Home Selling

Top 10 Myths About Real Estate Agents – Debunking Real Estate Agent Myths

Myths About Agents: What's True and What's Not

Just when you think you've found out everything you need to know about the "dirty, little secrets agents don't want you to know" from a bazillion of misinformed and, in all fairness, probably well meaning Web sites, here's what you really need to know:

Forget the hype. Forget the books you need to buy, the online services you need to subscribe to and start looking at what's really going on. Here's the straight story:

1) Real Estate Agents are Always Late for Appointments

False. There is no excuse for habitual tardiness among professionals. None. I don't care if it's your doctor, your cable TV installer or your Realtor.

Every person deserves respect, and respect is earned by providing what is promised and being on time. If your agent has a god-like, self-deluded impression of her or his own importance, find another. The agents I know are on time. Clients who listen to agents' excuses allow tardiness to happen. The agents I know are always prompt. Don't let a few bad apples give the entire industry a perception it doesn't deserve.

2) The More You Pay for a House, The More an Agent Makes

False. Ever hear a friend say this: "Every dime more you pay for that house makes the agent more money, so don't trust that agent." That's a misunderstanding. The difference between $300,000 and $310,000 is about $150 to an agent. Do you really think the agent pays any attention to the commission difference of a $10,000 spread?

3) The Less Commission You Pay to Sell, The More you Make

False. Discount brokers like to propel this myth. They claim to save sellers money by charging less. The truth is agents who are top producers and excel in this business do not discount services. Why? Because they don't have to.

Less-than-full-service agents can't afford all the bells & whistles paid for by full-service agents, who tend to draw higher offers. It boils down to you get what you pay for. A 2% commission reduction doesn't amount to much when your price is discounted 10% or more because your agent couldn't afford full market exposure.

4) Agents Must Show You Homes On Demand

False. Unless you have a signed contract with an agent or that agent represents the seller, that agent you call doesn't have to show you anything. You can't call a local real estate office and demand service or demand to be shown homes, because agents don't work for free.

If you aren't planning on writing an offer with the agent you call, be upfront or don't waste that agent's time. But don't expect that agent — who is likely to earn nothing — to be too excited about jumping in the car with you. That agent is not obligated to show you anything.

Nor is the listing agent obligated to show you a listing if you are represented by another Realtor without a request from that Realtor.

5) Agents Get Kickbacks from Lenders / Title / Inspectors

False. Since 1974, agents have been prevented from receiving any kind of kickback or favor from real estate vendors. It's against the law. It's against RESPA: the Real Estate Settlement Procedures Act. Some agents are slower than others to realize how the law affects them, but most have heard of RESPA and would not jeopardize their license, regardless of the temptation.

6) An Agent's Home Inspector Will Always Favor the Agent

Any agent worth her salt wants disclosure. Why? Because she wants what is best for her client but also, and this is not to be taken lightly, because she does not want to be sued.

Agents must disclose material facts. A buyer is always, without fail, better off knowing the truth about a house. Good agents care that a buyer receives full disclosure and are willing to fight for repairs on the buyer's behalf or help the buyer cancel the transaction.

7) All Real Estate Agents Make Too Much Money

False. An agent's average annual salary is less than $36,000 a year. You will find that about half the agents in any large brokerage close less than four deals a year. Nobody can live on that. Not once office fees are paid, MLS fees and lockbox fees are deducted, overhead and expenses for the agent are deducted, errors & omissions insurance and office supplies are paid.

Agents Sell Their Own Homes for More Money Than Yours

False. Busy agents and top producers don't have the luxury of time to waste when selling their own home. They also understand the market better than your average home seller, which means if a home isn't selling within a reasonable period of time, it means it is priced too high.

 

I have witnessed first-hand what happens when agents put their residences on the market. If they need to sell, they might even cut the buyer a better deal than the buyer can get on the open market. After all, the person most likely to be persuaded by a sales pitch is a person who sells for a living.

9) Agents Should Tell You About Crime, Schools & Ethnic Make-up of Neighborhoods

False. Federal Fair Housing laws prevent a real estate agent from discriminating against a number of protected classes, which automatically prohibits an agent from disclosing anything remotely relating to the protected classes.

Therefore, it may come as a shock to many people that agents cannot disclose crime rates, school stats or ethnic mixes of neighborhoods. If that kind of information is important to you, an agent can tell you where to find it but cannot provide it.

Those who tell you otherwise are misinformed.

10) Agents Will Say Anything to Make the Sale

False. Although it is true that some agents will lie to you, it's unfair to paint all agents with such a broad brush. Top producing agents, those who enjoy a solid reputation in the community and practice real estate honestly and truthfully, are very careful to uphold a client's trust.

