Articles and advice about selling a home
With interest rates near historic lows, competition in the real estate market has never been fiercer. You may have spent thousands of dollars upgrading your home, but if you don't price is correctly, a seller's worst nightmare can come true: it can sit on the market for weeks without a buyer in sight.
One of the toughest decisions sellers face is how much to list their property for. If you overprice your home it could sit on the market for weeks, but if you underprice it, you could be leaving money on the table. If selecting your list price causes anxiety, you're not alone. Here are some tips to selecting your home's price.
There's no better way to see how the real estate market is performing than to look at comparable properties. If your neighbour's house down the street sold recently, give the listing agent a call and find out its final selling price. When looking at comparable properties, find similar homes in your neighbourhood. For example, if your home is a two bedroom bungalow, it's better to look at similar two bedroom bungalows that have sold recently than three story century homes.
Understand the type of market
When pricing your property it's important to understand what kind of real estate market you're in. There are three types of markets: a buyer's market (many sellers, few buyers), a seller's market (few sellers, many buyers), and a balanced market (an equal number of buyers and sellers).
Your home should be priced differently depending on the kind of market you're in. For example, in a seller's market you can price your home more aggressively, as bidding wars are common, while in a buyer's market, not only might you have to price your home lower, you could also have to throw in perks like a take-back mortgage.
Days on market
A good indication of the kind of market you're in is days on market (DOM). DOM is a handy measure that tells you the average number of days a home is on the market from start to finish. If you bought a new home and you're closing in 30 days, but the DOM is 90 days, you may need to lower your listing price to sell your home sooner rather than later (or you can always take out bridge financing).
Competitive Market Analysis
A competitive market analysis (CMA) is the tried and true method used by real estate agents to help determine the fair market value of your home. If you're thinking about selling your home, agents will often give you a free CMA to get you to sign on with them. It's important to remember agents have a vested interest – an agent may tell you your house is worth more, just to have you sign with them. It's a good idea to do your own research to find out if an agent is being honest or just blowing smoke.
What is my home's current market value? If you're thinking about selling your home, finding out your home's market value is at the heart of this vital question. Deciding on list price is one of the decisions homeowners dread the most because there's so much at stake. Underprice your home and you'll be kicking yourself for not getting as much as you could; overprice your home and it could sit on the market for weeks and become yesterday's news. The trick is to find somewhere in the middle.
Good listing agents don't just rely on gut feel – most rely on a competitive market analysis (CMA). Agents can access active and sold listings on the MLS (multiple listing services) to help determine a fair market value for your home. Although homeowners don't have the same level of access, there are still things you can do to help determine the market value of your home.
Research public records
Every home sold in your city must be recorded with your local municipality. Since these records are available to the public, you should be able to request access. For example, if you're interested in how much your neighbour's home sold for, this is a great way.
Contact a title company
What's a title company? Title companies usually work with private sellers to help manage closings and ensure title is smoothly transitioned to the new owner. Title companies are often happy to provide you with information on recent sales to hopefully gain you as a client.
Watch new listings in your area
If you notice a “for sale” sign pop up on your neighbour's lawn, you can often follow it from the moment it's listed to when it's sold. If your neighbour's having an open house, you can stop in to see how much it's listed for or you can visit the MLS website to see further details. If you're curious how much it sold for, a quick phone call to the listing agent can get you the answer.
Hire an appraiser
Remember when you first purchased your home and your bank hired an appraiser? If you really want to know what your home is worth you can do the same. An appraiser will help determine your home's current market value. Just remember that this doesn't come on the cheap – you'll often have to pay several hundreds of dollars.
For most families, your home is your most valuable asset. When it comes times to sell, you'll want to get the highest selling price possible. A question sellers often ask is, should I sell my home myself or hire a listing agent?
Although FSBO (For Sale By Owner) has become an increasingly popular trend over the past decade, a listing agent can be worth their weight in gold by guiding you through the home selling process, especially if you're a first-time home seller. Let's take a look at some of the things a listing agent brings to the table.
Listing price is one of the toughest decisions faced by sellers. If you list your home for too much you could frighten away potential buyers, but if you list it too low little you could be leaving money on the table. A listing agent should have their finger on the pulse of the real estate market. They can tell you what's happening in the current real estate market, look at comparable properties, and advise you on a selling price.
It can be difficult for home sellers to look at their lovely home with an objective eye. Just because you're willing to overlook that dingy wall to wall carpeting, doesn't mean buyers will. First impressions are everything – an agent can help dazzle buyers from the moment they step foot in your home by depersonalizing your home, so buyers will be able to picture themselves living there.
Your home isn't the only house for sale on the market. A good agent will be able to help it stand out from the competition to get top dollar. Your agent will be able to pick out your home's key selling features desired by buyers, such as an open-concept kitchen, a walk-in closet, or a bay window.
