Why Isn't My Home Selling?
Price is the No. 1 culprit
If your answer is price, you’ll be right a good majority of the time. If your home isn’t selling, buyers think the value of your house is less than the price you want.
For all the time and effort that goes into buying and selling, the economics of the process is relatively simple. Anything is only worth what a buyer is willing to pay and a seller willing to accept. This is the same whether it’s a pack of baseball cards or a $1 million house.
Although the economics may be simple, arriving at that magic price is difficult. Just think of the cost, time and energy that companies put into pricing a product so it succeeds in the marketplace. It’s no different in real estate.
If you’ve taken the time to educate yourself on the local market and are diligent in hiring a professional agent, and are willing to listen to her, you can get a lot closer to the magic number. But you are setting yourself up for disaster if you don’t do your homework and go with what you “feel” your house is worth. Worse yet, is interviewing agents and choosing one solely because she says she can get you more than what the other agents think the house will sell for.
These are some of the most common mistakes sellers make when setting a price:
Price based on need
What you want to make from selling your home means absolutely nothing to buyers or the marketplace. So setting a price based on what you want so you can retire, move up, start a business, etc. will almost certainly fail.
Price based on ego
Your neighbor sold for $200,000 last year so you want $210,000 because you “know” your house is better. Regardless that the market dropped five percent since your neighbor sold. Nearly every owner thinks their house is the best on the block, or at least better than any of the ones that have recently sold or are on the market. Unfortunately for sellers, your opinion doesn’t carry any weight with buyers. Only their opinion matters.
Price based on greed
Even if it’s been shown that your house will likely sell for around $250,000, you insist on listing it for $275,000 because “you never know, someone could come along who just has to have it. Besides, if we don’t get any bites we can always lower the price later.” The problem is it won’t take long for buyers to realize your price is unrealistic and think you are, too, and won’t want to deal with you unless the house is “a steal.” The listing languishes, so you drop the price, but not enough, it sits even longer and pretty soon you have a listing that’s been on the market so long buyers decide there is something wrong and steer clear.
The solution is to get the price right. This is done by using what is called a Competitive Market Analysis (CMA). If you’ve hired the right agent, this is the first folder out of their briefcase when you meet to list your home. A CMA breaks down the sales price of homes that are similar to yours in location, size, age and condition.
Your agent will also consider the listing prices of homes on the market, but these are used more to identify the competition. Even with a strong agent and CMA, your price may not be on target. That’s because the market is always changing and your agent should be updating your CMA whenever anything comparable to your property sells.
Not every reason your home isn’t selling will be the price, although they will be related to it. Here we have that value vs. price issue. If buyers perceive imperfections in your listing, they will want a discount, so if they’re not buying, your price is not discounted enough for buyers to believe the value to them at least equals that of your price.
For example, if your lawn is brown and the landscaping worn, buyers will want a discount. The problem is that a seller will not consider this a major issue and attach a much lower discount than a buyer will accept.
This is why it is imperative that sellers do everything they can to eliminate any issues buyers may have with their house before listing. Obviously, you can’t do anything about a bad location, such as being near railroad tracks, or that you have just one bathroom. But you and your agent should have factored these drawbacks into the listing price.
Here are some of the most common reasons buyers are turned off by a particular house, so make sure these are addressed before lopping thousands of dollars off the asking price:
Put on a good show
This is the second biggest reason a home isn’t selling. Buyers often talk of “connecting” to a house. This is not likely to happen if your house is not company-coming-over clean and ready to show like a model. This goes for the outside as well. If you don’t want to put the effort into doing this, then you’d better adjust your price to compensate because buyers will only consider your house because it’s a good deal, not because it “speaks to them.”
Can’t buy what they can’t see
If you make it difficult for people to see your property, then chances of a sale at the price you want drops considerably. Selling can be a nuisance, but it’s a necessary one. If you don’t allow a lockbox or require appointment-only showings, you are the culprit to the house not selling.
Out of your hands
It’s not always the seller’s fault that a house isn’t selling. Sometimes the market changes and buyers disappear. Maybe a new home development has opened nearby and they are “stealing” the customers. Or maybe you’ve received bad advice from your agent. Any of these can affect whether your house sells, which means you need to consider the reasons and make the necessary adjustments.
