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Rent-To-Own Homes: What Are They? And What Is A Lease Option?

Are you eager to buy a home but need some time to build up your savings and credit score? Eager to sell your home but not receiving any offers from qualified buyers?

A rent-to-own agreement – achieved by way of a lease option contract – can be the ticket to accomplishing your goals. Check out what’s involved and some of the pros and cons to see if this type of agreement might be right for you.

What Is Rent-To-Own?

Though the term “rent-to-own” might seem pretty self-explanatory at first glance, there’s a little more to it than you might expect.

Essentially, a rent-to-own agreement is an agreement between a tenant and a landlord wherein the landlord agrees to lease a property to a tenant for a certain period of time, after which the tenant can purchase the property.

Rent-to-own is often seen as a more affordable way into homeownership because the buyer avoids many of the high startup costs associated with purchasing a home. However, rent-to-own agreements come with their own costs, and potential renters should be sure they fully understand what a particular rent-to-own deal entails before signing the contract.

How Does Rent-To-Own Work?

Rent-to-own contracts often utilize what is known as a lease option agreement. A lease option is made up of two parts.

The first part is a standard lease, which means a tenant rents a home and pays monthly rent and expenses to a landlord. The second part is the “option,” which locks in certain terms that allow the tenant (home buyer) to buy the home from the landlord (home seller) when the lease term ends.

In some cases, the contract may state that, rather than having the option to purchase the home, the renter is obligated to purchase the home at the end of the leasing period. This is known as a lease purchase agreement.

Let’s take a look at some of the finer points of these types of contracts below.

The Lease Agreement

The first part of a rent-to-own contract, the lease agreement, is a contract between a lessor (landlord) and lessee (renter) that allows the lessee to use a property for a designated amount of time. This agreement does not provide any ownership rights to the lessee, and as with any lease contract, most points are negotiable.

While every contract is different, here are some things you can expect to see in every rent-to-own agreement.

The Lease Term

These types of leases are often set up to last one to three years. Buyers generally prefer longer terms – even as many as 5 years – because it gives them more time to strengthen their credit score and save for a down payment.

Rent

The contract will specify how much the tenant will pay in rent, when rent is due, what happens if rent is late and what percentage of the monthly rent payment will be credited toward the eventual home purchase.

With a rent-to-own home, tenants may pay a little bit more in rent than what is typical in the area, to account for the extra money that’s being set aside for their future purchase.

Repairs And Maintenance

In a traditional lease agreement, it’s usually the landlord who is responsible for property maintenance and making any necessary repairs that may come up over the course of the lease. This isn’t the case with most rent-to-own agreements.

With a lease option or lease purchase contract, it’s the tenant who is required to keep the home maintained, complete repairs and pay for any related costs that may come up.

Security Deposit

It’s important to decide upfront how security deposits will be used and returned at the end of the lease. At the end of the leasing period, this deposit can typically be returned to the tenant or credited toward their home purchase unless circumstances permit the landlord/seller to keep it.

The Option Agreement

This portion of the contract gives the tenant the right to purchase the rental property once the lease ends. As part of this agreement, the tenant/buyer and landlord/seller will negotiate and come to an agreement on a few vital points.

Purchase Price

The tenant and landlord can agree to a purchase price when they first enter the agreement or decide that the home will be priced at market value once the lease ends.

Often, tenants prefer locking in a price from the start since home prices generally go up. However, landlords will often bake a certain amount of appreciation into the price to make up for this.

The Option Fee

A rent-to-own agreement is going to cost more for a tenant than a traditional lease agreement. If the tenant wants the option to purchase the home once their lease is up, they’ll need to pay for that privilege. This is what’s known as the option fee.

Landlords will typically require an option fee equal to a certain percentage of the agreed-upon purchase price. Depending on the agreement, some of this money may be applied to the home purchase if the tenant exercises their option to buy.

Option fees are usually nonrefundable if a tenant decides not to purchase the home.

The Option Period

This is the time period when a tenant can exercise their option to buy the rent-to-own home. In some contracts, the tenant can do so at any time during the lease. In others, it must be at a date specified in the agreement. Once the option period passes, the option agreement is null and void, and the tenant typically forfeits the option fee to the landlord.

Keep in mind – if you’re a tenant debating whether to exercise your option, you should still use the same best practices as any home buyer. Just because you’re familiar with a home and have an arrangement with the home seller doesn’t mean you should cut corners or limit your options.

Is Rent-To-Own A Good Idea?

There are pros and cons to a lease option for both the seller (landlord) and potential buyer (tenant) of a house. Whichever side you’re on, it’s highly recommended that you hire a real estate attorney to draft the necessary documents and learn about your rights.

Pros

If you’re a home seller, offering a lease option allows you to expand your list of potential home buyers. Depending on the housing market in your area, it can sometimes be difficult to find qualified buyers. When you list your home as rent-to-own, those who want to buy a home but need more time to secure a mortgage or save for a down payment become potential buyers, so you can sell a home that you might not have been able to otherwise.

These agreements can also be financially beneficial for the seller because you’ll be able to collect rent from your tenant during the leasing period. Plus, rent-to-own tenants tend to be a bit more conscientious when it comes to caring for the property, as they plan to buy it at the end of their lease.

As a home buyer, the biggest advantage to rent-to-own is getting to move into a desirable home while getting some extra time to qualify for a mortgage or save for homeownership.

If the purchase price for the rent-to-own home is agreed upon up front in your lease option agreement, you can also save on the purchase price if the home appreciates in value by the time your lease ends.

Cons

If you’re the home seller, a lease option means that you’ll need to become a landlord. Though you might not have quite as many responsibilities as a traditional landlord, since rent-to-own contracts typically stipulate that the renter is responsible for things like repairs and maintenance, you’ll still need to take care of collecting rent and ensuring that you’re fulfilling all your contractual obligations.

Additionally, if the tenant walks away at the end of their lease, the seller must then invest more time, energy and money to try and sell the home all over again.

There are risks on the tenant’s side, too. If you’re a tenant who does not end up buying the home for whatever reason, you’ll likely forfeit your option fee and potentially other money you’ve put into the home as well.

It’s also possible that home values could go down. If you agreed to a purchase price when you first entered the contract and the home is worth less than that when it’s time for you to exercise your option to buy, you’ll either have to buy the home for more than it’s worth or walk away and lose money.

Another nightmare scenario: your landlord ends up in financial hot water and loses the house to foreclosure. In this situation, you could lose your money and your home though no fault of your own.

How To Find Rent-to-Own Homes

Many homes are designated as rent-to-own by owners and can be searched for directly online.

If you’re interested in a lease option to buy a home, you may need to seek out homeowners who have started renting out a property because they were unable to attract an offer at their asking price.

The Bottom Line

Sometimes it’s tough for buyers to find financing or for sellers to find buyers. A lease option can solve for both and is worth exploring if you’re stuck in real estate limbo.

Before you sign a rent-to-own agreement, however, remember that it’s essential to consult a qualified real estate attorney who can clarify the contract for you and help you understand anything that might be confusing.

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What To Consider When Buying An Investment Property

When you’re ready to look for an investment property, you’ll want to make sure several factors are considered in the process. While real estate investment is complex, you should research and ask questions in order to prepare. To maximize capital gains and increase your awareness of the risks, environment and long-term benefits, you should optimize your search for an investment property.

The ongoing debate in real estate investing has been whether you should invest for cash flow or for appreciation. Both investment models have their merits, but they entirely depend on your reasons to invest in real estate. If you are investing for extra income and don’t plan to keep the property for more than 10 – 15 years, then you should focus on cash flow. Cash flow is the amount of money left from rent after all expenses are paid. If you are in real estate with the goal of selling your property in the long run after prices have risen significantly, then concentration on real estate appreciation is beneficial.

What Affects My Property Value?

