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Scoop Part 1 here, and Part 2 here.
PART 3
8. Not Knowing All Your Options
There’s more than one way to sell your home. It pays to know your options.
You can list with a full service Realtor. They can do most of it for you. You’ll typically have to lock into a legal agreement for a year, and hope you’ve chosen one who will put your best interests above their own.
Then there are so called ‘flat fee’ and discount brokers who will put your property on the MLS and major websites. Then you are pretty much on your own. What they don’t tell you is that on top of their fees, you’ll have to offer a competitive market rate commission to a buyers agent to get a buyer. That’s typically 2.5% to 3% of the purchase price, but could be more.
You can go the DIY for sale by owner route. You can go to Home Depot and get a for sale sign to stick in your yard (if your city and association will allow it), take out a newspaper ad and post your home on Craigslist. Then get ready for a whole ton of calls from Realtors who just want to list your property. A lot of busy work, with few real buyers. Even fewer, if any qualified buyers.
There’s also the question of how you’ll get paid. Clearly there are challenges and a lot of extra unknowns when accepting a buyer who will rely on getting a conventional mortgage loan. Selling to a cash buyer is clearly faster, easier, and less risky. You’re not just waiting for the deal to blow up due to the appraisal, repair issues, or weird underwriting quirks.
In other cases you may actually want to take your proceeds in installments. You may not want to put a big lump sum of cash in your bank account all at once. You may not want to deal with a big income tax bill this year or capital gains. You might owe more on your mortgage than the property is worth. A knowledgeable buyer who will pay in monthly installments and take the burden of the debt and maintenance off your hands immediately can be a great fit. You get an ongoing monthly income, without having to do anything. Any tax implications of a sale may be much lower. You won’t have long lost relatives popping up out of the blue asking to borrow money.
Or perhaps a mix of the two is right for you. Maybe you need $3,000 to move into a new rental, and then are happy to get the rest in installments which will cover your monthly bills.
9. Dragging Your Feet
You may be busy, you may not have much extra bandwidth in your brain for dealing with open houses and interviewing a dozen Realtors. However, the longer you wait, the worse it usually gets.
The market can change on you at any minute. Wait another month and your property could be worth $50,000 or $100,000 less. Or maybe your neighbor loses a similar home to foreclosure and completely trashes your home value by 50%.
Then there are all those nasty risks of natural disasters. Wildfires, electrical fires, earthquakes, storms, and more.
If you are already in a situation where you are behind on your mortgage, property taxes, association dues, income taxes, or code violation fines, waiting is only going to make it worse and slash your options. Some fines can accrue at $1,000 a day. That is more money bleeding out of any proceeds you could get in addition to all of the other holding costs we already mentioned.
Time is your enemy when selling a home. The sooner you can find a buyer, sign a deal and get through the closing the better.
10. Thinking Zillow Zestimates are What Your Home is Worth
Zillow has been a plague on the real estate market for years. Most obviously due to its controversial home value tool. It’s known for being wildly inaccurate and causing much strife between home buyers and sellers, lenders and real estate professionals. A Zestimate is not an appraised value. In the past Zillow has had to restate the values of millions of homes and has even restated years of historical Zestimates. There are now also many conflicts of interest which may influence Zillow to change values frequently for its own financial benefit.
The best gauge of your home value is a true appraisal. Second is comparing similar homes which have sold within 1 mile of yours, within the past 6 months. This includes comparing by square footage, bedroom count, lot size, age, property condition, and swimming pools. Then you may need to deduct the cost of any repairs or needed updates the next buyer will have to do.
Summary
The process of selling a home can be stressful and full of unexpected quirks. Fortunately, by knowing and watching out for these common fails you can skip the headaches, risks and long periods of sleepless nights, and just get onto the next great step in life.
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