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What Should I Know before I Sell My Home?

Until just a couple years ago, Colorado Springs real estate worked at a very fast and competitive pace. During the past year and a half, however, the market has begun to even out and hold steady. As a result, many buyers from a few years ago find they got carried away and paid too much. Many sellers think their home is worth much more than it actually is at this time.

You may have read horror stories about foreclosures. Let’s separate the myth from the facts: In Colorado Springs, foreclosure inventories have risen, but when adjusted for population growth the true percentage is only 3 out of 100 homes listed. Not much higher than normal. Have you read about gluts of repossessed houses on the market, driving prices into the basement? Not true here. In fact, in 2008 there are 7% fewer homes for sale in Colorado Springs than a year ago. Meanwhile, the price of a home, on average, has fallen only 1.3%. Looking squarely at the facts, this all means that a home can still sell for a great price in Colorado Springs!!

To get the most out of your home sale, know as much as you can about the selling process and how you’ll fit into it. Here are 9 Prime Topics I suggest my clients explore:

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1.  Know how much it costs sell

2.  Can Randy sell my home for 1.5%?

3.  Know the best time to sell

4.  Know what to do if you’re worried about your loan
5.  Know how long it will take to sell
6.  Should I sell my home myself?
7.  Know how a Realtor finds a good Realtor
8.  Know how to prepare your home to sell
9.  More Questions? Send for My Free Report “Selling in Today’s Market”

1.  Know how much it costs to sell

As a rule of thumb, I tell my clients to expect their selling costs to come in around 7% of the purchase price. Here’s how it breaks down:

n  6% in real estate commissions (typical in Colorado Springs, split 50/50 between the two agents.)

n   1% for Title Insurance and Escrow fees.

n  Other fees can arise for attorneys, city permits, cleaning/staging services, and the like, but these are less common and can sometimes be avoided with good planning and preparation.

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2.  Can Randy really sell my home for 1.5%?

I am serious about helping my clients profit. So much so, that I decided to put my commission where my mouth is! I offer a sliding scale - here’s how it works: 

P  1.5% Listing Fee – if property sells within 30 days; 

P  2.25% Listing Fee – if property sells within 45 days

P 3.0% Listing Fee – if property sells after 75 days (which is the standard commission most professional Realtors charge to begin with).

 I’ve been asked why I adopted this revolutionary approach and the answer is simple: The sooner a home sells, the less my out of pocket costs are to market and advertise – which in this economy can run $1,000+ each month for print ads and internet. Plus, why should my clients pay more if I’ve had to work less??  Homes that sell quickly are a team effort with the homeowners, so my goal is to let you get paid for your efforts, too.  My reward is great referrals from past clients who know I saved them some extra money along with quick results.

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3.  Know the best time to sell

Indeed, timing is everything when it comes to profit. The ideal scenario is to sell when inventories are lowest and plenty of buyers are shopping for your type of home – I call it the “EBay Effect”.  Bidding wars are every homeowners dream.  On the other hand, when five similar houses are on the market you can expect buyers to shop them all. To get the offer, you’ll have to be the one that looks brightest and newest at the sweetest price.

In Colorado, the time of year impacts property values tremendously. Few people choose to deal with house shopping and moving during the hectic holiday season, especially if it is a particularly cold snowy winter. Families buying homes in November and December usually do so because they have to, not because they want to. As a result, the end of the year can be one of the best times to get the highest price for a house.  Market cycles also tend to revolve around school schedules, military movements, and the hiring practices of our biggest employers. 

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4.  Know what to do if you’re worried about your loan

You may have read horror stories about foreclosures.  Let’s separate the myth from the facts:  In Colorado Springs, foreclosure inventories have risen, but when adjusted for population growth the true percentage is only 3 out of 100 homes listed.  Not much higher than normal. Have you read about gluts of repossessed houses on the market, driving prices into the basement?  Not true here.  In fact, in 2008 there are 7% fewer homes for sale in Colorado Springs than a year ago. Meanwhile, the price of a home, on average, has fallen only 1.3%.  Looking squarely at the facts, this all means that a home can still sell for a great price in Colorado Springs.

Many times foreclosure is avoided by selling a home through “Short Sale”, working with the approval of the Bank. In a Short Sale the bank does not own the property, but the homeowner is trying to sell it for less than the amount remaining on the loan.  Because the Bank will be “shorted”, they become the third party in the transaction. The Bank must agree to the purchase price, repair allowances, and all financial terms of the deal.  An important thing to realize is that the Bank is on absolutely no timeline to provide their approvals! They are not held to the dates in your contract with the Buyer. Short Sales tend to take much, much, longer to complete and are more difficult to navigate than a “normal” sale.  But, sometimes it is the best way to get out from underneath an impossible mortgage payment and move on.