Age And Condition

In terms of the physical quality of the property, the two factors that can affect the value are age and condition. As a rule of thumb, the older the property, the less valuable it becomes. Property that is relatively new will be worth more. On the contrary, there is beauty in an older property. Significant city landmarks and historical homes can be very valuable. Though, they would have to be well maintained and livable.

The appearance and structure of the property may create doubt, but don’t allow it to deter you from the property. Of course, the actual physical property is important, but it isn’t actually what depreciates in value year after year. The physical structure will lose its worth over time, regardless of how beautiful the appearance of the property. Depreciation is accounted for by the IRS when determining taxes. In addition, it may be costly to maintain a property that requires capital investments of frequent treatment over time. Therefore, you must focus on the land.

The Land Itself

Land drives real estate appreciation. As the population is constantly increasing, the housing market improves by a higher demand for homes, an increase in property development, and an increase of land value. A smaller and less-luxurious building on a larger piece of land is a better investment for the same amount of money of a house. This will bring you more real estate appreciation in the long run.

Property Taxes

Property taxes are important to look for as well. Depending on the type of rental property purchased and how long it’s kept, investors could discover a big increase in property taxes. This may occur when a homestead exemption had been in place for the previous owners.

Of Course, The Location

Accounting for location is commonly emphasized in property valuation. Location is most important because it can be a solid long-term investment. The conditions and proximity of local amenities, parks and recreation, public school system, overall access to resources such as transportation, employment centers, and libraries affect the value of your income property. A variety of local amenities increases the value of your potential income property.

Poorly maintained and operated schools can drive down the value of your home, too. This situation makes a home in a substandard school district less desirable than one in a higher-performing school district, where homeowners feel they are getting a better value on their property taxes.

In addition, according to a Realtor.com data report, areas with a high concentration of renters, homeless shelters, power plants, and even funeral homes could drive down property value. At the same time, locations with higher property crime rates and high occurrence of extreme weather will drive up homeowners insurance costs as well.

Zoning Classifications

When it comes to determining the value of your income property, urban zoning plays a big role.

Before you buy, be sure to research the history of its zoning classification and any future plans the city or neighborhood associations may have.

In dense, urban neighborhoods, mixed-use development and zoning diversity can increase the value of the surrounding homes. After all, people move to cities to be close to coffee shops, boutiques, restaurants, and bars, among other amenities. When you’re checking out the property, make note of any desirable commercial spaces within walking distance.

The same can be said about suburban and rural properties, but only to a certain extent. Big-box stores, restaurants, expressways, schools, and other amenities should be a short drive away, but not in their backyards. After all, prospective property owners looking in these areas value space; they want to be surrounded by other residential zones – not Wal-Mart.

Anywhere you’re looking to buy, beware of industrial zoned areas. Smokestacks, semi-trucks, chemical smells, and other undesirable characteristics loom in these areas. This drives down property values for all.

The Economic Climate

Although you can control the physical structure and location of your real estate property, there are determinants outside of your control. Whether local, national, or global, the economy certainly affects real estate appreciation. As we mentioned above, economically thriving locations will appreciate gradually over time. The increased demand for housing is contingent upon the increase of employment, which means that prices of both land and properties will go up.

What Would Be Considered A Major Threat To My Investment Property?

Natural Disasters

Consider areas prone to natural disasters such as tornadoes, floods, or hurricanes when looking for an investment property. Tenants who are searching for a home are looking for safety first. Geographic stability is a key factor that will help determine the value of the property. While the tenants of the property are at risk to fatal disaster effects, a natural disaster could wipe out your investment. Investing in coastal properties seems like a promising high-value income but these areas have the risk of your capital being lost due to natural disasters.

Here is an interactive map indicating natural disaster risks to real estate across the United States. Some areas are far more prone to disasters than others, meaning there is a higher risk of losing your assets and cash flow. Wildfires, earthquakes, tornadoes, floods, hurricanes, and even man-made disasters such as mass shootings and terror threats impact your property value. The disaster may not even affect your property, but could wipe out the surrounding area, which could indeed impact your property. Many underestimate the risks of local economic pain associated with disasters.

Fixer-Uppers

Beware of the major fixer-uppers. If you’re new to investing in real estate, beware of taking on a bigger challenge than you can handle. Find or ask a friend with skills for large-scale improvement and knows how to do quality work at bargain prices.

The major fixer-uppers could result in the excess of expenses to rehabilitate the property, making it difficult to make a profit on its sale. A better option is to look for properties that need modest repairs that are priced at below-market rates. Additionally, making sure the property for sale is legal. In areas that do not allow rentals, property owners may be illegally renting out their units. At the town’s clerk office, check out the local zoning before considering property in the area.

Crime

Crimes are certainly detrimental to the value of the property income.  Nobody wants to buy or live in a neighborhood that has a moderate-to-high incidence of crimes. Any sort of reputation of crime in an area can affect the value of your income property. Potential buyers and renters will try to avoid dangerous neighborhoods. A report from Academy Mortgage states every 1% increase in violent crimes, the price of homes in the area falls 0.25%. Evidently, the impact of crime can dramatically affect the value of your property.

Foreclosure Rates

Foreclosure greatly affects the value of your income property because the greatest impact is on the surrounding neighborhood. According to a report from researchers from Fannie Mae and the University of Connecticut, homeowners who lived within 300 feet of a foreclosed residential property experienced a drop of 1.3% in home value and those living 300 – 500 feet of the foreclosed home typically see a drop in value of 0.6%.

Areas with foreclosed homes have an increase in property tax rates and a significant decline in the value of surrounding properties. Foreclosures also tend to have an effect on a potential buyer’s perception of the area. Unfortunately, there isn’t much homeowners can do to protect their properties from these negative effects. Many may not even be aware of foreclosures nearby, which is why the U.S. Department of Housing and Urban Development provides a full list of foreclosed homes by area.

Is It Worth Getting An Investment Property?

As we’ve discussed, there are many different factors that can affect your investment property – both positively and negatively. This is why it’s always important to do your due diligence before making an investment decision. Is the property in good shape without any structural issues? Is it in a good neighborhood that will be attractive to renters? Do the financials make sense so that you’ll have positive cash flow after all expenses are paid each month?

When you find something that checks all the boxes on your list of requirements, then an investment property can be a great decision. It will not only increase your monthly cash flow, but you can also enjoy the benefits of price appreciation over time. Real estate is also a great way to diversify your investment portfolio.

What Makes A Property An Investment Property?

A common question from many new real estate investors is what actually makes a property an investment property. If you purchase land or a house with the intent of charging a monthly rent, holding onto it so you can profit from its appreciation or a combination of the two, then that’s considered an investment property.

It’s also important to understand that technically an investment property can’t be your primary residence, except if you’re planning to house hack. For example, let’s assume you purchase a duplex with the intent of living in one unit and renting the second. Even though you’re living in the building, this would be considered an investment property.

How Much Do You Need Down For An Investment Property?

When you purchase an owner-occupied home both USDA loans and VA loans allow you to put zero money down on the purchase. Other programs allow you to use a down payment of just 3%. However, in most instances, when you’re purchasing an investment property the requirements are significantly different. Lenders have their individual set of rules but most will require you to put down anywhere from 15% – 25%.

There is one exception. If you’re purchasing a multifamily home and planning to live in one of the units, then you’d still qualify for a conventional mortgage through Fannie Mae which only requires a down payment of 3%. Just keep in mind that lower down payments typically come with higher interest rates and require you to pay for private mortgage insurance. Both of these would lower your investment cash flow.

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12 Energy Saving Tips For Your Home And Wallet

The ease and convenience of energy in our homes can make it difficult to remember that it’s not an unlimited resource. Each day, we make decisions to use power and energy for most of our needs. Often, we don’t think twice about the resources we’re using.

There are many ways to lower our environmental impact from the comfort of our own homes; adjusting some lifestyle habits can save energy and money. In fact, with diligence and some strategic planning, your green lifestyle choices can offset the costs associated with buying and owning your own home, all while helping reduce waste and protecting the environment.

