What's my Home Worth?
One of the most important factors (if not the most important factor) you consider when it comes time to sell your home is your home's current market value. And let's face it, even if you're not ready to sell, it would be nice to know what your home was worth from time to time, right? With recent advances in technology, a lot of websites would lead you to believe that you can instantly look up your home's value online, anytime. In fact, sites like Zillow have grown to become the top real estate websites on the internet because of this allure. The truth is, this is simply not the truth.
Because no computer, software, or mathematical equation can objectively compare your home to other similar homes and predict exactly what any given buyer is willing and able to pay for your home under any given market conditions, these online home value estimates are just that: estimates. And most of the time, online estimates are significantly inaccurate. In fact, Zillow, the site that features the most popular automated valuation model (AVM) on the web, will tell you that in plain writing on their own site at www.zillow.com/zestimate.
(Snore alert: if statistics bore you, just skip to the next paragraph) According to Zillow, their estimates for homes in Riverside County, Ca, in August of 2015, were within 5% of the actual sales price, 42.3% of the time. And only within 10%, 67.5% of the time. Riverside County's median home value in August 2015 was $337,110. 5% of that is $18,555. 10% of that is $37,110. By the way, they've rated their estimates for Riverside County at 4 stars (on a 1 to 4 scale), which is the BEST, most accurate estimate they offer.
Simply put: On it's BEST day, the most popular instant home value estimator around, says there's only a 2 out of 5 chance (42.3%) that your estimate is even within $19,000 of your home's actual value. And only a 2 out of 3 chance (67.5%) that it's within approx $37,000 of it's true value.
Not only does that leave a WIDE range of value and A LOT of money on the table, but if a human being told you they were only 42%, or 67%, confident that your home was worth a certain dollar amount, you would probably take their advice with a grain of salt, right? So why would you trust and rely on computer software that gets the equivalent of a school grade F, or D at best, at getting anywhere close to your home's true market value?
"Instant" home values should not be relied on to pinpoint your home's value, unless you don't mind giving some lucky buyer the steal of the century or want a "for sale" sign in your front yard to start growing roots.
The truth is, there is no substitute for having a local, experienced, knowledgeable REALTOR conduct a comparative market analysis (CMA) on your specific home. At Ken Scott Real Estate, our REALTORS provide this service to their clients at no charge. Not only do we provide this service at no charge, but more importantly, we will sit down with you to determine the best selling strategy that fits your needs. For example, if homes in your area are taking 73 days on average to sell, do you have that kind of time or do you need to sell sooner? If you would like to sell your current home and buy a new one, should you list your home for sale first or get a new home under contract first? Because everyone's situation is different, and markets conditions are constantly changing, there's no one-size-fits-all in home pricing and selling strategy. We will work with you to create a tailored selling strategy that fits your situation and your needs. Give us a call today or fill out our home value request form here:
Preparing Your Home for Sale
So the time has come to sell your home and you're really hoping to sell it for $20,000 less than it's worth, right?... Chances are, you're saying "What?? No way!" right about now, as you should be. You want to get TOP dollar, right? Of course you do! Unfortunately, many sellers leave thousands of dollars on the table every day by not taking just a little extra time and effort to really make their home "shine".
If you show up at a car dealership, excited to buy a brand new car, spot the perfect one, walk over to it, and see that it has a huge dent in the door and scratches all over the hood, would you still be excited about paying top dollar for it? Probably not. In fact, in the unlikely event that you'd still like to even buy it...you'd expect a pretty good discount, right? The same basic concept applies to potential home buyers as well. So let's go over some simple, easy-to-execute tips to really leave those potential buyers with a great first impression and give you the best chances of turning one of those potential buyers into an actual buyer:
Enhance your home's "curb appeal" This is exactly what it sounds like: does your home look attractive at first glance (or from the curb)? Go stand at your curb, or edge of your front yard if you don't have a curb, and look at your house as if you were considering buying it. Is the landscaping clean, trimmed, and healthy? Is there any chipping or peeling paint that stands out to you? Obvious damage anywhere? Clutter or excessive personal property? Does the house look like it's been maintained well? These are some of the first things a buyer will see that will start to create their first impression. In fact, some of these things may even be the reason a potential buyer doesn't want to even come inside.