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Copyright © by Move, Inc. By Diana Lundin
Showing posts with label Expired listings. Show all posts
Showing posts with label Expired listings. Show all posts
Friday, August 12, 2011
Friday, January 7, 2011
Home Sellers: Cut to the Chase in Home Repairs and Enhancements
2011 opens as a strong buyer’s market so home sellers must be on their toes to give their homes maximum appeal. Not only should sellers complete the home repairs they know must be made, they should also hire a certified home inspector to thoroughly and impartially evaluate their properties. If this inspection results in a fix-it list, review the list with your real estate professional to establish necessities and priorities. Depending on your budget and objectives, you may want to repair only items that could cause significant deterioration to your property, such as a leaky roof. Ideally, the closer you can get your home to “move-in-ready” status, the more likely you are to attract today’s cautious and discerning buyers. Among the most common repairs and enhancements yielding immediate buyer appeal include:
Paint inside and outside in neutral colors
Steam clean or replace carpets
Polish or replace hardwood floors
Clean or re-grout kitchen and bathrooms
Replace light fixtures
Change light bulbs throughout and replace wall-switch covers
Repair dripping faucets
Fix sticking door
Repair broken fencing
Home sellers wanting to do more should consider the findings of Remodeling magazine’s 2010-’11 Cost vs. Value Report, released in December 2010. The survey used input from REALTORS in 80 cities to rank home remodeling projects according to those that bring the greatest cost recovered at sale. Many of the top projects focus on exterior replacements, as replacements are generally less expensive than other types of projects and they add all-important curb appeal – essential for today’s competitive market or any other. The Top Five projects in the Cost vs. Value Report include:
No. 1 – Entry door replacement (steel)
No. 2 – Garage door replacement (four-section door, reuse existing motorized opener)
No. 3 – Siding replacement (fiber-cement siding)
No. 4 – Kitchen remodel (minor: new cabinet doors, drawers and hardware, plus new energy-efficient appliances, flooring, counters, sink and faucet)
No. 5 – Deck addition (wood)
When the dust clears and projects are complete, be sure that you and your real estate professional document your repairs and enhancements, and share the report with prospective buyers. Walk prospects through the enhancements and include their costs. A home in good condition demonstrates pride of ownership. Taking the time to make enhancements helps ensure your home is presented in its best-possible light, primed for sale.
Paint inside and outside in neutral colors
Steam clean or replace carpets
Polish or replace hardwood floors
Clean or re-grout kitchen and bathrooms
Replace light fixtures
Change light bulbs throughout and replace wall-switch covers
Repair dripping faucets
Fix sticking door
Repair broken fencing
Home sellers wanting to do more should consider the findings of Remodeling magazine’s 2010-’11 Cost vs. Value Report, released in December 2010. The survey used input from REALTORS in 80 cities to rank home remodeling projects according to those that bring the greatest cost recovered at sale. Many of the top projects focus on exterior replacements, as replacements are generally less expensive than other types of projects and they add all-important curb appeal – essential for today’s competitive market or any other. The Top Five projects in the Cost vs. Value Report include:
No. 1 – Entry door replacement (steel)
No. 2 – Garage door replacement (four-section door, reuse existing motorized opener)
No. 3 – Siding replacement (fiber-cement siding)
No. 4 – Kitchen remodel (minor: new cabinet doors, drawers and hardware, plus new energy-efficient appliances, flooring, counters, sink and faucet)
No. 5 – Deck addition (wood)
When the dust clears and projects are complete, be sure that you and your real estate professional document your repairs and enhancements, and share the report with prospective buyers. Walk prospects through the enhancements and include their costs. A home in good condition demonstrates pride of ownership. Taking the time to make enhancements helps ensure your home is presented in its best-possible light, primed for sale.
Thursday, November 4, 2010
A Consumer's Guide To Selling or Buying A Home In PA
Buying or selling a home can be intimidating, even if you've done it before. That's why we recommend using a real estate professional -- a REALTOR® -- to guide you through the process. Even if you elect not to use a REALTOR® and strike out on your own, the more informed you are as a real estate seller or buyer the more pleasant your experience is likely to be. The Pennsylvania Association of REALTORS® (PAR) publishes a number of forms that are designed to help guide the consumer (and your REALTOR®) through the steps of the home buying/selling process.
Legal Stuff
Please keep in mind that this document is only meant to familiarize you with some of the basic elements of a real estate transaction. In no way is it meant to present a comprehensive explanation of all the various laws, regulations and business practices involved in buying or selling a home -- there may be certain things that are not discussed at all, and the explanations that are given are often simplified. Further, this document is not intended to provide legal advice to consumers, and it should not be relied on in place of seeking professional advice from a REALTOR® and/or attorney if you are unsure of any of the terms or concepts involved, or if you have questions about any aspect of the process. Obtaining the services of a REALTOR® and a real estate attorney are always encouraged.
Agency and Business Relationships
Whether you are buying or selling a home, it is important understand what relationships exist -- or can exist -- between you and a real estate professional. Even if you have chosen to go it alone (i.e., buy or sell without the help of a REALTOR®), chances of escaping this experience are pretty slim. Here's why: every real estate licensee that you meet during the course of your transaction (open houses, listing appointments, phone calls to brokerages, etc.) is under a legal obligation to explain to you the various business relationships you can have with him or her -- even if you do not wish to work with them at all. This explanation will come by way of a written Consumer Notice if the meeting is in person, or via an Oral Consumer Notice if it's by telephone. By law, the Notice must be given before you start discussing your real estate needs and, in effect, puts you on notice not to mention anything that might hurt your negotiating position until you know who the real estate licensee works for. The written Notice must be delivered to you at the first personal meeting where a discussion of your needs takes place OR, if the original Notice was given orally, at the first face to face meeting. You'll have to sign the Notice so the real estate licensee has proof that it was presented to you.