Awareness is key to creating an energy-efficient home. Making small changes can make a huge difference. Here are nine easy ways to save energy in your home.

1. Change Your Daily Habits

You don’t always need to make sweeping changes to reduce your energy consumption. Sometimes small, 1% changes to your daily routines can make a noticeable difference. Look for quick energy-savings wins such as:

  • Turning off lights when you leave a room
  • Hanging your clothes to dry
  • Washing dishes by hand
  • Leaving the oven door closed when in use

Many of our daily routines are formed over the years, but it’s not impossible to change through repetition. As you become more conscious of actions that promote energy saving, you’ll discover even more ways to conserve.

2. Take Advantage Of The Weather

Depending on where you live, you can take advantage of the weather to heat or cool your home. Opening your curtains and blinds to let the sunlight in will help take some of the burden off your furnace. If you want to cool your house, open your windows and let the breeze fill your home. You’ll cut down on air conditioner usage and let in much-needed fresh air.

3. Turn Off Electronics

Just because you have many electronic devices doesn’t mean they always need to be plugged in all the time. If you have only occasionally used electronics, such as a Blu Ray player or toaster, only plug them in when they’re in use. What about your cell phone or tablet? Unplug them when they are done charging instead of leaving them plugged in overnight.

Electronics continue to use energy even when they aren’t in use. This is referred to as phantom energy loss. As long as appliances are plugged into an outlet, they’re using energy. Unplug devices when not in use. Another option is to purchase smart power strips, which automatically cut power to devices that aren’t being used. Or opt for standard power strips and turn off all of the plugged-in devices with one switch.

Did you know the average American household has 40 electronic devices plugged in at any given time? Look around your house to find all of your electronics that are energy vampires and start unplugging. Not only will you save energy, but you’ll also declutter your home.

4. Replace Your Light Bulbs

The average household spends 5% of its budget on lighting. One way to lower your electricity bill and save energy is by investing in new energy-efficient light bulbs. New lighting standards were put in place in 2012. Since that time, better bulbs have become more common, including LED, compact fluorescent lamps (CFLs) and halogen incandescent bulbs.

About 90% of the energy from traditional bulbs is wasted as heat. It’s best to replace your existing bulbs with more efficient versions.

5. Install A Smart Thermostat

If you have an older thermostat, it may not be working as well as needed to heat and cool your house. One way to fix this is to invest in an Energy Star-rated smart thermostat. A smart thermostat takes programming to a whole new level. You can program several different heating and cooling schedules that automatically adjust when you leave the house or are sleeping.

Smart thermostats also give you access via Wi-Fi, meaning you can control your thermostat from almost anywhere in the world. They also feature a low-power standby mode when they aren’t active.

If you don’t want to spend money on a new thermostat, do yourself a favor and drop the temperature 7 – 10 degrees in your house for 8 hours each day. This one adjustment will save you as much as 10% on heating and cooling annually.

6. Reduce Water Heating Costs

Water heaters use the second-highest amount of energy in your house. Upgrading to an energy-efficient water heater can lead to significant savings in the long run. They also perform better and are eco-friendly.

If you don’t want to spend money on a new water heater, you can take other steps to reduce your water heating bill. You can do this easily by dropping your water heater temperature a few degrees. Another way to reduce energy spent on heating water is through the use of low-flow showerheads. Using less hot water daily will also save considerable energy in your home.

7. Dress Appropriately For The Weather

The way we dress also affects whether our house feels too cold or hot. Dressing for the season instead of adjusting your thermostat, you’ll save money. Wear layers in the fall and winter and short sleeves and shorts in the summer.

8. Have Your HVAC Checked Annually

Properly maintaining your furnace is just as important as the temperature in your home. Check your air filter monthly, especially during heavy usage. A dirty air filter slows down the airflow and makes your HVAC system work even harder. Plus, having a clean filter means less dirt and dust buildup in your system, minimizing expensive repairs and extending its life.

You should also get your HVAC equipment tuned up annually. A professional can check for underlying issues or upcoming maintenance issues. A thorough inspection and cleaning will keep your system working more efficiently, saving you money.

While you’re inspecting your equipment, see if you need to seal or insulate any air ducts. Shoring up any duct issues could save you money on your electricity bill each month.

9. Seal Up Air Leaks In Your Home

You may not realize it, but your house probably has several air leaks right now. Unwanted openings in your home let out your hot or cold air along with your money too. Buy some inexpensive caulk and patch any holes or cracks near your baseboards, windows, outlets, or doors.

Making the changes above will save on energy costs now and help your home run more efficiently to maximize savings long term. Here are three more ways to reduce energy usage that may require a more significant financial investment upfront.

10. Insulate Your Home

If you haven’t adequately insulated your home yet, now is the time to get started. Insulation keeps the heat out of your house in the summer and keeps it in during the winter.

To determine if your house is adequately insulated, have a professional check your current insulation’s R-value. R-value is the rating system for insulation’s resistance to conductive heat flow. The higher the R-value, the more effective your insulation is at doing its job. The amount in insulation you need depends on where you reside and the climate. Check out the Department of Energy’s insulation guide for an R-value map of the U.S.

11. Install Energy-Efficient Windows

Another considerable but useful expense is purchasing energy-efficient windows. Your home may lose significant amounts of heat through older single-pane windows. Americans who replace old windows with Energy Star-rated windows lower their energy bills an average of 12%.

Energy-efficient windows do more than save money. They reduce greenhouse gas emissions from your house. Windows with low-emissivity coatings cut down UV sun damage to your home’s floors, carpets, and furniture. Plus, they help keep your home’s temperature consistent by cutting down on cold drafts and overheating.

12. Replace Old Appliances

You may not realize it, but your appliances cost you more than the initial purchase price. There’s also the cost to run your appliances during its life cycle. Older appliances take more energy to operate than newer energy-efficient models. Here are some appliances you consider replacing if they are older:

  • Dishwashers
  • Refrigerators
  • Freezers
  • Clothes Washers
  • Clothes Dryers

Energy Star-certified appliances use less energy, but perform as well if not better than what you’re using now. Many newer appliances are equipped with “smart” features that save time and energy. Take inventory of your appliances and replace them with energy-efficient versions when it makes sense.

Why Conserving Energy Is The Smart Move

Making small and big changes to your routine and your home can lead to big savings, both in energy use and in your bank account. You’ll also increase your property value and shrink your carbon footprint. Do your part to make the world a better and safer place by creating an energy-efficient home. The environment will thank you, and you’ll save money.

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What To Look For When Touring A House

Most buyers begin their search for a new home online. Internet listings provide invaluable information about each house’s layout, design, amenities – even the character of the surrounding neighborhood. The unquestionable stars of the show, however, are your listing photos.

Buyers may want to be treated to a virtual home tour before they commit to actually visiting a property for further inspection. But, no matter how comprehensive an online listing may be, nothing matches the experience of standing inside (and outside) and experiencing it for yourself.

Kick Off Your Home Buying Journey

A great way to discover whether a home is right for you is to tour the home. Some buyers prefer to do open houses. This is where any prospective buyer can visit a property during a set period of time, typically on the weekend. However, touring a home on your own has many benefits.

What Is A Home Tour?

A home tour is when you have an appointment to privately view a home. If you’re working with a real estate agent, they will set up these home tours for you. If you’re buying a for sale by owner home, you’ll coordinate this directly with the seller.

Benefits Of A Home Tour

The benefits of touring a home are that you can truly get an idea of what it’s like. The listing pictures is a good start, but nothing will take the place of actually setting foot in the home. You’ll get a feel for the layout and the condition of the home, not to mention the neighborhood. While you can do this during an open house, touring a home on your own will really allow you the time to take everything in without other buyers present.

What Should I Look For When Touring A House?