Making misrepresentations or a false statement is against the law. Agents who break fiduciary relationships or fail to disclose material facts are subject to prosecution and a loss of their license to sell real estate.

All About Listing Agreements

Types of Real Estate Listings, Terms, Conditions & Fees

If you're ready to read about listing agreements, it's likely that you've already found a good real estate agent and had a lengthy discussion with this agent — noting the agent's responses to your 10 interview questions — and are now ready to think about listing your home for sale.

The common top three listing agreement choices are:

1) Open Listing;

2) Exclusive Agency Listing;

3) Exclusive Right-to-Sell Listing.

The best choice for you will depend on your willingness and ability to tackle some of the home selling duties and your overall real estate market climate.

Open Listing

An open listing lets an owner sell her home by herself. It is a non-exclusive agreement, meaning the owner may execute open listings with more than one real estate broker and pay only the broker who brings an able buyer whose offer the owner accepts. The big difference is an owner will probably pay only a selling broker's commission, which is about one-half of typical fees. The reason is because the owner is unrepresented. Therefore, owners do not pay a broker to represent the owner, but do pay the broker to represent the buyer. However, if the owner finds the buyer herself, the owner will not owe anybody a commission. Open listings are not popular with many full-service real estate brokers.

Exclusive Agency Listing

An exclusive agency listing is similar to an open listing except the major difference is the broker will represent the owner. The owner still reserves the right to sell the property herself and not pay a commission. The broker is free to cooperate with another brokerage, meaning the second brokerage could bring an able buyer whose offer the owner accepts. Typically, the broker is paid a listing commission that is shared with the selling broker, so the owner pays both fees.

Exclusive Right-to-Sell Listing

An exclusive right-to-sell listing is the most commonly utilized instrument. It gives the broker the exclusive right to earn a commission by representing the owner and bringing a buyer, either through another brokerage or directly. The owner pays both the listing and selling broker fees. The owner cannot sell the property herself without paying a commission, unless an exception is noted in the contract.

Exception to the contract: Say, your next-door neighbor has expressed an interest in buying your house. Often a listing broker will give the seller X number of days to produce a contract with the neighbor without owing a commission.

Other Terms & Conditions to Consider

Length of Listing

The duration of the listing agreement is negotiable. Common terms can be 30 days, 90 days, six months, one year or more.

Selling Commission

How much will you pay the selling agent? When there is a lot of inventory on the market and fewer buyers, to generate traffic, you might want to consider paying the selling agent more than you would in a market where inventory is tight and a lot of buyers are vying for few listings. For example, if the total commission is 6%, and the listing broker wants to offer 2.5% to the selling office, you could insist on paying 3% instead. It's your money. The listing agent will get less, but so what?

Cancellation of Contract

Will the broker / agent let you cancel the agreement? Why would you want to do business with a broker who would not release you from the contract if you were unhappy or dissatisfied with their service? If the broker will agree to let you cancel at any time, that broker is giving you a guarantee. In that instance, the duration of the contract doesn't much matter.

Expiration of Contract

If the contract should expire without mutual renewal or the parties elect to cancel the contract, the listing broker might supply the owner with a list of names of prospective buyers the broker produced. If any of those buyers approach the owner within the time period specified in the listing contract and successfully purchase the property, the owner could still owe a commission.

Top 10 Reasons to Hire a Real Estate Agent

With so much information readily available online, clients sometimes ask me, "Why should we hire a real estate agent?" They wonder, and rightfully so, if they couldn't buy or sell a home through the Internet or through regular marketing and advertising channels without representation, without a a real estate agent. Some do OK, many don't. So if you've wondered the same thing, here are 10 reasons why you might want to consider hiring a professional real estate agent.

1. Education & Experience

You don't need to know everything about buying and selling real estate if you hire a real estate professional who does. Henry Ford once said that when you hire people who are smarter than you are, it proves you are smarter than they are. The trick is to find the right person. For the most part, they all cost about the same. Why not hire a person with more education and experience than you? We're all looking for more precious time in our lives, and hiring pros gives us that time.

2. Agents are Buffers

Agents take the spam out of your property showings and visits. If you're a buyer of new homes, your agent will whip out her sword and keep the builder's agents at bay, preventing them from biting or nipping at your heels. If you're a seller, your agent will filter all those phone calls that lead to nowhere from lookie loos and try to induce serious buyers to immediately write an offer.

3. Neighborhood Knowledge

Agents either possess intimate knowledge or they know where to find the industry buzz about your neighborhood. They can identify comparable sales and hand these facts to you, in addition to pointing you in the direction where you can find more data on schools, crime or demographics. For example, you may know that a home down the street was on the market for $350,000, but an agent will know it had upgrades and sold at $285,000 after 65 days on the market and after twice falling out of escrow.