Compensation is an important factor when choosing a listing agent. You'll want to make sure your agent goes the extra mile to earn their commission. The standard real estate commission is 5 per cent split evenly between the buying and listing agent. If you're buying and selling with the same agent, you should be able to negotiate a lower commission. Although commission can be costly, it can be a lot better than the alternative: selling your home yourself. Also, going with the lowest cost agent can be a case of penny wise, pound foolish if you end up selecting an inexperience listing agent.
One of the most dreaded parts selling a home is negotiating with buyers. Some FSBO companies have gone as far as to offer sellers negotiation assistance. An agent will deal on your behalf with the buyer's agent, so you don't have to haggle over price. Your agent will be able to provide comparable properties to help convince buyers your home is worth every penny.
Showing your home
Selling a home can be a hectic time. Most homeowners don't have time to show their home, especially when they're buying at the same thing. A listing agent will help you save time by showing off your property for you, so you can concentrate on moving, instead of fielding calls and scheduling viewings from potential buyers.
Decisions, decisions. Selling a home is fraught with decision. Should I buy or sell first? How much should I list my property for? What improvements should I make to get top dollar? These are just some of the many questions homeowners are faced with when selling a home.
By choosing the right agent, not only will your toughest questions be answered, the home-selling process should go a lot more smoothly. Choosing your listing agent is an important decision not to be taken lightly. Here are some important questions to ask prospective agents to help narrow the field of candidates and make your final decision.
1. How much experience do you have?
Just like when you're applying for a job, experience matters. If your home is above average in price and location, you'll want an experienced real estate agent to represent you. At least five years' experience is a good rule of thumb. You'll want an agent who's in it for the long haul and willing go the extra mile to ensure your home sells for the highest price possible.
2. How many homes did you sell last year?
Although past performance does not guarantee future results (as the financial industry likes to tout), it's wise to ask prospective agents how many homes they've sold in the last year. An unscrupulous agent who hasn't sold a home in a while may suggest lowering your list price just pocket the commission sooner. A healthy number of sales is a positive sign, but there's such a thing as too many sales, especially if the agent is so busy they won't have time to return your phone calls or attend your open houses.
3. How quickly do you sell homes versus the market?
Days on market (DOM) are one of the key measures in real estate. It measures the age of a real estate listing. In a red hot real market, days on market are typically lower than a balanced or buyer's market. You'll want to know how quickly an agent can sell versus the market. An agent who's never heard of this metric should probably be stricken off your list of potential agents immediately.
4. What is your list price to selling price ratio?
Sellers have the freedom to list their home for as much or little as they want. The list price to selling prices ratio measures how much a home sells relative to its list price. A successful real estate agent who prices homes properly should be able to “beat the street” and sell homes above 100 per cent. Be wary of listing agents who sell homes 120 per cent or more above list price – they may have a habit of underpricing homes to generate a bidding war with the hope the home will sell above its market value. In some real estate markets this strategy works, in other not so much.
5. How will you market my home?
How is your home supposed to sell if nobody knows it's for sale? Marketing your home helps generate interest from buyers. Marketing with some agents only goes as far as a sign on your lawn, while others are willing to go the extra mile by putting your home on TV to generate buzz. It's important to know the services you're getting before you sign up.
In the last article we looked at smart ways to improve your home to get top dollar. Although it would be nice to have oodles of cash in the bank, sometimes you're on a limited budget. If money is tight and you can't afford to spend $50,000 on a new kitchen, there are still plenty of inexpensive ways to improve your home without breaking the bank. Here are renovations and improvements that will improve your home and won't cost you a fortune.
First impressions are everything with buyers. Curb appeal has the potential to make or break your home. There's no easier way to scare away buyers than a dead lawn. Be sure to buy some new grass seed and water your lawn right before showings so it will look its best. To be on the safe side, cut your lawn weekly. If you have bushes or shrubs, make sure they are neatly trimmed.
If you can't afford a few cans of paints, the next best thing can be to wash your home. You can start on the exterior and work your way to the interior. Wash everything from the gutters to the doors and in between. Don't forget to wash your windows so they are bright and looking their best.Reface your cabinetsRenovating your kitchen can be expensive. Even giving your kitchen a simple facelift can cost thousands of dollars. Rather than taking out a second mortgage on your home, why not reface your cabinets? Scott McGillivray host of HGTV's Income Property is a big fan of smart renovations like re-facing cabinets when you're on a tight budget.Pressure wash sidewalks and driveways. When was the last time you washed your sidewalks and driveway? If your car leaks oil all over your driveway, chances are your driveway could use a good washing. Instead of getting down on your hands and knees and scrubbing, you can save time and energy by pressure washing your sidewalks and driveway to make sure they are looking their best.
Before you list your home it's a good idea to have a yard sale to get rid of anything unwanted. Parting with your worldly possessions can be emotional. To make things easier, if you haven't used something for over a year, chances it's taking up valuable space. Your agent can also help you stage your home to make it look its best. For example, you might consider switching to single beds to help make your bedrooms appear more spacious.
