The Ten Most Important Steps in Selling Your Home
With the cost of real estate escalating to new highs every year, the sale of your home is a huge financial transaction which, if not handled property, can result in thousands of dollars going out the window purely from the poor planning of the sale. After spending over 23 years selling real estate I have perfected the process for selling all types of homes and would like to help you keep more money in your pocket by sharing the 10 most important steps in selling your home with you.
1. Review Existing Mortgage Contract for Possible Charges upon the
Mortgage documents are very complicated and about 90% of people don’t really know what conditions come into play when a property is sold prior to maturity of the mortgage held on the property. In the event the mortgage must be discharged there could be thousands of dollars in fees for doing so. Typically the fee will be the greater of 3 months of interest penalties or the interest differential between the current market interest rate charged by the mortgage company and the rate of your mortgage multiplied by the length of time left on your mortgage. Even though interest rates have not risen over the past 5 to six years this latter penalty can be very substantial. Few people realize that when the financial company holding your mortgage calculates this “interest differential charge” the current market rate is based on the posted rate by the institution not the rate the institution really gives their customers. For example one financial institution is currently posting a 5 year mortgage rate of 4.79%. However if you negotiate the rate you may actually get a rate of 2.99%. If you discharge the mortgage prior to maturity, the charge will be based on the difference between the rate of 4.79% and the current rate. So if the posted rates never changed between the time you took out the mortgage and the time you discharged the mortgage the “interest differential” charge may still come into play because of the difference between the posted rate and the rate that you negotiated with the bank. Tricky isn’t it?
Let’s take a look at what the charges would actually be on a mortgage of $300,000 using the rates above and assuming the mortgage is discharged 3 years early. The 3 month’s interest charge would be about $2300. The “interest differential” charge would be somewhere in the range of $16,000. Because the interest differential is the greater of the two charges the “interest differential” charge would apply upon discharge of the mortgage.
Some mortgage contracts allow the mortgage to be “ported” from one property to another. This means that all terms of the mortgage on the current property are moved over to the new property for the remainder of the term. This can be a great way to get around the penalties noted above. However a cautionary note; some mortgage documents only allow you to port the mortgage if it is going to be for the exact same amount. If you want to increase or decrease the current amount of the mortgage then porting is not allowed. Of course many financial institutions will negotiate more favourable terms in order to keep your business.
Don’t get caught by surprise; make sure you understand what happens with the mortgage on your home before you sell not after.
2. Have a Plan in Place
Knowing where you want to live and what you want to move to and deciding whether or not to buy or sell first are crucial components of the selling process.
If you choose to sell before you buy do your homework on your future location in advance of putting up the for sale sign so that you know what to expect once your home sells. Make sure you can purchase the type of home you want in the location that you want at a price that is affordable to you. Leaving this research until the last minute often results in “panic” buying decisions which will end up costing you more money.
If you choose to buy before you sell make sure that you understand the financial implications of doing so. If your home does not sell before the closing date of the home you purchased you must be prepared to finance (and qualify for any financing) for both homes.
Bridge financing is an affordable method of financing both properties when the closing dates of your existing home and the home you are purchasing do not match. Bridge financing is not available if your current home is NOT sold firm. Bridge financing is only available if the mortgage holder on your current home will be the same mortgage holder on the home that you purchased.
It is strongly advised to consult your mortgagor or financial advisor prior to the sale of your home to ensure that you are familiar with all financial costs of the move and that you are approved for all the financing that you will need.
3. Declutter
The most difficult and time consuming process of selling your home is getting rid of all the “stuff” that you no longer use or need. If your furniture and artifacts are taking over your house the buyer can’t focus on what your home has to offer and will be on to the next property before they look at every room. We all have too much stuff. Stuff that the kids left behind when they moved out: The clothes, toys, school memorabilia, baseball cards. Stuff from our parents: The furniture, the dishes, the family heirlooms that are crammed into spare rooms and taking up valuable space in living rooms. You think you can absorb these things, then, all of a sudden you can’t. It will take some time but the decluttering must be done before the sign goes up. Make a plan and a schedule and stick to it. You can also email me for my separate 10 tips for decluttering guide.