4. Price Guidance

Contrary to what some people believe, agents do not select prices for sellers or buyers. However, an agent will help to guide clients to make the right choices for themselves. If a listing is at 7%, for example, an agent has a 7% vested interest in the sale, but the client has a 93% interest. Selling agents will ask buyers to weigh all the data supplied to them and to choose a price. Then based on market supply, demand and the conditions, the agent will devise a negotiation strategy.

5. Market Conditions Information

Real estate agents can disclose market conditions, which will govern your selling or buying process. Many factors determine how you will proceed. Data such as the average per square foot cost of similar homes, median and average sales prices, average days on market and ratios of list-to-sold prices, among other criteria, will have a huge bearing on what you ultimately decide to do.

6. Professional Networking

Real estate agents network with other professionals, many of whom provide services that you will need to buy or sell. Due to legal liability, many agents will hesitate to recommend a certain individual or company over another, but they do know which vendors have a reputation for efficiency, competency and competitive pricing. Agents can, however, give you a list of references with whom they have worked and provide background information to help you make a wise selection.

7. Negotiation Skills & Confidentiality

Top producing agents negotiate well because, unlike most buyers and sellers, they can remove themselves from the emotional aspects of the transaction and because they are skilled. It's part of their job description. Good agents are not messengers, delivering buyer's offers to sellers and vice versa. They are professionals who are trained to present their client's case in the best light and agree to hold client information confidential from competing interests.

8. Handling Volumes of Paperwork

One-page deposit receipts were prevalent in the early 1970s. Today's purchase agreements run 10 pages or more. That does not include the federal- and state-mandated disclosures nor disclosures dictated by local custom. Most real estate files average thicknesses from one to three inches of paper. One tiny mistake or omission could land you in court or cost you thousands. In some states, lawyers handle the disclosures, thank goodness!

9. Answer Questions After Closing

Even the smoothest transactions that close without complications can come back to haunt. For example, taxing authorities that collect property tax assessments, doc stamps or transfer tax can fall months behind and mix up invoices, but one call to your agent can straighten out the confusion. Many questions can pop up that were overlooked in the excitement of closing. Good agents stand by ready to assist. Worthy and honest agents don't leave you in the dust to fend for yourself.

10. Develop Relationships for Future Business

The basis for an agent's success and continued career in real estate is referrals. Few agents would survive if their livelihood was dependent on consistently drumming up new business. This emphasis gives agents strong incentives to make certain clients are happy and satisfied. It also means that an agent who stays in the business will be there for you when you need to hire an agent again. Many will periodically mail market updates to you to keep you informed and to stay in touch.

When is the Time Ripe to Reduce the Price?

How Price Improvements Can Bring Multiple Offers

Price reductions, price improvements, price adjustments, it doesn't matter what you call it, nobody wants to hear about lowering prices except a buyer. In slow markets and buyer's markets, it's not unusual for sellers to point fingers at the agents and agents to point fingers at seller's unrealistic expectations for a price. Sellers say, "Why don't do you do more to sell my house?" And that's a good question. Sellers should ask an agent this question.

Before Reducing the Price

- Review Your Marketing / Advertising & Answer These Questions

1. How many ads have been published?
2. Do the ads contain too much or too little information?
3. What kind of direct mail campaign has been launched?
4. How many open houses have been held?
5. How does the house show online, lots of pictures?
6. Is your signage in a prominent location, contain several phone numbers, plus a Web site?
7. Do you have a virtual tour published, with scrolling text and audio?
8. What kind of feedback have you received from agents and buyers?
9. Are you offering enough compensation to selling agents?
10. Have you had any showings?

- Are You Selling in a Buyer's Market and Have Little Motivation?

1. Maybe you don't have to sell. When the market is slow and inventory is high, demand falls. If that's the case, maybe you should take your home off the market.
2. It makes no sense to put an overpriced home in MLS that is not receiving any showings because it skews the numbers for market performance.
3. If you're not motivated, you might be better off renting your house or staying put until the market rebounds.

Realtor JaCi Wallace once said to me: "If a seller does not conform to the marketplace, that person is not a seller. That person is just somebody with a sign in the yard."

Picking the Right Price

If you're too high, you'll need to continually reduce the price until you hit that "magic" number, and by then buyers will begin wondering:

1. What is wrong with your house?
2. How much lower will you go?

Ideally, you want one price reduction. Here are guidelines to consider:

• Realize your agent is not your adversary but is on your side; enlist her help.
• Pull up pending sales and examine the history. How many days on market before the price was reduced and how much of a price reduction was made? You won't know the sold price, but you can determine average price reduction percentages.
• Compare sold prices with active listings. Are they reversed? Are sold prices higher?
• Pull the history on active listings to determine how many days on market before the prices were reduced. Ignore active listings without price reductions unless they are similar to yours and the DOM are low.
• Run side-by-side comparisons with active listings near the price point you are considering. Price yours so it falls in the bottom two to five listings or, if you're really determined, price it less than anything else on the market.