When you start touring homes, make sure you have a plan of attack. Know what you want to look for before you even arrive. Here are a few of the important things you should keep in mind at each home you’ll be touring.

Architectural Style

Most people have a good idea of what type of home they’re most interested in before they even start looking. Maybe you love the look of a midcentury home or maybe a Craftsman is more your style. You’re most likely going to have a good idea of the style of the home before you arrive, but your home tour will give you an up-close look to see if the architectural style matches your tastes.

Look For Water In The Basement

While you’re in the home make sure you head to the basement even if it’s unfinished. If there’s been a lot of rain recently, but the basement is dry, consider that a good sign. However, if you spot signs of moisture, it could be a red flag. You’ll want to determine the source of the water before moving forward.

Look For Cracks In The Walls

If you notice a small crack in the drywall, it’s probably nothing to worry about. But if you spot a larger drywall crack – or worse, a crack in brick – then there might be some concern. This is a strong sign that there might be structural problems with the house. 

Home Additions

Are there signs of a home addition? Maybe you were planning to view a three-bedroom, three-bathroom home only to find out there’s a fourth bathroom in the basement. Maybe the attached garage has been converted into a family room. If these additions weren’t permitted, they could end up being a major headache. The city could force you to pull permits for the addition and make sure all the work is done to code. They can also decide that you need to completely remove the unpermitted work.

Why Doing Home Tours During Off Hours Should Be High On Your To-Do List

If you’re in the market to buy a home, tours are probably high on your to-do list. While most sellers will hold open houses on weekends, you might consider requesting one in “off” hours. Doing so will provide you with a different view of your prospective purchase. How different, though? More importantly, why would a different perspective matter? Consider these five reasons.

Get A Better Idea Of Traffic

Traffic is a major quality-of-life issue. But a home tour on a Sunday afternoon is hardly going to give you an idea how busy the residential streets around the property can be, especially during peak hours. Not to mention the traffic you can expect on your commute to and from what might be your new address.

Request a visit during the week, perhaps around 6 p.m., so you can get a realistic idea of what you’ll be facing when coming home from work or running errands.

Experience Location In A Different Way

Taking a home tour on a weekday can really reveal what “location” means for the home you’re considering. How well-cared-for are the rest of the homes on the block? What makes the neighborhood itself stand out? What’s a typical morning here like? What happens after dark? Take note of any safety concerns that arise during your visit. Remember: even if you don’t schedule a formal home tour, you can always scout out its surroundings.

See Light In Different Hours

It might seem negligible, but how light enters and moves through a house is a huge component in making a house feel like home. Know the orientation of the home. Which rooms face east, west, north and south, and how does that affect how comfortable you feel in different areas of the house? Does the morning sun shine directly onto your pillow? What if the glare from corner streetlight means you can never open the curtains in the living room? These might not seem to be deal-breakers, but they can be the worst kind of surprises – unpleasant.

Take Measurements

You can get basic room measurements from online listings, as well as overall square footage. But if you have an individual showing during an off time, you’ll have the chance to take a few specific measurements that might come in handy. This especially applies to closets, storage areas and any rooms you anticipate you might be converting (say, from a spare bedroom to a home office).

Have A More Personal Experience

Open houses can be crowded affairs. You may be only one of many potential buyers at a weekend open house. All that coming and going may even interfere with your ability to take pictures and notes. Scheduling a home tour during off hours will give you a chance to have a more relaxed, intimate experience of the home. You can ask the homeowner questions and perhaps spend extra time in each room.

Take Full Advantage Of The House Tour

While you’re at the home, make sure to take advantage of your time there. Here’s how.

Ask Questions

If you’re buying a home directly from the seller, and they’re present for the house tour, you can ask them questions about their home and listing. This will help you learn all you can before deciding if the home is right for you. Some questions you can ask include:

•  What is your favorite part about your home?

•  How old is the home?

•  How much do the utilities cost on average?

•  Is there a homeowners association? If so, what are the fees?

•  How old is the electrical and plumbing? The roof?

•  Do you have a deadline to submit offers by?

Take Notes

If you’re touring multiple homes, it’s important to take notes so you can remember the key points about each home once you’re finished. Even if you’re just looking at one home, it’s a good idea to jot things down so you can remember them afterward. This will help you decide whether or not you want to make an offer. Consider writing down your likes and dislikes about each home. Bonus points if you take pictures or videos! Once you’re able to take some time to digest everything when the tours are over, you may even think of some things you didn’t when you originally walked through the homes.

How Many Times Should You Visit A Home Before Buying It?

Ideally, you’d want to visit a home anywhere from four to six times before deciding to make an offer. Part of these visits should be drive-bys to check out the neighborhood. The other visits would be to actually look inside the home. Each of these visits should take place at different times of the day. Rooms might seem very inviting in the morning, but could have a completely different feel in the afternoon.

Can You Tour A Home Without A Realtor?

While it’s not required to have an agent before taking a home tour, it’s certainly recommended. Agents are experienced and understand everything you should be looking out for. They become even more important once you decide to make an offer on the home because they’re going to guide you through the whole process, making sure you’re getting the best deal possible. 

A home purchase is a major investment, one you don’t want to rush into. Besides, if you do end up loving the home, establishing a more personal relationship with the seller is never a bad thing.

Buying a house is a truly life-changing experience, and a home tour is just one of many tools that can help you make a sound decision. Getting your sneak preview in during off hours might be the key to your making the most competitive offer and scoring your dream home.For more information, check out our tips on how to buy a home directly from the owner. Or if you’re ready to start searching for homes online, you can view for sale by owner homes here.

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How Much Does It Cost to Stage Your Home?

If you’ve ever felt an enticing pull from a glamorous store window or from photographs online, you know more than ever how good design can impact your spending. Home stagers operate using this very concept.

But with a wide range of costs and benefits, it can be difficult to figure out if home staging is right for you. So, let’s break down the costs of home staging, how it works, and give you some tips on how to make the most of your money.

What Is Home Staging?

There are many different views of what home staging is – some may view stagers as laissez-faire workers who merely light a candle or plop down a vase of flowers before calling it a day, while others associate home staging with intensive, top-to-bottom home renovations.

In reality, both scenarios can be true – the quality and intensity of a home staging varies depending on the stager and of course, your home.

Generally speaking, however, home staging is a marketing strategy that combines interior design and psychology to generate more money for you, the home seller.

There’s even a growing industry for home staging awards which acknowledge the best in the redesign business – think of it as the Golden Globes for modeled homes.

So, how did home staging rise to the forefront of the real estate world? Well, because it works.

But don’t just take it from me.

The Benefits of Home Staging

Just like everything else, home staging has its fair share of skeptics – after all, can some new chairs or a fresh coat of paint really make that much of a difference? The short answer: yes.

Unstaged homes may appeal to contractors looking to buy fixer-uppers for their own profit, whereas staged homes make it easier for first-time home buyers to really visualize living their lives in your home.

But what do the numbers say?

According to a 2019 report from the National Association of REALTORS®, “Eighty-three percent of buyer’s agents said staging a home made it easier for a buyer to visualize a property as their future home.”

Additionally, the NAR also found that on average, for every $100 spent by the seller, the potential for return could be as high as $400.

With the opportunity to reap these rewards in mind, let’s make sure your home staging tactics are on the right track.

The Dos and Don’ts of Home Staging

Do: Remove Personal Belongings

In a Q-and-A with the Chicago Tribune, Dr. Andrea Angott – who has a Ph.D. in psychology and has been studying the behaviors behind home staging’s success – discusses the most important steps to take when staging.

She found that one of the most important things to do when staging your home is remove all personal effects from your bathroom. This includes toothbrushes, razors, soaps and beauty products.

In the Q-and-A, Angott theorizes that this is of great importance due to the fact that “… people don’t want to feel that the house they’re buying is lived-in … they don’t want to imagine that other people are inhabiting the place they want to buy.”

