Key elements of getting “Top Dollar”

Real estate and physics have some very basic fundamental principle and law. In physics the law of gravity is paramount.  If you throw a ball up, you know that it is going to come down.  Tough to defy this law.

 

In real estate, the most basic Law, is that the better your home looks, the faster it will sell and for more. Tough to defy this law.  Therefore, as a seller it is necessary to prepare your home properly for sale.  You want your home to look really nice and be shown in the best possible light.  This can be easily accomplished in a short period of time.

Home Staging Tips for Home Sellers “Get Ready To Move — Start Packing”

Try looking at your house “THROUGH THE BUYER’S EYES” as though you’ve never seen it or been there before. Any time or money invested on the following will bring back more money in return, and hopefully a faster sale.

INSIDE the HOUSE:  I have 9 home staging tips for you

OUTSIDE the HOUSE:  I have 6 home staging tips for you

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Selling for Top Dollar

Want to sell your home quickly and for top dollar?  “Staging” can help.  “Staging” is presenting your home in its best and most appealing light to the majority of home-buyers.

In theory, “staging” isn’t hard or costly, but in reality, many homeowners find it difficult because it’s often hard to see something objectively when we love it.

An easy way to see effectively “staged” homes is to visit decorated models.  Decorating a model is expensive, but builders are willing to invest the cost because they understand just how well a “staged” home sells.  You too can profit from this knowledge.

Odors the #1 Deal Killer of Sales

Odors are the number one deal killer, yet they are often ignored by sellers. Costing them thousands of dollars, because the potential buyers are turned off. Their desire for the house is limited or they are so much turned off that they have no interest. Agents will tell you that some buyers will not even walk through a home with cigarette or pet odors. They leave and go to the next house.

Homes with odors need to do every thing they can do to eliminate these odors.

�         Have the carpets, drapes and upholstery furniture professionally cleaned.

�         Do not allow smoking in the home once the decision to sell is made.

�         No cooking in the kitchen that produce negative cooking odors – fish, etc.
�         Musty odors should be aired out and eliminated, fresh paint smells aired out; refrigerator smells -put a box of Armor Hammer baking soda in the back of it.

Spot and Fluffy may be costing you Thousands

Many buyers area allergic to pets or afraid of them. To you they are like family members and loved as much as one. However, you need a plan on how to handle the issue of your pets.

Guard dogs should be closely monitored and not around when the home is being shown. They are a legal liability if they bite someone or cause a injury in some way. Often small children assume they are friendly and end getting bit.

Open houses – try to make arrangements for the pets to go to the neighbors or on a little trip. Barking or sniffing dogs can annoy a buyer or distract them. Then they miss the great features of your house.

Cats. People who have allergies may leave your home without ever touring it. Others worry about odors and cat hair. Neither are a positive when showing your home.

Capital Gains, Profit from Real Estate and Taxation

Money gurus are always preaching long-term investing. Not only will that give you a better shot at earning more, it’ll also get you a lower tax rate when you sell.

But exactly what rate you get depends on several things, including when you bought the asset, when you sold it, your overall income level and sometimes what tax-code changes are made in the meantime.

Currently, capital gains may be taxed at 5 percent, 15 percent, 25 percent or 28 percent or a combination of rates. These tax levels are known as long-term capital gains and apply to assets that you hold for at least 366 days (more than one year). The long-term capital gain tax is, generally, much lower than what you pay on your regular income.

In fact, it is a taxpayer’s income level that generally determines which capital gains rate is owed. If your profit pushes you into a higher bracket, you could possibly be taxed at a combination of rates.

And you could face yet another rate depending upon the type of property you sell.

Rates cut in May 2003
For many years, investors whose overall income put them in the top four income-tax brackets faced a long-term capital gains rate of 20 percent, while lower-income investors paid capital gains taxes of 10 percent.

Tax-law changes in May 2003, however, lowered the rates by 5 percent each. Most investors, which generally means folks in the higher income ranges, now find their capital gains taxed at 15 percent. But if you don’t fit into this most-common capital gains mold, here’s a breakdown of all the tax levels.

Remember, each of these is the long-term capital gains rate. In most cases, that means you have to hold an asset for more than a year before you sell it. If you cash it in sooner, you’ll be taxed at the short-term rate, which is the same as your ordinary income tax level and could be as high as 35 percent on 2005 returns.

These lower rates are scheduled to expire in 2008, but Congress is debating whether to extend them through 2010. Supporters of continuing the lower rates say investors need some rate certainty for planning purposes. The biggest argument against keeping the rates low is the increasing federal budget deficit.

