The Second Key to Max Profit When Selling Your Home
There are two major things a seller can do, even in a seller’s market, to max out their bottom line. The first I wrote about in detail and is all about creating buyer enthusiasm. This is essentially putting the shiniest, most attractive bait on the hook to the get the best and/or most buyers acting on the listing. The second key is what takes place after a buyer is under contract and it is just as important. It just involves different tasks. Simply put it is:
Maintaining Buyer Enthusiasm and Seller Profit
Neogtiations after a contract sales price has been agreed upon by the seller and buyer can be just as tense as the intial negotiations, if not more so. Buyers can feel they have a seller by the shorts and want to create points of renegotiation along the way. The first point of renegoation is home inspection. Having an idea of how to prepare for a home inspection is so important. Sellers can easily overlook simple things that can cause big panic. Or buyers can feel so entitled they overask. How should a seller respond to an an over indulgent buyer? An experienced, skilled, full-time professional agent knows how to deliver “no” without losing a buyer.
Appraisal is the second hurdle many buyers need to cross as a contingency to a sale. Even if a buyer has waived an appraisal contingency and is willing to eat any difference between appraised value and contracted sales price, there can be a buyer’s remorse issue if the divide exists at all, or is what the buyer considers too big. Not every listing agent meets an appraiser with a package of information to support the sales price. Whether the buyer has an appraisal contingency or not, I know that part of maintaining buyer enthusiasm and my seller’s profit is meeting the appraiser every time.
One of my favorite success stories about meeting an appraiser comes from having a less updated home sell for more than a very updated home of the exact same floor plan. I met the apprasier and though we still appraised low, we sold for more than the updated home. Turns out that discount broker didn’t meet the appraiser and relied on the home to speak for itself, leaving $15,000 on the table. (That was way more than the updated home’s seller would have paid by hiring a non-discount broker.)
In a seller’s market, getting through HOA void periods quickly is important as well. Having an agent that prepares for that ahead of time and doesn’t wait until the seller is under contract is just leaving the right to void period open for a buyer. And that’s not the only pitfall regarding HOAs. Did you know if HOA or condo violations are not corrected before settlement a buyer maintains a right to void under the title paragraph of the contract? Professional, local agents know the most frequently seen HOA violations and can help a seller prepare for their HOA resale inspection before the home is ever listed.
Details abound in the contract to close period of a home sale. Getting the major points of negotiation handled before there is an issue is a major part of that. Hiring a professional agent to lead the way is always the path to the highest profit. Again, it may seem intuitive to cut commission to save money, but he best don’t work for less. If a seller wants the best result (highest bottom line,) the agent they hire matters.
The First Key to Max Profit When Selling Your Home
Getting the maximum profit when you sell your home, even in a seller’s market is not as easy as you think. A seller can’t assume that any old agent that is willing to cut their commission because “it is so easy to sell houses in a seller’s market” is going to wring every dollar they deserve out of their home sale. Max profit doesn’t start with hiring the cheapest agent a seller can find, even though it is an absolute fact that the largest closing cost is agent commission. Reducing the largest line item paid in your closing costs may seem like a natural win, but as my father used to constantly remind us, “You get what you pay for.”
No matter the market conditions present when you are selling your home, the first key to success lies in three words:
Creating Buyer Enthusiasm
In one of the hottest seller’s markets on record, I have met two For Sale By Owners (FSBO) who had cut their commission line item in half by going it alone. What were they lacking? Besides buyers willing to write offers despite enough buyer interest to get it done, someone on their side to help them see their home through a buyer’s eyes and present it to the market in a manner to lift buyer enthusiasm. That is what generates higher prices, and in a seller’s market, bidding wars. Despite popular opinion on FSBOs, neither one was priced higher than the market would allow. They just had no clue how to create buyer enthusiasm and get legitimate offers. That’s where a professional marketing agent is worth their weight in gold.
Once I was hired as the professional listing agent, the focus shifted from how much could be saved on commission to how to get buyers to want this listing before they have even seen it in person. In each case, that involved staging, but not to the degree you might think. Simple rearranging of furniture to show a floor plan’s utility or larger amounts of space. Placing punches of color to draw attention to the home’s best features. Getting buyers to see how they would live in the property vs. seeing how a seller is currently living in a property. How someone lives every day in a home is not how they sell.