Is Your Price Too Low?

• Even in distressed markets, as home prices slide into downward spirals, properties that are priced below what buyers are readily willing and without prodding to pay will receive multiple offers.
• It's common to have price wars among buyers who are competing, which will then result in an accepted offer for more than list price.

Every House Will Sell if the Price is Right!

A Land Park seller owned a home that was located along the I-5 freeway in Sacramento, California. It hadn't sold after 60 days on the market. To sell it, the price had to be less than anything else in the neighborhood, which was the very reason the seller had purchased the home in the first place. After a $60,000 price reduction, the house attracted two buyers and sold almost immediately.

CMA Comparative Market Analysis

How to Use a CMA Comparative Market Analysis

Before putting a home on the market or listing with a real estate agent, savvy home sellers obtain a comparative market analysis, also referred to in the industry as a CMA. You've probably received direct mail letters or post cards from local real estate agents about CMAs. These pitches offer you a free report to tell you how much your home is worth. Sellers use a CMA to figure out home pricing.

What is a Comparative Market Analysis?

Although reports can vary, from a two-page list of comparable home sales to a 50-page comprehensive guide, the length and complexity of the report depends on the agent's business practice. However, standard comparative market analysis reports contain the following data:

Active Listings

Active listings are homes currently for sale. These listings matter only to the extent that they are your competition for buyers. They are not indicative of market value because sellers can ask whatever they want for their home. It doesn't mean any of the prices are realistic. The offered sales prices do not reflect market value until they sell, and in buyer's markets, for example, most sell for a lot less.

Pending Listings

Pending sale homes are formerly active listings that are under contract. They have not yet closed, so they are not yet a comparable sale. Unless the listing agent is willing to share information about the pending sale — and many are not — you will not know the actual sold price until the transaction closes. However, pending sales do indicate the direction the market is moving. If your home is priced above the list price of these pending sales, you could face longer DOM.

Sold Listings

Homes that have closed within the past six months are your comparable sales. These are the sales an appraiser will use when appraising your home for the buyer, along with the pending sales (which will likely have closed by the time your home is sold). Look long and hard at the comparable sales because those are your market value.

Off-Market / Withdrawn / Cancelled

These are properties that were taken off the market for a variety of reasons. Usually the reason homes are removed from the market is because the prices were too high. The median prices of this group will almost always be higher than the median prices of comparable sales. However, listings cancel also for the following reasons:

• Seller's remorse. The sellers decided they cannot part with their home and no longer want to sell.
• Priced too high. Nobody made an offer or the only offers received were low-ball offers, which were rejected.
• The DOM were too long. Agents sometimes withdraw listings so they can put them back as a new listing and fool buyers.
• Repair requests. The homes were once under contract and after the home inspection, the buyer requested repairs which the seller refused.
• Seller fired the agent. It's not uncommon for unhappy sellers to fire an agent and hire a new agent.

Expired Listings

This group will reflect the highest median sales price because they did not sell and were probably unreasonably priced. Some of the expired listings could also show up as an active listing, listed by a new agent at a new price. Listings also expire because they were not aggressively marketed or because the home was in need of repairs.

Examining Comparable Sales

Comparable sales are those that most closely resemble your home. It is difficult to compare a tri-level home to a single-story home. Select the homes from this list that are mostly identical to your home in size, shape and condition, such as:

- Similar square footage

Appraisers compare homes based on square footage. Larger square-foot homes are worth less per square foot than smaller square-foot homes. The variance among a group of median-priced homes ideally should not exceed more than 200 to 400 square feet, plus or minus.

- Similar age of construction

Ideally, the age of the home — the year it was built — should be within a few years of other comparable sold homes. Mixed-age subdivisions are common. For example, in one area of Sacramento, a subdivision consists of homes built in the 1950s, and then they jump a couple decades to the 1970s. Although the homes are located next door to each other, the homes loaded with character from the 1950s sell for more than their newer Brady Bunch counterparts. If your home was built in 1980, say, and brand new homes up the street are selling for more, you cannot command the same price as a new home.

- Similar amenities, upgrades and condition

Appraisers will deduct value from your home if other homes have upgrades and yours does not. A home with a swimming pool will have a different value than a home without a pool. A completely remodeled home is worth more than a fixer. Homes with one bath are worth less than homes with two or more baths. Deferred maintenance will count against you.