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5.  Know how long it will take to sell

Over the past 12 months, the average time to sell a home in Colorado Springs has been over 60 days, depending on the neighborhood.  Expect an overpriced to linger on the market much longer. Buyers have more tools and information at their fingertips than ever before. As a result, they are keen judges of pricing. Most will reward a correctly priced home with a full-price offer, and not even bother “lowballing” an offer to a homeowner who has treated the market aggressively by overpricing.

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6.  Should I sell my home myself?

Ahh, the age old question! The truth is, some people are successful at selling their home themselves. Ultimately, each homeowner has to decide for themselves. Know this: 

n  85% of For Sale By Owners switch to a Realtor to get their homes sold. 

n  Of the remaining 15%, half say they would use a Realtor the next time. 

n  Leaving a mere 7% of For Sale By Owners who were good enough at it to see the sale through and happy enough to do it again – I wonder how many of those are Realtors themselves??

So, why are the odds so challenging for FSBOs?

ü  It requires more work than most homeowners think, and must be done objectively. One of the first challenges is showing the home. You wouldn’t think so at first, that part seems easy. But, often the owner works and simply can’t be there at everyone’s beck and call. Take it from a pro, buyers operate on their timeline, not yours!  If your home is unavailable when they’re shopping, most will simply cross it off the list and move on.  Another complication: Statistics constantly prove it is better if the owner is not home when a showing occurs.  But if you're acting as the agent, you need to be there.

ü   One concern to tackle is security. How often have you opened the door for a perfect stranger and let them just walk through your home, checking out at all your things? Is it safe?  Probably not.  This is something every FSBO has to figure out.  One rule of thumb I give: If you wouldn’t let your mother do it alone, think twice.

ü  Unfortunately, some homeowners can’t resist the temptation to “screen” their successors.  This is highly illegal!!  The Fair Housing Act states that all prospective buyers must be considered equally. So, no advertising that you live in a “Christian neighborhood” or “family home”. If an offer comes in from an 8-person family with 2 dogs and a ferret, you need to consider it the same as if it came from that nice newlywed couple your neighbors really liked.  Violating the Fair Housing Act is a federal offense, and seriously nothing to mess with.

ü  If that offer comes in, it’s time to negotiate. Here’s where a lot of FSBO deals get killed. Simply put, it gets too personal for the homeowner and emotions take over. What do you mean you think the cabinets are ugly and expensive to replace – we paid $10K for those!! You want the chimney cleaned – we only use it on holidays!!   Radon test – what for??

ü  As if all that isn’t tricky enough to manage, most homeowners can’t be expected to understand all the ins-and-outs of Colorado real estate law. Contracts get challenged, misinterpreted, and closings fall through. Did you know there is actually one form that carries a $10K fine to the Seller if he fails to provide it to the Buyer? A forgotten checkbox or vaguely worded statement can cost just as much, if not more!  Worse, disputes can tie up your home’s sale and moving plans while things are argued out, maybe in court.

ü  Even in crazy-hot markets, For Sale By Owner is the most challenging property to sell.  Expect it.  You’ll have to price your home perfectly, make it easily available to show, safely, and market it legally and effectively, while remaining emotionally detached at all times.  How many of us can really do all that?  Especially during one of the most stressful decision-making times of our lives!

Realtors sell the vast majority of homes, for good reason.  And, study after study shows that we get higher prices for the houses we sell. Realtors screen visitors and accompany them on showings. We make it our job to be available. Every visitor’s comings and goings are tracked through the electronic lockboxes we use. We are expert negotiators working in our client’s interest, and we know how to weed out the frivolous requests from the important ones. Colorado real estate is our expertise so we deal with contracts keeping the law in mind.

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7.  Know how a Realtor finds a good Realtor

In a nutshell, the best agents stay on the cutting edge of the market and are attuned to its nuances and subtle changes. They approach their clients needs with the same attentiveness they would give their own families. 

Here are a few things that I would do if I were hiring a Realtor:

1.     I would only consider real estate agents who are Realtors®.

Did you know that not every licensed agent is a Realtor®?  Only members of the National Association of Realtors® are held to a strict Code of Ethics. We must continually attend classes to stay current, and are expected to maintain a higher level of industry knowledge.

2.    I would only consider professional Realtors®. Those who have been working full time in the business for at least five years, who have proven market experience.