Clean up the front walkway and entrance Now that your buyers have decided they'd like to see the inside, let's give them an impressive welcome. The front entry is the first chance they will get to see your home up close. From cleanliness to cosmetic appearance, what they see here will affect their perception of the rest of the house. Simple things like making sure the walkway is clean and free of debris, porch or landing area is swept and walls and ceiling are clean and free of spider webs, paint on the front door, door trim, and all other painted surfaces on the way to the front door are fresh and clean, windows are clear and clean, etc, will go a long way in starting their visit off right. Whether true or not, a dirty front entry gives the perception that the home has not been loved, or well maintained. And once that impression has been developed, turning that around can be very difficult.
De-clutter and clean the interior You've given your potential buyers a very impressive welcome so far, now let's really turn on the charm! Take a tour of your own home. Go through each room/area of your home, slowly look around from floor to ceiling, and imagine that you're playing a game where the goal is to find as many defects as possible, as well as anything that gets in the way of a walking path or is taking up space unnecessarily. Some common things to look for are:
- Fingerprints/smudges on door knobs, light switches, door trim, walls, windows, and cabinetry
- Paint chipping or peeling at edges, corners, and high moisture areas like bathroom ceilings
- Burnt out light bulbs
- Carpet stains and frayed carpet at thresholds/transitions
- Dusty blinds and ceiling fan blades
- Missing or broken electrical outlet covers
- Stacks of magazines and/or mail on countertops or furniture
- Excessive toiletries on bathroom counters, shelves, or toilet tanks
- Our REALTORS can give you a detailed, room-by-room checklist with many more ideas
While a reasonable buyer may not expect your home to be spotless and in excellent condition, your efforts will not go unnoticed. For the buyers who are looking for a fantastically clean home that appears to have been meticulously maintained, they may just feel right at home when they come in. And even better, the buyers who are not expecting it will be blown away, and may even perceive your house to be worth more. Remember, buyers are looking at more homes than just yours. Standing out and giving them a great reason to remember yours will greatly increase your chances of a successful sale.
De-clutter and clean the exterior The same idea applies as above, but you are looking at your front, back, and side yards along with your roof. Some common things to look for are:
- Toys, tools, trash, and debris (commonly gets built up on the side areas of a home)
- Dirt and leaves on patio, stepping stones, or any other hardscaping
- Unreeled hose(s)
- Paint chipping or peeling at door trim, window sills, and any exposed wood
- Dirty windows
- Burnt out light bulbs (if necessary or anticipating night showings)
- Pool is dirty, green, or filled with leaves
- Perimeter fencing missing planks or has severe water staining
- Our REALTORS can give you a detailed checklist with many more ideas
Make smart repairs when feasible and necessary Repairs can range from anything minor, such as touching up interior paint or fixing a leaky faucet, to major repairs, such as fixing a fallen fence or replacing a roof. Before you perform any repairs you think may be necessary, consult your REALTOR. He/she will be able to advise you on which repairs may increase the value of your home, or the likelihood of your home selling, and which repairs may just be money wasted.
While most repairs will be seen as something that may help you sell quicker or for more money, some repairs will be the deciding factor on whether a buyer is able to obtain financing to purchase your home or not. The overwhelming majority of home buyers use financing to purchase their home, so if buyers cannot obtain financing on your home due to condition, you may find yourself looking at the options of making the necessary repair(s) or selling your home at a discount to a buyer with cash. While some necessary repairs are hidden or unpredictable, your REALTOR will be able to point out most repairs that will be an issue with financing.
Listing Your Home for Sale
Now that you've taken the time to really make your home shine, it's ready to hit the market! Since every seller's needs are different, your REALTOR will work with you to create a pricing strategy and marketing plan based on your specific needs. Regardless of the strategy and plan you implement, the same concept applies: to maximize your chances of receiving a great offer (or multiple offers) in a timely manner, you must maximize exposure of your listing. Your REALTOR will know what methods of exposure will yield the best results for your local market, but here are just a few things to consider when creating your plan:
For Sale Sign Despite the abundance of technology in use today, the classic, front yard "for sale" sign is still in the top 3 ways that buyers find the home they ultimately buy, according to the annual buyer/seller survey done by the National Association of Realtors. While most sellers today understand the benefit of having a sign in their front yard, a common reason why some sellers are hesitant to put up a for sale sign is that they don't want their neighbors to know their home is for sale. While this may seem desirable, it can actually work to their detriment. Most homeowners want friends and family to live closer to them, so naturally, when they see a home for sale in their neighborhood, the first thing they'll typically do is tell a friend or family member who just may end up being your buyer. Many prospective buyers also frequently explore neighborhoods that they want to live in, searching for their new home. Without a sign alerting them that your home is for sale, you may be missing these excited, eager to purchase buyers.
