible to verify its description and consider its value. They should review the preliminary title report to verify any that the title is clear of issues or at least as reported, and also to check zoning regulations and environmental credentials. The termite report and any disclosures mandatory in your state should also be reviewed.

An Oresy.com auction allows bid from the moment a property is listed until the closing second of the auction. When a bid is made, Oresy.com automatically confirms it with an email to the bidder and to you, the seller. Other potential buyers who have already bid will be notified that a higher bid as now been placed, prompting them for a response. In a typical online auction, bids are slow and low in the opening hours and even days, but bidding will intensify in the last day, hour, and quite likely even the last moments.

Important note: if a bid is placed at the last moment, the auction will be automatically extended by a few minutes to allow other bidders the opportunity to respond to the bid.

At the end of the auction, the system congratulates the winning bidder by email, and informs you, the seller, of the winning bid. Other bidders are notified that another bidder has won the auction.

Contact the winning bidder immediately to congratulate them and to arrange a meeting to sign the Purchase Agreement and to collect the earnest money deposit. The earnest money deposit should be in the form of a cashier’s check. If the high bidder is out of the area, and it is not possible to meet that day, you should email or fax the purchase agreement to the buyer and have the buyer return a signed paper copy, along with a cashier’s check for the earnest money deposit, within 72 hours.

The deposit should be made out to the escrow company; once the purchase agreement has been signed, the escrow process begins.

George Avram

Broker/Owner

Continental Realty, Inc.

16 Crow Canyon Court Suite 100

San Ramon CA 94583

925-548-5461

www.24by7bid.com

DRE# 01422589

18 Questions For Every Home Seller (Part 13) e-book

13.       What's in a good offer?

Offers are absolutely not just about the price. Before you "ratify" the offer (sign on the bottom line to turn the offer into a contract), consider a few indicators of good offers.

If you don’t have a good agent, it helps to have an understanding of current real estate loan standards, such as interest rates, fees, and financing timelines to confirm that the offer's financing is not overly optimistic. Bonus points if the buyer is pre-approved (a lender has confirmed buyer's income, employment, etc.) since this means you're dealing with someone serious about purchasing rather than someone simply testing the waters.

A good offer is fairly simple: I want to pay you X dollars, this is how I'll pay you, and I want to finish this by date Y. But most offers contain at least one contingency clause that predicate the transaction on certain conditions being met. Don't be put off by this; the good news is that it means your buyer has at least given some careful consideration to the offer.

George Avram

Broker/Owner

Continental Realty, Inc.

16 Crow Canyon Court Suite 100

San Ramon CA 94583

925-548-5461

www.24by7bid.com

DRE# 01422589

18 Questions For Every Home Seller (Part 7) e-book

Are the services of a listing agent worth 3% of a house to you? The primary function of a listing agent is simply to get your property into the MLS system, something you can do yourself nowadays for a relatively small fee.  What else could you do for yourself? Could you research the realistic value of your house in the market and price it accordingly? Are you savvy at online marketing? Could you prep your home for an Open House and show it to potential buyers in a way that makes the house desirable? Could you be a hard-nosed bargainer and bring your potential buyer up to their “price ceiling?” If so, you could pursue a “For Sale By Owner” method of selling.

Alternately, if the cost savings interests you but you’re less sure about valuing the house objectively and bargaining over the final price, read the surprising options available today from Oresy.com; these are covered in the last section of this book.

The Listing Contract

Think of this contract as the terms of employment between yourself as the seller and the broker you hire to find a buyer. Remember that a broker typically is hired for a fixed period of time and, in order to secure a commission, that broker may urge you to accept a low offer before that period ends rather than see zero compensation because no deal was completed.

The Open Listing option

When you give a broker a non-exclusive agreement to list your property, this is called an Open Listing. Using it, you can hire thirty brokers and agents if you like, assuming they welcome open listings. If one of the brokers listing your property finds a buyer and the deal closes, you must compensate that broker for his role.

