Common Question for Sellers
- Is there a best time to sell my house?
- Are there important factors to consider when selling a home?
- How much is my home worth?
- What should I do to get my house ready?
- Should I make repairs?
- What are my obligations to disclose?
- Are there standard contingencies in an offer?
- Should I be flexible in granting contingencies?
- What do I do if my house isn’t getting activity?
- Is it possible to sell for less than my mortgage?
- How will a foreclosure affect my credit?
- How long will a bankruptcy or foreclosure stay on my credit report?
- Is it possible to refinance after bankruptcy?
QUESTION 1: IS THERE A BEST TIME TO SELL MY HOUSE?
Property sells year round. It is mostly a function of supply and demand, as well as other economic factors. The time of year you choose to sell can make a difference in the amount of time it takes and the final selling price. Weather conditions are often a consideration in some states than in other parts of the country. Generally the real estate market picks up in the early spring. During the summer, the market usually slows. The end of July and August are often the slowest months for real estate sales. The strong spring market often places upward pressure on interest rates, many prospective home buyers and REALTORS® take vacations during mid-summer. After the summer slowdown, sales activity tends to pick up for a second, although less vigorous, season which usually lasts into November. The market then slows again as buyers, sellers and REALTORS® turn their attention to the holidays. The supply of homes on the market diminish because sellers often wonder whether or not they should take their homes off the market for the holidays. There are still buyers in the market place, but now those buyers have fewer homes to choose from. Those homes on the market at that time have considerably less competition. Generally speaking, you’ll have the best results if your house is available to show to prospective buyers continuously until it sells.
QUESTION 2: ARE THERE IMPORTANT FACTORS TO CONSIDER WHEN SELLING A HOME?
The two most important factors are price and condition in selling a home. The first step is to price it properly. Then, go through the house to see if there are any cosmetic defects that can be repaired. A third factor is exposure. It is also important that the home gets the exposure it deserves through open houses, broker open houses, advertising, good signage and listing on the local Multiple Listing Service, as well as the internet. Choose the real estate REALTOR® that you believe will get the job done, not the one that quotes you the highest price – sometimes just to buy your listing.
QUESTION 3. HOW MUCH IS MY HOME WORTH?
There are two methods many people use to determine their homes value, an appraisal and comparative market analysis. Appraisals vary in cost and are defendable in court. They average about $300 for a single family home and more on multi-family dwellings. Appraisers review numerous factors and base information on recent sales of similar properties, their location, square footage, construction quality, excess land, views, water frontage and amenities such as garages, number of baths, etc. A comparative market analysis on the other hand is an informal estimate of market value performed by a real estate REALTOR® or broker. It is based on sales and listings that will compete with your property that are similar in size, style and location. A range of values will be determined thus arriving at a probable market value. Many REALTORS® offer a free analysis anticipating they will have a new client. The analysis or opinion should be in writing and should involve professionally accepted appraisal practices. Some individuals do their own cost comparison. It may take several hours of research at the county recorders office, where there will be indexes to match street addresses and parcel numbers. Once matches have been chosen a tax card can be used to find the assessed value, size, style, number of rooms, baths, etc.
QUESTION 4: WHAT SHOULD I DO TO GET MY HOUSE READY?
The way you live in a home and the way you sell a house are two different things. First and foremost, “declutter” counter tops, walls and rooms. Too many “things” make it difficult for the buyer to see their possessions in your rooms or on your walls, however don’t strip everything completely or it will appear stark and inhospitable. Then clean and make attractive all rooms, furnishings, floors, walls and ceilings. It’s especially important that the bathroom and kitchen are spotless. Organize closets. Make sure the basic appliances and fixtures work and get rid of leaky faucets and frayed cords. Make sure the house smells good: from an apple pie, cookies baking or spaghetti sauce simmering on the stove. Hide the kitty litter, and possibly put vases of fresh flowers throughout the house. Pleasant background music is also a nice touch. The second important thing to consider is “curb appeal.” People driving by a property will judge it from outside appearances and make a decision then as to whether or not they want to see the inside. Sweep the sidewalk, mow the lawn, prune the bushes, weed the garden and clean debris from the yard. Clean the windows (both inside and out) and make sure the paint is not chipped or flaking. Also make sure that the doorbell works.
- Questions and Answers on Home Inspections
- The 10 Most Common Things That Come Up IN A Home Inspection
- Pre-Inspection Check List
QUESTION 5: SHOULD I MAKE REPAIRS?
Minor repairs before putting the house on the market may lead to a better sales price. Buyers often include a contingency “inspection clause” in the purchase contract which allows then to back out if numerous defects are found. Once the problems are noted, buyers can attempt to negotiate repairs or lowering the price with the seller. Any known problems that are not repaired must be revealed as a material defect. You do not have to repair the problem, only reveal it and the house should be appropriately priced for that defect.
QUESTION 6: WHAT ARE MY OBLIGATIONS TO DISCLOSE?