Once the stage is set, a professional listing agent knows to hire a professional photographer. Just like a seller who wants to cut commission believing it will net them more money, I fought hiring a professional photographer for too many years. Looking back, I can’t believe I ever took my own listing photos. The professionals in any field can not be matched and are a huge component of success. And naturally, the biggest compliment I get from my top notch photographers is that they love taking pictures of my listings because they are always primped for photo day and make great subjects. I like to say they are smiling and saying cheese when the photographer arrives. Still, it is unbelievable to me that a lot of listing agents don’t worry about what they photographers are taking pictures of if they are just professional.
While words used in describing a listing are also very important, they are a second to photos. Listing preparation and staging are vital to making sure your photos leap off the screen of the buyer’s phone, tablet or keyboard and plant that fast growing seed of buyer enthusiasm. Making sure the home presents the same in person to build on that level of enthusiasm is where all the preparation a seller did and maintains throughout showings is important. Making beds, clearing clutter, emptying litter boxes daily…you get the idea.
As I tell all of my sellers, the minute a buyer slumps their shoulders or sighs at clutter, condition, painting projects, old carpet…whatever…you have lost the chance at a full price offer. The cash register in the buyers head is running and they are overestimating the cost to get the home to look the way they want it. And the reality is that getting a home to look they way most buyers want is not as difficult, or costly, as a seller may think. Listing preparation is critical to buyer enthusiasm. Skipping it all together and relying on a hot market to bring you tremendous results is costly mistake.
Both of my FSBOs listed at the same price they had gone it alone and both got multiple offers and ended up selling above list price, which paid for the fee they had tried to avoid when unsuccessfully listing alone. However, it wasn’t just as simple as making sure the home looked great. That’s where we come to the second key to max profit when selling. Click the link to find out more.
Rumors That the 2021 Summer NoVa Real Estate Market is Slowing Down
There has been talk among agents that the real estate market in Prince William, Fairfax and Loudoun Counties is starting to slow down. Oh how I wish those rumors had some basis in reality. The extreme buyer demand that has sellers cashing out at unbelievable prices, has left buyers waiving just about every conceivable contingency and reaching deep into their savings or retirement plans just to have a chance at purchasing. Still, this past Memorial Day weekend I had buyers offer $30,000 above a fairly optimistic list price on a home that had plenty of outdated decor, and waived all contingencies only to lose along with ten other buyers.
The week or so that the gas shortage was causing anxiety in Northern Virginia, presented a great opportunity for buyers to get out and see homes while others were afraid to burn the gas in their tank to see property. That window allowed one of my buyer-clients, a first-time buyer, an opportunity to get under contract without having to waive home inspection. He was even able to negotiate some closing cost help. I had to pinch myself to make sure I wasn’t dreaming. Maybe that was the weekend the rumors of the slowing market started.
Alas, it was only an abbreviated window of opportunity which was created entirely out of panic, not actual shortage of gas. To me, it was like having a snow storm in winter during a seller’s market. Others may sit out the conditions and wait for the snow to melt, but not me. Striking while other buyers are sitting it out is the only way to give some buyers the leg up.
What we may be starting to see in the Northern Virginia marketplace is the typical slow down as we welcome summer and vacations are top of mind. For the first time since I became an agent in 2005, last year (2020) there was no slow down in July and August. Pandemic lock downs made vacations impossible. That makes summer vacations in 2021 even more of a priority for many who missed them last year. I believe the term I heard in some news media was “revenge travel.”
No matter what may ease up the buyer demand, even temporarily, rest assured that if you are a seller in Prince William, Fairfax or Loudoun County, your home will still sell and for a top price if you take time to prepare it and hire a listing agent that will professionally market it. We can shed some buyer demand and still be in a seller’s market.
Appraisals are top of every listing agent’s mind in the frenzied seller’s market that all of Northern Virginia,mm and most of the country, is experiencing in 2021. Homes, even listed for reasonable prices, inevitably get bid up seven to ten percent of list price on average. A lot of times, it is even higher than that.
Most savvy listing agents are advising their sellers about sky high offers with appraisal contingencies. Those offers are only going to be as good as the appraised value. It’s a number meant to make a seller say yes, without thinking of the ramifications of low appraised value.
The way that buyers are getting sky high offers accepted is by waiving appraisal all together, or by offering low appraisal guarantees. Back to the practices of savvy listing agents, those are the ones that understand the importance of appraisal coming in as close to that offer price as possible. A buyer can feel immediate remorse if they are shelling out tens of thousands of dollars just to make up for a short fall in appraised value. So meeting the appraiser is critically important.