This reasoning is also why stagers will tell you to depersonalize your home and make it as “neutral” as possible – this means no family photographs, collectibles or antique-esque furniture.

Don’t: Remodel

This tip might sound misleading – after all, isn’t home staging a form of remodeling? But what we mean is this: don’t go wild with new renovations.

Home staging should fix purely cosmetic blemishes because chances of receiving a full return on your remodel are low. Additionally, no matter how “to die for” you might find your new remodel, you could be cutting out a whole market of potential buyers who don’t share your same tastes.

Typically, it’s safer, and less stressful, to simply stick with easy fixes.

Do: Understand Your Target Market

When it comes to real estate you want to make selling your home as seamless as possible, which means understanding your target market.

Is your neighborhood fit for families? Is your home a great space for new couples? If you can figure out what pool of potential buyers would be most likely to purchase your home, you can then stage with their tastes in mind.

Don’t: Sell An Empty Home

A general rule of thumb in real estate is to try and avoid selling an empty house – something which is reserved for a “last resort” situation. This is because unstaged houses generally spend more time on the market and wind up selling for less.

With vacant homes, buyers typically have a harder time visualizing their lifestyle and though it may seem counterintuitive, empty rooms actually seem smaller than furnished ones. It will also be easier for buyers to fixate on minor flaws, seeing as they’ll be a main focal point in your empty room.

To combat this, you can still fix up your home in small ways – skip ahead to the section on “soft staging” for more ideas, or consider sprucing up your landscaping for increased curb appeal.

Whatever efforts you choose to make, they’ll be well worth it in the end.

So, How Much Does Home Staging Cost?

If you’ve been looking for a black-and-white answer about how much hiring a home stager will cost, chances are you haven’t found one. That’s because staging costs vary greatly depending on your home and your situation.

But if you’re looking for an estimate, feel free to try out Home Advisor’s True Cost Guide or simply keep reading to learn more.

Vacant Vs. Owner-Occupied Homes

To properly discuss the potential cost of a home staging, we must first talk about the seller’s living situation: are they occupying the home for sale or living elsewhere?

Both situations present different costs but usually owner-occupied homes give a stager more to work with. In owner-occupied homes, the stager will be able to utilize the furniture and decor the seller already has for the final staged designs. A vacant home, however, calls for a stager to rent or buy new pieces to furnish your home.

This doesn’t guarantee, however, that having furniture on hand will save you tons of money. Yes, vacant homes require rented or purchased pieces, but owner-occupied staging still calls for the cost of labor, and depending on how many items you have, you may also be looking at storage costs down the road.

This is why it’s also important to know what kind of home you have before staging.

Assess Your House

Let’s say you have a multilevel home – obviously your stager will need to make trips up and down stairs to properly stage the key rooms in your home. If their redesign calls for bulky furniture, they may even have to hire movers to get things where they need to be.

A ranch-style home won’t have the same costs in labor as a home with three stories, which is why finding an exact price for staging online can be so difficult.

So, it’s up to you, the seller, to weigh the costs your unique home may have and figure out what staging options are right for you.

How Can I Save Money on Home Staging?

No matter your home style, chances are you want to save money. And believe it or not, there are many ways to make your dollar work harder when it comes to home staging.

Make the Most of Consultations

Although home staging consultations generally still cost you money, the per-hour rate of a consultation will be significantly less than a general labor fee per hour. So, take advantage of this time to be as productive as possible.

Typically, consultations last just 2 hours during which time home stagers will assess your furniture and decor to decide what pieces can be used or what should be stored. By setting aside decorative pieces and furniture ahead of time, you can save your stager the labor and time of sifting through your home for those eye-catching pieces.

Stage Key Areas

Obviously staging fewer rooms will save you money, but be sure to spruce up the most important areas of your home. This includes the kitchen, dining room, master bedroom and living area.

You should also keep the entryway where potential buyers will first enter as nice as possible – you want them to have a positive first impression of your home.

Closing Costs

This tip really depends on your home stager and your individual situation, but it can’t hurt to ask your stager if you can pay them using money from the sale.

Including staging in your closing costs can save you money in the moment, but if you’ll need the money from your sale to go elsewhere, this may not be for you.

It’s all about assessing what works best for you.

Soft Staging

Finally, there’s the tactic of soft staging.

Soft staging is decorating and accessorizing your home to add small touches without fully furnishing the space. This can range from fruit bowls to artwork to area rugs.

Soft staging is generally discouraged by real estate professionals and stagers alike since the more effort you put into staging, the more return on the investment you’ll get. However, it is a cost-effective solution for sellers looking for a frugal fix and is always better than selling a vacant home.

The Bottom Line

At the end of the day, you want your home on the market for as short a period as possible – to save money from the monthly upkeep and to ease the stress of selling.

Staging your home, regardless of whether you pull out all the stops or use the soft staging technique, can decrease your time on the market and put more money in your pocket.

If you want to take a more hands-on approach to home staging, check out our article on affordable DIY Home Staging Projects.

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How To Do A Comparative Market Analysis

“Appraisals,” “comps,” “CMAs” – keeping up with the latest real estate lingo can seem intimidating. But if you’re interested in the home selling process, you should understand what a comparative market analysis, or a CMA, is.

What’s A CMA?

By definition, a comparative market analysis is a tool used in real estate to estimate your home’s value based on current trends in the housing market.

In other words, while it’s typical to first consider location and square footage as affecting your home’s value, CMAs look at numerous different elements and compare them with similar properties in your area.

A CMA will give you a better sense of what a fair listing price for your property is or, if you’re also in the homebuying process, what price to propose as a competitive offer.  

What Isn’t A CMA: CMAs vs. Appraisals

The distinctions between a CMA and an official home appraisal – another method of evaluating your home’s worth – can seem blurry. So, let’s break down what these differences are.

To put it simply, a CMA is a broader and more informal assessment of a home’s value while an official home appraisal is more formal and typically must be scheduled far in advance. Additionally, because CMAs can be conducted remotely, some real estate agents may mock one up for free.

However, the primary difference between a CMA and an appraisal is which clients these indicators cater to.  

CMAs are well-suited for the home seller as a tool for pricing, while home buyers typically need an appraisal to assess the property’s value. Additionally, appraisals are usually required during the lending process, whereas CMAs aren’t a requirement.

How A CMA Works: The Process

CMA flow chart: Comparative Market Analysis Process

In most cases, sellers working with real estate experts won’t see much of the CMA process. And although CMAs do require a fair amount of knowledge about your area’s housing market, they aren’t impossible to understand on your own

Let’s look at the process these professionals take to put together a CMA.

When conducting a CMA, the first step is searching your area for comparable sales, otherwise known as “comps.” Comps are recently sold homes in your area that’ll ultimately help estimate your property’s value. Typically, comps meet the following criteria: 

  • At least three comps are selected for a CMA – the more comps that are used, the more accurate your estimate will be.
  • A comp should be a property sold within 3 – 6 months of creating a CMA. If there’s a clear lack of recent on-the-market homes in your area, a real estate agent may use unsold, listed homes or expired listings to conduct a CMA.

The next step is to identify all the differences between the comparable sales and your home. Real estate experts will usually price out these differences with the help of a contractor to make the comps as identical to your property as possible. 

For example, let’s say your home has an addition that a comparable property doesn’t have. A real estate agent would typically work with a contractor to determine the value your addition gives your property. Desirable features, like a fireplace, remodeled deck or addition will add to the sales price of the comparable property, while undesirable features will deduct from the sales price. 

After all these adjustments comes reconciliation. In this stage, a certain weight is given to each comp based on how similar the property is to your home. Then, a specific estimate of what your price should be is calculated.

How To Do A CMA

If you find yourself intimidated by the concept of CMAs, you’re probably not alone. A quick search online pulls up endless images of graphs, charts and lots of numbers.

There are lots of moving parts to conducting a CMA on your own – but we’re here to break them down.