Once you de-clutter, the next thing you should do is de-personalize. Although you may cherish your family photos, it's a good idea to store them away when you're selling your home. You want homebuyers to be able to picture themselves living there – that's hard when you've got all your personal belongings laying around.
You've went through the trouble of preparing your home for sale, listing it and showing it to prospective buyers. Your hard work has finally paid off, as you've received five offers on your home. While you may be prepared to jump for joy, you're not out of the woods yet. Each offer can be very different; you'll need to carefully evaluate each one to see which one – if any – you should accept.
If you've received an offer you can take some time to pat yourself on the back. You must have done something right, as a buyer is interested in your property. As mentioned, all offers are created equally. There are two ways to evaluate offers: based on price and conditions. In an ideal world, the seller would receive an offer above asking with no conditions. Unfortunately, it doesn't always happen that way.
For example, let's say you list for home for $425,000 and receive five offers. Two offers are below asking, so you reject them immediately. The third offer is for $425,000 with condition of home inspection, the fourth is $430,000 no conditions and the fifth is $435,000 with condition of home inspection and financing.
At first glance it would seem a no-brainer to take the higher offer price, but you'd be making a critical mistake: you'd be overlooking the fact there are conditions included in the offer. As the old saying goes, a bird in the hand is worth two in the bush. Quite often sellers will accept firm offers for less money, as it's a sure thing. This is an important lesson for sellers and buyers; including a condition in your offer can actually cost you money and potentially your dream home.
When you receive an offer there are three things you can do: you can reject the offer, accept it, or counter offer. For example, if you list your home for $425,000 and you receive a lowball offer of $325,000, you can reject the offer outright to tell the buyer you're insulted with their offer. If you receive an offer above asking of $445,000, you can decide to accept it right around. Your third choice is to counter offer.
A common question is, why wouldn't the seller counteroffer every single offer, even if it's above asking? The answer is simple – when you counteroffer, you give the buyer time to reconsider their decision. You might actually insult the buyer if they offer above asking and you aren't willing to accept. If you're happy with the offer, it's wise to consider accepting right off the bat. If you receive two similar offers, you can always ask the buyers for improvements, but if both decide to walk away you could end up empty handed.
Should I list my home as it or renovate it to the nines? If you're thinking of selling your home, you might consider improving your home to get top dollar. In today's ultra competitive real estate market, it's a competition among sellers to see who can impress buyers the most. Although you can spend thousands of dollars in renovations, few investments yield a positive return on investment. The key is to do the renovations that give the biggest bang for your buck, as the most expensive renovation isn't always the best. Here are some renovations likely to yield a decent return recoup cost.
It's often said your kitchen can either make it or break it with buyers. Your kitchen has the potential to be one of the key selling points of your property or an eyesore. Today buyers are looking for open-concept kitchens with new appliances and a backsplash. If your home's kitchen is dated by a few decades, it may be worth a facelift. If your kitchen just needs a touch up, re-facing the cabinets can be a relatively inexpensive project with great results.
After the kitchen, the most sought after room in homes is the bathroom. If your bathroom still has lime green fixtures from the 1950's, it's probably worth spending some dough to bring it up to par. Today buyers are looking for newer fixtures, glass showers, and roomy medicine cabinets. Before you blow your budget on your bathroom, it's important to determine who your potential buyer could be. If a lot of homes are being topped up on your neighbourhood, why spend thousands on a bathroom renovation, when the new buyers are probably going to gut your home?
Nothing can scare buyers away faster than worn out floors. If your floors are in rough shape, you can reface them to bring back that new floor shine. If you have wall-to-wall carpeting in your home, it may be time to tear up your dingy carpeting and let your floor shine through. Before you tear up your carpet though, make sure your floor underneath is salvageable, as new floors don't come cheap.
Not only is painting inexpensive and a great DIY project, it provides one of the best return on investments of any project. When deciding to repaint your home, it's important to select neutral colours – you may be a fan of bright orange rooms, but potential buyers may not share your taste. Select a colour that will add value to your property, not detract from it.
Windows that let the sun shine through can help your home light up in the eyes of buyers. If your home has drafty and old windows, it may be time to replace them. Not only do new windows let in more light, they can reduce the heating bill for the owners to be. With Enbridge rising its heating rate 40 per cent this year, buyers will thank you for new windows.
The process of selling a home has changed a lot over the last two decades. With the emergence of the World Wide Web in the late 1990's, the Internet has become a must-have for most Canadian families. The Internet has many uses including researching, socializing, and real estate.
Real estate has really taken off thanks in part to the Internet. Today it's easier than ever to find properties online with a couple clicks of your mouse. The Internet isn't just for buyers; it's also a powerful tool for sellers. Here are some of the ways sellers can use the Internet to their advantage.
Real estate aggregator
One of the most powerful ways to sell your home online is through a real estate aggregator. What's a real estate aggregator? It's a website that gathers listings from other websites, conveniently listing them in one spot for buyers. If your home is listed on MLS (multiple listing services), the good news is it should automatically appear on other websites at no extra cost. This should help get the word out your home is for sale and increase showings.