Your options for working with the real estate licensee will be limited by two things: whether he or she is already working with the "other side" in the transaction, and the internal policies of the broker that the licensee works for. The full slate of possible relationships are: buyer agency, seller agency, dual agency, designated agency, and transaction licensee.
The Paper Parade: Agency/Employment Contracts
Once you have read the Consumer Notice and have made a decision to work with a REALTOR®, you will be required to reduce your relationship with him or her to writing.
If you are a seller, this will be in the form of a listing contract, where you define your relationship with the REALTOR® and outline the terms under which he or she will market your property, including the fee to be paid to the broker. As a seller, you also are required under Pennsylvania law to fill out a Seller's Property Disclosure Statement. This Statement must be delivered to all prospective buyers before an offer is made.
If you are a buyer, the form you sign will depend on the relationship you choose to create with the REALTOR®. A very common form used for this purpose is the Business Relationship Between Broker and Buyer. This form deals with three types of business relationships. First, if the REALTOR® is already working with the Seller, or as a subagent of the Seller, this form gives you an opportunity to acknowledge Seller Agency, and provides important notices on the back. You will encounter this most often if you are not opting to work with a REALTOR® during your buying process.
Second, if you choose to work with a REALTOR® as a Transaction Licensee, this form allows you to create that relationship; again, the notices on the back come into play.
Finally, if you choose Buyer Agency, an Exclusive Buyer Agency Contract is contained in the form, allowing you to create a relationship with a REALTOR® who will look out for your interests through the entire process of searching for and buying a home. You also have the option to create a Non-Exclusive Buyer Agency relationship, in which you are obligated to work with the broker only if you end up buying a property that he or she showed to you, but not if you purchase a property shown by another broker. You should discuss with your REALTOR® what he or she offers, and what will work best for you.
Dual Agency
As you might expect, there will be occasions when a buyer and seller, represented by the same broker, enter into a transaction together. When this occurs, the broker, having duties to both the buyer and the seller, takes on the role of a dual agent. Most brokers have policies that allow them to serve as both seller and buyer agents in the same transaction. Brokers whose practices include dual agency may designate separate agents to represent the separate interests of the buyer and seller. The designated agent for the seller will continue to act as a seller's agent, advocating on behalf of the seller; similarly, the designated buyer agent will work to serve the buyer in that transaction. As a buyer or seller, you have the right to choose the designated agent with whom you will work. When the same designated agent represents the seller and buyer in the same transaction, he/she will be a dual agent.
Fees
Whether you are buying or selling, you'll probably want to know how your REALTOR® is being compensated. Most fees are usually paid by a seller, and the PAR listing contract contains a provision setting the fees for your broker as either a flat fee or a percentage of the sale price. Most listing brokers have policies under which they will pay a portion of their fee to another broker who brings a buyer to the property; this is also covered in the listing contract.
If you choose to sell your property yourself and are approached by a broker who represents a possible buyer you will probably be asked to fill out a Broker Fee Agreement stating that you will pay a certain fee to the buyer's broker only if his or her client ends up purchasing the property.
Buyers are frequently charged with a "transaction" or "conveyancing" fee by the selling broker (the office working with the buyer). These fees generally are charged in connection with the many miscellaneous services provided to the buyer such as coordinating inspections, assisting with the loan application and placement for the order of title insurance etc. Like any fee imposed by a real estate licensee, it is payable only when it has been agreed to in writing. This rule holds true for sellers as well: no fee can be charged unless you agree to it in writing.
The Paper Parade: Committing to Buy or Sell
Offers to purchase real estate must be in writing and generally are submitted to sellers via an Agreement of Sale. Before you get to that point, though, there are a few more forms you might encounter.
All sellers and buyers must receive their estimated closing costs before an Agreement of Sale is signed. Buyers whose deposit is being transferred to another broker (a common practice when the agent taking your check is not the listing broker) must be informed of the transfer generally via a Deposit Money Notice. The buyer also must have received a Seller's Property Disclosure Statement. The buyer and seller have a chance to acknowledge receipt of these and other forms that may be required as they fill out an Agreement of Sale.
