Top 10 Ways to Sell your Home or Investment Property for Top Dollar
Your property is an investment - make sure it pays off for you when you sell. Learn the Top 10 Ways to Sell for Top Dollar when you sell your home or investment property!
Getting the best returns from a property is the right of every homeowner and real estate investor. Here are ten ways to ensure that you are receiving the best possible deal as a seller.
1. Choose The Best Team
You shouldn’t go through a significant financial transition like selling a personal or investment property alone. Emotional attachment to your home, mistaken evaluation of your property, or a legal hurdle in completing the transfer are just a few of the many issues that can adversely impact the sale. And all of these can be avoided by picking out the best team. A real estate attorney that works seamlessly with you and your realtor to make sure your interests are prioritized is the no. 1 place to start.
Avoid deal-killing attorneys at all costs. They would be the ones with a superior attitude, no empathy, emotional intelligence, or regard for you as a client. Professionals like these usually keep the clients at arm's length, communicate mostly through emails, and don't coordinate or communicate with the realtor. This leads to a gap in your team, which usually results in poor decisions.
Instead, look for an attorney that can help you think through tough decisions, navigate you through legal intricacies of the deal, and is available for you.
Working with the Enterprise Esquire will also get you references to the best realtors that will help you sell your property at the best possible price with minimal complications. The realtor and attorney, working in harmony, make up your dream team.
2. Understanding Ownership Of Your Property
You shouldn’t sell a property if you don’t have a clear title to it or if you don't own 100% of the property. This is usually an issue that comes up with inherited properties, blended families, re-marriages, and quitclaim deeds. As your attorney, we will secure a title report to make sure you own 100% title to the property you are about to sell. Otherwise, it can severely harm a your bottom line and, in some extreme cases, prevent the sale from happening.
3. Paying off Liens and Mortgages
Have outstanding mortgages and liens will affect your bottom line as well. Typically, you cannot sell your property if you have any recorded judgment or lien in that county where the property is located. Most mortgages, liens, and judgments can be paid off prior to or at closing. As your attorney, we will request that you get a payoff letter from your mortgage company.
State and federal tax liens need to be paid off before or at the time of closing. You will not be able to sell your property without a payoff for these debts. Lastly, city or municipalities may have their own requirements such as water and/or sewerage bills must be paid at closing otherwise the sale won’t go through.
As your legal counsel, we can help you straighten out the details of all legal complications and financial obligations associated with the sale of your house. The sale of your home won’t go smoothly without this knowledge.
4. Earnest Money
A $1,000 earnest money is the industry-standard amount of earnest that sellers ask for average-priced homes. But did you know as the Seller, you can ask for additional, more substantial earnest money amount be deposited after the attorney review and inspection contingencies are closed. But you have to request this before you sign the contract with the buyer – so talk to your realtor about this upfront. This additional deposit signals the buyer’s seriousness in purchasing the property as they have more skin in the game (or money in deal to loose).
To protect your bottom line, if you agree to make repairs to the property and it is a significant amount of money, request that the earnest be made non-refundable or state that the repairs will done after the buyer receives their Clear-to-close (“CTC”). That way you are not out of pocket additional money only to find out that the buyer is unable to get financing to complete the purchase.
5. Different Lenders and Loan Types
Knowing who is funding the buyer’s purchase of your house is important. Conventional bank loans usually get processed with one proper appraisal by a certified appraiser. But specialized loans like VA and FHA might require a second, more later-in-the-stage appraisal, which usually means after you have shaken hands with the buyer about repairs or inspection credit. And if the second appraisal uncovers different issues, you will be forced to do those repairs before the deal can close. A smart attorney won’t let you sign off on inspection credit or start repairs until, as per your buyer’s loan requirement, until all mandatory inspections are complete. So you won't have to reevaluate your bottom line twice.
For buyers, a knowledgeable attorney can guide them to the lenders with the least restrictions, ideal processing time, and mortgage rates.