MLS isn't the only game in town. Online classified websites like Craigslist and eBay can help let buyers know your property is on the market. The great part about the Internet is you can include photos of your home to impress buyers right off the bat. Be sure to inquire with your local newspaper to see if you can list your website in print and online.
Domain name and website
If you really want to go the extra mile, you can set up a website for your home. You don't have to be a computer programmer to create a website – your listing agent should be able to help you out. A domain name and web hosting can be purchased relatively inexpensively. It's a great way to help your home stand out from the pack. Although there are free webhosts out there, paid hosting and a domain name will help you appear professional to buyers.
Don't underestimate the power of social media. Website like Facebook and Twitter aren't just for catching up with your friends – they can be a powerful way to advertise your property and generate interest. Advertising your property can be as simple as a Facebook status update or a Tweet, or you can take it a step further by purchasing ad banners. With millions of Canadians on social media, it would be foolish to overlook it!
When you're selling your home, that last thing you want is to run into buyer's remorse with the purchaser. What's buyer's remorse? It's the sense of regret from making a purchase. It is frequently associated with major purchases like a home or car. It can be caused by a number of factors, including the fear of making the wrong choice, guilt over overindulgence, or a suspicion you've been influenced by the seller. Buyer's remorse can kick it at any time – it can happen right after a purchase or days later. When you're the seller, you want the purchaser to avoid buyer's remorse at all cost, as it could put your deal in jeopardy. Here are three ways you can help put buyers at ease and avoid buyer's remorse.
When selling your home, it's important to get inside the head of the buyer. You want to get to know the buyer and why they are purchasing your home. For example, the buyer may be relocating for a new job or moving to be closer to schools. Once you find out the buyer's motivation you can use it to your advantage. We all like to be told we made the right choice. Be sure to remind the seller why they bought your home and why it's a good decision.
Buyers like to be reminded about why they made the best purchase. Continue to sell the buyer on the benefits of your home, even after the sale. Tell them why your home offers the best bang for the seller's buck in the neighbourhood. Be on the lookout for factors that could help your case, such as home selling above asking in your area. You can boast to the buyer your home provides excellent value.
The final step to avoiding buyer's remorse is to reassure. Reassuring the buyer will help them avoid the anxiety that comes with a major purchase. How do you calm their fear? A good start is to introduce the new buyers to the neighbours next-door. Next you can give them a guided tour of your neighbourhood and tell them about your fond memories in your house.
If you do all three steps correctly, you can speed up your deal and ensure the buyer doesn't switch their mind after the fact.
Buyers aren't the only one stuck footing the bill come closing time. As a seller, you should be prepared for the transactional cost of selling real estate. Closings costs are anything but a drop in the bucket – closing costs can amount to anywhere between 1.5 per cent and 4 per cent of your home's selling price.
Most closing costs articles are from the buyer's perspective. While there some closing costs the buyer needs to cover, the seller has closing costs of their own to worry about. It's important to budget for closing costs, especially if you're buying and selling a home at the same time, as they can really add up. Let's take a look at the most common closing costs faced by sellers.
A new trend in real estate is for sellers to commission their own home inspection. As the saying goes, sometimes you have to spend money to make money. Sellers should view an inspection as a wise investment that can result in a higher selling price.
In a seller's market where multiple offers are common, having a home inspection report available for buyers to review can help your home sell for a higher price. Some buyers will not feel comfortable putting in a clean offer without a home inspection, but with a home inspection they may put in an offer they otherwise wouldn't have. For a nominal fee of $100, buyers can even do a walk-through with the inspection.
Real Estate Agent Commission
A lot of buyers are shocked when they find out they don't have to pay real estate commission when buying a home (at least not directly), it's the seller that foots the bill. Real estate commission is often the most costly closing cost faced by sellers. Commission is usually calculated as a percentage of selling price; the standard in the real estate industry is five per cent for the selling and listing agent.
A growing trend is for more flexible commission arrangements. In Vancouver where the average home prices have skyrocketed, five per cent represents a pretty penny. You may be able to negotiate a lower percentage or a fixed fee instead.
Real Estate Lawyer Fees
Real estate lawyer fees is one of the closing costs both buyers and sellers need to cover. Selling a home is most likely the single largest financial transaction of your life, so you'll want to ensure it's done correctly. A real estate lawyer will make sure you are legally protected and the deal goes through smoothly. Some of the important things your real estate lawyer does include making sure your title is free and clear, preparing the deed, and preparing the statement of adjustments.
Mortgage Penalties: The Greater of 3-Months Interest or the IRD
If you own your home free and clear with no mortgage you can ignored this cost. However, if you still have a mortgage, you should inquire about this before you list your property. Mortgage penalties can be hefty for sellers. The first thing you'll want to do is find out if your mortgage is portable. If you're buying a home with a higher purchase price, you can blend and extend your mortgage.
Mortgage penalties are straightforward for a variable rate mortgage – three months' interests. If you have a fixed rate mortgage it's a little more complicated: you'll pay the greater of three months' interest or the interest rate differential.