Open House Tied with the "for sale" yard sign for the number 3 way that buyers ultimately said they found their home, is the classic Open House. An Open House is a great opportunity to allow potential buyers to view your home in a no-stress, welcome environment. It gives them a chance to explore the property without feeling like they're interrupting dinner or trying to quickly walk through the house before you have to run out for an errand. A time where they can imagine this as their home, rather than an inconvenient guest in someone else's. Better yet, it also gives you an opportunity to really show how the house looks at its best since you'll have time to clean and prepare. It can be difficult and stressful to rush to clean up the house before a buyer comes over right before dinner, right after a child's birthday party, or during the big game on Sunday. Having a dedicated slot of time where any prospective buyers can come view your home while it looks it's best will always work to your benefit.
Electronic Lockbox access for REALTORS With few exceptions, having an electronic lockbox so REALTORS can show your home on their buyers' schedule is the most ideal way to make your home available to buyers. The easier it is for someone to see your home, the more buyers you will have see your home, meaning greater chances of receiving that great offer. We find that time and time again, if there is only a small window of time that a buyer can see your home, or only on certain days, or not without someone home, etc, most buyers will simply skip that home or move it to the back of their list. Simply put, the more difficult it is for a buyer to see your home, the less buyers you will actually have come see it. An electronic lockbox will only allow a licensed, registered REALTOR to access your home and records the date, time, and REALTOR that accesses your home, making it much more safe secure than a traditional, combination lockbox.
Listing Photos Not only is having great listing photos extremely beneficial to the marketing of your property, but according to the annual survey of buyers/sellers done by the National Association of Realtors, over 80% of home buyers state that it is THE most important aspect of a for sale listing. Over 90% of home buyers today search for their next home online. Just like the access issue above, we consistently find that when buyers come across a listing with a lack of pictures, they quickly skip past the home and move on. Simply put, less pictures = less buyers looking at your home. Besides a lack of pictures, having BAD pictures is just as detrimental. Pictures are used to convey the look and feel of your home. Despite how great your home looks in person, if buyers see pictures that make it look dark and unwelcoming, that only capture a portion of a room, or focus on a bush rather than your home, the majority of buyers will move on and not even want to see your home in person.
Internet and MLS marketing In the same annual survey noted above, 3 out of 4 actual home buyers note that the internet and their REALTOR are the reasons they found the home they ultimately bought. Knowing that, you can understand how important it is to ensure that your REALTOR is able to market your home on the internet and the local MLS (a database in which the overwhelming majority of homes for sale are marketed to a large network of REALTORS). The same rule applies here as has applied above; the more exposure your listing has, the greater your chances of selling your home for top dollar and in a timely manner. And conversely, the less exposure your home has and/or the less accessible it is to buyers, the smaller the chances of it selling.
With some of these things in mind, we do understand that not everyone's situation is the same and unique situations call for unique solutions. Our REALTORS will gladly listen to your specific needs and concerns and work with you to develop the best marketing plan for your property.
Once you receive that great offer you were hoping for, your REALTOR will carefully analyze it so they can summarize it for you, pointing out the overall terms, terms that work in your favor, terms that don't, and whether you may want to consider accepting the offer or sending the buyer a counter offer. In the event you receive multiple offers, your REALTOR will also be able to advise on the best strategy, whether it be sending counter offers to all buyers, a single or select few, or advising all buyers to submit their highest and best offer.