Until a written offer is received and accepted (all terms agreed to and acknowledged by signature or initials by both parties), the property is still "on the market." That means that if a second offer is received from another buyer before the first offer is "signed, sealed, and delivered," the seller could very well accept that second offer. The seller is not under an obligation to review offers in the order in which they are received, so if more than one offer comes in during the window of time that seller has for approval, offers can be compared. Sellers should consult their REALTOR® and attorney for guidance if they are receiving multiple offers.
Buyers can put a little pressure on the seller to accept or reject an offer quickly. When an offer is made, the buyer stipulates in the Agreement of Sale how long the seller has to review it. In a competitive situation, the buyer may consider keeping that period short. The buyer's REALTOR® can help determine an advisable time-frame by taking market conditions, desirability of neighborhood, and other factors into account.
All offers and counteroffers should contain a time period for acceptance. If the time period passes with no action, the offer (or counteroffer) dies.
More information is available to potential buyers about the Agreement of Sale in a booklet titled "The Buyer's Guide to the Agreement of Sale." The booklet should be available through your REALTOR® or your local association of REALTORS®.
Inspections, Contingencies, etc.
Buyers can make their offers contingent on the property passing certain inspections. The PAR Agreement of Sale contains pre-printed inspection contingencies for the property in general, for wood boring insect (termite) infestation, for radon, for lead-based paint hazards, for the water service, and for the sewage system. Notices regarding these inspections, and giving other useful information, are found on the backs of most pages of this form. Some of these Notices are required by law, so both the seller and buyer should read them.
Buyers and sellers should be aware that if the property was built before 1978, a federal law regarding lead-paint hazards applies. The seller must disclose any knowledge of lead paint, and the buyer has the right to inspect and/or assess the property for lead. A pamphlet titled "Protect Your Family from Lead in Your Home" must be given to the buyer of pre-1978 properties.
The Agreement of Sale also contains other non-inspection contingencies that may affect the sale of the property. For example, there is a Mortgage Contingency which gives one or both parties the option to cancel the agreement if the buyer is unable to get financing for the purchase. There are also several frequently requested contingencies the most common of which makes the purchase contingent upon the buyer being able to sell his or her current home that can be added to the contract by filling out one of the many available addenda. If you have special conditions that need to be met to make you comfortable with the sale or purchase of a home, talk to your REALTOR® about setting up special contingencies to cover those conditions. Keep in mind that you cannot enforce a promise if it has not been written into the Agreement of Sale, an Addendum (written "add-on" to the Agreement), or an Amendment to the Agreement (usually written sometime after the original Agreement).
When the Offer is Accepted
If you are using a REALTOR®, he or she will assist with the scheduling of any agreed upon inspections and will work with you in meeting the requirements imposed upon you as a buyer or seller. During this time, a title search will be performed to make sure there are no "clouds on the title" (meaning there are no legal impediments to the seller providing the marketable title that buyers and their lenders usually require).
Most buyers have an opportunity for a pre-settlement "walk-through" of the property, where they make sure everything is there that should be there, and where they have an opportunity to check that required repairs were made, etc. It's important that buyers take advantage of this opportunity, so that any outstanding issues can be dealt with properly at settlement. It is also important to remember that the property was bought "as is," or in the condition it was when the Agreement of Sale was executed. Improvements that were not specifically spelled out in the agreement will not have occurred, and normal wear and tear from the time of the agreement to settlement are acceptable.
Settlement
When all contingencies have been fulfilled, title searches completed, and monies secured, settlement can occur. Settlement, or closing, is when the property actually changes hands and the title, or deed, is transferred. In most transactions, sellers are required to be out of the property by settlement and the property is to be in "broom-clean condition." Occasionally, with advanced planning and by special arrangement, sellers may remain in the property after settlement, or buyers may move into the property prior to settlement. When these special circumstances occur, arrangements are made for the payment of security deposits and the payment of appropriate sums in exchange for the privilege of having possession before or after settlement. The Pennsylvania Association of REALTORS® has a form to accommodate those times when the seller will remain in the property after settlement, or to allow the buyer to move in early or to at least gain access to the property to store materials or to prepare it for the buyer's move.
If Something Doesn't Work Out
As a seller, if you find yourself in a Listing Contract with a real estate agent who is just not doing the job you expected, what are your options? Your first act should be to call the broker and or office manager and discuss your dissatisfaction. The broker is responsible for the actions of salespeople in the office and may be able to offer some solutions. If discussions with the broker or manager are unsuccessful, you make seek to be released from the Listing Contract. This requires the agreement of the broker. Some brokers offer a period of time where the seller can walk away from the contract; others will charge the seller a fee for costs incurred marketing the property. Because it is a service contract, you do have the option of canceling the contract, without the broker's consent, but it may not be without some cost to you. If a broker believes that the cancellation was unjust, he/she may seek a legal remedy. And remember, if a buyer who was introduced to the property during the term of the broker's Listing Contract ends up buying the property, you may be liable for the broker's fee.