Even though your home may not be new anymore, there are still plenty of things you can to ensure it's looking its best for showings. With so many ways you can stage your home, what's a seller to do? Here is a list of the best home staging tips and tricks:
Cleaning was listed once again as number one by agents in the “Home Sale Maximizer Survey.” Cleaning entails tidying and de-cluttering your home. You'll want to tidy your home from top to bottom and make sure everything is put away nicely. To help make things go quicker, have your family pitch it.
2. Light it up
There's no better and more cost effective way to help your home look its finest than lighting. Improving your lighting goes beyond simply turning on your lights; you'll want to make sure broken light fixtures are repaired, new light bulbs are installed, and don't forget to open your blinds and curtains to let the sun shine in.
3. Home staging
Four out of five (80 per cent) agents recommended staging your home. The good news is you don't have to spend thousands of dollars to stage your home. Listing agents see home staging as a good investment because it helps attract a higher selling price and they may even be willing to foot the bill. If you're not so lucky, there are some simple things you can do like putting out fresh flowers to stage your home yourself.
One of the benefits of owning a condo is that you don't have to worry about the landscaping – homeowners aren't so lucky. Number four on the list is landscaping. Be sure to mow your lawn at least once a week and water your lawn before each showing. You'll want your home to have a good curb appeal; there's no easier way to scare away buyers than with a brown lawn!
5. Plumbing and electrical
You know those home repairs you've been putting off for years? While you've managed to deal with that leaky faucet, homebuyers might not be so forgiving. If you're not a handyman, hire a plumber to o provide a helping hand. If there are electrical outlets that don't work in your home, hire an electrician to fix them. If you don't bother to mention issues to buyers and they discover them on your own, they might wonder what else you're trying to hide.
When you finally sell your home it's time for celebration, but don't crack open the bubbly just yet. There's still a lot of work that needs to be done before it's a done deal. It would be nice if selling your home was as easy as selling your used video game console on eBay. Unfortunately, there are quite a few steps sellers need to take before the deal is finalized and the buyer takes possession.
Agreement of Purchase and Sale
Closing typically ranges from 30 days (known as a “quick close”) to 90 days. The clock starts ticking on the closing process once you've accepted an offer from the buyer. Of course, sellers rarely accept the very first offer they receive. Most often you'll negotiate back and forth with the buyer before settling on a final selling price. Once an Agreement of Purchase and Sale has been signed by both parties, it's time to get the ball rolling on the closing process.
When a buyer makes an offer, they are expected to make a deposit (often five per cent of selling price) to show their offer is in good faith. This is to show the seller they are serious about purchasing your home and aren't going to just walk away if they change their mind. Rarely are the funds paid directly to the seller (it's inadvisable); the funds are typically held in trust until the deal is finalized.
Prior to closing all conditions of the deal must be met. If the buyer signed an unconditional offer (otherwise known as a clean offer), you can skip this step; however, if there are conditions, they must be met before the deal is finalized. Conditions should be spelled out in the Agreement of Purchase and Sale and typically have a stated deadline to be met. For example, the buyer may have four days from when the agreement is signed to get approval from their mortgage lender and conduct a home inspection.
Real Estate Lawyer
Once the stipulated conditions have been met, it's time to finalize the deal with your real estate lawyer. Your real estate lawyer will make sure you are legally protected and that the deal goes through smoothly. Some of the important things your real estate lawyer does include making sure your title is free and clear, preparing the deed, and preparing the statement of adjustments.
In the final week you'll have a meeting with your real estate lawyer to sign the closing documents. On your closing day you'll receive a phone call from your real estate lawyer to indicate the deal has closed. If you're buying and selling at the same time and your closings fall on the same date, hopefully you can time them so you can move on the same day to ensure everything goes smoothly. Congrats, you've successfully sold your home!
We're currently in the midst of one of the longest seller's markets in history. For over a decade, sellers have been in driver's seat when it comes to real estate transactions, but it hasn't always been that way. Rewind to the late 90's, when there was a buyer's market and sellers couldn't give away their properties. We may be in a hot real estate market right now, but it would be foolish to think it will last forever.
You may be wondering why real estate activity is typically lower in a down economy. The reason is simple: fewer buyers are looking to upsize if they are uncertain about their job security. Furthermore, the transactional cost of real estate, typically 1.5% to 4% of selling price, acts as a deterrent to sellers. Now that you understand why you may consider offering incentives, let's take a look at selling incentives you can offer to buyers in a down economy.
Vendor Take-Back Mortgage
Vendor take-back mortgage used to be popular in the 90's, but today you'd be hard-pressed to find them. What's a vendor take-back mortgage? It's a type of mortgage where the seller offers to lend funds to the buyer to help finance a home purchase. Why would a seller lend money to a buyer? A buyer may have poor credit or may not be able to secure enough financing from primary lenders like banks and credit unions. The interest rate offered is totally up to the seller; you can offer a rate above the going mortgage rate if you so desire. Vendor take-back mortgages can be risky, as there's no guarantee the buyer will pay you back in full. The last thing you want to do is go to court to try to recover the funds.