6.       How do I evaluate potential agents?

Because of the serious cost of hiring an listing agent or broker -- often more than 6% of the value of your home -- do your best to avoid the services of an unprofessional or ineffective agent. Here are a few potential signs of trouble to watch out for.

Agents must be there to help you, not to push you. Look for thoughtful agents. Not only considerate and polite, although this helps: did the agent come to the interview prepared with list and sold comps in the area? How about a detailed marketing strategy?

If your agent or broker isn’t able or interested in educating you about every step in the process of selling your property, seems to be asking you to “rubber stamp” decisions rather than make them yourself, or seems to play on your inexperience to personal advantage in any way, you need to find a new agent immediately, or consider selling without an agent. Ignore pushy brokers and agents.

If they push you early and hard to sign a listing agreement, especially a lengthy one, walk away. After all, if the agent can’t be bothered to thoroughly outline their intended strategy and patiently answer all your questions before moving on to the contract, you can’t expect much from him after the contract is signed.

And beware of desperate agents. Are agents calling you at all hours to plead for your business? This is probably not a very successful agent.

Agents who have no focus on specific property types or geographical area are unlikely to know enough about your specific area and class of property to serve you optimally.

Agents uncomfortable with other professional consultants such as contract lawyers or property inspectors may not be able to negotiate effectively as you try to close your transaction or present the property well to potential buyers.

Marketing Strategy: Today’s market requires a real estate agent to be a marketer above all else. Ask the agent about his/her marketing strategies. How will they advertise your property and where? If their only responses are the standard ones—the MLS, free sites like Craigslist.org, and fliers in the neighborhood—be skeptical. Can they guarantee strong page rank on the major search engines? If I type in “real estate” and the name of my town into the search boxes of YouTube and Metacafe, will I see my property?

Minimize the term of your contract. It’s in the listing agent’s interest to contract with you for as long as possible. In other words, no agent will promise to sell your house in two weeks. As a seller, you want your agent to do everything possible to maximize the price and minimize the time the house sits on the market. If you sign a contract with an agent for six months, you are giving an inattentive agent no incentive to sell your house in the next five months. A good agent will push the property effectively from day 1, of course, but if you don’t have this kind of agent a long contract term can seem like an eternity. If your agent insists on a six-month minimum contract term, find someone who wants to sell your house sooner. A 60-day term is ideal, but settle for a 3 month contract if necessary.

Could you recommend an agent?

- Mar

ia, I heard you’re putting your house on the market?

+ We already have an ad in the paper and online. But I think we should bring in an agent. Do you know any good ones locally?

- You don’t want to use ours. We sold our house five years back and had some trouble with an inexperienced guy. He not only urged us to sell at a low price, he lost our first promising prospects.

+ What happened?

- We’d already moved out and the agent was going to show the place by himself. The prospective buyers showed up on time first thing in the morning, waited twenty minutes for the agent. When he got there, he apologized for being late but had forgotten the keys to the lockbox and so couldn’t show it anyway. We never saw those two again. So we never saw that agent again!

18 Questions For Every Home Seller (Part 6) e-book

5.            Should I sell my home myself?

Ultimately, it is the seller’s responsibility to prepare the property for sale (or hire someone to do some or all of this work), select a selling method, and see the transaction through to completion (or rely on a broker tidy up the loose ends). In this section, we’ll help you make an informed decision about the roles brokers, agent, and consultants can play in the sale of your property and the cost of doing so.

Should I hire a real estate agent or broker?

A good agent or broker can tell you how much your house is worth on the market today, and it is his or her job to find and negotiate with a buyer to realize that value. You can hire a certified broker directly, or an agent who’s more of a salesperson. In this case, the agent will be supervised by a broker.