Step 1: Find Your Comps

As we discussed earlier, real estate experts start their CMA process with finding comparable sales properties.

Using an online listing site of your choice, look for homes that can compare to your property. When comparing a potential comp to your home, you’ll want to look at eight different components:

  • Location
  • Lot size
  • Square footage
  • Age and condition of the property
  • number of bedrooms and bathrooms
  • Special features
  • Date of sale
  • Terms of financing and sale

Each of these components play a role in the value of your comparable sale – to make things easier, you’ll want to find homes that mirror your property as closely as possible.

You can also check out FSBO’s Pricing Scout tool, which finds comparable sales based on square footage and room amount. This resource is easy to use and free, and it’ll give you a pricing estimate to help guide your CMA.

Step 2: Research

To gauge your area’s market, you may want to conduct some light research. To do so, consider looking at some local real estate data. This can include:

  • Your area’s average home selling price
  • Recently sold homes in your area
  • The value increase of homes in your area since the time you purchased your home

Being familiar with this information can help you both gain a better sense of potential listing prices and identify reasonable offers in the future.

Step 3: Adjustments

The next step in conducting a CMA is to factor in those special features in your home that may add value. This includes fireplaces, updates and additions. Although you may not get all your money back from these features, they’ll certainly add value to your home.

Step 4: Check Yourself

Before definitively settling on a price, make sure you cross-check your estimate with other listing prices in your area or your FSBO Pricing Scout estimate. You want to be sure you’re asking a reasonable price, but one that still makes you happy.

How Accurate Is A CMA?

The accuracy of CMAs can vary among real estate professionals and will also vary when conducting one yourself. Keep in mind that the number of comps you use and how well you know your area will play a role in the accuracy of your estimate.

Conducting a CMA on your own may sacrifice some pricing accuracy, but you’ll still walk away with a good idea of your home’s worth.

Do I Need A CMA?

CMAs are an easily accessible and effective way to learn about your area’s housing market. They’re a great first step to take, especially if you’re feeling unsure as a first-time home seller.

If you’d like some more help finding a pricing estimate, FSBO’s Pricing Scout tool can instantly assess your home’s value for free. Just remember to conduct your own research as well – you know your home best!  

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Tips To Create The Perfect House For Sale Flyer

Whether you call it a property flyer, house for sale flyer or anything in between, having something that a buyer can take away with them after touring your home is essential. To create a great first impression with your real estate flyer, you’ll first need to ensure you have the right content.

Before we get into a breakdown of the essential components to include in order to create the best flyer to help sell your home, let’s get your home ready for showings:

What Home Improvements Add The Most Value?

Freshening up your home in preparation for listing is never a bad idea. Small cosmetic improvements not only make the home look better, they also boost your bottom line, especially if it ensures a speedy sale. When listing a home, you want to do whatever you can to get an offer ASAP, otherwise, you’ll be stuck carrying the home, plus the cost of a new mortgage, or be forced to reduce the price in order to offload the property.

With that said, making improvements on your home should be a strategic process as well. Spend too much and you lose money; spend too little and the hard work and money you do spend could be worthless.

Fortunately, there are a handful of improvements that guarantee a steady return on investment (ROI): exterior upgrades, kitchen updates, and bathroom renovations. But this doesn’t mean you have to completely renovate your home or drop a large sum just to sell your home.

Of the projects mentioned in this Bankrate article, four out of the five that return the most money are upgrades for the home’s exterior. We’ll explain. Money spent on increasing curb appeal goes a long way in two key areas: first for netting top dollar for the home; second in creating stand-out photos for your marketing flyers and the online listing.

Take Professional-Quality Real Estate Photos

Not to stress you out, but there’s probably no other time when photos are more important than when selling a home. According to data from the National Association of REALTORS®, 44% of buyers begin the home search online, and the overwhelming majority (93%) leverage some type of web listing throughout their home search. Having clear, well-lit, colorful photos lets prospective buyers feel as if they are actually inside the home and clearly allows them to see if your home has what they’re looking for. Since this is the first impression potential buyers receive of your property, excellent photos could mean the difference between multiple showing appointments, and a home that stagnates on the market for months.

Even in a for-sale-by-owner situation (FSBO), it’s worth it to invest in the services of a professional real-estate photographer. Since you don’t have an agent marketing the home on your behalf, these photos will do much of the heavy lifting for you.

How Can I Make A House ‘For Sale By Owner’ Flyer?

With slick photos of your property in hand, now it’s time to create a professional flyer to announce your open house or to let neighbors know the home will be going up for sale.

Thanks to new technologies such as Canva, Adobe Spark and Pic Monkey, graphic design novices can create their own flyers in just minutes.

How To Create A Beautiful ‘House For Sale By Owner’ Flyer In Under 5 Minutes

Step 1: Choose A Template

Trust us, creating your own marketing flyer isn’t something you want to DIY from scratch (unless you’re already a Photoshop pro). Picking a premade flyer template will save you a ton of time and ensure your creation looks cohesive and professional. Even though you are doing a FSBO transaction, you don’t want your listing to look any less professional than others in the area.

Step 2: Add Images

The number of images you’ll be able to add depends upon the template you choose. Pick the most compelling images for your flyer – ones that show the expanse of the house, have great eye-catching colors (like if there is fall foliage in the yard), or the ones that show off the differentiating features of the home. If you’ve taken the time to update your kitchen or bathroom, be sure to add an image of these updates as well. Many potential buyers won’t even go look at a home if the photos reveal outdated appliances or “work” to be done.

Step 3: Craft Your Message

Keep the words (“copy” in marketing speak) on the flyer short and to the point. Be sure to include information about the most important selling features of the home: the number of bedrooms and bathrooms, any stellar school districts, or any/all new upgrades.

It may help to create your MLS listing copy first, and then shorten it for the flyer. This way, you’ll be sure to include the most relevant points on both pieces of marketing.

Step 4: Customize

Even though using a flyer template is the best move when creating a for sale by owner flyer, it’s best to change it up just a little so your flyer doesn’t look like the one for the house that is selling one street over.

Get creative here: feel free to change the background colors, font, text spacing and size. Knowing a bit here about color theory can help you select colors for the flyer that complement the features of your home. For example, if your home has a bright yellow door, make sure to add pops of yellow on the flyer to accentuate this feature.

Step 5: Distribute

Print hard copies of your flyer and distribute throughout the neighborhood. Be sure to print enough to have a stack available for buyers who come to the house for showings, so they can take one to remember your house later as they’re making decisions. Often, buyers look at many homes in one day, so having a tactile reminder of what they’ve seen is important.

While investing the time and money into a paper copy of a flyer may seem like an antiquated marketing practice in 2020, don’t discount how many people in your neighborhood may not be looking for a home, but would want to tell their friends, family and colleagues about available properties in the area.

Digital Real Estate Flyers

In 2020, you should definitely save a copy of your flyer in several digital files (PDF, JPEG, Word Doc) so you have compatible digital files at the ready when someone asks you to send the flyer via email.

Recap

There you have it, you’re ready to create your home flyer! If you need any more guidance, we have you covered. Our packages for home sellers include walking you through the process of creating your home’s listing, generating home flyers and more.

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Documents To Sell A House For Sale By Owner

Whether you’re selling your home on your own or with the help of a real estate agent, there’s tons of paperwork involved. After all, it’s the biggest sale in most people’s lives. Read on to learn more about the documents you need and where to get them. You’ll also get the answers to frequently asked questions about how to sell your house yourself.

Where Can I Find The Right Paperwork To Sell My Home?

Before you start having showings of your home, you’ll need to line up all of the necessary paperwork. Different states have different regulations. What may be relevant in one state may not be applicable in another, so be sure to thoroughly research the local requirements. You can check your state and county government websites and fill in any cracks with information that can be found on the sites of your state land title association and local real estate agent associations.

