Three Points That Will Help a "For Sale by Owner" (FSBO) Sell Their Home in Half the Time

In today’s economy, many homeowners try to enter the real estate market without the help of a broker. As an agent, I have noticed that the main reasons for this may be the price homeowners pay to get their homes sold or simply bad experiences with realtors. Many brokerage firms charge a standard 6% commission, which can turn out to be a lump sum to some homeowners. However, it is important to remember the time and money that homeowners have to invest if they want to sell through for sale by owner.

1. Price your home right

This is the most important part of the process. Be very careful not to overprice your home; overpricing will reduce the buyers’ interest in the property and makes competing homes seem like they are of better value. Overpricing when selling a home is the single biggest reason why many “for sale by owner” (FSBO) home sellers don’t sell their homes successfully.

The best way to price your home is to research the selling price of similar homes that have recently sold in your neighborhood. The easiest way to accurately price your home is to contact your local home appraiser. This will prevent mortgage rejections from happening in the future if you find a potential buyer.

Finally, set your price right under a whole number, such as $349,000 rather than $350,000

2. Market your home correctly

Welcome to the era of the Internet: EXPOSURE, EXPOSURE, EXPOSURE. In today’s market, 92% of buyers search online for their next home. That is in comparison to only 28% looking at print advertisement. We specialize in internet strategies to promote the sale of your home. A couple of places where you could start reaching out to potential buyers are on Zillow.com, ForSaleByOwner.com, FSBO.com, and through social media.

It is very important to write a detailed description of your house, but remember that being simple and to the point is everything. Details like beds/baths, square footage, nearby schools, supermarkets, and your home’s best features are all critical when a buyer is trying to find the perfect fit.

Last but not least, get a yard sign. It is proven that about half the time the person buying your home is referred by a fellow neighbor or friend who lives in the area so make sure everyone in your neighborhood knows you’re selling!

3. Photography and staging

First impression is key. Photography and staging go hand in hand. Make sure that the home’s yard/driveway is uncluttered. Remove parked cars, garbage cans, and bikes. The same thing applies for interior shots. Remember to think of furniture as props and the room as a stage. Take a lot of photos as the more you shoot, the better the odds are that you’ll get some great shots.

You are selling your home. Usually, this is one of your most valuable possessions. It deserves quality. Put some effort into it. It will pay off.

Conclusion

Most “for sale by owners” (FSBO) are willing to cooperate with brokers, usually offering a 3% commission and saving the remaining 3%. The main concern is the time and money a “for sale by owner” (FSBO) has to invest. After paying for advertisement, disrupts family time for showing, keeps the house clean at all hours, hosts open houses every weekend, negotiates with unqualified or bargain-hunting buyers, and finally covers lawyer fees, are “for sale by owners” really saving much? For some homeowners, it is not really worth their time and since 95% of properties are listed with an agent, and 95% of buyers buy something that is listed, it only leaves a “for sale by owner” with a 5% reach. If you played that in Vegas, it wouldn’t be very good odds in today’s market. Happy selling!

What Real Estate Investors Should Know About Local Customs

As a commercial real estate investor, there is a good chance that you will invest in a property located in another state in which local customs may be very different from where you live. Knowing some of these customs may help you avoid mistakes that may cost you money. While people say when you are in Rome, do what Romans do. However, there is often disagreement about whether the seller or buyer is in Rome. This article discusses some of the common customs that you should know. It may or may not explain why these customs are what they are which could be a very long story.

Independent Consideration

You often see this independent monetary consideration in contracts in Texas (TX), Georgia (GA), and North Carolina (NC) but not in California (CA) where love and affection are acceptable consideration. Listing brokers in these states often insist that you pay the seller $1000-$5000 as independent consideration for the right to cancel the contract during the typical 30-day due diligence period. As an out-of-state investor, you have to pay for air fare, hotel, food, and car rental to visit the property as part of your due diligence. So if you decide that the location is not as good as it appears from satellite map or whatever reasons, it does not make sense to pay another $1000-5000 to cancel the contract. While the law in these states requires an independent monetary consideration, it does say what that amount must be. So you should pick a big number between $1 to $10 to make the contract legal!

Nonrefundable Earnest Deposit

In CA, there is no such thing as nonrefundable deposit per a CA court ruling. Most if not all real estate contracts in all states have a paragraph addressing damages due to contract breaching by either party. This is often sufficient. However, some listing brokers and sellers outside of CA often insist that all the earnest deposit “going hard”, i.e. becoming non-refundable and released to the seller, after the expiration of due diligence period. While the purpose is to make sure you think twice about breaching, it could be difficult to get any of earnest deposit back if

  • You, for unforeseeable position, e.g. hit by a truck or have a heart attack and go to heaven or wherever, cannot close the transaction.
  • The property is partially damaged, or even burned down by arson.
  • The seller spends it all and your loan is not approved due to soil contamination discovered later on!

You are in a bad position to negotiate with nothing to offer when the money is in possession of the seller. It is therefore advisable to keep the deposit in escrow until closing. However, sometimes you have to make a tough choice, especially when there are multiple offers so you can buy a desirable property.

Property Taxes

In CA, the property is automatically reassessed at the purchased price. The property tax rate is about 1.25% of the purchased price. Due to the Proposition 13, property taxes can only increase by a small percentage annually unless there is change in ownership.

In TX, the property tax rate is about 3% of the assessed or taxable value. However, the taxable value may or may not be the purchased price which is often higher. If the higher purchased price is reported to the county then you will pay property taxes based on the higher purchased price. So it’s a good idea not to report this higher purchased price since it is not required. Lately in TX, the local government tries to raise revenue by aggressively reassess the property values. The new assessed value could be significantly higher than, e.g. 100% the old assessed value. Should this happen to your property, you may want to hire a professional company to protest this property taxes increase even on a property with NNN leases. The success rate appears to be fairly high. As an investor, it’s wise and prudent to keep the NNN expenses as low as possible for your tenants. You definitely want your golden goose to keep laying eggs.