Contrary to popular belief, closings costs aren't just a drop in the bucket. Closing costs can add up to anywhere between 1.5% and 4% of a home's selling price. If the buyer has the minimum 5% down payment with no further savings, offering to cover the closing costs can help seal the deal.
Rather than cover the closing costs yourself, an alternative is to suggest the buyer apply for a cash-back mortgage. Although the buyer will pay a higher mortgage rate, at least the sellers won't have to cover the closing costs themselves.
A home inspection is a major expense for buyers. The typically home inspection starts at $400. Although you can skip the home inspection if you're short on savings, it's probably not a wise decision. Instead of each buyer paying for their own independent home inspections, the seller can pay for their own home inspection and make it available to buyers. This can actually result in a higher selling price, as buyers will feel a lot more confident making an offering knowing your home has a clean bill of health.
When it comes to home improvements, there's a lot of misinformation out there. It can feel overwhelming as a homeowner to decipher what is fact and what is fiction. But like a detective on Law & Order, you need to access the facts and decide which renovations make the most sense. Unless you've won the lottery you're most likely working on some kind of budget. Let's separate fact from fiction and dispel the top home improvement myths out there today.
Remodelling projects will always add value to my home
This is simply untrue. In fact, the opposite is true. You'll be lucky to achieve an average recover rate of 100 per cent on most projects. The most popular and costly renovations like a new or improved kitchen and bathroom yield an average recovery rate of only 75 to 100 per cent . That means you could spend $20,000 on a new kitchen and only end up with an increase in value of $15,000 on property.
There's also such a thing as overbuilding in your neighbourhood. For example, if you top up your home and it's the most expensive home on the street, buyers might see it as a fish out of water and baulk at the higher listing price. A lot of the money you invested in renovations could be for naught if you don't renovate your home smartly.
Purchasing the highest quality materials always attracts more buyers
While your new granite countertops may impress your friends, it may scare some buyers away. Budget conscious buyers, especially first-time buyers, may be out of the running. With fewer buyers, this can result in lowering your listing price after the fact. This is the last thing you want to do when you've spent thousands in home renovations.
Adding square footage always add value to my home
In most cases adding square footage to your home will increase its value, but not always. It's important to add useable square footage to your home that buyers can enjoy. For example, you can increase the square footage of your home by finishing the attic, but you probably won't get the biggest bang for your buck if the ceilings are only 4 feet high and you can't stand up. Not to mention that fact it could add to your heating bill.
Neutral colours are always best
Before you list your home, it's a good idea to give it a fresh coat of paint. One of the things that homeowners struggle with is the paint colour to choose. To be on the safe side, we're told to go with neutral colours. Although eggshell white may seem like a safe bet, it will leave very little to the imagination for buyers. Instead it's worth consulting with an interior designer to help choose safe, but lively colours that will add value and warmth to your home.
A lot of sellers make the mistake of assuming a real estate transaction is a done deal once the buyer has signed the Agreement or Purchase and Sale. Although the majority of deals go through smoothly, as the old saying goes, don't count your chickens until they hatch. There are still plenty of things that can put a deal in jeopardy before your closing date. To avoid the heartbreak of losing a sale it's important to be aware of the top reasons sales fail.
What's buyer's remorse? It's the sense of regret from making a purchase. It is frequently associated with major purchases like a home or car. It can be caused by a number of factors, including the fear of making the wrong choice, guilt over overindulgence, or a suspicion you've been influenced by the seller. Buyer's remorse can kick it at any time – it can happen right after a purchase or days later. When you're the seller, you want the purchaser to avoid buyer's remorse at all cost, as it could put your deal in jeopardy.
Just because your home sold $50,000 above asking, doesn't mean the buyer's lender agrees with its value. In a seller's market where multiple offers are common, it's not unheard of for lenders to come up with a lower value once the appraisal is conducted. This can leave buyers scrambling for the extra funds. If a condition of financing is included in the deal, buyers can weasel out of the deal. If it's not, buyers will have to come up with the extra funds themselves. Coming up with an extra $50,000 can be difficult and can put your deal in jeopardy. Buyers might have no choice but to lose their deposit if they can't come up with the extra funds.
Poorly written conditions
An Agreement of Purchase and Sale is an important document, as it represents a legal contract between the buyer and the seller. You'd think writing conditions would be second-nature for real estate agents. Unfortunately, it's not unheard of for the buying agent to include poorly written or ambiguous conditions. For example, the buyer may request a condition of a home inspection, but not stipulate how many days it has to be completed in. To avoid this situation, it's a good idea to have your real estate lawyer review your Agreement of Purchase and Sale before you sign. This can avoid being caught in the middle if you run into problems with the signed contract.