6. The Game of Credits
Sellers need to be familiar with two major types of credits: closing cost credit and inspection credit. A closing cost credit, also known as a seller concession, reduces the buyer's out-of-pocket expenses needed to close on the home. Depending upon the market and the desirability of your home, buyers may request up to 6% of the purchase price as a closing credit. This is the max amount a lender will allow. You are not required to give a closing credit and you need to consider whatever amount you give in light of any potential inspection credits/repairs you may give. Your real estate broker can help you understand the deal well enough to decide on a closing credit that will not cut too deep into your profits.
The inspection credit is what you can give to the buyer if you decide not to make any requested repairs to your home prior to closing. You do not have to give a credit for every little thing, in fact, the Multi-Board 7.0 real estate contract states that minor repairs or cosmetic issues cannot be submitted or you as the Seller can cancel the contract.
As your attorney, we keep you informed on the contractual should enlighten you about what major and minor repairs are, so you and the buyer can decide on a fair inspection credit.
BONUS TIP: Closing credits asked for at the time of offer. The buyer then conducts an inspection and is able to ask for an inspection credit. This means the buyer has 2 opportunities to reduce your bottom line. Keep in mind both the closing and potential inspection credits when reviewing offers.
7. Understanding Contingencies
The mortgage contingency stipulates that the buyer must have their financing secured and be “cleared to close” by a certain date. More often than not, the lender will not have the buyer’s file cleared to close by the mortgage contingency date and the buyer will request an extension to this contract contingency. Your legal counsel should, to protect your interests, in some situations, grant the 1st extension request and then request the buyer to either increase their earnest or make their earnest non-refundable. This will give you an indication of what the buyer thinks about their own ability to get financing. It’s a real life put your money where your mouth is strategy. Otherwise, the buyer has kept your property off the market for 2 months and can cancel the deal due to lack of financing, get their earnest money back and you are back at square one. This shifts the risk from the Seller to the buyer. For more insight, check out my blog post, Hot Tip for Home Sellers - Earnest Money.
8. Calculating Closing Costs
This is easily one of the most frequently asked questions from Sellers. Closing costs are something most Sellers are concerned with because it has the biggest impact on their bottom line. Usually, closing costs amount to 10-12% of the purchase price. This includes, title company fees, state, county and city transfer taxes, prorated property taxes, HOA fees, and attorney's fee. The bulk of it is the broker's fee, which averages 5%-6%.
The Enterprise Esquire always works to increase your bottom line as the Seller. We help keep title fees manageable by procuring certain municipality documents ourselves (e.g., Chicago water & zoning certs) saving you money. Don’t be fooled by lower priced attorneys who will cost you more money by using costly title companies and whose fees are marked-up for items you need to close.
9. Property Survey
A home survey is done to demarcate the boundary lines of your property. It identifies the land and details of the structure that you legally own. It's a common practice for sellers to have a survey done for their property. A survey cost somewhere between $425 and $700, depending on the property. If you’ve had a survey done within the six months, you can use it if you submit an affidavit that no new improvements or additions have been made to the property after the survey. If you want the buyer to bear the cost for the survey, be sure to add that to the listing detail of your property. It also needs to be crossed out or not initialed when you accept the buyer's offer.
10. Home Warranty
A home warranty provides buyer protection against faulty electrical, plumbing, heating system faults, and appliance failures in their homes. Some specific home warranties may cover additional or less area, but generally, most home warranties cover systems and appliances. They cost around $550 and $750 (based on the service and the coverage) and are usually paid by the seller. It's more a practice than a legal obligation that the seller pays of the home warranty. They are a great way to give the buyer assurance in the property’s systems and appliances without you having to repair anything. Some of home warranty companies are:
Having the Law Office of Alexis Hart McDowell, known as the Enterprise Esquire, on your team when selling your property is the BEST decision for you and your bottom line. We not only have the experience, but the emotional intelligence and team focused approach to handle any issues that arise to ensure you have a smooth transaction. We’d love to speak with you about the sale of your property - schedule a FREE 15 min. consultation at your convenience!
