Michael Bates

What is a short sale?

This is a term that is gaining familiarity among those shopping for a home. Basically a short sale, a.k.a. short pay is a term that is used to describe real estate for sale where the seller is listing it and attempting to sell for less than is owed on the mortgage or mortgages. This does require approval from the lender. Some reasons real estate is listed as a short sale are relocation, divorce, job loss, medical problems, and the most common reason today is the mortgage has adjusted up and they can't afford the payments anymore.

Patience is required when placing an offer on a home that is a short sale. Since it needs bank approval, it will take at least two months. Now, the current owner needs to be able to prove hardship and explain why they can't afford the payments and there is no way they can make up the back payments. There are some short sale listings where there is an approval already and that process will proceed as a normal transaction for the most part.

Each bank is very different on the approval process. Some banks are claiming to attempt to be more customer service friendly in the short sale approval process. But, unfortunately, most of the big banks just can't seem to get there. Now don't get me wrong, they have improved over the past two to three years.

If you are a seller, make sure you talk to someone whether it be your CPA or Attorney. You need the guidance and need to know the ramifications of a short sale on your finances.

The bottom line is the short sale approval process is improving, but is still taking months to close. Be Patient!

You’ve been handed an offer. It’s so close to your desired price, but not quite there.

What now? How do you negotiate your way to the deal you’re looking for?

If you’re using a REALTOR^®, they will guide you though the negotiation, providing support documentation and other helpful back-up to justify your price. But if you’re going it alone, you will have to hone your negotiating skills.

The first step to a successful home negotiation is when you priced your home to begin with. If you set a fair asking price, you should have the confidence to justify it.

If you overpriced your home (remember… “so I can come down in the future”), you will have trouble convincing a bona fide buyer to up their offer.

Now, the second step for negotiating is to KNOW THE BUYER.

Years ago a real estate expert told me that the party who is less motivated almost always gets the better deal. The ONE single element that will determine how well you negotiate your offer is…

How MOTIVATED Is The Buyer,

And How MOTIVATED Are YOU?

And if you’ve been trying to sell your home for nine months, your kids are late for starting school this year because you haven’t found a home yet, your spouse has moved on to another city to start their job, and you now have a bona fide offer, YOU may be very motivated to sell!

Nevertheless, here’s a tip you MUST bring to any real estate transaction…

Move Heaven And Earth To AVOID Emotional Attachment

To The Transaction

If you’re desperate, or if you found another home, and can’t hold back your excitement about buying it, then you’re going to get clobbered when negotiating your current home’s sale.

And that’s one reason why you need a REALTOR^® representing you during any transaction. The middle person alone will help save you money.

So take a look at your BUYER. Pay attention to their comments and body language when they’re visiting your home.

Ø Did they make positive comments when viewing your home?

Ø Did they come back to visit your home at least three times?

Ø Did they make positive sighs and other body language when walking through your home?

Ø Here’s an important tip: TAKE NOTES about the features buyers like about your home. Then, turn the features into Lifestyle Benefits of living there to “wet their appetite.”

If a young couple looks starry-eyed because they feel they’ve found their dream home, YOU will most likely have more negotiating power. Clearly, THEY are more emotionally motivated.

So you decide to make a counter offer to your buyers. Make sure you back up your offer with FACTS…real reasoning. Show examples of similar home sales in your neighborhood. Look at the notes you took by observing the buyers, and REMIND them of the features and benefits they like about your home.

You may go back and forth several times before arriving at a price. But remember, if a buyer comes within $1,000 of what you want for your home, you’d better think hard before turning it down!

Once you’ve agreed upon a price, you should call in the help of a professional, such as a real estate attorney. If you have a REALTOR^®, they’re usually trained to handle further items for negotiation, and have excellent contract forms that have been tested for years.

But remember, NEVER sign a contract until you completely understand ALL of the terms and conditions. A lot of real estate “mumbo-jumbo” can make you feel overwhelmed. Using a real estate attorney or a REALTOR^® can make the process easier for you.

OK, you’ve now arrived at a sales price. You’re now about to enter into a new phase of the transaction: ESCROW and CLOSING YOUR SALE.

If you’re using a REALTOR^®, they will be worth their weight in GOLD with the next phase of the deal (if they haven’t already saved you thousands in pricing, dressing, and negotiating your home).

Here’s a list of items you (or a REALTOR^®) needs to handle:

1. Opening of an Escrow account with a reputable and affordable escrow/title company.

2. Examination of Title of the home, and the purchase of title insurance to protect against any flaws or deficiencies in clear title.