4. Prepare
Making sure that everything is in top notch shape repairing everything from loose gutters to chipped paint is crucial. Make sure paint is fresh, the house is pristine and everything is working as it should. These are huge steps toward a successful sale. For your FREE checklist on everything to do to prepared your home send me an email or give me a call and I would be happy to send it out to you.
5. Staging
There are two things that can be said about almost every buyer; they like visually pleasing homes and they buy with their emotions. Most buyers form an opinion about a home within the first 1—2 minutes of arriving at the home and it is estimated that only 10% of home buyers can visualize the potential of a home. That means 90% are not going to be able to look past dirt, clutter, and imperfections.
Staging is not about putting placemats and table settings on a table. It’s about creating a neutral warm feel that will appeal to the greatest number of buyers. You never get a second chance to make a first impression so having everything perfect from the get go will get you better results.
6. Professional Photos
Listing photos of homes that are dark and dingy, with blown out windows, or are crooked or blurred are poor reflections of your home's value. A picture is worth a thousand words and statistics say:
98% of homebuyers who searched for a home on the internet found photos to be among the most useful features when looking for homes on line
90% of potential buyers are looking at listings online before physically visiting a property.
88% of those buyers want to see professional quality photos with each listing.
Overall, when viewing an online real-estate listing, home buyers spend about 60% of their time on photos, 20% on the property description and 20% on the real-estate agents' remarks section.
7. Setting the Price
Pricing your property is a balancing act. On the one hand, you want to set a listing price that maximizes interest among qualified, motivated buyers who will be willing to pay top dollar for your property. Indeed, such buyers will ultimately determine your property's top market value.
On the other hand, you do not want to set a listing price that attracts a lot of buyer prospects, but sets the stage for negotiations that result in your getting less than what your property is really worth.
In a perfect world, your home's value would be everything you think and need it to be. However, simply put, your home's value is not determined by you, but by what the market is willing to pay for it at a given time. These days, the "market" increasingly refers to home buyers who have researched property values over the Internet for months, have already viewed a number of homes, and are not under any undue pressure to buy.
On average, serious buyers look at about fifteen properties before they make an offer. Doing so gives them a basis for determining how competitively a property is priced, both in terms of the market generally and what they are looking for specifically.
If you overprice your property you'll usually lose serious buyers even if they otherwise love it. Experience shows that buyers usually do not make what they consider to be realistic offers on overpriced properties because they assume that doing so will just be a waste of time. The bottom line is BE REALISTIC AND DON’T OVERPRICE!
8. Multiple Listing Service
If you are selling a property, listing with a realtor who uses MLS means your property gets maximum marketing exposure to all other members of the local Board. You will have realtors everywhere trying to find a buyer for your property. It is the MLS computer system that will provide other members of the real estate Board with detailed information about your property. The information on the MLS system is also fed into a public system called www.realtor.ca where active buyers can view the pictures and details of your home. Statistics prove that homes on the MLS sell faster and for more money then similar homes not on the MLS system.
9. Listing Date
Selling real estate is often said to be a numbers game meaning that the more people that go through your home the higher your chances of getting an offer. The numbers necessary to get an offer depend on many things such as price of home, market supply etc. When you put your home on the market you want to go on with a big BANG. Considering the largest amount of buyers will look at a home over the weekend and that 90% of buyers will look at a home based on pictures they see on the internet, the best day to put your home on the MLS is on a Tuesday or Wednesday. Listing on these days will attract the greatest amount of attention from agents and buyers and will produce the largest numbers of showings on the 1st weekend that the home is on the market with a result of one or more offers at great selling price!
10. Appointments
Based on the premise noted above that selling real estate is a numbers game my motto has always been “get the most people thru a home in the shortest period of time to produce the highest selling price”. A realtor cannot make miracles happen. If a seller is very selective as to when buyers can view their property then both buyers and agents will get turned off the home and move on to other properties. Being completely flexible on accepting all appointments will get you top dollar and get your home sold faster.
That’s it; not rocket science, not long and complicated just plain old common sense based on many years of selling experience. If you think you are ready to make a move give me a call. I’m ready, willing and very able to move you forward with your real estate plans.