- Location

Everybody knows that real estate is valued on "location, location, location," but have you considered what that means? A home with a view of the city, for example, is worth more than a home facing a cement wall. Homes located on busy thoroughfares are worth considerably less than homes on quiet streets. Compare your home to those in similar locations. If your home sits across the street from a power plant, look for other homes with power plant exposure or those located along railroad tracks, among other undesirable locations.

Pricing Houses – Pricing Houses to Sell

Price Your House Right

The single most important factor to consider when selling a house is the home price tag: how much your house is worth. You don't want to overprice the house because you will lose the freshness of the home's appeal after the first two to three weeks of showings. After 21 days, demand and interest wane. On the other hand, don't worry about pricing it too low because homes priced below market value often will receive multiple offers, which will then drive up the price to market. Pricing is all about supply and demand. It's part art and part science, and no two agents price property the same way.

Pull Comparable Listings and Sales

• Look at every similar home that was or is listed in the same neighborhood over the past six months.
• The list should contain homes within a 1/4 mile to a 1/2 mile and no further, unless there are only a handful of comps in the general vicinity or the property is rural.
• Pay attention to neighborhood dividing lines and physical barriers such as major streets, freeways or railroads, and do not compare inventory from the "other side of the tracks." Where I live in the Land Park neighborhood of Sacramento, for example, identical homes across the street from each other can vary by $100,000. Perceptions and desirability have value.
• Compare similar square footage, within 10% up or down from the subject property, if possible.
• Similar ages. One neighborhood might consist of homes built in the 1950s next door to another ring of construction from the 1980s. Values between the two will differ. Compare apples to apples.

Sold Comps

• Pull history for expired and withdrawn listings to determine whether any were taken off the market and relisted. If so, add those days on market to these listing time periods to arrive at an actual number of days on market.
• Compare original list price to final sales price to determine price reductions.
• Compare final sales price to actual sold price to determine ratios.
• Adjust pricing for lot size variances, configuration and amenities / upgrades.

Withdrawn & Expired Listings 

• Look for patterns as to why these homes did not sell and the common factors they share.
• Which brokerage had the listing: a company that ordinarily sells everything it lists or was it a discount brokerage that might not have spent money on marketing the home?
• Think about the steps you can take to prevent your home from becoming an expired listing.

Pending Sales

• Since these are pending sales, the sales prices are unknown until the transactions close, but that doesn't stop anybody from calling the listing agents and asking them to tell you. Some will. Some won't.
• Make note of the days on market, which may have a direct bearing on how long it will take before you see an offer.
• Examine the history of these listings to determine price reductions.

Active Listings 

• These matter only as they compare to your listing, but bear in mind that sellers can ask whatever they want.
• To see what buyers will see, tour these homes. Make note of what you like and dislike, the general feeling you get upon entering these homes. If possible, recreate those feelings of reception in your own home.
• These homes are your competition. Ask yourself why a buyer would prefer your home over any of these and adjust your price accordingly.

Square Foot Cost Comparisons

• Remember that after you receive an offer, the buyer's lender will order an appraisal, so you will want to compare homes of similar square footage.
• Appraisers don't like to deviate more 25% and prefer to stay within 10% of net square footage computations. If your home is 2000 sq. ft., comparable homes are those sized 1800 to 2200 sq. ft.
• Average square foot cost does not mean you can multiple your square footage by that number unless your home is average sized. The price per square foot rises as the size decreases and it decreases as the size increases, meaning larger homes have a smaller square foot cost and smaller homes have a larger square foot cost.

Market Dependent Pricing

• Same house, three different prices. After you have collected all your data, the next step is to analyze the data based on market conditions. For comparison purposes, let's say the last three comparable sales in your neighborhood were $150,000. In a buyer's market, your sales price might allow some wiggle room for negotiation but be strong enough (near the last comparable sale) to entice a buyer to tour your home. To sell in this market, you might need to price your home at $149,900, settling for $145,000.
• In a seller's market, you might want to add 10% more to the last comparable sale. When there is little inventory and many buyers, you can ask more than the last comparable sale and likely get it. So that $150,000 home might sell at $165,000 or more.
• In a balanced or neutral market, you may want to initially set your price at the last comparable sale and then adjust for the market trend. For example, if the last sale closed three months ago, but the median price has edged upwards of 1% per month, pricing at $154,500 would make sense.

Selling Before Buying – Concurrent Closings

Reasons to Sell Before You Buy

Homeowners who are planning to move up often wrestle with the dilemma: "Should we sell first or buy first?" You'll find plenty of agents advising you to buy before you sell, but that's rarely in your best interest. It's in the agent's best interest because if you buy, you will need to sell, and the agent will be guaranteed two sales, regardless of how much it cost you to do it this way.