5-percent rate
This capital gains rate applies to taxpayers in the 10-percent or 15-percent income tax brackets. They will pay a maximum 5-percent long-term gains rate on property held for more than a year.

Lower-income investors get an even better investment sale deal in 2008. That year, these filers will pay no tax on sales of long-term holdings.

The 5-percent rate still applies to a portion of your gains even if your asset sale pushes you into a higher bracket. For example, if, as a single filer, your taxable income was $25,000 but you netted another $7,000 from a long-term stock sale, some of that gain would still be taxed at the lower 5 percent capital gains rate even though technically you were bumped into the 25-percent tax bracket.

In this case, $29,700 (the income ceiling for the 15-percent bracket) minus your ordinary income of $25,000 gives you a $4,700 capital gains cushion at the 5-percent level. Only the remaining $2,300 of gain would be taxed at the 15-percent rate applicable to your new, higher tax bracket.

15-percent rate
This most widely paid capital gains tax rate applies to long-term investments by individuals in the 25-percent or higher tax brackets. When you hear “lower capital gains rate,” it generally means this level, because there are few investors with incomes low enough to qualify solely for the 5-percent rate.

25-percent rate
This rate applies to part of the gain from selling real estate that depreciated. Basically, this keeps you from getting a double tax break. The Internal Revenue Service first wants to recapture some of the tax breaks you’ve been getting via depreciation throughout the years. You’ll have to complete the work sheet in the instructions for Schedule D to figure your gain (and tax rate) for this asset, known as Section 1250 property. More details on this type of holding and its taxation are available in chapter three of IRS Publication 544, Sales and other Dispositions of Assets.

28-percent rate
Two categories of capital gains are subject to this rate: small business stock and collectibles.

If you realized a gain from qualified small business stock that you held more than five years, you generally can exclude one-half of your gain from income. The remainder is taxed at a 28-percent rate. If you’ve already hired a tax professional to help you sort out the 25-percent rate on depreciable property, she can help you figure this tax, too. Or you can get the specifics on gains on qualified small business stock in chapter 4 of IRS Publication 550, Investment Income and Expenses.

If your gains came from collectibles rather than a business sale, you’ll still pay the 28-percent rate. This includes proceeds from the sale of a work of art, antiques, gems, stamps, coins, precious metals and even pricey wine or brandy collections.

Five-year rates disappear … for now
The changes that dropped long-term rates also eliminated (for transactions after May 5, 2003) two capital-gains rates that previously had been in effect.

The 8-percent and 18-percent rates existed for investors who were committed for the longer haul. Both of these rates, the 8 percent one for taxpayers in the 10-percent and 15-percent income tax brackets, and the 18-percent rate for those in the top four brackets, were applied to assets held for at least five years. By dropping simple long-term (more than one year) rates even lower, the latest capital gains changes supersede the five-year rates.

However, depending on future tax legislation, the five-year rates (as well as the “old” 10-percent and 20-percent long-term categories) might return.

For now, the 5-percent and 15-percent rates are in effect only through 2008. The temporary time frame was included to ensure that the tax cuts didn’t produce too much red ink on the federal budget ledger sheet. On Jan. 1, 2009, prior law will reappear if lawmakers do not make any further changes.

So, what’s an investor to do? Since most people will pay less taxes on their long-term gains thanks to the new laws, financial experts say to take advantage of today’s lower rates when they fit into your portfolio plans.

But don’t forget about the Dec. 31, 2008, deadline. And definitely keep an eye on federal tax-law writers in the interim.

How much work should you do before selling?

Recently a couple that owned a home in Berkeley, Calif., decided to move to neighboring Piedmont. They started their search by visiting Sunday open houses. It was quite apparent to them which listings had been prepared for sale and which ones had not. They were invariably drawn to listings that were charming, clean, and uncluttered.

Looking at open houses helped this couple realize what they needed to do to their Berkeley home to ensure that it would attract buyers. By the time their home went on the market, it was charming, clean and uncluttered. It sold quickly and the sellers realized a handsome profit.

As a seller, you have several options when considering how much work to do before selling. One option is to do relatively little and sell the property in it’s “as is” condition. Another is to invest time, effort and money into fixing the property up before you sell. A third option is to do a combination of the first two approaches.

In making your decision, keep in mind that in general buyers pay more for homes that are in move-in condition. Most buyers would prefer to buy a turnkey listing that doesn’t need a lot of work. A home in great condition will usually attract more buyers than will one that doesn’t show well and needs a lot of work.

But there is a market for fixer-upper properties, although it is more limited. Fixer buyers will pay more for fixers that have a big upside potential. Fixer listings sell at a discount when compared to listings that are in move-in condition.