Obviously, hire a broker or agent you are comfortable with. And hire someone you believe is a strong bargainer, since in traditional sales your representative negotiates the final price with the buyer’s agent. In this case, the agent’s commission provides the agent’s incentive to keeping the price as high as possible. But what if the house receives no strong bids? In this case, an unscrupulous agent or broker may try to convince you to drop the price substantially to guarantee the sale (and guarantee the agent’s commission) before your contract with him or her expires. In this example, the broker has a strong incentive to undercut your confidence in the value of your property. Since an important aspect of every agent’s role is to help you understand the real value of your property on the market today, this unfortunate situation can be easily missed by many sellers.

The simple reason why a growing number of sellers today forgo the services of a broker or agent is this: the listing/selling agent typically collects up to a whopping 6% of the sale price of the property. (Additionally, buyers typically pay buying agents 3% to assist them in the transaction.)

Why do listing agents charge 6%? In reality, the broker who lists the property collects only 3% because the brokerage that finally sells the property collects half of the 6%. If you know you may end up paying two separate brokers, it is natural to ask yourself why you shouldn't just pay one: the one that actually sells your property.

18 Questions For Every Home Seller (Part 5) e-book

4.            How much is my home worth?

Home sellers are often frustrated by this seemingly simple question, and indeed pricing is a difficult step. Using traditional sales methods, you are caught between a rock and a hard place: if you ask too little, you’re giving up a portion of your net worth. If you set a high price, the property is less likely to sell -- and of course properties that sit for many months on the market can seem unappealing.

Most auction-based methods sidestep this problem by setting a low starting price and letting the market drive the price up to its final value. But regardless of what method you might use, a value estimate range will define your sales efforts.

Is my home’s previous price a guide?

At the time of this writing, the market is flat in my area. If I purchased a property a few years ago, I could probably sell it today for roughly the same price. But more commonly, real estate values are in long, steady ascension, with occasional sharp drops. In other words, the price of your home today has little or nothing to do with how much you paid for it years ago, and basing your price on what you paid in the past will either cheat you of a higher price or, in a poor market, prevent a sale entirely because of your unrealistic expectations.

Online sales tools

Chances are you’ve already turned to online tools to value your home. If not, enter “real estate value” or “how much is my house worth?” in a search engine. The resulting web sites will provide you with a quick estimate.

But keep in mind that such services never reflect a great many factors, such as the condition of your house or the very latest dips or bumps in the marketplace. So keep in mind that even the most reputable online home valuators can be as much as 15% over or under the realistic price. And some sites were created primarily to provide leads to real estate agents and to collect personal information.

Another online tool for real estate sellers are forums. Because of the participation of agents and brokers in some of these conversations, advice you receive there may be self-serving on their part. And others in your market may provide inaccurate or out-of-date advice.

Know your market

Get on sounder footing in understanding what your own home is worth by familiarizing yourself with other nearby properties. Attend the Open Houses and observe the final selling price. Is it under or over what the online valuators predicted? How long did the property take to sell? What properties aren’t selling? The final, real world prices when similar properties do sell nearby -- these are the true values and are strong indicators of what your selling experience might be. These are comps: A price paid recently for a similar home in a comparable location.

Keep in mind that comps are merely hints at your property’s value; no two properties are quite identical even if they were built to the same plan, and neither are any two locations. This means the only perfect certainty valuing a property is to find a buyer willing to buy at a given price. If you are comfortable researching comps and other valuation indicators on your own, you are a strong candidate for selling your home without the aid of an agent.

Amenities

The value of your property is higher if you can show it has some of the amenities that buyers today value highly. For example, is there a home office space? Easy-to-connect internet and cable TV hookups? An outdoor grill area? An upstairs laundry area? A laundry sink? A guest bedroom with private bathroom? A casual eating space in the kitchen? Include these in your valuation -- they really can distinguish your house from the place that just sold down the street -- and highlight them during your Open House.

