The Secret Sauce for Sellers
A Mortgage Broker's Perspective
YOU OFTEN HEAR talk of the ‘secret sauce’ for a smooth home-buying experience: Thorough Pre-Approval, working with the right realtor, early rate-lock, no contingencies to the offer, etc.
But when it comes to selling, nailing that secret sauce can be a bit trickier. A few years ago, it seemed like properties were being gobbled up regardless of price or condition. But today, it takes forethought and tact to sell a property well.
In today’s market, some properties seem to hit the market and go contingent with an accepted offer in a matter of mere milliseconds, while others ride the MLS train all the way to the station (and back). In my experience, there are typically a few main reasons why properties sit on the market for extended periods of time:
The property is not priced correctly for the market, property type, condition or location, and therefore fails to attract the right buyers, OR
The property is in an un-appraisable state, meaning only non-traditional financing or cash offers will be able to close, which greatly limits the buyer pool.
*Reason #2 above is typically evidenced by the property going in and out of escrow several times, which is tragic for buyers and sellers, who will both have experienced the devastating emotional roller coaster of thinking the deal was a sure thing and then coming to find out it would never work due to the condition of the property or some other reason.*
To avoid unnecessary emotional roller coasters and help smooth out future deals for both Buyer and Seller, I’ve put together a few quick tips here on how to best sell a home (from a mortgage broker’s perspective):
Make sure the home will appraise. It seems simple, but this is absolutely key. I’ve seen a number of strong listing agents order an appraisal on their property prior to listing on the market to ensure it’s priced well, and that the property is in proper condition to appraise for conventional financing. Some of the most common property conditions that will cause an appraisal to come back ‘SUBJECT TO’ instead of ‘AS IS’ are as follows:
Leaky roof
Broken guardrails on decks or staircases
Termite damage or evidence of active termites
Wood rot
**While a SUBJECT TO appraisal does not necessarily mean the deal cannot close, it will likely cause delays and stress on both sides and should be avoided if possible.**
If you are currently living in the home you plan to sell (or if you have the ability to occupy the home as your primary residence), consider claiming your Homeowner’s Exemptions for property taxes in the year of or prior to selling. Here in Kauai, a Homestead exemption can shave off hundreds a month or more in property taxes depending on the property type and tax-assessed value. While you might think, “What does it matter to me if the property taxes are lower?”, think again! When a buyer is trying to qualify for the housing payment to purchase your property as their new primary residence, it will be significantly easier for them to qualify with your Homestead property tax class as opposed to higher monthly tax rates. Also, depending on the situation, it can take up to a year or more for the property tax class to update at the county level after closing, so you could be saving the new buyers thousands of dollars, a great way to build good faith and ensure the most possible buyers can qualify to make an offer!
If you or the tenant of the property you’re getting ready to sell have made a habit of feeding the stray neighborhood cat, please kindly consider:
Adopting the cat and bringing him/her with you,
Asking your tenant to adopt the cat,
Asking a neighbor to adopt or look after the cat, or
Bringing the cat to the animal shelter/Humane society.
Believe it or not, I have actually worked a deal where qualified buyers were ready to write an offer to purchase a property, but each time they went to walk the property for inspections, etc., an increasingly grouchy neighborhood cat would greet them and beg for food. There was no doubt the previous owners had trained the cat to expect food each time they were around. Unfortunately, these buyers were both allergic to cats and, after the second time this happened, decided they’d rather buy in a neighborhood with less furry friends.
Please feel free to reach out and share your own top tips for smooth home sales.