HOME SELLER TIP: A higher sale price is not the only benefit to be derived from fixing up your home for sale. If you’re doing the fix-up work, rather than the buyer, you have control over the improvements. You can shop the repair work for the best price. This can save you as much as 15 to 30 percent. Just make sure you use licensed contractors who will abide by city building permit requirements.

Often the decision of how much fix-up for sale work to do will depend on how much time you have before marketing your home. The best approach is to plan ahead so that you have as much time as possible. It can take months to get a house ready to sell, depending on what kind of work needs to be done.

No matter what kind of time frame you’re working with, consult with your real estate agent before embarking on major fix-up work. Plan to walk through your home with your agent. Make a list of all the items that should be done before you sell. Ask your agent which reports should be ordered and order them as soon as possible.

The next step is to get bids from contractors and trades people for the recommended work. Also find out about availability and how long it will take to complete the work. With this information you can fine-tune your fix-up for sale work.

Some projects may be too costly and some may not be able to be completed within your time frame. Your agent can help you prioritize if necessary. Other projects, like de-cluttering and cleaning cost practically nothing except your time and effort.

THE CLOSING: Even if you decide to sell “as is,” it usually helps the sale to present a property that is clean and free of debris. Buyers need to see what you have to sell in an uncluttered state in order to make a decision to buy.

By Dian Hymer
Inman News Features

For-sale-by-owner fallouts

Why most do-it-yourself sellers give up after 30 to 60 days.
Are you planning to sell your home in the next few months? According to the National Association of Realtors and state Realtor associations, the home sales market in most areas is booming. Most community median sales prices are at or near record levels.

The obvious reason is today’s ultra-low mortgage interest rates have flooded the home sales market with eager buyers. Landlords are complaining about high apartment vacancies because virtually every renter who can afford rent can afford to buy a house or condo.

In addition to extremely low mortgage interest rates, virtually every mortgage lender offers 90, 95, 97, 100 and even 103 percent mortgage financing. As a mortgage broker recently told me, “Even a bankrupt arsonist can get approved for a home loan today.”

But home sellers aren’t complaining because, if they owned and occupied their principal residence any two of the last five years, they can claim up to $250,000 tax-free sales profits (up to $500,000 for a married couple filing jointly).

If you’re thinking of selling your home, don’t miss the fall sales market.

The best time to sell your home is usually in the spring and early summer. That’s when the most home buyers are searching for homes in most communities. Statistics show the 2002 national home sales volume so far is likely to set a new annual record.

But the second best time to sell your home is in the fall. Weather is usually good and, especially with today’s low mortgage rates, prospective home buyers are out in droves. If you have a lower-priced home that is likely to appeal to first-time home buyers, now is a great time to sell. Just ask any realty agent who specializes in residential sales.

To hire a real estate agent, or not; that is the question.

Most home sellers, at least for a few fleeting moments, dream of selling their home alone without having to pay a typical realty agent’s sales commission of 6 or 7 percent.

Just run a few newspaper ads, put a “for sale by owner” sign on the front lawn, hold some weekend open houses, and the home will sell. That’s what do-it-yourself home sellers dream about.

But the reality is usually far different. According to National Association of Realtors statistics, less than 20 percent of U.S. homes are sold without the help of a professional realty agent. However, maybe you are in that 20 percent who can sell your home alone and “save” the sales commission. Review this checklist of six key questions to help decide:

1. How can I correctly set my home’s asking price? Here’s a little “insider secret” for correctly setting your home’s asking price: Interview at least three successful local realty agents who sell homes in your vicinity and compare their estimates of your home’s market value.

Even if you want to market your home “for sale by owner” (called “fizzbo” by real estate agents), they won’t mind giving you their listing presentations. The reason is, they know that within 30 to 60 days, most “fizzbo” home sellers give up and list with a professional real estate agent. Chances are you will eventually list with one of the agents you interviewed.

Each agent you interview should give you a written comparative market analysis (CMA). The CMA form shows a) recent sales prices of comparable nearby homes, b) asking prices of similar neighborhood residences now listed for sale (your competition), c) asking prices of recently expired comparable homes listed for sale which didn’t sell, and d) each agent’s estimated sales price and recommended asking price for your home. Best of all, this service is free.

2. How can I effectively market my home alone? Placing newspaper classified ads, putting up a “for sale by owner” lawn sign and holding a few weekend open houses usually is not enough to sell a home.

Important problems to anticipate are how to handle the phone calls which will result, how to arrange showings if you will be home alone, who will conduct the weekend open houses and what to tell real estate agents who have prospective buyers.

