How to get the most out of your home sale

Let’s start with the obvious one, the condition of your home. In today’s market interest rates are high, and sales are taking much longer than they did when interest rates were 2-3%. Having a home in rough shape is going to be a serious detriment to getting the full asking price. Currently, there are lots of options for homes in great shape with owners who are starting to negotiate. The trick is to have a home that is appropriately updated for the neighborhood. Don’t put high-end marble in the kitchens and bathrooms if the neighborhood has Formica countertops, you could go a little above and put in an affordable granite. However, going all out will not give you the returns you sought in the upgrades if the area doesn’t call for it. The opposite is also true, going too low in updates for the area will cost you greatly. I recently viewed a house in a market where homes sell for 750k and the house was freshly remodeled. However, it was done like a low-grade rental, guess what the house has been sitting for well over 100 days with absolutely zero interest from buyers. All said the house must be in good working order(roof, plumbing, electrical, HVAC, foundation, etc) and cosmetically appropriate to the area.

              Depending on the work needed you will want to consider hiring a quality contractor. There are a lot of projects you can DIY or use a handyman to save money on. However, if you have neither the time nor skill to DIY or manage the work yourself, find a reputable contractor. Ask around for direct referrals if you know people who were happy with the work done on their house. This will be the best chance of getting someone who isn’t necessarily overly priced yet also has done great work. If you must a big-name contractor is a solution as well, just be aware they will come at a premium. Big names and referrals aren’t a guarantee that work will be quality, so on top of referrals ask to see their company liability insurance. This gives you some level of safety in case the contractor messes up and causes damage to a home. Do proper due diligence.

Pricing the home well is paramount to getting the most for it in this market. Sometimes just a few thousand over the pricing for the area will make the difference between your home sitting for months and your home being sold promptly. Going too low of course will help sell the property faster, however it leaves a certain amount of money on the table. We highly suggest working with a quality realtor, yes this comes with a price, but their work is extremely valuable if they are a good realtor. Interview a few, and ask to see their current and previous listings, how long they took to sell, etc. A major red flag to watch out for is pictures taken with their cellphone, a professional photographer makes a huge difference in the presentation of your home online. If a realtor is trying to save a couple hundred bucks on a photographer then there is a good chance they will not be doing their job well in other areas of the transaction. For example, negotiations with buyers agents, and most importantly setting realistic expectations for you the seller are really important parts of the job.  A good realtor won’t let you be your own worst enemy in getting your home sold!

              Finally, Time is the last part of getting the most for your home. If you are in a position where you are trying to rush your sale that is a recipe for disaster. I’ve been in this position myself and it didn’t go well. Being in a place where you can negotiate what works for you and what is fair because you have a great house, are armed with good information, and are not in a financial/emotional bind puts you in a strong position to walk away from your house with the most amount of money in your pocket.

              Unfortunately, it’s often the case that we can’t get all the cards stacked in our favor. Situations like being out of state, not knowing a good contractor to handle repairs, being unable to afford the repairs, financial stress, relational stress, or simply not wanting to deal with the headaches of getting things lined up are valid situations that do happen. Then what?

              Best case scenario you have time, the property is outdated but still very liveable. Even if you do not want to/are unable to do the updates Follow the above advice with a good realtor and you should be fine, there are lots of buyers who don’t necessarily want the latest and greatest, as long as they get some level of appropriate discount.

              However, if the property needs real repairs, you need to move it quickly or do not want to deal with the process of a normal sale. You will have to start looking at selling to investors. So you can be prepared for the sticker shock that comes with that here is what to expect. Each market is a little bit different, typically a good deal for an investor is what is called a “70% deal” which means that an investor will typically want to purchase a property at 70% of what the property would sell for minus repairs.  So, if your home area sells for 200k after repairs and your home needs 20k worth of work then an investor would likely offer 120k.

              Why is that? One of the greatest costs of doing a real estate flip is the cost of transactions. Most realtors charge 3% to sell, and buyer’s agents almost always charge 3%, on top of that is another 2% give or take for other closing costs related to the title. Then on top of that are financing costs which can run up another 8% or more easily.  Finally holding costs, and the cost of repairs are built into this calculation. Given these numbers above the true projected profits would not be 80k but closer to 28k and this does not include taxes at the end. 28k seems reasonable when the risk, work, and expertise get brought to the table.

              Important Note on the last paragraph. Every market and investor is different and is going to have different situations and needs to make the deal work. This means that the price they offer can still range quite a bit. That was simply a rough guide to give you an idea of what to expect.

              There are other ways to get a higher number even if you are willing to be a bit creative. Being willing to take your equity over time in payments for example can be helpful to getting that higher dollar amount even if you are willing to take it over time.

              If you are facing a situation where you are unable to use the traditional realtor route. Look for an honest investor who is going to be open with you and walk you through the process. Unfortunately, investors have a bad reputation for a reason. Many are unable to get a deal closed for one reason or another. I would ask for a proper earnest money deposit, to see some form of proof of funds, and to see some of their track record. This will weed out inexperienced investors who may simply end up jerking your chain around. As with working with contractors and realtors do your very best. If you are in the DFW area, feel free to reach out to us via email or phone through our Contact Us page.