If you are a buyer in a buyer agency contract with a real estate agent whose style is not suited to your personality, or if you are dissatisfied for some other reasons, you should first call the broker or office manager to give him or her the opportunity to fix the situation. If that doesn't resolve the problem, you may terminate your buyer agency contract. Whether the broker has any remedy will depend upon the reasons for your terminating the Agreement. Remember, though, if you buy a property that you looked at with the agent (or, if you signed an exclusive buyer agency agreement and you buy a property that you looked at during the term of your buyer agency contract), the agent will still be entitled to the agreed upon compensation.
If the buyer or seller has a problem with the other party in the transaction there are always several options available to resolve the problems (informal agreement, mediation, court proceedings, etc.). Near the end of the Agreement of Sale is a contract term giving the buyer and seller the option to mediate any disputes they may have over the transaction instead of taking them directly to court. There is an in-depth Notice explaining this option on the back of the last page of the agreement, but you should discuss with your REALTOR® and/or attorney if you wish to elect this option. You should look upon mediation as a service offered by the local association of REALTORS® as a benefit to the buyer and seller. Though it is the rare occasion when a transaction ends up in a dispute, having the dispute resolved quickly, inexpensively, and out of the courtroom is to everyone's advantage. The mediation system has been working for nearly a decade in Pennsylvania with a high percentage of the cases having been amicably resolved quickly and inexpensively.
As for your relationship with the real estate professionals involved in a transaction, it's important to remember that licensees using the term REALTOR® belong to the NATIONAL ASSOCIATION OF REALTORS® and subscribe to a Code of Ethics that holds their behavior to a higher standard than Pennsylvania law requires of them.
Source: Pennsylvania Association of REALTORS
Legal Stuff
Please keep in mind that this document is only meant to familiarize you with some of the basic elements of a real estate transaction. In no way is it meant to present a comprehensive explanation of all the various laws, regulations and business practices involved in buying or selling a home -- there may be certain things that are not discussed at all, and the explanations that are given are often simplified. Further, this document is not intended to provide legal advice to consumers, and it should not be relied on in place of seeking professional advice from a REALTOR® and/or attorney if you are unsure of any of the terms or concepts involved, or if you have questions about any aspect of the process. Obtaining the services of a REALTOR® and a real estate attorney are always encouraged.
Agency and Business Relationships
Whether you are buying or selling a home, it is important understand what relationships exist -- or can exist -- between you and a real estate professional. Even if you have chosen to go it alone (i.e., buy or sell without the help of a REALTOR®), chances of escaping this experience are pretty slim. Here's why: every real estate licensee that you meet during the course of your transaction (open houses, listing appointments, phone calls to brokerages, etc.) is under a legal obligation to explain to you the various business relationships you can have with him or her -- even if you do not wish to work with them at all. This explanation will come by way of a written Consumer Notice if the meeting is in person, or via an Oral Consumer Notice if it's by telephone. By law, the Notice must be given before you start discussing your real estate needs and, in effect, puts you on notice not to mention anything that might hurt your negotiating position until you know who the real estate licensee works for. The written Notice must be delivered to you at the first personal meeting where a discussion of your needs takes place OR, if the original Notice was given orally, at the first face to face meeting. You'll have to sign the Notice so the real estate licensee has proof that it was presented to you.
Your options for working with the real estate licensee will be limited by two things: whether he or she is already working with the "other side" in the transaction, and the internal policies of the broker that the licensee works for. The full slate of possible relationships are: buyer agency, seller agency, dual agency, designated agency, and transaction licensee.
The Paper Parade: Agency/Employment Contracts
Once you have read the Consumer Notice and have made a decision to work with a REALTOR®, you will be required to reduce your relationship with him or her to writing.
If you are a seller, this will be in the form of a listing contract, where you define your relationship with the REALTOR® and outline the terms under which he or she will market your property, including the fee to be paid to the broker. As a seller, you also are required under Pennsylvania law to fill out a Seller's Property Disclosure Statement. This Statement must be delivered to all prospective buyers before an offer is made.
If you are a buyer, the form you sign will depend on the relationship you choose to create with the REALTOR®. A very common form used for this purpose is the Business Relationship Between Broker and Buyer. This form deals with three types of business relationships. First, if the REALTOR® is already working with the Seller, or as a subagent of the Seller, this form gives you an opportunity to acknowledge Seller Agency, and provides important notices on the back. You will encounter this most often if you are not opting to work with a REALTOR® during your buying process.
Second, if you choose to work with a REALTOR® as a Transaction Licensee, this form allows you to create that relationship; again, the notices on the back come into play.
Finally, if you choose Buyer Agency, an Exclusive Buyer Agency Contract is contained in the form, allowing you to create a relationship with a REALTOR® who will look out for your interests through the entire process of searching for and buying a home. You also have the option to create a Non-Exclusive Buyer Agency relationship, in which you are obligated to work with the broker only if you end up buying a property that he or she showed to you, but not if you purchase a property shown by another broker. You should discuss with your REALTOR® what he or she offers, and what will work best for you.
