FREQUENTLY ASKED QUESTIONS
For the Seller
> Do I have to consider contingencies?
If you are a seller in a seller’s market, in which there is more demand than supply, you probably won’t have to entertain too many contingencies. But if you are selling in a buyer’s market, when buyers are few, prepare to be very flexible. Granting contingencies also depends upon what kind of price you want to get and on the condition of your property, most experts agree. Remember, contingencies are written into the contract and are negotiable during the negotiation phase only.
> How many people sell their homes themselves?
Most home sellers — about 4 in 5 — use real estate agents to list and sell their homes. Of the other 20 percent, some sell FSBO, also known as For Sale By Owner. Other owners, however, sell without marketing their homes. Property transfers between family members account for some of the direct home sales. Also, tenants are often offered the opportunity to buy the property they are renting before the landlord lists it for sale.
> What is the difference between list price, sales price and appraised value?
The list price is a seller’s advertised price, a figure that usually is only a rough estimate of what the seller wants to get. Sellers can price high, low or close to what they hope to get. To judge whether the list price is a fair one, be sure to consult comparable sales prices in the area. The sales price is the amount of money you as a buyer would pay for a property. The appraisal value is a certified appraiser’s estimate of the worth of a property, and is based on comparable sales, the condition of the property and numerous other factors.
> What repairs should the seller make?
If you want to get top dollar for your property, you probably need to make all minor repairs and selected major repairs before going on the market. Nearly all purchase contracts include an inspection clause, a buyer contingency that allows a buyer to back out if numerous defects are found or negotiate their repair.
The trick is not to overspend on pre-sale repairs, especially if there are few houses on the market but many buyers willing to buy at almost any price. On the other hand, making such repairs may be the only way to sell your house in a down market.
> How do I prepare the house for sale?
# First and foremost, put it in the best condition possible, especially if you are in a market with few buyers and lots of homes for sale. That means taking care of any major repairs that could deter a buyer (such as replacing any broken windows or replacing a leaky roof) if you can afford it. Next, work on your home’s curb appeal. Make sure your landscape is pristine. Mow the grass, clean up any debris and weed the garden beds. Plant a few annual flowers near the entrance or in pots to be placed by the door. Other quick fixes that don’t cost a lot of money but can help you get top dollar for your home: Clean the windows and make sure the paint is not chipped or flaking.
- Be sure that the doorbell works.
- Clean and freshen up rooms, furnishings, floors, walls and ceilings. Make sure that bathrooms and kitchens are spotless.
- Organize closets.
- Make sure the basic appliances and fixtures work. Replace leaky faucets and frayed cords.
- Eliminate the source of any bad smells, such as the kitty box. Use air freshener or bake a batch of cookies before your open house to ensure that the house smells inviting.
- Invest in a couple of vases of fresh flowers to place around the house and next to any information about the house you have prepared for buyers.
> What are the two most important factors when selling a home?
Price and condition are the two most important factors in selling a home, even in a down market. The first step is to price your home correctly. Use comparative sales information from your agent, or pay for a professional appraiser (usually $200 to $300), to objectively evaluate your home’s worth. Second, go through the house and repair any obvious cosmetic defects that could deter a buyer.
In a down market, you may have to consider lowering your price and/or making a major repair, such as replacing the roof, in order to lure a buyer. Also, make sure that your home is getting the exposure it deserves through open houses, broker open houses, advertising, good signage and a listing on the local multiple listing service or online listings provider.
If this isn’t happening, take it up with your agent or agent’s broker. If you are still not satisfied you are getting the service you need, you may have to switch agents.
> Can I deduct the loss I suffered when I sold my home?
The Internal Revenue Service currently does not allow deductions for losses on the sale of your own home. In fact there’s no way to use a loss on the sale of your principal residence to your advantage on your income tax return.
> What is seller financing?
Seller financing is when a seller helps to finance a real estate transaction by taking back a second note or even financing the entire purchase if the seller owns the home free and clear. Usually sellers do this when a buyer has difficulty qualifying for a conventional loan or meeting the purchase price.
Seller financing differs from a traditional loan because the seller does not give the buyer cash to complete the purchase, as does a lender. Instead, it involves extending a credit against the purchase price of the home while the buyer executes a promissory note and trust deed in the seller’s favor. These special circumstances must be acceptable to the lender who makes the first mortgage on the property.
The necessary paperwork is prepared by the title or escrow company after the terms are worked out between the buyer and seller.
If you are a seller considering such an arrangement, it is critical to thoroughly evaluate the creditworthiness of the buyer first. Fear of default makes many sellers reluctant to take back a second. But seller financing can bring a higher price plus complete the sale sooner in some situations. For more information, contact the Internal Revenue Service for a copy of its Publication 537, “Installment Sales.” Order by calling (800) TAX-FORM.
> Will a neighbor problem reduce the value of my property?
While it may not reduce the actual value, a cluttered landscape next door can detract from the positive aspects of your home. Review your local laws, which should be on file at the public library, county law library or City Hall.
A typical “junk vehicle” ordinance, for example, requires any disabled car to either be enclosed or placed behind a fence. And most cities prohibit parking any vehicle on a city street too long.
It also may be worthwhile to check into local zoning ordinances. An operator of a home-based business usually is required to obtain a variance or permanent zoning change in residential areas.
In addition, if a neighbor’s repair work produces loud noises, he may be breaking local noise-control ordinances, which are enforced by the police department.
Before bringing in the authorities, you may want to make a copy of the pertinent ordinance and give it to your neighbor to give them a chance to correct the problem.
* “Neighbor Law: Fences, Trees, Boundaries and Noise,” Cora Jordan, Nolo Press, Berkeley, Calif.; 2001. Purchase online.
> Do sellers have to disclose the terms of other offers?
Sellers are not legally obligated to disclose the terms of other offers to prospective buyers.