Congratulations, you just accepted that great offer and "opened escrow"! (Escrow is a neutral, 3rd party company that helps to coordinate and finalize the transaction for both the buyer and seller.) Over the next several weeks, there will be a lot going on, and your REALTOR will be there every step of the way to make sure all of the pieces fall into place correctly, and just as important, when they need to. Since no two transactions are exactly alike, it's nearly impossible to predict an exact timeline to expect, but generally speaking, most financed transactions will take about 30-45 days to complete and most cash purchases will take about 10-15 days. Below is a basic outline to help you gain a better understanding of what to expect during your transaction.
Complete and provide Seller Disclosures to Buyer You will need to complete several documents and questionnaires in which you are required to tell the buyer of any "material facts" that you know of regarding the property. A "material fact" is anything that can affect the value or desirability of the property. A very important thing to remember about these disclosures, is that you are only required to disclose the things that you know about the property. Along with these disclosures, you will also be responsible for providing the buyer with a natural hazard zone disclosure, which tells them whether the property is located in one of several natural hazard zones, and a preliminary title report, which tells them of anything that affects title to the property, such as easements, restrictions, existing liens, etc. If anything in these disclosures is unacceptable to them, and they are within your agreed contingency period, you have agreed to release their deposit back from escrow, shake hands, and go separate ways.
A very common question we get from sellers regarding disclosures is: "What about "x", do I need to tell the buyer about that?". While your REALTOR isn't qualified to give you legal advice or complete the disclosure for you, we recommend using good judgement when answering these questions and when in doubt - disclose, disclose, disclose. This means, that if you have to think twice about it, or if it's something you're concerned about the buyers having an issue with, you should disclose it. You would be better off telling the buyer about it now and having them cancel the transaction, than for them to find out after they've already purchased your home and choosing to sue you.
Buyer Inspections and Investigations The buyer will have a fair amount of time (typically a little over 2 weeks from the day you open escrow) to do any and all inspections and investigations (except for anything invasive, such as opening up the walls or anything that causes damage) regarding the property. The costs of any inspections are paid by the buyer, unless you have agreed otherwise in your contract, and you are entitled to a copy of any inspection report the buyer obtains on your property. Common inspections are: a general home inspection, in which a home inspector will look at the components and major systems of the property with a fine toothed comb and report any current issues/concerns, and a termite inspection, in which a certified termite inspector will search the home for evidence of termite infestation, rotted wood, or wood eating fungus and report any issues/concerns. The buyer may request that you repair any of the reported items. Although you are not obligated to make any repairs, in most cases, a mutual agreement can be reached. If not, as long as the buyer is within the agreed contingency period, you have agreed to release their deposit back from escrow, shake hands, and go separate ways.
Property Appraisal If the buyer is obtaining a loan, they will be responsible for having the property appraised. The lender must conduct a property appraisal to ensure that the buyer is not asking them to loan out more than the property's fair market value. Typically, your REALTOR will meet the appraiser at the property to provide access and give them any information they need, such as new work or upgrades done, to ensure the appraiser has everything they need to complete a thorough appraisal.
If the appraisal states that your home is worth less than what the buyer has agreed to pay, there's no need to panic just yet. In a seller's market, this can be a common issue due to fierce buyer competition driving the price of the house up above what an appraiser thinks is a reasonable price. In some cases, the appraiser that appraised your house could have accidentally missed some key information and/or recent sales that would justify the price the buyer agreed to pay for it. Whatever the cause may be, if you end up with a low appraisal, you have some options to consider and discuss with your REALTOR. In most cases, a mutual agreement can be reached, but if not, as long as you are within your agreed contingency period, you have agreed to release the buyer's deposit back to them, shake hands, and go separate ways.
Removal of Contingencies Once the buyer's contingency periods have passed (typically 2-3 weeks after opening escrow), your REALTOR will request that the buyer remove their contingencies, signifying that they are "all in", or agreeing to complete the purchase. If the buyer decides to cancel the transaction after they have removed their contingencies, they may be obligated to release their deposit to you as damages.
Funding the Loan and Recording the Deed Once escrow has all funds from the buyer and their lender and has verified that all necessary documents are complete, they will send the grant deed (which is the official document that conveys the title of your home to the buyer) to your county recorder's office to be publicly recorded. Once escrow receives confirmation that the grant deed has officially been recorded, congratulations, your home is officially SOLD! You will typically receive your sale proceeds from escrow within a couple days of closing.