It’s a tough time to sell your home in this market. You are competing with bank owned homes and short sale properties that have driven down home values. What can you do to compete and maximize your sales price?
The first thing you need to do is recognize your competition. By that I mean physically what condition are the homes in your area?
REO’s and short sales are almost always in some sort of disrepair or in need of deferred maintenance. One of the things that you can do is make sure your home is in the best condition that you can afford to make it. A fresh coat of paint, landscaping, new appliances, new carpet or if the carpet is still in good condition, a good carpet cleaning will all give you an advantage over the bank owned and short sale homes.
Be sure to keep your home clean and tidy. Do any dishes before you go to work. Make the beds every morning. Pick up pet waste if you have animals. Mow the lawn and trim the shrubs and bushes. Buy some inexpensive room scent wicks to make you home smell good. Buy some flowers and put them in vases in a couple of rooms in the home. These small things will make potential buyers feel your home has more value than the competition.
The second thing you can do is to offer a buyer assistance with their financing.
Again, the bank owned and short sale homes either do not have the ability or the desire to assist a buyer with financing and or closing costs. One way to maximize your sales price is to offer to “buy down” an interest rate for a buyer. This can be done in several ways, but as an example, if the going rate for a 30 year fixed loan is 5%, the seller could offer a loan at 3% for the first year of the loan, 4% for the 2nd year of the loan, and then the 3rd year thru the 30th year would be at 5%.
The buyer gets to use the initial interest rate to qualify for the new loan, thereby being able to purchase a more expensive home. Another option to maximize your sales price is to offer to pay some or all of the buyers closing costs. A good number of buyers in this market are first timers, have good income but are short of closing costs.
These buyers typically are willing to pay more for the home if the seller is willing to contribute to the closing costs of the buyer. So while the seller will incur costs to “buy down” a rate or pay for closing costs, my experience has been that when the dust settles, the seller comes out ahead.
The 3rd thing a seller can do to maximize their sale is to be creative with financing.
If there is a loan on the property currently, offer to have the loan taken subject to the existing terms and conditions. There are a lot of buyers out there who have had their credit harmed over the last few years. A buyer can bring in cash to the loan to close the escrow.
For example, if the agreed upon purchase price is $400,000 and the existing loan is $325,000, the buyer would need $75,000 plus their closing costs to close escrow. But there is no qualifying for the existing loan and the number of buyers that are looking to get into the market is huge. There is no appraisal so as long as the buyer and seller agree on a purchase price; the seller can again maximize their profit.
The only potential issue there, is a due on sale clause in the deed of trust that could be called should the existing lender so choose. This should be fully disclosed to all parties prior to entering into a purchase agreement. Along those same lines, if the seller does not need the equity from the sale, another option is seller financing.
Again the seller can maximize his profit by agreeing to carry a 2nd deed of trust. This would give the seller income as well. It would not be farfetched to ask for an interest rate of 7 or 8% in today’s market and considering the interest that the banks and financial institutions are paying on saving accounts and CDs this is a very good rate of return.
While some of these ideas may not be conventional methods to market your home, you need to think out of the box. Long gone are the days when you could put a sign in your front yard and sit back and wait for a buyer to come along. It is dog eat dog out there right now and the seller that uses all the marketing strategies to their benefit is going to be the victor!
Based in San Diego, California, Quality First Real Estate provides a broad array of real estate services including representing sellers in listings, buyers on the purchase of properties, mortgage loans for purchase and refinance, home marketing for lenders and home managers, and property management. With decades of successful experience in the Southern California real estate industry, working with a wide range of individuals and companies, QualityFirst can provide ALL the services needed for those looking to sell or purchase REO homes and properties. 2763 Camino Del Rio South #300 - San Diego, CA 92108