by Robert Bruss
QWhen is the best time to sell and what is the the best way to prepare to sell? ASpring is the best time to sell your home for top dollar because that's when the largest number of home buyers are in the marketplace. Although home mortgage interest rates recently rose slightly from their lowest rates in over 20 years, home buyers haven't stopped buying yet. Here are three key steps to take for best results.
Get your home into tiptop, "red ribbon deal" condition.
"Spend money in the right places to make money" should be the home seller's motto. If you want to get the highest possible price for your home, first get it into red ribbon deal condition. That means getting your residence into tiptop condition so all the buyer need do is turn the key in the door to move in.
Pretend you are buying the home. Look with a critical eye at your residence. What does it need to make it a model home so it's inviting? Go to a few Sunday open houses for ideas and to see how nice other neighborhood homes listed for sale look.
Fresh interior and exterior paint is the most profitable improvement you can make. Also, be sure to clean and repair everything. Pay special attention to organizing the closets and the garage. A few hundred dollars spent on new light fixtures can add thousands of dollars to your home's market value. New wall-to-wall carpeting makes even a dingy old home look fresh.
If necessary, fix the landscaping. A new white picket fence always makes a house look attractive. If your kitchen appliances are outdated, install a new, top-of-the-line side-by-side refrigerator, dishwasher, stove and built-in microwave to update the most important room for home buyers--and include the appliances in the sales price.
Choose the best agent to list your home for sale.
Even if you are considering selling your home without a professional real estate agent, after your home is in red ribbon deal condition interview at least three successful agents who sell homes in your neighborhood.
Each agent should give you a written competitive market analysis. This form shows recent sales prices of similar nearby homes, current asking prices of comparable neighborhood homes (your competition) and the agent's estimate of your home's probable sales price.
Be wary of any agent who estimates an excessively high sales price without justification. He or she might be trying to get your listing by overpricing your home, hoping to later get a price reduction.
Before interviewing each agent, write down a list of questions you want to ask. Be sure to get the names, addresses and phones of each agent's last three home sellers. After the agent has left, phone each to ask if the person was in any way unhappy with the agent and if she would list the home for sale with the same agent again.
When you select the best agent for your situation, some agents will insist on a six-month listing. That's fine, but only if the agent writes an unconditional cancellation clause in the listing.
But from your viewpoint, a 90-day listing is better, just in case you select the wrong agent. If your 90-day listing expires with the home unsold, but the agent is doing a good job, you can then renew it. But if the agent is doing a poor job, after 90th day the listing expires and you can switch to a better agent.
Know your listing choices.
More than 75 percent of home sellers hire a real estate agent, according to the National Association of Real Estate Brokers. The NAR reports about 20 percent of homes are sold by do-it-yourselfers and 5 percent are bought by corporate relocation firms for the seller's employer (most of these homes get listed with real estate brokers).
Here are your listing choices to consider when interviewing realty agents.
Open listings. An open listing is a property seller's written invitation to one or more realty agents to find a buyer for the home. The first agent who finds an acceptable buyer earns 100 percent of the sales commission. But the seller can cancel the open listing or find a buyer without an agent's help and not have to pay a sales commission.
Most agents refuse to work on open listings (except on rainy days when there's nothing else to do) because an open listing is really no listing at all. The reason is the agent lacks control over an open listing. Since open listings give the agent no incentive to work hard to sell the home, they are rarely successful.
Exclusive agency listings.
An exclusive agency listing means the seller owes a sales commission if the listing agent or any other licensee finds an acceptable buyer for the home. But no commission is owed if the seller finds a buyer without any agent's help. Because of the agent's lack of control over the property's sale, the majority of realty agents refuse to accept exclusive agency listings.
Exclusive right-to-sell listings.
Most residential listings are exclusive right-to-sell listings because they give the listing agent maximum control. Whether the listing agent, a selling agent who obtains a buyer, or the seller locates an acceptable buyer, the listing agent earns a sales commission (usually split with a selling agent).
Most exclusive right-to-sell listings are submitted to the local multiple listing service, which then distributes the listing details, including a photo, to all member agents. The multiple listing service is the most powerful sales tool realty agents have.
The reason is any member agent can show prospective buyers hundreds of listings, whereas a do-it-yourself home seller only has one home to show. To take full advantage of the multiple listing service be sure your listing agent submits your exclusive right-to-sell listing to the local multiple listing service.
A special type of exclusive listing is the net listing, whereby the seller receives the agreed net price and the listing agent receives any amount the buyer pays above this net price.
However, net listings are illegal in some states. The reasons are: one, the agent will receive an abnormally large commission if a buyer makes a high offer, but two, if a buyer makes a low offer, the agent receives little or no commission and might be tempted to not deliver a low offer to the seller. For these reasons, property sellers are better off using an exclusive listing which includes the sales commission.
To summarize: spring is the best time of year to sell your home because so many buyers are looking for homes. But it pays to get your residence into tiptop condition before listing it for sale with the most successful agent who sells homes in your neighborhood. Home sellers have several choices, but a 90-day, exclusive right-to-sell listing is usually best because it gives the agent maximum incentive to get the home sold quickly. Using the local multiple service listings will give your listing the widest possible exposure to member agents and their prospective home buyers.
Robert Bruss is a Bay Area real estate broker and attorney who writes a nationally syndicated column on real estate. His column appears the second Friday of the month. Send questions to Bruss care of Palo Alto Weekly, P.O. Box 1610, Palo Alto, CA 94302. On all tax-related matters, Bruss recommends that you consult your tax adviser for further details.
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