Will you agree to pay a buyer’s agent half of a typical real estate commission? Or will you refuse to cooperate with agents who have serious prospective buyers? Paying half of a customary sales commission to an agent is usually smarter than not selling your home.

A major marketing problem is how to make your home stand out from the crowd of other nearby homes for sale. Real estate agents have the local multiple listing service (MLS) to market listed homes to hundreds of member realty agents, many of whom have waiting buyers looking for a home like yours. But without access to the MLS, and the increasingly important Internet Web site www.realtor.com for MLS listings, how can your home compete?

3. How can I obtain a legally binding sales contract and comply with all the new disclosure requirements? As part of his or her listing presentations, each agent should show you the required and optional disclosure forms used in your area. Depending on state and local laws, these include the lead-based paint disclosure, known-defect disclosures, radon disclosure, hazardous substance disclosure, building code and permit disclosure and energy efficiency disclosure.

More important, do-it-yourself home sellers ask themselves, “When a serious buyer wants to make a purchase offer, especially on a weekend when most homes are sold, how can I obtain a legally-binding purchase contract?”

The obvious answer is to have a pre-arranged real estate attorney standing by to quickly prepare the necessary legal paperwork. Unfortunately, most real estate attorneys are not available on weekends. By Monday or Tuesday, your serious buyer might have contracted the dread disease, “buyer’s remorse.” Worse, the buyer might have bought another home.

4. When a buyer wants to make a purchase offer, how can I know if the buyer is financially qualified to complete the purchase? Most real estate agents know how to evaluate purchase offers from pre-approved buyers and recommend their sellers accept or reject them. But successful do-it-yourself home sellers need to be familiar with FHA, VA, Fannie Mae or Freddie Mac and jumbo mortgage terms. Pre-arrangement with a nearby mortgage lender offering easy-finance alternatives greatly eases do-it-yourself �fizzbo� home sales.

Some buyers, known as “flakes,” are not financially qualified to purchase a home. But they will waste your time. However, other potential buyers are already pre-approved for a mortgage by a mortgage lender and are ready to buy. Still other prospective buyers are unsure how to proceed with a home purchase unless an experienced real estate agent guides them through the process.

5. What home purchase contingencies are normal? Most home purchase contracts contain reasonable contingency clauses for at least (a) a satisfactory appraisal by the buyer’s mortgage lender, and (b) a professional inspection report satisfactory to the buyer.

However, some buyers will add contingency clauses that are usually not in the seller’s best interests, such as a contingency for the sale of the buyer’s current residence. Most real estate agents advise against accepting a purchase offer with such a contingency unless the local home sales market is very slow and there are no other prospective buyers.

But, as a do-it-yourself home seller, you’ll need to know what to do if a second buyer then makes an equal or better purchase offer with no contingency for sale of another residence.

6. Who will handle the home sale closing details? Depending on local custom, the actual home sale closing should be handled by an attorney, escrow or title firm. The buyer’s earnest money purchase deposit is usually held by the same entity.

Who pays for the closing settlement costs? What about arranging title insurance? Who pays the transfer taxes and other closing costs? These are home sale expenses that home sellers should anticipate.

How to decide if you can sell your home alone:

After reviewing this do-it-yourself home sale checklist, you might find the task of selling your home alone without a professional agent overwhelming. Or, you might relish the opportunity to save the sales commission by selling your home yourself.

But there’s one more consideration. It is the buyer who, when purchasing from a for-sale-by-owner, expects to share in the commission savings. That’s why “fizzbos” should be prepared to sell for less than the recent sales prices of nearby comparable homes.

Still another situation “fizzbos” need to anticipate is how to handle buyer’s agents who ask to receive 50 percent of a typical real estate sales commission for bringing a qualified buyer. Will you pay half of a commission? Or will you refuse to pay any commission, risking loss of that agent’s buyer?

Conclusion: Selling a home is never easy. But it can be especially challenging when the seller insists on selling without a professional agent. After 30 to 60 days without sales success, most do-it-yourself sellers give up and decide to list their homes with one of the agents previously interviewed.

That’s why most real estate agents enjoy giving their listing presentations to home sellers who think they can sell alone. However, experienced agents know few homes are sold without professional help.