Knowing the appraisal process, as taught to me by an actual appraiser when I studied for my broker’s license, I know what they have access to, what paperwork they get and what they are looking for when they are putting together a report. It is astounding how many agents don’t. Some think that if they just raise the list price to the offer price after the contract is ratified, it helps with appraisal. Not in the least. In fact, it may hurt your seller if that deal falls through and the entire MLS service area now knows exactly how much your seller had. They may come in slightly below once you hit the market again. They sure aren’t coming in over.
Appraisers are members of the MLS. They can see what we do to listings. They can see original list prices and the changes we make and when. They get copies of the sales contract itself. They know what the buyers have offered. Finally, they don’t care about your list price. They don’t care about the neighbor’s list price. They care about recent sales in the neighborhood. Sometimes, they care about pending sales. They also care about seeing the multiple offers on the property, as that is a demonstration of what the market thought the value was. Really important, they like seeing a list of major updates by year, going back at least five years, no more seven or eight. Let’s face it, an HVAC isn’t new just because it isn’t original.
Changing list price to reflect the contracted sales price is a poor business practice. It tells the world what the seller accepted before the deal is done. That’s a big no-no in real estate. And since the appraiser has a copy of the contract, it is truly pointless.
What’s the practice of the listing agent you have in mind to sell your home? Might want to make sure you are working with a listing agent that understands the appraisal process and won’t compromise your negotiating position if your first buyer gets sudden remorse. Take a look at my service areas to the right on the chalkboard and let me know if you would like my expertise on your side to get you those multiple offers, keep a buyer in a deal and never compromise your negotiating power.
When you sell a home in Northern Virginia, there are typical closing costs, required fees and taxes that you must pay. When I go on a listing appointment, an estimated net sheet showing the cost of a sale is one of a few major things that I go over with sellers. It’s amazing how many listing agents don’t, or just don’t actually know the closing costs associated with selling a home.
There is no way any of my seller-clients are hitting the market without an idea of their potential takeaway and the cost of selling a home. How anyone in this business can meet with a seller and not have a discussion beyond commission is beyond me. Yes, commission is the largest closing cost and all agents will be prepared to discuss that. Unfortunately, it is not the only one.
When you sell a home in Virginia, one dollar per thousand of your sales price is due as a Grantor’s Tax. Right now, our sales prices are higher than our tax assessments, but if they weren’t, the tax assessments would be the value the Grantor’s Tax would be calculated against. The tax man never loses.
Sellers in Prince William County, Fairfax County and Loudoun County also pay transportation fees as part of their sales. Fifty cents per thousand of sales price paid for congestion relief road projects in the tri-county area and one dollar and fifty cents per thousand of sales price for a WMATA (Wahington Metropolitan Area Transit Authority) improvement fee.
Attorneys fess and settlement fees are going to vary based on the settlement company. Hopefully, you are working with an experienced full time agent that knows the range of these fees.
If the property being sold is in an HOA , Condo, or both, resale documents can be paid at closing. No need to come out of pocket for them. If the association or condos are professionally managed, you better believe there will be an account close out fee. Experienced agents know and can estimate them.
Mortgage interest for the month you are closing is also collected. Given your principal pay off amount and your current interest rate for any loans that will be paid off, your listing agent should be able to calculate your estimated daily interest and calculate interest due at closing. Obviously, this is in addition to paying off those principal mortgage amounts.
Property taxes and HOA/condo dues are pro-rated to settlement date. Sometimes sellers end up paying the buyer at closing for those unpaid. Sometimes sellers gets credits from the buyer for those that are already paid. Again, an experienced agent can walk you through this.
Miscellaneous fees like termite inspections, pest treatments and home warranties are also part of your closing fees if there were part of your contract. So is any seller subsidy (closing cost assistance to buyers.) This is why it is important to look at a net sheet for any offer you are negotiating.
In addition to doing an estimate at our listing appointment, it is my business practice to do a estimated net sheet for sellers based on any and all offers received. A personal point of pride is getting very close to what is actually owed my sellers at closing. I actually pull out the net sheet I worked up, based on the transaction closing, and look at my estimated bottom line vs. the actual bottom line.
