Here, we’re going to focus on selling real estate. We’ll assume you’ve done your due diligence and picked out a good property to invest in. Now, let’s look at some ways to maximize profits and make the selling process a bit less stressful.
The Do’s and Don’ts of Selling Real Estate
We’ll start by checking off a few things to do and a few to avoid when selling real estate.
1. Find a real estate agent you can rely on. If your goal is to invest in properties in a certain area, you’ll want to establish a relationship with an agent experienced, not just in selling homes, but homes and properties in that particular area. You’ll want someone who’s motivated and will be available when you need them. And since it will hopefully be a long-term partnership, it needs to be someone you get along with.
2. Market aggressively online. Most people begin their search for a new home by checking the internet. Hire a professional photographer to take pictures that will be displayed online and post quality, color photos including the floor plan.
3. Know how the process works. Learn about comparable sales in the area, how quickly houses are selling and any concerns a home inspection might raise. Become acquainted with the contract process, escrows, the role a real estate attorney plays and what happens during the closing process.
Don’t Do This
1. Don’t go with the first real estate agent you interview. You need a reliable, full-time agent that will be there for you. Don’t go with someone just because they promise to get you the best price.
2. Don’t blindly trust your agent. Get things in writing. This is a business, and you need to treat it as such. Expect a written marketing plan that you agree with. And, understand that once you sign, you have entered into a legal contract for the agreed upon terms.
3. Don’t ignore offers lower than your asking price. You don’t want to discourage potential buyers. If their offer is low, give them a counter offer and see where negotiations lead.
What to Know When Selling Real Estate
Here we’ll answer some specific questions you might have about selling real estate.
1. Is There a Best Time to Sell?
Obviously, properties can and do sell at any time, but timing can be important and can influence selling price. As a general rule, peak selling times begin in late winter and continue through most of the summer. Young families with children often will look to close on a house before a new school year begins. There is usually a downturn in the market around the holidays, from early November through the New Year.
You should also consider mortgage rates and how home sales in the area are trending along with how the local economy is performing. These are all things a good real estate agent can help you with.
2. What Should My Selling Price Be?
The primary way real estate agents determine home values is by looking at comparable sales (comps). Recent home sales are public and can be viewed on the multiple listing services (MLS) database. By comparing the characteristics of area homes, you can gauge about how much your property is worth. As a very simple example, if two houses are very similar but one is a two bedroom and the other a three bedroom, the one with more bedrooms will fetch a higher price.
3. How Long Does it Take to Sell?
The most recent national figures put the average time a house sits on the market right around one month, which is an all-time low. The time varies widely though and depends on location, the asking price and the condition of your property. Again, this is something your real estate agent can help you find out.
4. Should I Invest in Repairs?
First of all, as the seller, you’ll be required to disclose any known problems to potential buyers. You don’t have to make repairs, you just have to price the home with the defects taken into consideration. That said, less expensive cosmetic improvements (paint, lighting, etc) that might increase the value of the property should be strongly considered. More extensive repairs will have to be weighed on an individual basis and hopefully were discovered when you did your due diligence before buying the property.
5. What Costs Are Associated with Selling a Home?
Here is a list of what you can expect to pay when selling real estate. If you develop a working relationship with a realtor, their commission might be negotiable, but here we’ll stick with the average costs, including realtor commission.
- Staging and home prep costs (1%)
- Seller concessions (1-3% )
- Homeownership and overlap costs (1%)
- Realtor’s commission (6%)
- Repair costs (determined based on inspection)
- Closing costs (1-3%)
6. How do Home Inspections Work?
Initiated by the buyer, a home inspection comes after an official offer is made and accepted but before the closing date. A third-party contractor hired by the buyer, the inspector, provides his report to the buyer. The seller must give the inspector access to the house, and an inspection usually lasts a few hours. If there are issues found, the buyer will bring them to the seller’s attention, and negotiations for needed repairs are sometimes necessary.
Whether you’re a homeowner or an investor, selling real estate can be stressful. But with proper preparation and a little research, it’s not that difficult. Finding a good real estate agent and learning about the local market are the two biggest keys to success. When selling a property, invest in areas that will yield a return, and keep costs to a minimum by doing your due diligence before buying. If you follow these simple principles as you gain a little experience, selling real estate can be a real money maker for you.