If you decide to sell first and then buy but, say, your home doesn't sell or it attracts very low offers that you do not want to accept, the agent will get nothing. Think about it.

Of course, which comes first, the chicken or the egg, depends on the market — is it a buyer's or a seller's market — and your personal motivation. However, for most sellers and buyers, the smart thing to do is to sell before you buy.

Reasons to Sell First and Then Buy

- Ability to Negotiate.

By selling first, you have the luxury of time. You don't have to take the first offer that comes along because you already have a place to live. It's called your home.

 - Higher Sales Price.

Sellers who aren't under pressure to sell often obtain higher sales prices because buyers realize the sellers are not desperate. Nothing yells "discount your offer" like a listing that reads: "seller motivated, bought another."

 - Contingent on Concurrent Closing.

By making the sale of your home contingent on closing concurrently with your new purchase, you have basically said to the buyer, "If I can't find the home I want to buy, I'm under no obligation to sell to you." You don't have to name the property address. You can simply state: "This sale contingent on closing concurrently with the purchase of seller's replacement home."

In fairness, a smart buyer's agent won't let a buyer sign a contract with a contingency clause like that; however, I get away with inserting that clause because few agents understand its implication.

- Contingency Period.

OK, let's say the buyer's agent is smart enough to strike a concurrent closing clause from the contract. The next best thing to ask for is a time period during which you are free to look for a replacement home. A contingency period will give you the right to cancel the contract during that time period if you so choose, which can range, on average, from 7 to 21 days.

 - Renting After Closing.

Some sellers who want to take their time to find the perfect home, that one-in-a-million, will often opt to rent after closing. If the buyer doesn't require immediate occupancy, the seller might rent back their own home for the amount of the buyer's new mortgage payment. Or the seller might move out, put their belongings into storage and rent a furnished, short-term apartment.

While Your Home is on the Market – Protecting Your Privacy

What Does Your Home Disclose About You?

Are your secrets safe? Before a home goes on the market and home buyers start to traipse through, savvy sellers will relocate confidential information. Even so, you might be astonished to learn what home buyers can figure out about you.

Private Documents

 - Is it snooping to open a drawer?

Not if the drawer is part of a built-in such as a kitchen cabinet or a dining room china cabinet. Buyers can innocently tug on a drawer to inspect its construction or depth and find important documents that you might not intend for anyone to see.

I once opened a drawer and discovered the seller's net sheet sitting on top of her comparative market analysis, in plain view. It clearly indicated a lower price was expected, so you can guess what my buyer offered.

 - Don't leave mail where anybody can find it.

Lots of sellers leave piles of opened mail neatly stacked on the kitchen counter. Buyers could find out how much you owe department stores or other credit cards. They can tell if you're late on your mortgage payments or if the I.R.S. is after you. Heaven forbid should you file bankruptcy or be sued and leave those documents on the table, but sellers do it. They must believe that buyers will not read someone else's personal mail, even when that mail is taped to the refrigerator door, begging to be read.

I've also shown vacant homes where the mail was tossed all over the floor in the entryway. Neither the seller nor his listing agent bothered to stop by and pick up the mail. It wasn't hard to figure out that much of the mail contained collection notices. If a buyer was armed with that information, guess what price the buyer would be thinking about. It wouldn't be list price.

Remove Diplomas and Wedding Photos from Walls

Notwithstanding that all personal items should be removed, sometimes sellers overlook the obvious and leave diplomas on the wall. People form biases and can carry a bias too far. For example, the seller might be a lawyer, and there are buyers who might not feel comfortable buying a home from a lawyer. For whatever reason. Diplomas also give away a seller's age or a close estimate. If a buyer sees a recent medical diploma, for example, the buyer might assume the seller is saddled with student loans and needs to sell to pay them off.

Wedding photos might give away the seller's religion, as do certain religious artifacts left in the home. Buyers can be prejudiced. Don't give buyers a way to form any opinion about you at all. Don't let buyers form ideas about you from the type of music you like or the literature you read.

Contents of Closets

Often sellers who are separating or getting divorced feel a lot of pressure to sell quickly, especially if the partner who remains in the home cannot afford to continue to maintain it. But that is not information most sellers want to share with buyers. Yet they do. They may as well toss their wallet out the car window doing 80 on the freeway.

They do this by hanging either all men's or all women's clothing in the closet. Was it a heterosexual or bisexual involvement? Who cares? It's nobody's business, really, if a seller is dissolving a relationship. But once a buyer finds out a seller desperately needs to sell, the buyer won't make an offer anywhere near list price. So don't leave any telltale clues around that could give away your motivation to sell.

