We are the generation of DIY'ers...national brands have been built on empowering consumers and telling them they can do it themselves. Millions of dollars are spent assuring people they have the know-how and background to tackle any project, from fixing an electric socket (ZAPPPP!) to changing out an engine - yes, one of my college buddies actually attempted that (unsuccessfully by the way).
So when it comes to selling your own home, you can do that, too. Right? Well, the answer is not so clear cut. Most people know the majority of homes are sold via realtors and brokerages. However, a small share of homes are sold By Owner and those owners don't have any real estate sales background. The advent of the internet age has made this a distinct possibility, an easier mountain to climb so to speak. But there are pitfalls in this approach that will take you longer to sell and possibly decrease your net profit. Here are a couple of danger areas to avoid:
The Overly Proud Owner: I had this experience 2 weeks ago. Sellers bragged to my buyers that they were "Professional Homeowners". By the time we were done, my buyers were so detailed-to-death and tired of saying "oh, wow, that is a terrific shade of blue" that we high-tailed it out. But Mr. Professional Homeowner was on our heels and followed us to our cars, still bragging about his home. I finally had to start my car and drive away to get him to stop.
Is a proud owner extolling the virtues and upgrades of their home a bad thing? Not necessarily. But the fact that he was over-priced by about 10% scared the buyers away - the odds are so slim that someone so impressed with their own home would consider a below-list price offer.
The Uninformed Homeseller: I come across this alot with people representing themselves. Lawyers commonly say the quickest way to lose a legal case is to represent yourself. Harsh, but probably true. Well, one quick way to a lawsuit (if things go south) is by representing yourself in a home sale if you're not up-to-date on the latest and greatest "gotchas".
Example 1: You own a home built in 1977. Using a pre-printed contract from the internet, you lock up a buyer and close in 30 days. After closing, a lawyer for the buyer calls asking for the full contract and addenda. Unfortunately, you had n ot realized that FEDERAL LAW requires a pre-1978 home to have a Lead-based Paint Disclosure signed by all parties.
Example 2: You are selling your mothers home and want to move it quick. In 2002, it had a settlement issue that was repaired and the home was remodeled in and out. Since know other problems have cropped up, you put a sign in the yard and 5 months later you slide the keys to the new buyers. A month later, you get a call from a lawyer representing the buyer. They are looking for the Sellers Disclosures which state the home had a repaired settlement issue. The new buyers were putting in a pool and the workers discovered the pier-and-grout system that stabilizes the home. You thought you mentioned it to them in passing and that they were ok with it, but with no WRITTEN disclosures, you're in hot water.
The Oops, I Can't Advertise That? Homeseller: This is a big one. You are selling your home and putting an ad in the paper. Knowing your home is perfect for single people, you mention in the ad that the home has a terrific location for single owners or owners without children while also being perfect for Christians, as there are 3 churches in walking distance. Ooops. You just violated the Civil Rights Act of 1968, aka the Fair Housing Act, which protects people with children from being discriminated against while also disallowing religious discrimination.
Ok, so I dramatize a bit for illustrative purposes. But the point is that real estate transactions can be unintentional minefields, for lack of a better term. As GI Joe once put it, "knowing is half the battle".
One result of our over-supply of homes for sale is that many homesellers have turned into landlords, for good or for bad. Tightened mortgage regulations and economic hardships have increased the pool of available renters so there's a good chance a seller looking to rent their property will successfully rent it out.
Many sellers continue to market and sell their property with the permission of the tenant. Normally, tenants receive discounted rent or a lower deposit in exchange for keeping the property in showing condition and being flexible with showing appointments.
What happens when the property actually goes under contract while tenants are on property??? In Florida, the existing lease must be honored in accordance with the terms specified within the lease. So if the tenancy continues 6 months after the closing date, the new owners shall assume landlording duties and responsibilities as outlined in Ch 83 of the Florida Statutes. Many leases, especially for homes for sale, specify rights and responsibilities as it pertains to the sale and disposition of the property while being rented. Normally it requires 30 - 60 days notice to the tenant which allows them to line up other housing.
Many tenants living in a home that's also for sale, when given sufficient notice of such sale, are very cooperative. Don't forget that after the initial showing, a home that's under contract will need to have additional inspections, appraisals, and possible followup showings in accordance with the sales contract. That will require an understanding tenant and the best way to achieve that is for a Landlord to be understanding and protective of the tenant's privacy.