Items sellers often disclose include: homeowners association dues: whether or not work done on the house meets local building codes and permits requirements; the presence of any neighborhood nuisances or noises which a prospective buyer might not notice, such as any restrictions on the use of property, including but not limited to zoning ordinances or association rules. It is wise to review the seller’s written disclosure prior to a home purchase and ask questions if it does not satisfy you entirely. No, according to experts, sellers do not have to disclose the terms of other offers. You may disclose the existence of other offers, so that all parties are aware that they should be submitting their best offer.
QUESTION 7: ARE THERE STANDARD CONTINGENCIES IN AN OFFER?
Yes, the two basic contingencies in a purchase contract are financing and inspections.
QUESTION 8: SHOULD I BE FLEXIBLE IN GRANTING CONTINGENCIES?
That often depends on if you are in a buyer’s or a seller’s market, the condition of your home, the price you hope to get, how motivated you are to sell, as well as the quality and quantity of the offers you are getting. Any contingencies that are negotiated are written into your contract. Both the buyer and seller can place requirements on the table during the negotiation phase. A frequently seen contingency is regarding the sale and closing of the buyers home before they can purchase yours. Whether this requirement is reasonable, or even achievable, depends on the individuals involved. Financial capabilities usually play a major role in negotiations. Few people can afford to own two homes simultaneously, except for some all-cash buyers.
QUESTION 9: WHAT DO I DO IF MY HOUSE ISN’T GETTING ACTIVITY?
Even in a slow market, price and condition are the two most important factors in selling a home. If a home is not getting the activity it needs in order to sell it is probably because it is overpriced for the market. The first step is to lower the price. Then go through the house and see if there are cosmetic defects that you missed that can be repaired. The second step is to make sure that the home is getting the exposure it deserves through open houses, broker open houses, advertising, good signage and a listing on the Multiple Listing Service and internet. A third option is to remove the home from the market and wait for overall housing conditions to improve and catch up to the price your asking. Finally, frustrated sellers who have no equity and are forced to sell because of a long term illness, divorce or financial considerations should discuss a short sale or a deed in lieu of a foreclosure with their mortgage lender and their REALTOR®. A short sale is when the seller finds a buyer for a price that is below the mortgage amount and negotiates the difference with the lender. In a deed-in-lieu-of-foreclosure, the lender agrees to take the house back without instituting foreclosure proceedings. These are considered more radical options than lowering the price.
QUESTION 10: IS IT POSSIBLE TO SELL FOR LESS THAN MY MORTGAGE?
A “short sale” is for home sellers who are upside down on their mortgage. The home’s value is less than the amount of the mortgage. A hardship must exist, then sometimes home owners can negotiate with lenders and split the difference between the sale price and loan amount, which still must be paid. A short sale is often complicated. If the loan has been sold into the secondary market, the lender will have to get permission from Fannie Mae or Freddie Mac to negotiate a short sale. Fannie Mae, the secondary market giant, has a policy of looking at each loan individually. If the loan was a low-down-payment mortgage with private mortgage insurance (or PMI), the lender needs to involve the mortgage insurance company that insured the low-down loan. Once all these issues are resolved or negotiated, the house may be sold.
QUESTION 11: HOW WILL A FORECLOSURE EFFECT MY CREDIT?
Without a doubt a property foreclosure is one of the most damaging events in terms of the borrower’s credit history. Talking to the lender who holds the mortgage note on the property might provide specific answers as the possible courses of action available to the borrower, as well as to the effects those actions might have on that person’s credit report. In terms of the effect on credit history, a deed in lieu of foreclosure or a short sale are not as adverse an event as is the forced foreclosure. However, even after a foreclosure or bankruptcy, there are lenders who are providing loans after 7-10 years have lapsed. The borrower will have many obstacles to overcome and will need to provide a good paper trail to the lender proving they are once again credit worthy.
QUESTION 12: HOW LONG WILL A BANKRUPTCY OR FORECLOSURE STAY ON MY CREDIT REPORT?
Bankruptcies and foreclosures can remain on your credit report for 7 to 10 years. However, there are lenders who will consider an applicant who went through a bankruptcy as recently as two years ago, as long as good credit has been reestablished. Much will depend on when the bankruptcy was discharged and what kind of credit a borrower has reestablished since then. The longer ago the discharge occurred, the better off a loan applicant will be. Another factor considered will be the circumstances surrounding the bankruptcy. If a borrower went through a bankruptcy because his or her company had financial difficulties due to downsizing or merger resulting in job loss, that means one thing to a lender. If, however, a borrower went through bankruptcy because of overextended personal credit lines from living beyond their means, that means quite a different thing. If you have additional questions consult “Rebuild Your Credit: Law Form Kit,” Nolo Press, Berkeley, Calif.
QUESTION 13: IS IT POSSIBLE TO REFINANCE AFTER BANKRUPTCY?
Although a good idea, it is usually difficult to refinance after a bankruptcy. If you have been struggling but keeping current on your payments the lender may be accommodating. You first need to contact them and explain your situation. They may suggest or perhaps you can suggest a way to work out alternative payments until you recover.