Before you put your home in the market, please, prep it; empty out drawers, stage closets and pack up anything remotely personal. If your house speaks to a buyer about you, it's probably saying the wrong thing.

Selling When Getting a Divorce

Protecting Credit During Divorce & Selling

Even the divorces and breakups that start out amicable can eventually turn sideways — if not completely inside out — despite well-intentioned efforts to remain civil. Regardless of who was wronged, who was innocent, how the blame is divided, or whether the union simply drifted apart, it's a death of a relationship, a time to mourn. It's also a time of rebirth and a new life.

So, don't get sidetracked. Although your "better half" may be out of the picture, your finances will follow you wherever the future leads you. My mother used to warn her daughters by saying: "You can always find another boyfriend, but it's damn hard to find another place to live." Her Midwestern common-sense advice, if you're wondering, applied to my brother as well.

Steps You Can Take to Protect Your Credit

First, Obtain Your Credit Report. You can get a copy of your credit report by notifying each of the three credit bureaus, Experian, TransUnion or Equifax, or you can obtain free copy of each report online by copying and pasting this secure link into your browser: http://annualcreditreport.com.

Second, Inventory Credit. Make a list of all creditors, secured and unsecured.

1. Secured creditors are those that attach an asset as security for the debt. If your home is mortgaged or you have a loan on your car, for example, your home and car are assets used as security.
2. Unsecured creditors are those that lend you money based solely on your promise for repayment.

Third, Separate Joint Accounts From Individual Accounts. Joint accounts are those containing both names, and each of you is responsible for the debt. Individual accounts are those opened solely in your name.

Fourth, Call Joint Credit Card Lenders. Find out if the credit extended is based on your credit or your partner's credit.

1. If the credit is based on your credit, but your partner has a card, ask to have your partner removed.
2. If the credit is based on your partner's credit, put the credit card in your pocket. OK, just joking. Ask to have your name removed.
3. If the lender refuses to remove a name from the account, close the account and open a new account.
4. If you have a balance on your credit card, the creditor will not close the account unless you pay off the balance. But you can prevent further charges on the account by asking for the account to be frozen.

Fifth, Sell or Refinance Secured Assets. It is important to separate the liability for secured assets.

1. If a car is financed in both names, regardless of whose name is on the title, both of you are responsible for the loan.
2. If a mortgage is held in both names, regardless of whose name is on the deed, both of you are responsible for the mortgage.
3. Even if your divorce decree assigns possession of those assets to one party, or if one of you voluntarily transfers title to the other, the liability for the loan will remain if you do not sell or refinance the asset.

Refinancing Your House

Should you reach an agreement whereby one person will remain in possession of the home, then the prudent course of action is to remove the existing loan and replace it with a new loan, providing, of course, that you lack the capital to pay off the loan in cash.

Record a New Deed. Ask your lawyer or title company to draw up a deed that transfers title from one person to the other. Commonly used deeds for this purpose are quitclaim deeds, but your lawyer may prefer to use a warranty deed or a grant deed.

Obtain a New Mortgage. Places to get a mortgage include your local bank, a credit union or through a trusted mortgage broker.

1. If you cannot qualify by yourself, you can either sell the property or obtain a co-signer such as asking a relative to help you qualify.
2. Should you owe your partner equity, ask your partner if he or she would be willing to let you obtain a large enough loan to pay off the existing loan and then carry a second mortgage for the amount owed. This way you can make payments to your partner for the equity, perhaps at a lower interest rate and better terms than a lender would give you.
3. Moreover, providing there is enough equity in the home to support a second mortgage — preferably the amount of both loans do not exceed 80% of the home's market value — your partner might be able to sell the mortgage at a discount to obtain the cash.
4. Bear in mind that obtaining a new loan will require an appraisal to substantiate value, but since lenders have a vested interested in making you a loan, you might want to also ask a trusted real estate agent to pull comparable sales for you as well. Appraisals are not written in gold. You do not want to pay your partner more for the property than it is worth, and refinance appraisals often result in higher values than you might get upon resale.
5. A new mortgage will also require a new title policy. Although you will be insuring the lender and not yourself, this process will give you relative assurance that your partner has not further encumbered the property without your knowledge.

Selling Your House

• Establish Market Value. Figure out how much your home is worth based on past comparable sales.
• Prepare Your House For Sale. Clean, declutter, depersonalize and pack.
• Find a Real Estate Agent. Consider experienced agents over friends or relatives with little or no experience.
• Don't Advertise Your Dissolution. Protect your privacy while your home is on the market. If buyers know the reason for the sale, you might receive a lower offer.

For legal advice, please consult a lawyer.