Dual Agency
As you might expect, there will be occasions when a buyer and seller, represented by the same broker, enter into a transaction together. When this occurs, the broker, having duties to both the buyer and the seller, takes on the role of a dual agent. Most brokers have policies that allow them to serve as both seller and buyer agents in the same transaction. Brokers whose practices include dual agency may designate separate agents to represent the separate interests of the buyer and seller. The designated agent for the seller will continue to act as a seller's agent, advocating on behalf of the seller; similarly, the designated buyer agent will work to serve the buyer in that transaction. As a buyer or seller, you have the right to choose the designated agent with whom you will work. When the same designated agent represents the seller and buyer in the same transaction, he/she will be a dual agent.
Fees
Whether you are buying or selling, you'll probably want to know how your REALTOR® is being compensated. Most fees are usually paid by a seller, and the PAR listing contract contains a provision setting the fees for your broker as either a flat fee or a percentage of the sale price. Most listing brokers have policies under which they will pay a portion of their fee to another broker who brings a buyer to the property; this is also covered in the listing contract.
If you choose to sell your property yourself and are approached by a broker who represents a possible buyer you will probably be asked to fill out a Broker Fee Agreement stating that you will pay a certain fee to the buyer's broker only if his or her client ends up purchasing the property.
Buyers are frequently charged with a "transaction" or "conveyancing" fee by the selling broker (the office working with the buyer). These fees generally are charged in connection with the many miscellaneous services provided to the buyer such as coordinating inspections, assisting with the loan application and placement for the order of title insurance etc. Like any fee imposed by a real estate licensee, it is payable only when it has been agreed to in writing. This rule holds true for sellers as well: no fee can be charged unless you agree to it in writing.
The Paper Parade: Committing to Buy or Sell
Offers to purchase real estate must be in writing and generally are submitted to sellers via an Agreement of Sale. Before you get to that point, though, there are a few more forms you might encounter.
All sellers and buyers must receive their estimated closing costs before an Agreement of Sale is signed. Buyers whose deposit is being transferred to another broker (a common practice when the agent taking your check is not the listing broker) must be informed of the transfer generally via a Deposit Money Notice. The buyer also must have received a Seller's Property Disclosure Statement. The buyer and seller have a chance to acknowledge receipt of these and other forms that may be required as they fill out an Agreement of Sale.
Until a written offer is received and accepted (all terms agreed to and acknowledged by signature or initials by both parties), the property is still "on the market." That means that if a second offer is received from another buyer before the first offer is "signed, sealed, and delivered," the seller could very well accept that second offer. The seller is not under an obligation to review offers in the order in which they are received, so if more than one offer comes in during the window of time that seller has for approval, offers can be compared. Sellers should consult their REALTOR® and attorney for guidance if they are receiving multiple offers.
Buyers can put a little pressure on the seller to accept or reject an offer quickly. When an offer is made, the buyer stipulates in the Agreement of Sale how long the seller has to review it. In a competitive situation, the buyer may consider keeping that period short. The buyer's REALTOR® can help determine an advisable time-frame by taking market conditions, desirability of neighborhood, and other factors into account.
All offers and counteroffers should contain a time period for acceptance. If the time period passes with no action, the offer (or counteroffer) dies.
More information is available to potential buyers about the Agreement of Sale in a booklet titled "The Buyer's Guide to the Agreement of Sale." The booklet should be available through your REALTOR® or your local association of REALTORS®.
Inspections, Contingencies, etc.
Buyers can make their offers contingent on the property passing certain inspections. The PAR Agreement of Sale contains pre-printed inspection contingencies for the property in general, for wood boring insect (termite) infestation, for radon, for lead-based paint hazards, for the water service, and for the sewage system. Notices regarding these inspections, and giving other useful information, are found on the backs of most pages of this form. Some of these Notices are required by law, so both the seller and buyer should read them.
Buyers and sellers should be aware that if the property was built before 1978, a federal law regarding lead-paint hazards applies. The seller must disclose any knowledge of lead paint, and the buyer has the right to inspect and/or assess the property for lead. A pamphlet titled "Protect Your Family from Lead in Your Home" must be given to the buyer of pre-1978 properties.
The Agreement of Sale also contains other non-inspection contingencies that may affect the sale of the property. For example, there is a Mortgage Contingency which gives one or both parties the option to cancel the agreement if the buyer is unable to get financing for the purchase. There are also several frequently requested contingencies the most common of which makes the purchase contingent upon the buyer being able to sell his or her current home that can be added to the contract by filling out one of the many available addenda. If you have special conditions that need to be met to make you comfortable with the sale or purchase of a home, talk to your REALTOR® about setting up special contingencies to cover those conditions. Keep in mind that you cannot enforce a promise if it has not been written into the Agreement of Sale, an Addendum (written "add-on" to the Agreement), or an Amendment to the Agreement (usually written sometime after the original Agreement).