3. Coordinating the completion of contract requirements: Home Inspections, Termite Inspections, Seller property disclosure statements, etc. – with reputable inspectors.

4. Verifying buyer financing is secure (this one is HUGE!).

5. Ensuring any contingencies have been completed: Remodeling, repairs, etc.

6. Ensuring any hold-backs or reserves are met.

7. Coordinating cleaning and maintenance that may be stipulated in the contract.

8. Handling any other special contingencies that may arrive up to the final hour.

It can be an awesome task. Don’t take this process lightly. If you’re going it alone, make sure you get educated, and use a real estate attorney if you’re not using an agent.

Now, at this point, you’re probably wondering how on earth you’re going to handle all of these tasks all-the-while maintaining your job…

…packing your home

…interviewing moving companies

…getting the kids in school

…coordinating repairs and cleaning

…stressing out about the new job, or community

…and searching and buying a new home.

It’s absolutely daunting, and you will need all the help you can get.

That’s one reason why I wrote this report: To help you sort out the important issues that translate into a Top Dollar and Hassle Free sale of your home.

And to know whether you should do it alone, or hire a competent professional for your needs. And speaking of competent professionals…

Do you remember the old riddle that goes, “What do you call the person who graduated dead-last in their medical school class?”

Answer: “DOCTOR!”

Well, it’s the same with REALTOR^®. Someone with vast experience and extraordinary professionalism usually costs the same as someone with little or no experience, or with compromising standards. You need to know how to tell the difference up front.

Bringing competence and experience into your transaction may mean the difference between a higher negotiated sales price and losing money, selling in less time or in more time (costing you potentially thousands in added interest), and experiencing problems and hassles or a problem-free transaction.

Our community is loaded with agents who are WRONG for you, your area, and your home. Some agents are in business part-time for a little extra cash. Others are subsidizing other businesses or careers. And then there’s your “cousin Harry,” who you may feel obligated to because he “really needs your business.”

Selling your home is probably the most important financial transaction you will ever make. That’s why I take my business so seriously. It’s also why I have developed customized home marketing programs meant specifically for your situation.

Here’s another moneymaking marketing fact you need to know…

The Way Your Live In A Home, And The Way You SELL A Home

Are TWO Very Different Things!

When you’re showcasing your home for sale, it’s going to look very different from the way it looks when you’re living there. Here are a few tips for showcasing your home for sale:

Ø First impressions set the tone for a buyer visit, and they’re LASTING! Approach your home in your car like any buyer would. Examine the outside as you’re approaching. How does it look? Are shrubs away from the home? Oil in the driveway? How does the grass and landscaping look? Cluttered looks detract from the architecture of the home. A clean, polished landscape says your home is valuable and well-maintained!

Ø Take a look at your actual home. Is the paint fading or chipping? Is the color outdated or impersonal? How does the roof look? As you drive up to or away from your home, what do you see first?

Ø Now go inside just like a buyer would. You want to be aware of four senses: smell, touch, sight, and hearing. Go through room by room and test all four senses. Check flooring and carpet for stains, overall wear, and odors.

Most importantly: Pack away all appliances, get rid of excess furniture, put away useless dishes, and make your home neat and orderly. If you’ve ever visited a model home, you’ll notice it’s clean and uncluttered. You have to move anyway, so you might as well pack early, and make your home more saleable. Go to the garage and make sure it’s neat.

Ø Hire someone to professionally clean your home. Top to bottom! Cleaning and cosmetic fix-ups, especially in the kitchen, bathrooms, and master bedroom, can many times yield you up to $10 in extra sales price for every $1 you invest.

Ø Pets should be out of sight (and smell!). Get rid of pet odors for showings. Remember the four senses. Also, some people are uneasy around pets, and they may distract attention from the features of your home.

Ø Pay particular attention to lighting. During the day, open all your blinds and curtains. If it’s cloudy out, turn on all lights for showings. At dusk, leave your front drapes open and turn on all the lamps and lights.

At night, do the same, but close your blinds and curtains. When showing your home, turn off all appliances, television, radio, and anything that will distract attention from your home.

You might want to play a little light music to enhance the emotional experience for your buyers. Remember, you want it to feel like “home.”

Most importantly, if there are any problems with the home or clear title, you must DISCLOSE them to any potential buyers. If you’re using a REALTOR^®, they can help you sort out these issues, and disclose them in a way that will minimize their impact on a buyer.

I want to reveal four marketing secrets that can help you make thousands more profit from your home. And the first one is this…

Purchase Decisions Are Emotional, Not Logical

Think about that. People never buy homes because of logical reasons. If they did, one four bedroom, two bath home would sell just like any other. But they don’t.