When are you sitting down to talk to a potential listing agent, they should know ALL of these things. If they don’t do a net sheet for you, that’s a red flag. In addition to marketing, a listing agent’s job is preparing you for what to expect as a cost of the sale. You will ALWAYS know the cost of a sale when working with me.
Pictured above is the Flat Stanley project my young cousin mailed to me from Pottsville, PA over a decade ago. It has very little to do with being a licensed Virginia real estate agent, but doesn’t that custom Virginia touristy t-shirt look great? That’s me going the extra mile, something I do for my clients every day. Incidentally, Flat Stanley attended one of my broker pre-licensing classes when he visited Virginia. He may know more about Virginia real estate than a well decorated agent, licensed in Maryland and Virginia, that sent me an offer on listing recently. Yes, that’s an exaggeration, but not by much.
Buyers have no idea how important it is to have a competent, well respected agent in the area where they are looking to purchase. When you are buying in the western suburbs of Prince William County, located about forty-five minutes from the closest point in Maryland in light traffic, you may want to hire an agent that does the majority of their business in Virginia. In multiple offer scenarios, full-time local agents that have thriving businesses know what their buyers are likely up against. They also likely have relationships with the local listing agents. Finally, they have knowledge of the Northern Virginia Residential Sales Contract inside and out.
In an intense multiple offer situation recently, I received an offer for my seller from an agent in some poody-doo production club with a well known franchise brokerage. Opening the document, what struck me was that it was over ninety pages. The average offer was about twenty-four pages. I was afraid I was going to find every piece of buyer brokerage paperwork in it. What I found was a document that repeated itself with Maryland disclosures and when I got far enough in, an offer for another home. The competence issue was immediately apparent. This agent had ZERO idea what a Virginia offer had to contain and was so flustered getting it together she included another offer for another property.
Being licensed in two states/jurisdictions means nothing if you aren’t competent in what each one requires and work in them regularly. I imagine, for instance, that agents that live in DC or near the borders of their states like Arlington or Lovettsville in Virginia, would regularly be pulled into neighboring jurisdictions. Being based in Prince William County, VA I rarely have a reason to go into Maryland. The idea of being licensed there to get one deal every four years seems awful. When I am representing someone else’s best interests, I need to KNOW what I am doing. The best business practice for me is to refer that buyer or seller to someone who deals with the local contract and market day in and day out. In fact, I just did it earlier this week with a former neighbor needing help selling a family home in Ocean City, MD.
Being licensed in Virginia is definitely enough for me. If you need help in Maryland or DC, I will find a fantastic agent to help you. The goal in real estate is to do what is best for the client. When it comes to dealing with Prince William, Fairfax and Loudoun Counties, I can go that extra mile. That’s because the basics are a walk in the the park when you practice Northern Virginia real estate daily.
There is no question the photo above this post is of an old home. It’s a funny thing about the age of homes. If they are fifteen years or newer, they are pleasing because they are new. If they are one hundred years or older, they are charming because they are old. The in-between, where a lot of homes in Prince William County fall, have the ability to look a lot newer than they do without major renovations.
Middle aged homes show their age in a lot places. Outdated wallpaper and paint colors are obvious, as is worn carpet. What isn’t obvious are switch plate and outlet overs that have been painted over and over, and the yellowing switches or plugs themselves. For relatively minimal costs, you can remove the “age spots” from middle aged homes with crisp white, plain switch plate and outlet covers and new switches and plugs to match.
Another relatively low cost area that can be the equivalent of a botox injection to remove wrinkles, is changing out door hinges and door knobs to what is current. Right now, that would be brushed nickel or oiled bronze.
Freshening up caulk in bathrooms and kitchens is another easy fix and will often be done by your painter as part of a whole house paint job. If you want bathroom grout brightened up, there are companies that specialize in that for reasonable prices if you don’t want to take on the job yourself with a toothbrush, rag and white vinegar.
An experienced listing agent, like myself, can help you when engaged early in the process, to not over spend in areas that are not necessary and focus your budget and energy where it will make the best overall impression. Some sellers have engaged me as far out as two years from hitting the market. You don’t need to worry about bringing me in too early. Helping you with listing preparation consultation is part of what I do.
Snow Removal is a Must When Your Home is on the Market
When your home is listed during the winter months, snow and ice are definite possibilities in Northern Virginia. Shoveling snow and getting rid of ice are absolutely necessary to ensure the safety of those visiting your home. If someone falls on your property because you did not have the snow or ice removed, it may end up being your liability and a claim under your home owner’s insurance.