When the Offer is Accepted
If you are using a REALTOR®, he or she will assist with the scheduling of any agreed upon inspections and will work with you in meeting the requirements imposed upon you as a buyer or seller. During this time, a title search will be performed to make sure there are no "clouds on the title" (meaning there are no legal impediments to the seller providing the marketable title that buyers and their lenders usually require).
Most buyers have an opportunity for a pre-settlement "walk-through" of the property, where they make sure everything is there that should be there, and where they have an opportunity to check that required repairs were made, etc. It's important that buyers take advantage of this opportunity, so that any outstanding issues can be dealt with properly at settlement. It is also important to remember that the property was bought "as is," or in the condition it was when the Agreement of Sale was executed. Improvements that were not specifically spelled out in the agreement will not have occurred, and normal wear and tear from the time of the agreement to settlement are acceptable.
Settlement
When all contingencies have been fulfilled, title searches completed, and monies secured, settlement can occur. Settlement, or closing, is when the property actually changes hands and the title, or deed, is transferred. In most transactions, sellers are required to be out of the property by settlement and the property is to be in "broom-clean condition." Occasionally, with advanced planning and by special arrangement, sellers may remain in the property after settlement, or buyers may move into the property prior to settlement. When these special circumstances occur, arrangements are made for the payment of security deposits and the payment of appropriate sums in exchange for the privilege of having possession before or after settlement. The Pennsylvania Association of REALTORS® has a form to accommodate those times when the seller will remain in the property after settlement, or to allow the buyer to move in early or to at least gain access to the property to store materials or to prepare it for the buyer's move.
If Something Doesn't Work Out
As a seller, if you find yourself in a Listing Contract with a real estate agent who is just not doing the job you expected, what are your options? Your first act should be to call the broker and or office manager and discuss your dissatisfaction. The broker is responsible for the actions of salespeople in the office and may be able to offer some solutions. If discussions with the broker or manager are unsuccessful, you make seek to be released from the Listing Contract. This requires the agreement of the broker. Some brokers offer a period of time where the seller can walk away from the contract; others will charge the seller a fee for costs incurred marketing the property. Because it is a service contract, you do have the option of canceling the contract, without the broker's consent, but it may not be without some cost to you. If a broker believes that the cancellation was unjust, he/she may seek a legal remedy. And remember, if a buyer who was introduced to the property during the term of the broker's Listing Contract ends up buying the property, you may be liable for the broker's fee.
If you are a buyer in a buyer agency contract with a real estate agent whose style is not suited to your personality, or if you are dissatisfied for some other reasons, you should first call the broker or office manager to give him or her the opportunity to fix the situation. If that doesn't resolve the problem, you may terminate your buyer agency contract. Whether the broker has any remedy will depend upon the reasons for your terminating the Agreement. Remember, though, if you buy a property that you looked at with the agent (or, if you signed an exclusive buyer agency agreement and you buy a property that you looked at during the term of your buyer agency contract), the agent will still be entitled to the agreed upon compensation.
If the buyer or seller has a problem with the other party in the transaction there are always several options available to resolve the problems (informal agreement, mediation, court proceedings, etc.). Near the end of the Agreement of Sale is a contract term giving the buyer and seller the option to mediate any disputes they may have over the transaction instead of taking them directly to court. There is an in-depth Notice explaining this option on the back of the last page of the agreement, but you should discuss with your REALTOR® and/or attorney if you wish to elect this option. You should look upon mediation as a service offered by the local association of REALTORS® as a benefit to the buyer and seller. Though it is the rare occasion when a transaction ends up in a dispute, having the dispute resolved quickly, inexpensively, and out of the courtroom is to everyone's advantage. The mediation system has been working for nearly a decade in Pennsylvania with a high percentage of the cases having been amicably resolved quickly and inexpensively.
As for your relationship with the real estate professionals involved in a transaction, it's important to remember that licensees using the term REALTOR® belong to the NATIONAL ASSOCIATION OF REALTORS® and subscribe to a Code of Ethics that holds their behavior to a higher standard than Pennsylvania law requires of them.
Source: Pennsylvania Association of REALTORS
Wednesday, June 23, 2010
EXPIRED REAL ESTATE LISTINGS
What Should You Do If Your Listing Has Expired?
Sellers find it difficult to be optimistic after a listing has expired. Most are excited and nervous when that listing agreement is first signed, hoping that the home sells quickly and for a big profit. It's frustrating to wait week after week for a purchase offer when that offer never arrives.