How To Prepare Your House For Sale

Prepping and staging a house. Every seller wants her home to sell fast and bring top dollar. Does that sound good to you? Well, it's not luck that makes that happen. It's careful planning and knowing how to professionally spruce up your home that will send home buyers scurrying for their checkbooks. Here is how to prep a house and turn it into an irresistible and marketable home.

Difficulty: Average

Time Required: Seven to 10 Days

 

Here's How:

1.  Disassociate Yourself With Your Home.

• Say to yourself, "This is not my home; it is a house — a product to be sold much like a box of cereal on the grocery store shelf.
• Make the mental decision to "let go" of your emotions and focus on the fact that soon this house will no longer be yours.
• Picture yourself handing over the keys and envelopes containing appliance warranties to the new owners!
• Say goodbye to every room.
• Don't look backwards — look toward the future.

2. De-Personalize.

Pack up those personal photographs and family heirlooms. Buyers can't see past personal artifacts, and you don't want them to be distracted. You want buyers to imagine their own photos on the walls, and they can't do that if yours are there! You don't want to make any buyer ask, "I wonder what kind of people live in this home?" You want buyers to say, "I can see myself living here."

3. De-Clutter!

People collect an amazing quantity of junk. Consider this: if you haven't used it in over a year, you probably don't need it.

• If you don't need it, why not donate it or throw it away?
• Remove all books from bookcases.
• Pack up those knickknacks.
• Clean off everything on kitchen counters.
• Put essential items used daily in a small box that can be stored in a closet when not in use.
• Think of this process as a head-start on the packing you will eventually need to do anyway.

4. Rearrange Bedroom Closets and Kitchen Cabinets. 

Buyers love to snoop and will open closet and cabinet doors. Think of the message it sends if items fall out! Now imagine what a buyer believes about you if she sees everything organized. It says you probably take good care of the rest of the house as well. This means:

• Alphabetize spice jars.
• Neatly stack dishes.
• Turn coffee cup handles facing the same way.
• Hang shirts together, buttoned and facing the same direction.
• Line up shoes.

5. Rent a Storage Unit. 

Almost every home shows better with less furniture. Remove pieces of furniture that block or hamper paths and walkways and put them in storage. Since your bookcases are now empty, store them. Remove extra leaves from your dining room table to make the room appear larger. Leave just enough furniture in each room to showcase the room's purpose and plenty of room to move around. You don't want buyers scratching their heads and saying, "What is this room used for?"

6. Remove/Replace Favorite Items.

If you want to take window coverings, built-in appliances or fixtures with you, remove them now. If the chandelier in the dining room once belonged to your great grandmother, take it down. If a buyer never sees it, she won't want it. Once you tell a buyer she can't have an item, she will covet it, and it could blow your deal. Pack those items and replace them, if necessary.

7. Make Minor Repairs.

• Replace cracked floor or counter tiles.
• Patch holes in walls.
• Fix leaky faucets.
• Fix doors that don't close properly and kitchen drawers that jam.
• Consider painting your walls neutral colors, especially if you have grown accustomed to purple or pink walls. 
• (Don't give buyers any reason to remember your home as "the house with the orange bathroom.")
• Replace burned-out light bulbs.
• If you've considered replacing a worn bedspread, do so now!

8. Make the House Sparkle!

• Wash windows inside and out.
• Rent a pressure washer and spray down sidewalks and exterior.
• Clean out cobwebs.
• Re-caulk tubs, showers and sinks.
• Polish chrome faucets and mirrors.
• Clean out the refrigerator.
• Vacuum daily.
• Wax floors.
• Dust furniture, ceiling fan blades and light fixtures.
• Bleach dingy grout.
• Replace worn rugs.
• Hang up fresh towels.
• Bathroom towels look great fastened with ribbon and bows.
• Clean and air out any musty smelling areas. Odors are a no-no.

9. Scrutinize. 

• Go outside and open your front door. Stand there. Do you want to go inside? Does the house welcome you?
• Linger in the doorway of every single room and imagine how your house will look to a buyer.
• Examine carefully how furniture is arranged and move pieces around until it makes sense.
• Make sure window coverings hang level.
• Tune in to the room's statement and its emotional pull. Does it have impact and pizzazz?
• Does it look like nobody lives in this house? You're almost finished.

10. Check Curb Appeal.

If a buyer won't get out of her agent's car because she doesn't like the exterior of your home, you'll never get her inside.

• Keep the sidewalks cleared.
• Mow the lawn.
• Paint faded window trim.
• Plant yellow flowers or group flower pots together. Yellow evokes a buying emotion. Marigolds are inexpensive.
• Trim your bushes.
• Make sure visitors can clearly read your house number.

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