If you need some help, a real estate attorney can provide this information for you and might take on your home sale at this point for a flat fee. You can also check out these do-it-yourself real estate forms and guides to get access to attorney-prepared, state-specific information that you can instantly download and start using.

What Documents Do I Need To Sell My Home?

While this varies by state, some examples of documents you may need to sell your home are:

Property survey: This is a legal document that shows the buyer the boundaries of your property. It also includes other details such as where any fences, driveways or other structures are located. This is typically ordered by the buyer.

Receipts and warranties: This information will help you document any new appliances, finishes and upgrades to your home.

Plans and permits: If you did any additions or upgrades, be sure to have the plans and/or permits handy.

Certificates of occupancy: These certificates show  that your home is compliant with municipal building codes and is safe to inhabit. You’ll need to get this from your municipality, have the permit pulled, have the inspection done, do the repairs (if applicable) and then have your home re-inspected.

Loan documents: This document typically includes the first mortgage, second mortgage and any home equity lines of credit.

Latest utility bills: These bills show buyers the amount your household has paid for electricity, water and/or gas each month.

Latest property tax bill: This bill gives buyers an idea of what they will pay in taxes should they purchase your home.

Title: The title shows that you own a legal or equitable interest in the home.

Homeowners association covenants and agreements: This will show buyers the rules established by the body that governs your neighborhood or condominium. It can include information about parking, pets, noise levels and more.

Floor plan or blueprints, if available: This gives buyers more insight into the layout and size of each room in your home. One way to stand out to buyers is to play up anything about your home that may be historically significant, such as a framed blueprint or a newspaper article about the home.

Once you have all your documents gathered, have at least two copies of anything that pertains to the house or your ownership. This way they’re available to potential buyers to inspect when they visit your home.

How Do I Sell A House By Owner?

Selling your home is a big thing to take on, but you can see significant savings by doing it yourself. There are five main steps to take:

  1. Assess your home’s value
  2. Get your home ready for sale
  3. Promote your home’s sale
  4. Negotiate the sale
  5. Close on the sale

Let’s get into the details of what each of these means.

Assess Your Home’s Value

Before listing your home, you want to accurately determine its value. A home that’s listed over its value can deter buyers. Later on in the process, it could cause problems with a buyer’s mortgage lender if the appraisal comes in too low.

On the other hand, you don’t want to list your house too low because you won’t get its full value. So how do you figure out its proper value?

First, you can easily look up an estimate online. Sites like Rocket HomesSM offer free home value estimates. This gives you a general idea, though it may not be completely accurate.

For a small fee, For Sale By Owner offers Pro Pricing. A licensed professional will perform an in-depth evaluation on your home. Within 5 – 7 business days of visiting your home, you’ll have a detailed report.

The other avenue is to hire a licensed appraiser. Most will charge $300 – $500 for the appraisal. You can use this valuation in negotiations with buyers. Unfortunately, a buyer’s mortgage lender won’t accept this appraisal and will order another.

Get Your Home Ready For Sale

Before you consider putting your home on the market, you need to make sure it’s in tip-top shape. While you may have gotten used to your home’s quirks, a potential buyer may see them as faults.

Make minor repairs, touch up paint and marks on the walls, clean the carpets and declutter. Think about how you would clean if a celebrity or royalty came to visit.

You want buyers to see the full potential of the space. Make sure it smells clean and is sparkling.

If you’ve already started packing, make sure all boxes are in a storage area and out of the main living spaces. You could go a step further and rent a storage unit to keep your stuff while transitioning.

Promote Your Home’s Sale

It may sound old school, but start with a great yard sign to promote your home’s sale. People hunting for houses in your neighborhood will see it and make note of it.

Get your house listed. Start by listing on popular home listing sites, like ForSaleByOwner.com. If you want to take it a step further, pay to have your home listed on a multiple listing service (MLS). An MLS is a catalog of homes accessible to real estate brokers and agents. With a listing on an MLS, you’ll get more traffic.

Organize and host an open house. Advertise it on sites like Facebook and Craigslist. Place signs on major roads nearby to lead people to your home.

Negotiate The Sale

Once you get an offer in, you’ll need to negotiate. A buyer may offer below your asking price or ask for you to pay closing costs.

This is the stage where you’ll need documentation. Within days of accepting a buyer’s offer, you must get a copy of their mortgage approval. Once a buyer submits a written offer that’s acceptable to you, a written contract must be drawn up.

This contract will include price, closing concessions, closing date and location plus a list of contingencies. These contingencies protect the buyer and allow them to back out of the contract if things go awry. For instance, if there’s a problem discovered during a home inspection, a buyer will have the option to back out.

Close On The Sale

Depending on your state’s laws, the closing will either take place at a title company or a real estate attorney’s office. The date of closing is when the buyer and seller come together and finish the sale.

Your house doesn’t sell until this moment. Make sure to keep communication channels open between yourself, the buyer and the closing agent. When asked for documentation, provide it as soon as possible to keep the process moving.

Why Do I Need A Disclosure Statement?

Before any potential buyer visits your home, you’ll want to make sure you complete a disclosure statement and have copies available when you show your home or hold an open house.

Required by most states, the disclosure outlines key defects or dangers about the property. This might include, but isn’t limited to, radon, structural problems, flooding, mold, lead paint, asbestos and other potentially problematic conditions.

Disclosure typically comes in the form of boilerplate documents (put together by the local or state REALTOR® association), where the seller is responsible for answering a series of yes/no questions detailing their home and their experience in it. You should be able to download a disclosure statement form for free from your state’s REALTOR® association.

It’s only fair that the buyer knows about such problems before making an offer. At the same time, a thorough disclosure statement protects you from post-sale claims by the buyer that they didn’t know about defects in the house.

What Should Be Included In A Real Estate Contract?

Nothing is more critical to your home sale than preparing and executing a proper legal agreement between you and the buyer. This contract between the buyer and seller outlines the terms of the agreement and should include:

  • Property and its characteristics: The type of property (condo, single family home, multiunit), address, lot size, parking, property identification number, etc.
  • Identity of the parties involved: Typically the buyer and seller
  • List of fixtures/personal property: What’s included in the purchase price
  • Purchase price: The agreed-upon price of the home
  • Earnest money amount and financing terms: The money paid to confirm the contract and details on the buyer’s financing
  • Target closing date: The date intended for the home sale to occur
  • Contingencies: Examples of this include attorney review, inspection provisions and/or a home sale/close contingency
  • Prorations: What the seller and buyer owe on items such as taxes, assessments and utilities
  • Title: What type of title clearance the seller is obligated to provide
  • Closing costs: Which party must pay for which closing costs
  • Notice or default legalese: What happens if a party breaches the contract
  • Miscellaneous provisions: Any other provisions the parties agree on

Before that first offer comes in, be prepared. If you can’t give the buyer the proper documents or be able to fill out a contract on the spot, your offer could fall through.

Are There Closing Costs On Homes For Sale By Owner?

There will always be some sort of fee for you as the seller, even if you’re not using a real estate agent. The good news is that almost everything in a FSBO transaction is negotiable, though.

Something else to keep in mind is that closing costs will vary, sometimes quite a bit, by state. Some common examples of closing costs you can expect are a deed transfer tax, excise tax and document preparation. Sometimes you may also need to pay for the owner’s title policy.

If you want to ensure your home sale goes smoothly, you’ll need to be absolutely sure you have all the required paperwork and documents to sell your home in order. If you need more guidance, check out our packages for home sellers. We’re here to help!

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5 Simple Steps To Market Your Home For Sale By Owner

Whether we’re in a buyer’s market or a seller’s market, if you’re trying to sell your home, you want it to stand out from the rest.

With most potential buyers scouring online real estate postings, there are a few ways you can showcase your home and win buyers over through a few marketing strategies. Selling your home without an agent might be a little more work but if you put in the effort, you’ll see the results.