Regardless of the length of listing -- whether the agreement was for a term of 90 days, 180 days or a year -- when the listing has expired, the broker / seller relationship has come to an end (more or less). This is when sellers often ask whose fault is it that the home isn't selling?
Check Motivation
The first step is to review your reasons to sell. If you are not motivated to sell, you are not a seller. You're a home owner with a sign in the yard. Without motivation, you've got about as much hope for selling as an owner with a sign that reads, "Keep Off the Grass."
Review Marketing
Where is the business plan to sell your home? Review the marketing with your agent, step-by-step. Did your agent drop the ball? Did you? What worked, what didn't pull ad calls or showings? Did you have a virtual tour, send out direct mail, put a lockbox on the property?
Consider Condition
Go out and look at other homes on the market to determine if your home is in the same condition as those actively for sale. Perhaps you need to do repairs before selling. Maybe your home needs to be staged. Does your home scream curb appeal?
Look Again at Buyer Objections
What have buyers said about your home? Review buyer feedback, which your agent should have obtained for you when your home first went on the market. Is there validity to what buyers were saying? How can you compensate for those objections?
Discount Sudden Activity
You won't have to look too far to find agents because they'll all come crawling out of the woodwork when your listing expires. Realtors are prevented from soliciting a seller when the listing is active in MLS. But you're fair game when the listing has expired.
You may wonder why your listing, now that it has expired, is so popular. Many agents specialize in contacting expired listings because they want the listing. Period. Moreover, realize that some agents will take an overpriced listing just to get signage.
Contact Several Listing Agents
Interview agents. Ask the hard questions to determine if the agents are giving you the right answers. Find out what another agent might do differently. If another agent offers substantially more service than your existing agent, list with that agent.
Talk to Your Existing Agent About Why the Listing Expired
If your agent has fulfilled the marketing plan, worked diligently to sell your home, and the market is not answering the ring to your dinner bell, then you might need to conform to the market. This means a price reduction. Ask your existing agent to prepare another comparative market analysis to determine if your home is priced to sell.
If you respect and value your agent, relist with that agent. Adjust your price accordingly and follow your agent's suggestions, even if it means making repairs or improvements you'd rather not do. If your agent is spending money on your listing through advertising, aggressive marketing and networking that listing, that agent deserves your loyalty.
Elizabeth Weintraub, About.com
Sellers find it difficult to be optimistic after a listing has expired. Most are excited and nervous when that listing agreement is first signed, hoping that the home sells quickly and for a big profit. It's frustrating to wait week after week for a purchase offer when that offer never arrives.
Regardless of the length of listing -- whether the agreement was for a term of 90 days, 180 days or a year -- when the listing has expired, the broker / seller relationship has come to an end (more or less). This is when sellers often ask whose fault is it that the home isn't selling?
Check Motivation
The first step is to review your reasons to sell. If you are not motivated to sell, you are not a seller. You're a home owner with a sign in the yard. Without motivation, you've got about as much hope for selling as an owner with a sign that reads, "Keep Off the Grass."
Review Marketing
Where is the business plan to sell your home? Review the marketing with your agent, step-by-step. Did your agent drop the ball? Did you? What worked, what didn't pull ad calls or showings? Did you have a virtual tour, send out direct mail, put a lockbox on the property?
Consider Condition
Go out and look at other homes on the market to determine if your home is in the same condition as those actively for sale. Perhaps you need to do repairs before selling. Maybe your home needs to be staged. Does your home scream curb appeal?
Look Again at Buyer Objections
What have buyers said about your home? Review buyer feedback, which your agent should have obtained for you when your home first went on the market. Is there validity to what buyers were saying? How can you compensate for those objections?
Discount Sudden Activity
You won't have to look too far to find agents because they'll all come crawling out of the woodwork when your listing expires. Realtors are prevented from soliciting a seller when the listing is active in MLS. But you're fair game when the listing has expired.
You may wonder why your listing, now that it has expired, is so popular. Many agents specialize in contacting expired listings because they want the listing. Period. Moreover, realize that some agents will take an overpriced listing just to get signage.
Contact Several Listing Agents
Interview agents. Ask the hard questions to determine if the agents are giving you the right answers. Find out what another agent might do differently. If another agent offers substantially more service than your existing agent, list with that agent.
Talk to Your Existing Agent About Why the Listing Expired
If your agent has fulfilled the marketing plan, worked diligently to sell your home, and the market is not answering the ring to your dinner bell, then you might need to conform to the market. This means a price reduction. Ask your existing agent to prepare another comparative market analysis to determine if your home is priced to sell.
If you respect and value your agent, relist with that agent. Adjust your price accordingly and follow your agent's suggestions, even if it means making repairs or improvements you'd rather not do. If your agent is spending money on your listing through advertising, aggressive marketing and networking that listing, that agent deserves your loyalty.
Elizabeth Weintraub, About.com
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