A home inspection is a common condition that causes a lot of angst for sellers. It's not unheard of for buyer's to walk away from deals after a less than perfect home inspection. This can make it difficult for the seller to put the home back on the market, as buyers will wonder what's wrong with the property. To avoid this, you should include in the Agreement of Purchase and Sale the right to review any inspection conducted by the buyer, so you'll at least know why the buyer is deciding to walk away from the deal.
When you're selling your home, who doesn't want to get top dollar? Even though we're in a seller's market, the competition has never been fiercer between sellers trying to outdo each other. The real estate market hasn't always been this hectic. In a buyer's market when there are many houses for sale, how do some homeowners end up selling your home for top dollar? It's all comes down to pricing strategy. Here are our top tips for selling your home for top dollar.
Price your home right
When you're selling your home, it's important to remember you're not alone. Neighbours selling their home should be treated as your competition. Most buyers won't just visit one property before they fall in love. You should take the time to view homes in your neighbourhood to see how they stack up against yours. For example, if your home is listed for $550,000, but your neighbour's home is listed for only $525,000 and has nicer upgrades, you're probably going to have a hard time selling it without lowering the price.
When choosing your list price, it's important to consider price points. Price points are used by buyers to search for homes. For example, some buyers will only look at homes priced below $400,000; if your home is priced for $405,000, you might be missing out on a large part of the market. Furthermore, homes over $1 million can be an especially tough sell, since CMHC no longer provides mortgage insurance. Homebuyers will need to come up with a 20 per cent down payment on their own, which can be daunting to say the least.
Value range marketing
When choosing a list price it's important to understand how negotiating in real estate works. The buyer and seller are at odds; while the buyer would like to purchase the home for as little as possible; the seller would like to sell for the most money possible. In the middle is the happy medium, the final selling price. By pricing your home in the middle, you can attract more buyers and avoid the risk of selling your home for less than you had hoped – it's a win-win situation.
Offer a bonus to selling agents
Have you ever heard of the phrase, “penny wise, and pound foolish?” As the old saying goes, sometimes you have to spend a little money to make money. The typical real estate commission is five per cent split equally between the listing and selling agent. By offering the selling agent something extra, they may be more willing to show your home. If you decide to sell your home, it's no coincidence selling agents won't line up to see it; if there's no commission in it for them, you could face an uphill battle.
Contrary to popular belief, home inspections aren't just for buyers. If you're selling your home, paying for a home inspection can be a wise investment. In red hot real estate markets like Toronto and Vancouver where bidding wars are the norm, getting a pre-inspection can lead to more offers, which could result in a higher selling price.
Why get a pre-inspection? A pre-inspection can alert you to issues that you can remedy before listing your property that may have caused sellers to balk. It's important to hire an experienced and certified home inspector, just like you would if you were buying a home. Here are the most common types of pre-inspections sellers can get on their home.
Whole Home Inspection
When you think of a home inspection, this probably comes to mind first. As its name alludes to, a whole home inspection examines every nook and cranny of your home. From your roof to your furnace and in between, your home inspector will look for any areas of concern. While a lot of buyers are worried about the cosmetics of a home, it's the stuff hidden in the walls that can be the most costly to repair like the electrical, heating, and plumbing.
Pest and Dry Rot Inspection
Even if you live in a cooler climate, your home can still be susceptible to pests. Some pests are easier to identify than others – that's why it's important to hire an experienced pest control specialist. For example, it should be pretty obvious if you have a problem with carpenter ants, but termites can stay hidden inside your walls and cause a lot of damage before you discover their presence.
If your home is located out in the boonies in a rural community, you may still rely on a septic tank or a well for clean drinking water and sanitation. A septic inspection will ensure your water is safe to drink and free from harmful bacteria. You'll also want to make sure the septic tank and waste water lines are functioning properly.
If water floods into your basement every time it rains, chances are you have a crack in your foundation. The first step to remedying foundation issues is to hire an inspector that specializes in foundation inspections. A foundation inspection makes the most sense with older homes built around the turn of the century; it's probably not worth it for newly-built homes.
Not only can swimming pools can be a liability, they can cost a bundle to repair. Did you know that you need to line a swimming pool on average every 10 years? This can cost thousands of dollars. It's better to resolve any issues with your pool ahead of time, as opposed to risk losing a sale, as buyers aren't usually the biggest fans of pools to begin with.
A lot of sellers feel stress and anxiety from the daunting task of determining a listing price. There's so much at state with your listing price – the listing price can determine whether a home sells or sits on the market for weeks. Your listing price shouldn't solely be based on gut feel – a lot of time and effort should go into determining your listing price. Your listing agent should perform a CMA (competitive market analysis) to help determine the best price for your home. Price points play a big role in determining your list price.
What are price points?
One of the factors sellers often overlook when coming up with a list price are price points. To understand the importance of price points, you need to think like buyer. When buyers are looking for their dream home, they don't just aimlessly drive around looking for their dream home on the street. Most buyers use MLS (multiple listing service) to locate homes.