By Robert J. Bruss
Tribune Media Services

Top mistakes made by home sellers

Selling your home could be a complex and tiring process. From the moment you decide to put your home on sale to the final moment of handing over of keys, the process could stretch over months and it could sometimes be overwhelming. In order to have a smooth selling process, you could avoid the following mistakes made by home owners:

1. Overpricing
Pricing is an important factor in all buying and selling decision. It will determine if your house is going to be sold or not. Looking at the pricing aspect, real estate market is similar to other markets. There is always a general market price that a particular house that will fetch in a particular area. Common mistake is for owner to ask for the selling price of their home way above the market price.
Ask yourself this question: Would you buy a house for $300,000 if the current market price of other similar houses are around $250,000? Most probably not! Unless the renovation of the house or the view of the house is so fantastic and you find it worth to put in the extra $50,000. Else you would buy other houses in the same area that cost $50,000 less. Right? Therefore in selling your house, it is particularly important to be realistic about the value of your home. If you overprice your house, buyers will be put off by the price and your house may not be sold.

2. Inadequate planning of the sales process
Another common mistake made by home seller is insufficient planning. Even before the sales process starts it will be important to plan for the following:
The profits you can generate from the sales
The cost and financing for your new house
The legal and contractual aspect of the selling/ buying
Timing for moving in the new house and moving out of your sold property
Very often home sellers are frustrated when things do not go their way. With planning, it should minimize the unexpected. It will also be very helpful to engage the help of an experience real estate agent and use his expertise to help you in the planning of your home sale.

3. Poor Home Conditions
Have you ever walk into a house where the wall paint are worn off, the kitchen floor is oily, pipes are leaking and the house is in a mess? What is your impression of the house? Probably if any buyer were to walk into such a house, he would not have a good impression of the house, or his perceived value of the house will be much lower than if it were to be in a better condition. As buyers are going to pay attention to your home conditions, you should take steps to present your house in a positive light. The key thing is that you don’t have to invest thousands of dollars into renovating your house, but to present your house in a clean, neat and pleasant place. You could for example do some de-clutter the home’s interior, rid the home of unpleasant smells, do some repairing and apply fresh coats of paint to all walls and doors etc. You want your house to feel warm and welcoming. Remember, buyers need to feel good about your home before considering to put an offer for your house.

4. Poor Communication with your housing agent
In property sales, it is important to understand that the seller and the agent are working together as a team, to sell the house at the best possible price. The partnership between the agent and the owner is a key factor to a smooth and enjoyable sales process. Home sellers should as far as possible give accurate and full information about the house. This will help the agent in analyzing the strength and weakness of your house and present it in a positive light to a potential buyer. Sellers should take a proactive approach in the selling process by regularly getting updates from the agent. If there should be any slight misunderstanding, it should be resolved with the agent as soon as possible. Home owners have to place trust into their agent. Therefore next time when you choose an agent, get a responsible person and one that you can work well with.

5. Assumptions about what your sellers like
All buyers make decision on what they like/need and not what we think they like/need. As every person’s background and culture differs from another, they will have their own opinion of what they like when they are looking for in a house. As you may think that a house near the road is convenient, the buyers may think that it will be noisy. Therefore during the buyers viewing let your agent show the house for you.

6. Missing out on a genuine offer
It will take practice to identify a genuine buyer from one that is not. Home sellers often missed out on a genuine offer and not selling their home. Imagine this scenario; you receive 2 offers for your house. The first offer for your house is $210,000 (but the offer is not genuine, buyer just paying lip service). The second offer is $208,000 (genuine offer). You may turn down the second offer due to the lower price and finally find that the first buyer did not want to buy from you. Then you lost out a genuine offer. For that reason, it will be important to assess your buyers (an experienced house agent will be of great assistance) to determine if the buyers are genuine. A possible way to test is to ask the buyer for a deposit to buy your house and when they would like to move in. If the buyer is not putting down any deposits or do not know when you would like to have the house, he may not be very genuinely interested in your house.

7. Buyer’s Credit Background
Even though a buyer may be able to meet the price that you wanted, it is important to qualify your buyers to determine if they could finance the purchase. You will find it be terribly frustrating that after going all the hassle of viewing and negotiating on the selling price to find that your buyers could not buy your house. You could ask the buyer about how he will be financing the purchase of your house. If a loan is required, you could ask the buyer if he have checked with lenders if he could get the loan. Alternatively you could advise him to fill in a loan application and submit it to the lender as soon as possible. You could also approach from the buyers agent if any credit assessment is done.

8. Engaging many agents at any one time
You may have the impression that engaging many agents could help you increase the chance of the sale of your house. However by engaging many agents, there can be many downsides:
The competition between the agents may lead to the undercutting of your selling price
Differnet Agents may bring the same buyer to view your house a second time, leading to confusion.
Buyers may think that you are desperate in selling (so you engage multiple agents to sell it off fast). Since they think you are desperate, they may not give you a good price.