But what happens if there is no lease in place (a month to month for example) when a home goes under contract? Well, the law references the previous lease with respect to cancellation of an unwritten lease:
83.57 Termination of tenancy without specific term.--A tenancy without a specific duration, as defined in s. 83.46(2) or (3), may be terminated by either party giving written notice in the manner provided in s. 83.56(4), as follows:
(1) When the tenancy is from year to year, by giving not less than 60 days' notice prior to the end of any annual period;
(2) When the tenancy is from quarter to quarter, by giving not less than 30 days' notice prior to the end of any quarterly period;
(3) When the tenancy is from month to month, by giving not less than 15 days' notice prior to the end of any monthly period; and
(4) When the tenancy is from week to week, by giving not less than 7 days' notice prior to the end of any weekly period.
Basically Florida law only requires a MINIMUM of 15 days notice for a tenant on a month to month unwritten lease. That's really not much time, so I would recommend a minimum of 30 days.
Florida law also gives the landlord (or their agent) the ability to access the property to further the sale of that property. All access is conditioned upon "Reasonable Notice" to the tenant.
83.53 Landlord's access to dwelling unit.--
(1) The tenant shall not unreasonably withhold consent to the landlord to enter the dwelling unit from time to time in order to inspect the premises; make necessary or agreed repairs, decorations, alterations, or improvements; supply agreed services; or exhibit the dwelling unit to prospective or actual purchasers, mortgagees, tenants, workers, or contractors.
(2) The landlord may enter the dwelling unit at any time for the protection or preservation of the premises. The landlord may enter the dwelling unit upon reasonable notice to the tenant and at a reasonable time for the purpose of repair of the premises. "Reasonable notice" for the purpose of repair is notice given at least 12 hours prior to the entry, and reasonable time for the purpose of repair shall be between the hours of 7:30 a.m. and 8:00 p.m. The landlord may enter the dwelling unit when necessary for the further purposes set forth in subsection (1) under any of the following circumstances:
(a) With the consent of the tenant;
(b) In case of emergency;
(c) When the tenant unreasonably withholds consent; or
(d) If the tenant is absent from the premises for a period of time equal to one-half the time for periodic rental payments. If the rent is current and the tenant notifies the landlord of an intended absence, then the landlord may enter only with the consent of the tenant or for the protection or preservation of the premises.
(3) The landlord shall not abuse the right of access nor use it to harass the tenant.
Selling a property with a tenant can be an involved, sensitive situation that requires the utmost in care and compassion. When in doubt, one almost always gets more "flies" with honey rather than vinegar!
Recently, I have had 2 mind-numbing experiences with permits. Yep, the bane of a homeowner's existence. Permits issued by a municipality are actually a good thing as they provide:
I have come to learn that in Florida, title searches conducted by title companies do not examine public records for any open permits that have not received final inspections. Basically, they are not a lien and property can be transferred with open permits. That moves the onus to both Buyers and Sellers to ensure their property has no open permits.
So how do you find any open permits? The easiest Sway is to contact the city or county building department and asked for a property card printout. It should show any additions or improvements that have had a permit pulled. It will NOT show any record of unpermitted additions or improvements.
Let's say there is an open permit, for example, on a window replacement. What should a buyer do? First, determine with the municipality if the permit is in fact still open, i.e. no final inspection. The easiest method to resolve that is to contact the contractor who installed it and have them call for the final inspection. If the homeowner did it, then the homeowner calls in the final inspection. That should do it.
If the contractor is out of business, then the homeowner MUST close the permit by requesting the final inspection on the contractor's behalf.
Addition permits can be trickier to finalize but they can be done. If a permit was never pulled on an addition, that may be quite costly and intensive for the seller. If the buyer goes through with the purchase and assumes responsibility for the home, the municipality may REQUIRE the new owner to rectify the permit issue, which may include larger fees, penalties, and invasive inspections.
So do yourself a favor and check for permits!
August stats are in and they aren't half bad. We have not fropped through 28,000 units yet, which I would have liked to see. I still believe our "healthy" Tampa Bay area levels are around 15,000 - 18,000 homes for sale. So we are slightly less than double our normal inventory, which is still applying downward pressure to prices.