A selling agent typically sets up email alerts, where homes are sent via email to buyers. Rather than send every single home for sale in the neighbourhood, agents can narrow down the listings by using certain criteria. One of those criteria is list price. Agents typically select a range of prices for buyers. For example, if you've been pre-approved for a home price of up to $550,000, you may tell your agent you'd like to view homes listed between $400,000 and $550,000.
Why do price points matter?
Price points matter because they can help interested buyers locate your home. For example, if you price your home at $198,000, while the majority of buyers are looking for homes valued $200,000 or higher, you may be ignoring a significant portion of the market. You can end up with a lower selling price if you price your home at a lower price point. By increasing your price to $205,000, you could increase your showings and have a better chance of sell your home for top dollar.
Setting your price point
Setting your price point is all about marketing. When you visit your local Wal-Mart and see a product for $6.99 and one for $7.00, even though $6.99 is only one cent cheaper, it can seem like a lot better deal in the mind of the buyer; the same can be said for price points for homes. If you price your home at $399,750, it sounds like cheaper than $400,000, although the buyer is only saving $250. Although buyers and sellers rarely sell at the listing price, starting with an attractive listing price can help gain the interest of buyers and eventually result in a sale.
When you're selling your home it can feel like you're living in a hotel – unfortunately, without the benefit of room service. You'll want to keep your home spick and span and looking its best for potential buyers. If your dishwasher is full of dirty dishes and your home needs a good vacuuming, buyers could think twice about putting an offer in on your home. You want your home to truly shine when buyers walk through the front door, so they can picture your house as their home. Here are some simple things you can do to help ensure your home looks its best.
There will be a lot of people walking through your home, so it's a good idea to sweep before and after each showing. Be sure to sweep in the highest traffic areas like your kitchen, bathroom and entryway. A dust pan and broom can do wonders for your home.
Take some time to get rid of the dust bunnies and cobwebs lurking in your home. Be sure to dust objects that attract the most dust like curtains, electronics and couches. Some buyers may have allergies to dust – you don't want them to leave your home because of a runny nose.
Take some time to tidy your kitchen counter. Put that blender away you haven't used for months that's taking up ample space. This can also be the perfect time to get a head start on packing, but putting away anything extra you don't need.
There's nothing that scares away buyers quicker than a messy bedroom. Take some time to make your beds and put away your clothes. Make sure your closet isn't jam-packed with clothes; although you may have a walk-in closet, buyers won't appreciate it if they can barely get the door open!
As I mentioned it's important for your home looking like a hotel. Just like a hotel your garbage cans should be emptied before and after showings. Ensure your garbage cans are odour-free and looking their best.
Buyers aren't the biggest fan of carpets to begin with. If you're sticking with carpets, it's a good idea to vacuum them to ensure they are free from dust. If your carpets are dirty, you can use a carpet cleaner to help make them look brand-new.
Lights on, blinds open
Let the light shine into your home by opening the blinds during the day. If you're showing your home during the night, be sure to have the lights on in your home. Although it may crank up your electricity bill, the last thing you want is to face a lawsuit from a buyer who trips and falls down a flight of stairs to the basement.
Choosing a list price is one of the toughest decisions faced by home sellers. Your list price will have a big bearing on whether your home sells quickly or sits on the market for weeks. Through competitive market analysis (CMA), your real estate agent should help determine your pricing strategy.
When selling your home, it's important to think of your neighbours as competition. Although they may be your friend, buyers looking to purchase in your neighbour will more than liking view homes around your area to see how they stack up against your own. If your home is the highest priced and offers the least, it could sit on the market for a long time.
What are signs a price reduction may be in order?
Once your home hits MLS (multiple listing service), you should expect the agent calls to come flooding in. If after the first week you haven't heard a peep, then you have a problem. A lack of showings is a telltale sign that a price reduction is in order. Refusing to lowering your price and hoping for a white knight to come to the rescue and offer you full price is a pipe dream that can end up costing you big time. If selling agents see that your home has been sitting on the market for weeks without a buyer, they might come in with lowball offers, hoping that you're desperate to sell.
When should you reduce your price?
A lack of showings is definitely a symptom that home buyers feel your home is overpriced. Before you lower your price, you should look at a vital statistic: days on market (DOM). DOM measures the average number of days it takes for homeowners to sell their home from initial listing to acceptance of an offer. In hot real estate markets, DOM typically is fewer days than a buyer's market. For example, if DOM is 30 days and your home has been sitting on the market for 60 days, it's a clear sign a price reduction and perhaps a new marketing strategy are in order.
What are alternatives to lowering your price?
The time of year you list your home can have a big impact on if your home sells. Winter is typically a slower time of year for real estate. This can be a good thing or a bad thing for sellers. Although you have less competition from fellow sellers, there are fewer buyers out looking for a home. By waiting until spring you can typically have a lot more showings, although you'll have more competition from sellers. Sometimes you don't have a choice about when you're selling your home due to job loss or marital breakdown; although it's important to keep in mind your pricing strategy should be different depending on the season.