Six Things Realtors Wish You Knew
by Michael Ertem
Realtors saw it all from beautiful to the ugly to the "What were they thinking really?" decor. By experience, we Realtors learn a thing or two: Why some properties sell, while others take long time and stay on the market. Why some buyers will never make it to the closing table at escrow. How to get a better deal on the mortgage. Even just how much the other agents stand to make on your home. And the good news is, we all want to share. Below, 6 things I would like you to now whether you are a seller or buyer.
Price it just under the market if you want to sell quickly.
In today's market, San Francisco Bay Area home sellers are again optimistic on the value and price of their homes but buyers aren't. Your challenge as a seller is to price the house so that it is compelling that increases the exposure. What that means in dollar signs: Set a price Just a fraction below market value. As an example: If similar homes in your neighborhood are in the market around $420,000, you might price yours at $399,000 or $405,000.
The proven fact is; The longer a house is on the market, the less likely you are to get fair value,. So you really want to position yourself to be the one that sells, not the one that lingers. Especially If you're turning around and buying an another home, and you already have cash in hand. That fast sale puts you in a very powerful position.
The preapproval letter is just the beginning
A lot of buyers, go to shopping spree the minute they get preapproved for a mortgage. They start running up the cards and opening new lines of credit to buy things for their new home to be.
But that preapproval letter is just one of the first refreshment stations of the homebuying marathon, not the finish line. Just before closing, a lender will re-examine a prospective buyer's financial situation complete with a recent copy of the credit history and other updated information.
If numbers used in approval have changed for the worse (salary decrease, higher card balances, new lines of credit), then the applicant could get stuck with a higher interest rate or even lose the loan. Never get new loans or start using credit cards more heavily until after you've actually closed on the home.
Even better, retain your frugality until you've been in the home for a few months and have a good sense of how homeownership affects your finances.
Selling a house probably takes longer than you think
If you're selling a home, it's important to understand the timeline.
Underestimating the time it takes -- and building a schedule around those unrealistic expectations -- adds stress. Instead, realize how long the process takes in the real world (not just your head) and plan accordingly. Another important factor: Different markets (and prices) move at different speeds.
Here is the realistic schedule
A smart seller allows a minimum of 4 to 8 weeks to sell. And that's if you have a home that's priced right in a good market with one solid offer that makes it to the closing table.
Again, the market in Berkeley and cities around Berkeley is favoring sellers as of today (fall 2015). As long as you prepare the home as good as if not better than competing houses within that time frame, it will get many offers and top dollar.
Can all buyers successfully buy and close?
To prove their worthiness, sometimes prospective buyers will show a pre-qualification letter which means absolutely nothing. In a prequalification, lenders usually don't verify buyers' information. A preapproval, on the other hand, involves third-party verification.
"'Prequalified,' that means they've talked with a lender and said, 'I have good credit and I make X number of dollars a year,'" Wiren says. Based on that, the lender responds that the buyer can reasonably expect to borrow a certain amount -- if those self-supplied facts are accurate and there aren't any negatives. Most lenders don't research those details until the buyer applies for a loan.
Serious (and smart) buyers are "preapproved." That means they've already applied for the loan, the bank has verified their financial information and (if the numbers remain the same until closing) it promises to loan a specific amount at a specific interest rate.
Still, after an offer, smart agents will call the lender and verify that the prospective buyer is preapproved for the necessary amount. At the same time, that agent will verify that the lender would have no problem closing in the expected time period -- usually 30 to 45 days.
Yes, it would be nice to have a nice smelling house.
Sellers sometimes drag their feet on little details that make a big difference. It does really matter if sellers have the carpets cleaned or take the family photos off the wall. A buyer needs to walk in and have it look good, feel good and smell good.
As a seller put yourself in the shoes of prospective buyers and try to see the house for the first time. The home should be kept showroom-ready. It's a regular occurrence that I walk into a home with a buyer and find beds unmade and underwear on the floor. I don't see a home that's ready."
You want to create warm, inviting and comfortable impression.
Realtors don't make as much as you think
Chances are the agent you hire to sell your house isn't getting as big a cut of the deal as you might think. Six percent isn't anywhere near what Realtors are taking home. In fact, it's more like half of half all commission paid. Usually two sides (Buyers agency and Sellers agency) will split that commission, Then, internally within the brokerage, there is another split from 50 to 90 percent to the agent depending on experience and production volume.
In my case, I am an independent broker and that is how I can offer low listing fees and afford to give home buyer rebates to help both home buyers and home sellers.
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