I am amazed that some of average sale prices are up to 25% LOWER than their original listing price and around 85% - 90% of the current list price.
However, there are buyers out there. Recently wrote an offer for a client for a small bank-owned forclosure that was on the market for just 3 days. Wouldn't you know the realtor had 10+ offers in under 72 hours of listing the property! Normal retail homes in average condition will find their values similiar to what they were in 2002 & 2003...you can't change it and the new privacy fence or low flow toilets will not add extra value to the home.
MLS MONTHLY REPORT August ‘09
TAMPA BAY AREA (tri-county) Homes Condos Total Units
Total Units Available: 19,009 8,999 28008
Total Units Pending: 3,252 988 4,240
Total Units Sold: 2,031 578 2,609
Absorption rate: 10.68% 6.42% 9.32%
Avg Days on Market 96 days 103 days 98 days
Months of Inventory 9.4 mons 15.6 mons 10.7 mons
Sold vs List Price % 93% 91% 93%
Sold vs Original List Price % 83% 80% 82%
PINELLAS COUNTY Homes Condos Total Units
Total Units Available: 6,927 5,442 12,369
Total Units Pending: 1073 459 1532
Total Units Sold: 653 297 950
Absorption rate: 9.42% 5.46% 7.68%
Avg Days on Market 86 days 110 days 94 days
Months of Inventory 10.6 mons 18.3 mons 13.0 mons
Sold vs List Price % 91% 90% 91%
Sold vs Original List Price % 78% 79% 78%
N. BEACHES (476-478, 370-375) Homes Condos Total Units
Total Units Available: 588 1511 2,099
Total Units Pending: 55 103 158
Total Units Sold: 36 80 116
Absorption rate: 6.12% 5.29% 5.53%
Avg Days on Market 130 days 124 days 126 days
Months of Inventory 16.3 mons 18.9 mons 18.1 mons
Sold vs List Price % 83% 88% 85%
Sold vs Original List Price % 72% 78% 75%
Foreclosures seems to rule the real estate headlines these days, and rightly so. The banks who offered mortgages to anyone with a pulse (and even some WITHOUT!) fostered an anything-goes atmosphere of real estate speculation, which culminated in the miserable situation we now find ourselves in - empty, desolate homes dot our landscape, falling more into disrepair every day. If you're unlucky enough to have one of these abandoned foreclosures in close proximity to your home, you need to understand that the immediate future can change the valuation of your home for years to come. I offer this example:
Your neighbors move out overnight, leaving a seemingly nice home empty. Day after day, you drive by the home, watching the lawn wither, the weeds grow, and imagining the dank, humid air inside the non-ventilated home. But you continue driving, hoping the bank sells it soon. The reality is that it takes the bank 12 - 18 months to take ownership of the property. When they do, the home looks so bad that it fetches only 75% of what a normally maintained home in your neighborhood would get. To make matters worse, the new owner (investor) wants to rent it immediately for positive cash flow and the new tenants are less than desirable. The home's condition continues to spiral and before you know it, the neighbors start moving out. You can see where this leads....but there's hope IF you decide it's worth your time!
After the home has been abandoned, don't wait. Time is NOT on your side. Get together with your neighbors (like you've been saying you always wanted to do) and devise a schedule to keep the lawn mowed, the weeds pulled, the shrubs trimmed, and even the pool somewhat clean (which will be hard if there is no electric). Plan on sharing maintenance on the property for at least a year or more! However, with 4 - 8 immediate neighbors, it's easy to share the duties. Here are some of the benefits of maintaining a foreclosure property:
Ok, now there are some issues to consider before forming your neighborhood QRF (quick reation to foreclosure) force. First, ensure the property is actually abandoned. Piles of mail, old newspaper, and a vacant home are good indicators. Also, there is some liability with going on a property you don't own to perform maintenance, so you should seek county or legal guidance. If you get hurt, you will most likely have little recourse so don't undertake this without proper risk assessment. Also, do NOT break into the home...do what you can to secure it (boards over windows, lock doors, etc).
Extraordinary times call for extraordinary measures and the only one who can change the bleak foreclosure landscape in your neighborhood is YOU!.
Rich Cornelius sells real estate in the Tampa Bay area. With 4 yrs experience, his business is based on sharing information with clients, being very responsive, and unique marketing plan.
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