They don’t because people discriminate by nature. One home will always appeal to them over another based on their DESIRES.

They buy homes because of the FEELINGS the home gives them. Nearly everyone buys a home thinking of the LIFESTYLE BENEFITS they’ll get by living there.

Lifestyle benefits are the memories of watching your children play in a safe area. While getting a good education at local schools. Where your home is decorated as an extension of your individual personality. Where you enjoy Sunday dinner with the family, and Thanksgiving reunions.

It’s the place where you relax in your favorite hammock on Saturday afternoon. The place where you can hold summer barbecues under the shade of a beautiful Birch tree.

The place where you finally send your children off to college…and eventually off to live a life of their own.

Your house is NOT going to be evaluated as a “house.”

It will be evaluated for its potential to become a HOME.

So it’s important to recognize and appeal to buyer’s EMOTIONS when marketing your home.

Now, the second marketing secret you need to know about marketing your home is this...

Buyers Are Looking For A Bargain

And looking for a bargain is again, subjective. What one person sees as a bargain, another may see as overpriced.

Nevertheless, you need to “position” your home as “priced right” in the market…another reason to do your homework when pricing your home.

If you price your home right, you can promote it as such. Buyers clearly respond to promotions that state “priced to sell,” “a unique bargain at this price,” “act now, won’t last long at this price.”

And getting as many buyers to respond is your goal, right?

The third marketing secret you need to know about is this…

Buyers Are Attracted To Affordability

Affordability appears the same as a “bargain,” but it’s not…

Affordability relates to how inexpensively someone can live in your home…more to do with FINANCING than anything else.

What have you done to make your home affordable? If you’re selling your home without a real estate agent, are you willing to carry back financing on your purchase price? How EASY will you make it for a buyer to buy your home?

And if you use a REALTOR^®, they should put together several financing “packages” with a local mortgage lender. This will make the home appear special, and affordable to buyers.

The fourth and final marketing secret you need to know is this…

The Best Way To Motivate A Sale Is To Create URGENCY

Have you ever noticed the dynamics of a bidding war?

Buyers are scrambling like lunatics to put in the highest offer in order to get the home they desire. But what’s really happening is the bidding war takes on a momentum of its own.

In other words, the mere shortage of the home makes people frantically WANT it. People naturally value what’s in short supply…what they cannot readily have. And what more could a seller want than a bidding war on their home!

But did you know that you can create the very same dynamic with YOUR home?

Anytime you want to increase the value of your home, or the overall demand, CREATE A SHORTAGE.

A shortage can be limited time, limited supply, or limited financing. Anytime you create a limit, you motivate people to act.

Very few real estate agents know about this, yet it’s one of the most important elements of successful marketing.

Successful Marketing Of Your Home Requires

A Complete, Systematic Approach

The four marketing secrets I mentioned above are very important. But to motivate a successful sale, you need to employ a systemized approach to marketing your home. There’s no ONE single method that will automatically make your home sell immediately.

Here’s a fact you need to understand up front: Never attempt to price your home based on what you “want or need” to net out of the proceeds.

If you spent $40,000 on a remodeling job that will only increase your homes value $30,000, you will lose $10,000. If you paid too much when you bought your home, and need to sell it within a year or two of buying it, chances are (unless your market is hot) you will lose money on your net proceeds.

I’ve seen these sad situations, but there’s little anyone can do about it.

Never Confuse The Difference Between Cost And VALUE

That said, however, you DO need to understand what your net proceeds will be from a sale of your home. And to calculate them, you need to consider five factors.

1. Take the gross listing price of your home.

2. Subtract the amount buyers will discount to arrive at sales price (Step #2 above).

3. Subtract your estimated real estate commission.

4. Subtract contingency costs and repairs/personal property stipulated in a contract.

5. Subtract closing costs: appraisals, attorney’s fees, escrow and title fees, etc.

In many cases, the net proceeds can be as much as 10% or more off your listing price. And interestingly, this amount does NOT change even when sellers attempt to sell their homes WITHOUT a REALTOR^®.

Guess what the first thing any buyer is going to do with a “For Sale By Owner?” They’re going to knock off the equivalent of the real estate commission you would normally pay anyhow. They hate the fact that you’re trying to pocket that money…and they’re going to fight over it.

Then they’re going to keep discounting based on other home and market criteria.

Before you know it, you’re back at the same place as if you used a professional. Only now, you’ve lost the resources a REALTOR^® could have brought to the transaction…negotiation power, important home value information, market power, marketing resources…and much more!

So be careful. There’s a reason why 94% of all For Sale By Owners end up using a professional to market their home…It pays off in the net proceeds!