Did you know that 58% of real estate agents change careers within one year, and another 23% drop out before reaching five years in the business?  There are many personal reasons why, but the most common is money.  It’s expensive to stay in this business, only the very best agents actually earn a living from it.  Only 19% of agents who passed their exams 5 years ago remain in the business.  Of those, 23% keep another job.  I’d want a Realtor who has relied upon happy clients to make it possible to thrive when most can’t.

3.  I would only work with a Realtor® who has earned their GRI designation.

GRI stands for Graduate, REALTOR® Institute. It is one of the most comprehensive designations a Realtor can earn, typically taking a year and a half to complete. The GRI is comprised of 15 courses, each designed to better our knowledge in key areas.  Realtors must pass 15 tests, proving they have advanced knowledge in areas like Fair Housing, Real Estate Law, Property Tax, Water Rights, Buyer/Seller Agency, and Contract Law.  Only 19% of Realtors have earned a GRI designation, according to the National Association of Realtors. 

4.   I would prefer a Realtor® who knows their way around technology.

Flyers and a sign in the front yard are fine, but a little old school if left at that. There is a whole generation (or two) of buyers out there who are more familiar with pounding the keyboard than pounding the pavement.  My Realtor would have to know his way around the internet.  He’d have to be comfortable with a digital camera and uploading lots of photos.  He’d have to be willing to communicate via email or handheld, and not be afraid to TXT IF A GR8 SHOWNG – OFFR COMG, FULL $$! 

 5.    I’d treat it like a job opening, and don’t skip the interview!

You’re about to offer someone a several-thousand dollar paycheck and trust them to guide you through one of the most important financial decisions you’ll ever make – selling your home.  Take it seriously, and make sure they do too.

Too often, a client has called me after hiring their co-worker, friend, cousin, etc. The most familiar thing I hear is:  “Well, s/he just got a license and I couldn’t say no.”  Unfortunately, after a while on the market with poor results, these Owners are now in a statistically proven disadvantage. While not impossible to overcome, it can’t be undone.  

I understand the compelling reasons to automatically hire friends, the friend-of-a-friend, or family. But, we’re talking hundreds of thousands of dollars of your investment. Interview several qualified individuals with the intent of hiring the one who best fits your needs and special circumstances. It’s perfectly okay to ask for references.  I’m not saying “Don’t hire Aunt Sally.”   My advice is: Don’t skip the interviews!!   

6.   I would think long and hard before hiring a discount listing service.

There’s a line from an astronaut movie I get a real kick from. As they sit strapped into take-off position, ready to save the world, one of them announces something like, “Congratulations, you’re now sitting on a million pounds of fuel in a rocket built by the lowest bidder.”  In real estate, especially, you do get what you pay for.

Every day, people risk the most important investment they’ve ever made to discount listing services. It’s tempting to get professional services on sale when you’re facing thousands of dollars in real estate fees. The reality is, a Realtor hired to market like crazy and negotiate in your favor can easily make up those fees by getting a higher offer for your home, faster.  Which also means less stress and headaches for your family.

Would you expect an attorney offering “bottom dollar” advice to get top-notch results? How about a surgeon?  Don’t get me wrong, I think sales are fine – for shoes, lettuce, even cars.  But not a trusted advisor dealing with your family’s six-figure investment.

7.     Finally, I would hire a trusted advisor.

I would hire a Realtor who’s experience is worth listening to. One with the confidence to tell me the truth about my property, not just what I’d like to hear. It’s tempting to go with an agent because they suggested the highest price.  Sometimes that’s a just ploy.  Believe it or not, the only goal some agents have for the first client meeting is to “hook” the deal.  I’d choose someone because they have a proven track record and know what they’re talking about.   My motto, in career and life, has always been:  “Honesty is the best policy.”

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8.  Know how to prepare your home to sell

The important thing is to look newer & shinier than any of your competition.  Generally, homeowners believe they have to do more than they really need to. First and foremost, the “curbside appeal” should look its absolute inviting best. Studies indicate this is where most buyers get hooked. Once inside, “light & bright” and clutter-free should be your aim. Kitchens, particularly, should be tidy, and basements should be clean and bright.  A few 100-watt light bulbs and clean the windows, shampoo the carpets. Spend as little money as possible and don't get carried away!  You never know what the buyers will ultimately want. What if you install new carpet (at a huge expense) only to find out they hate “Builder Beige” and plan to tear it out?? You’ll definitely not recoup your investment on that one. Let the people who buy your house get carried away and repaint, install new windows, and refinish the hardwood floors if they want to.

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9. Send for My Free Report “Selling in Today’s Market”

Some of the information on this page was taken from my 14-page FREE report "Selling in Today's Market."  You can receive a copy of this entire report by filling in the form below. Or, you may call me directly at 719-339-0236 with any additional questions.

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