Price Your Home

Pricing your home right isn’t necessarily pricing your home below market value. It’s important to look at what similar homes in your neighborhood are selling for. Try to remember this is a business transaction; compare your home to those like yours in your neighborhood, not bigger homes or those with more improvements or space.

Reconsider overpricing your home. Even in a seller’s market, potential buyers have done their homework. If you put yourself in a different price bracket, like with homes with more square footage or updated appliances, you’ll place yourself lower on the totem pole. Buyers in higher price brackets are putting your home further down their list and buyers in lower price brackets will think they can’t afford your home.

Stage Your Home

With tours and open houses, potential buyers are analyzing every aspect of your home. While pictures are enticing, people want to make sure they can see themselves in your space. To do that, you’ll need to stage your home well.

A clean and detailed home isn’t required but many buyers will look at how you keep your home. Cleanliness is important. Put everything in its place and consider lighting candles or otherwise having pleasant smells around when potential buyers visit. If you have pets, this helps mask their odors, even if you don’t think they have any. If you’d like, you can hire a professional stager to make sure your home has the ultimate look as people tour it.

Home Inspection

Even though buyers interested in your home will have their own inspection, you should take this step first. A home inspection will tell you what repairs should be handled before you sell your home. Some repairs and updates can increase your selling price, meaning your repairs could be more profitable in the long run.

Use the home inspection to complete any necessary repairs, updates and renovations that have the potential to attract many buyers. Since you’ve been living in the house, you might not realize how much needs to be done simply because you haven’t given it a thorough look. A home inspection can help you identify those necessities.

Advertise Your Home

Advertising happens few different ways. Start by putting a “For Sale By Owner” sign in your lawn and creating flyers with photos and information about the home. You can also put related signs down the street from your home directing people to your newly listed real estate.

Effective advertising can take some work. While real estate agents would normally handle this step, it’s important not to skimp when you’re doing it yourself. Make sure your home is listed on all the available real estate sites. Not all potential buyers use the same sites, so it’s good to cover your bases and list your home on as many sites as possible, including Zillow, Redfin, Trulia and any multiple listing service you can find.

Share your home listing in your network as well. Even if you don’t think your friends and family are interested in buying your home, they might know someone who’s looking to buy. Expanding your potential buyer pool is important; leave yourself open to answer any questions as well.

Your listing should have as many details as possible – in the photos and in the listing itself. While many spots, like the kitchen and bathrooms, are important to showcase, consider photos of the entryway, back patio, closets and more. The description should include any recent updates, standout features, and appliances that you believe are noteworthy. For instance, if you recently upgraded the refrigerator, make note of it. Also mention notable features of your community, like strong school ratings, access to major highways, and local shopping and dining attractions.

Since you’re the only one selling your home, don’t be afraid to consider other advertising avenues, including print advertisements. Your community newspaper, magazine or other neighborhood outlets might be willing to list properties for sale. You might have luck listing your home in online advertisements or marketplaces, too, like Facebook and Craigslist.

Consider creating a virtual tour. Potential buyers want to be taken on a trip through your home before they actually step foot in it. Creating a virtual tour showcases your home without people walking in it first. It’s a great introduction to your home and can lead to private showings or an increase in demand during open houses.

Be Flexible With Home Terms

Not everyone may love your house as much as you do. If you’ve done everything you can to market your home without any major leads, don’t be afraid to call in reinforcements. Consider talking to a real estate agent about a Comparative Market Analysis (CMA). You don’t have to have an agent to request this and it also gets the word out to realtors who are looking for homes for their buyers.

Remember this is a business deal and if your home isn’t selling at the price point you thought it should, you might have to drop the price. Regardless of the conditions, no one wants to have their home on the market for a long time. Be flexible and understanding when it comes to home terms.

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By-Owner Sellers Share The Secrets To FSBO Success

If you’ve decided to sell your home without an agent, or “for sale by owner,” you’ll have a few big tasks to take care of ahead of you.

Selling without an agent isn’t for everyone, but there are plenty of people who have sold their own homes and lived to tell about it. Learn their success stories to avoid big mistakes.

How To Sell Your Home For Sale By Owner

If you’ve never sold a home before, you might have difficulty getting started. You’ll want to create a listing so agents and other potential buyers can get an inside look at your home.

How To Find A Buyer

Marketing your home goes beyond the listing. You can showcase your home through social media and word of mouth. Consider taking out social media ads and promoting your listing online. Ask your friends to share it as well.

FSBO seller Peter Fiore found buyers through word of mouth and social media. He sold his home in a little more than a month for even more than his asking price. Fiore says he saved at least $75,000 selling on his own.

Also consider your target audience. For instance, if your home is downtown or has easy access to shops and restaurants, you may want to target people who want to live near that scene, typically single people or couples. If you live outside the big city, your home might be best suited for families looking to avoid city life.

Thomas Nyle was selling his Greenwich Village studio and decided to use the fact that the unit didn’t include a parking spot to his advantage by narrowing his audience to buyers who didn’t own cars and wouldn’t be looking for parking amenities. He sold the studio to a schoolteacher who takes public transportation (or bikes or skates) around town.

Many buyers want to see their future in your home. To achieve that, showcase your home’s best attributes and how customizable it is to everyone’s wants and needs. Versatility is important for potential buyers, so don’t be afraid to remove something you really love in an effort to show off how easy it is to make changes.

Put Your Best Foot Forward

While a clean home isn’t a requirement, a dirty home can be a major turn-off to potential buyers. Without the help of an agent, you’ll need to appeal to more people than you think.

First impressions matter, which means you’ll need to focus on staging and presenting your home. Have professional cleaners come in to get your home ready for visitors. How would you want your home to look if your favorite celebrity stopped by? Use that as a guide on how to prepare and stage your home.

While clutter isn’t dirt, it should be given the same level of attention. Cluttered corners and countertops can seem like you don’t have enough space in your home, which might be a big turn-off to potential buyers. Before you have professional photos taken, go through your things and donate unused items and throw out broken things. If you have large pieces, you can call a junk removal company or put it out for bulk day.

It’s also important to be honest with your buyers. If there’s a foundation or roof problem, get it fixed before you sell the home. Many potential buyers won’t bite even if you reduce the asking price. Most issues come up at the inspection, so you might as well beat them to it by preparing for the best offer based on the condition of your home.

Remember, It’s Just Business

Your home is very personal to you, but that doesn’t mean everyone feels the same attachment to it. At the end of the day, selling your home is a business transaction – it’s not personal.

Risa Martinez of Milwaukee learned this valuable lesson as a by-owner seller. You can clean your home to within an inch of its life, you can point out its many attributes, but sometimes it just won’t immediately click with buyers. “They are not rejecting you,” Martinez says. “They just don’t necessarily like what you’re offering them. There’s a perfect buyer out there, they just have to find you.”

Instead, focus on getting the most buck for your bang. Handle necessary repairs, make viable improvements and deep clean. It may help to have an outsider come in and point out potential updates. Sometimes, when we’ve lived in a space for so long, we miss those opportunities.

Also remember that not everyone will love your space as much as you do. Be mindful that some prospective buyers don’t feel love at first sight. Be open to finding the right buyer for your home, not necessarily just any buyer. If you’re firm in your price and believe your home has what it takes, don’t expect a sale right away. Instead, wait for the right buyer.

Remember to be aware of fair housing policies. You can’t discriminate against a potential buyer based on race, sex, religion, family status or other factors.

The Bottom Line

When you sell your home by yourself, the success of the sale depends on you. Finding the right buyer at the right price at the right time is multilayered. Prepare your home long before you list it. And when the time comes to show it off, don’t be afraid to step back and get it in tip-top shape for potential buyers.

If you’re ready to sell your home by yourself, get the tools you need first. Even though you don’t have a real estate agent, that doesn’t mean you can’t take advantage of the best resources. Before you sell, learn everything you can about expectations and the home-selling process.