But My House is Worth More…

My in-laws, who currently live in VT, recently purchased a new primary residence in VT. Now they need to sell their current primary residence. They had a very reputable local Realtor come in to give them a suggested list price. The price came back as $X, which they seemed happy with. I offered that they might want to get another opinion, just to be sure that the price was realistic. So they had another reputable local Realtor come in. The second Realtor suggested $X + 3%. Of course they were happier with the second opinion because it could end up netting them more equity in the end. However, their logic was “We want to list with the second Realtor because she wants to sell our house for $X + 3%. But we also think that we really want to list it at $X + 6%.”

There are a few issues with this logic. First, any Realtor would want to sell your house for the highest price possible. Our compensation is driven by the eventual sales price. In this example, the second Realtor didn’t want to sell the house for more, it was simply her opinion that the market value of the house was 3% more than the opinion of the first Realtor. You see, when Realtors provide pricing recommendations, that’s all it is, an opinion. Now, hopefully it’s an educated opinion. The Realtor should always pull relevant comparable home sales and do a pricing analysis based on the current market, condition of the home, and location of the home. But it’s still an opinion. We have no crystal ball that will tell us exactly what the Market Value (sales price at that exact point in time) will be. So, in my in-laws case, they simply had 2 Realtors with 2 slightly different opinions. This happens all the time. Luckily the pricing suggestion was only 3% different. If you have a case where the opinion is different by 10% or more, you may have the case of an agent trying to buy the listing. Always get a third opinion if that happens. At least two of the agents should be close on their price recommendations. Go with one of them.

The other issue is the desire to price the house at $X + 6%. My in-laws were originally happy with the suggestion of $X. Then they get the suggestion of $X + 3% and suddenly they think the house might be worth $X + 6%. If there is one thing I hate, it’s an overpriced house. They don’t sell. They sell other homes of similar size and quality that are more realistically priced. They waste valuable marketing time and dollars. Agents won’t show them. They become stagnant, and then no one wants them. The sellers carrying costs grow. The agent gets a bad reputation for “buying” listings. The seller most likely will end up dropping the price, only to have lost potential buyers because they moved on to houses that were priced correctly from the beginning. Really, it just becomes an ugly situation for everyone involved.

At this point my in-laws haven’t yet listed their house. They are still deciding on an asking price. Hopefully they will choose a price that is realistic and not too out of the ballpark. Father’s Day won’t be too pleasant if they are still holding 2 houses…

Fluffy and Benji Live Here Too…

Did you know that in 2006, 73% of all US households owned a dog or cat? We sure do love our four legged companions.

But how do you minimize the impact of your beloved fluffball when you’re trying to sell your home?

First, you want to make sure that you either remove your pets from the home for all showings, or have them crated with a “Do Not Disturb” sign. You never know how your pet will react with strangers in the home, and I’ve seen more than one agent running after an indoor cat that escaped during a showing. Always try to minimize your pet’s presence so the buyer can focus on the home and not your cute Labrador.

Next, get rid of the smelly stuff. This means constantly cleaning litter boxes, removing stains from carpets, and using natural cleansers to remove odors. Nothing is worse than walking into a potpurri-filled home that’s trying to mask pet odor. It immediately raises a concern with the buyer and they wonder what else you’re trying to cover up.

Finally, get rid of the toys. No one wants to look at slimy tennis balls, cat towers, and half-chewed fake mice. Gather up the sources of amusement and put them in a covered basket. You’ll still have easy access to them, but buyers won’t have to look at your pet’s dirty laundry, so to speak.

If you follow these simple steps, you’ll minimize the impact your pets may have on your home sale and keep them in a secure state of mind during this time of transition. Woof!

How Long Should I Stay Put?

You bought a house 2 years ago and now you’re getting the itch to move. Maybe you’ve outgrown the space, would like a different neighborhood, or want a closer commute. You’ve started going to Open Houses on Sunday, feeling out the market. This is what one of my colleagues refers to as the “Torture Tour.” Maybe you’ll find something and want to put in an offer. But what is your current house worth? Will you have enough equity to cover the costs of the sale and still make a profit so you can buy the next house?

Unfortunately, most likely not, unless you are looking to downsize or move to a community with lower home prices. Typically you need at least 3 or 4 years in your current home to realize enough market value appreciation to cover the sale costs such as agent commissions, conveyance taxes, and attorney fees. In today’s market where home prices have leveled off, this is especially true. If you bought a home and put in quite a bit of sweat equity, you may be able to eek out a profit.

If you find yourself in a position where you’ve only owned for a year or two and want to move, call a Realtor and have a Comparative Market Analysis done on your home before you start the “Torture Tour.” This will allow you to understand if you’ll clear the sale with a profit. The Realtor should provide you with an Estimated Net Equity sheet. This will show you if the estimated sales price will cover all of the costs (mortgage payoff, agent commissions, state and local conveyance tax, attorney fees, deed recording fees, paperwork costs, etc.). From there you can determine if you want to sit tight or can start to look.