Sometimes, there are legitimate reasons that the snow can not be removed quickly. In that case, removing your home from the market temporarily may be the best option to avoid risk.
Selling your home during the winter may add a few more things to consider, but it is a season when there is less competition. And as for winter 2020-2021 , there are so many buyers looking for homes, there is really no need to wait for spring. Just be more prepared with a snow shovel, sand or de-icing material instead of spring flowers and mulch.
Not all listing agents do the same job for their sellers. Some listing agents may not even know some of the informational options at their disposal when inputting a listing. It’s important to know what differentiates a great listing from a listing that is so non-descriptive it may be backfiring on a seller.
From the start, when I take a new Bristow/Gainesville listing, or anywhere else, the process is the same. Get the home owners to see their home through the eyes of a buyer. Clean. Organize. Rearrange furniture to highlight the space and utility of your home. Paint. Make sure small details are covered, like getting dust off of ceiling fan blades, cleaning or replacing switchplate covers and so forth. Only then is the home ready for professional photography.
Pictures are worth a thousand words, which is why they are so important and should never be done by anyone but a professional. However, in addition to the photos, going from room to room and taking measurements and notes about the types of flooring, number of ceiling fans, types of ceiling and any points of architectural interest like cathedral ceilings or bay windows. These are put in the MLS to flesh out the listing and sometimes used to caption photos with more information about something a buyer may not know about that room by looking.
Finally, having a list of improvements and updates to the home, done by year, is an important marketing piece, particularly if you have done a lot to the home. It helps buyers understand the higher asking price and appraisers justify it in their evaluations.
If you hire a listing agent that slaps a sign in your yard, put a price and basic info on the MLS listing with crappy cell phone photos, you have missed the fact that marketing matters, even in seller’s markets. Will your home sell with crappy pictures and a bare bones MLS description? Sure. However, you aren’t going to get to the highest levels of price in offers if you don’t have professional marketing from top to bottom.
When it’s time to sell and you want professional grade marketing behind your listing, give me a call. My primary service areas are Bristow, Gainesville, Haymarket, Manassas and Centreville. Other Northern Virginia locations are served by request and availability.
On November 19th (2020,) after months of planning with the seller, I was pleased to introduce 14455 Gringsby Court to the market. The need for the advance planning was simple. The seller was renting out the property, which had been her first home purchase. While she had wanted to get out of being a landlord years earlier, the market had not lifted the value to a point where it made sense to liquidate the asset until this year.
Whenever a landlord-seller lists their rental property, there is anxiety about how long it will be vacant while waiting for a buyer. Some landlord-sellers, despite the advise to list when the property is vacant that many years of selling residential property has given me, ignore it. They panic over the vacancy rate and having to pay the mortgage without rental income. THANK GOODNESS, the seller of this Newgate townhouse understood that short term pain equals long term gain. Sure, you can list a home while a tenant is still living in it, but they have no incentive to keep the home neat and show ready, or to comply with showing requests. Furthermore, with the seller’s market of 2020, it was unlikely this home would be on the market longer than a week. In reality, what took longer was the preparation that took place AFTER the tenant left, which included installing new carpet, having the whole home painted and some maintenance issues addressed. The home was also staged by me for professional photography. Preparation took two and a half weeks.
The home ended up hitting the market November 19th and had an offer within four days. That first offer was crap, plain and simple. It was an investor, fishing in a seller’s market, for a deal. Though the home was priced for the updates needed, compared to comparable sales, the investor took off the amount needed for those updates from the list price when making the offer. Obviously, the seller waited for another offer.
Offer two was better, but still leaning on what needed to be improved and whining about how much work the property needed. The kitchen and bathrooms were cosmetically outdated, but were functional. While offer two was pinching pennies and begrudgingly upping their offer up, offer three came in on November 24th with a full price offer. The seller went with offer three. Buyer two was willing to do more, but only when a higher offer appeared. Not how you win in multiple offer situations. When a serious buyer appears, you make the deal.
Today, December 23rd (2020,) this Newgate townhouse closed for full list price of $260,000.
If you are looking to buy or sell in Centreville, Manassas, Gainesville or Bristow please get in touch with me. My years of experience will help you squeeze every dime out of your home sale.