18 Questions For Every Home Seller (Part 4) e-book

3.            When should I sell?

Seasonal peaks and valleys

In most American markets, the best times to sell are late February to mid-June and early September to late November. More buyers will be out looking at properties and more will be making offers. In mid-summer and in winter, expect low offers -- if any at all. Leave these seasons to desperate sellers, and if you’re buying another house yourself, consider looking during these periods.

Ideally, prepare your home for the market well before the peak season to get started when the season begins. This will give you as much time as possible to sell, most likely avoiding the problem of needing to sell before the summer or winter dead period begins.

And if you can, sell during the February-June window when other sellers are less motivated to close a deal. Many sellers are more motivated to complete a sale in the fall season because they may see the need to pay income-reducing expenses before year’s end.

In a strong market

It’s tempting in a strong market to want to realize big gains, but of course if you intend to move to another strong market your gains will be swallowed up in the cost of your new home. And if you move from a strong market to a weaker market, you may end up eliminating mortgage debt in the short term (selling for $450,000 and buying for $350,000 for a comparable space) but future appreciation may likely be weaker in your new location in future, as well.

In a soft market

Selling in a soft market means fewer potential customers, a lower property value, and a potentially disheartening wait for a buyer at a reasonable price. But if your new home will also be in a soft market, a bargain awaits you after the sale while waiting for the market to improve might only lead to worse valuations for the foreseeable future. If moving to a stronger market, you will likely take on more debt or need to trade down to a lesser space, but you may see greater future appreciation of your new home than you would have ever known in your former soft market.

18 Questions For Every Home Seller (Part 3) e-book

1.            What’s happening in real estate?

Just fifteen years ago, the real estate broker was at the center of most home sales. Sellers as well as buyers and agents depended on the broker and the broker’s “multiple listing services” book (MLS) to bring a property to the attention of the marketplace.

Online technology brought about a revolution in this marketplace as in so many others. The main change is the elimination of the middle man, a process known as disintermediation. For example, travel agents have been largely replaced by direct purchases from web sites and antiques are now often auctioned off online by the owner rather than in an auction house by an auctioneer.

In the 1990s, the first wave of Internet-driven change overtook the real estate business. For example, it quickly became possible to comparison shop for home loans among many, many lenders. As real estate services moved online, the online MLS became available to agents as well.

More recently, such listing services have become accessible to the consumer. Individual buyers can now search real estate listings almost as easily and thoroughly as a veteran broker or agent, and indeed most home buyers today begin on their own, browsing listings. Finding a compelling listing, these buyers might visit and even bid on a property before they have ever consulted a real estate agent or broker.

To be sure, real estate brokers and agents are still consulted -- particularly by those accustomed to the traditional business model. But the process of disintermediation continues and there is simply too much money involved in the purchase or sale of your home for a seller not to ask: what is my agent doing to earn a percentage of my home? Why can’t I do that job to avoid handing over a piece of my home’s value? Much of this book will address such “value proposition” questions and the corollary, is there an agent or consultant who really is indispensable and worth the expense?

Stopping by Carl’s office

“Carl, how did you sell your home? I heard you sold it online in an auction?

“That’s right. We considered auctions because I had a new job to start and renting for months looked really expensive. But the auction not only sold the house in a couple of weeks. It also fetched us a competitive price and cut our broker fees dramatically.

“I’ve auctioned off skis and a computer online. But a house?

Well, you’re right. A house isn’t the same as a household commodity like skis -- you need a specialized online auction service where serious buyers are following the listings. I used Oresy.com.

“I don’t get it. Who’s going to bid hundreds of thousands of dollars based just on a few pictures online?

“No, that wouldn’t work. Actually, you market the house like crazy and photos of the properties do go up on the site. The point isn’t to sell them on the house via photos but to convince them to see the property in person. Then you ‘Open House’ previews, provide inspection reports, and so on. The bidding happens online in a fixed timeframe.

We’ll look at Oresy.com and the process of selling your property there in the last section of this book.