In Florida, there is a monthly state sales tax for commercial properties, so make sure you know who is supposed to pay it. In Illinois, the property taxes rate is fairly steep at about 5%. The property tax rate for NC is about 1.45% of the taxable value which is not changed after the sale.

Attorney States

In CA, an escrow company can handle the closing of a real estate transaction. In GA, FL, or NC, escrow companies can only hold the deposit for you and you must hire an attorney licensed in that state to do the closing. These states are often called “attorney states”. The proponents say that a real estate transaction is very complex so it must have an attorney to assist you. For opponents, it’s all about job security for lawyers. If you invest in a property in an attorney state, you want to hire an attorney who charges a flat fee since the amount of work is very much predictable. You will receive an estimate based on what you need the attorney to do. He or she won’t start working until you authorize him or her in writing to do it. The attorney will review all the documents and give the blessing before you sign them. It is advisable to avoid an attorney who charges you by the hours. Most likely you are dealing with a lawyer looking for a big pay day.

In CA, the buyer automatically receives the Preliminary Title report which shows the owner and various information, e.g. liens and loan amount on the property. If you cancel the transaction, you normally don’t pay escrow any fees. In attorney states, the attorney will do the title search and review. The title company then issues a title commitment to insure against any title defects. Should you cancel the transaction, the attorney and Escrow Company may charge a fee for the work done.

Closing Costs

When you make an offer, you often state that buyer and seller split closing costs based on the custom in the county where the property is located. In CA or TX, the sellers customarily pay for owner’s title insurance premium based on the purchased price which guarantees the buyer of a clear title (technically you should not have to buy owner’s title insurance when you refinance the property because the title was already insured when you bought the property.) The buyer pays for the lender’s policy premium based on the loan amount. This lender’s policy is required by the lender to protect it against losses resulting from claims made by others against the property. Of course, if you pay cash for the property then there is no lender’s policy. However in GA, it’s customary for the buyer to pay for both owner’s and lender’s policy. So make sure you have sufficient fund to close the transaction.

Deeding Instrument

In CA, the sellers often transfer his interest to the buyers by a grant deed. In other states, the seller will transfer his interest to the buyer by a general or special warranty deed.

  • General warranty deed is used to convey the seller’s interest in real property to the buyer. The seller certifies that the title on property being conveyed is free and clear of defects, liens, and encumbrances. The buyer may sue the seller for the damages caused by the defective title.
  • Special warranty deed is also used to convey an interest in real estate. However, the grantor does not warrant against the defects arising from conditions that existed before he/she owned the property. So the special warranty deed is not as good as the general warrant deed. However, most sellers will use this deed for obvious reasons.

What’s Under Your Car’s Carpet?

It’s now been 2 years since stories of flood cars from Hurricane Katrina saturated the world of ‘buyer-beware’. But it’s not just flood cars that cause problems. Other liquids like spilled milk, snow melt, pressure washed carpeting or a leaking windshield can cause serious problems too. Let us show you just how serious a wet floor can be!

Our expertise is in airbag systems, airbag replacement and airbag service, so we are often called upon to do investigations for insurance companies, attorneys and individuals involving accidental or inadvertent airbag deployment. After inspecting many such vehicles and knowing the serious personal injuries they can cause, the reason for these airbag deployments are shocking. What we have found has a common theme…liquids and electronics do not mix!!

This article will show you exactly what happens; not necessarily immediately, but 6 months, 1 year or even up to 4 or 5 years down the road. Once you know the facts, just being aware of these potentially serious situations and hazards can help you deal with the causes and may just save you from serious personal harm.

Although an estimated 500,000-600,000 cars were damaged by the hurricane and subsequent flood waters, many non-flood vehicles are susceptible to the same type of damages. What damage? Water or moisture collecting under the seats and console damaging highly sensitive electronic components.

The airbag control units for most of the vehicles on the road today are located on the floor, or near the center of the vehicle under the seats and consoles. They are positioned there specifically by the manufacturers in order to replicate, as closely as possible, the effects of an accident on the passengers in the vehicle. But by being positioned at such a low point in the vehicle, they are at risk of contamination from water or many other situations. Some simple, normal, everyday things that happen when you drive a car can have severe consequences. Here are a few.

With winter coming and snow flying in many states, melted snow and ice will now be introduced to the floors of vehicles across the country. Turn on the heater and this snow and ice becomes water, saturating the carpet and ultimately draining to the lowest pint in the vehicle…the floor under the seats.

As vehicles in the ‘sun states’ get older and sit in the sun day after day, the soft rubber seals around the windshield begin to harden and crack. Once the brittle seal cracks or breaks, any rain or water from the car wash that hits the roof and windshield is now channeled into the car, hidden by the interior trim panels and travels down to the lowest points in the car…the floor and beneath the seats.

Or how about the used car dealer wanting to get the most for his cars? With the best intentions, he power cleans the interior of a every vehicle he gets from the auction. These are not flood cars, just used cars with soiled carpets. With a pressure wand in hand, or a power steamer, the carpets are purposely washed and then dried as well as possible. But it’s too late… the water that soaked the carpet during the process has already seeped through, drained under the seats and now collects on the metal floor, saturating the padding on the way and going exactly where we don’t want it wet; around the airbag control unit.

And with so many people eating and drinking in their vehicles, cup holders all over the dash and console, the potential for a spilled soft drink or cup of coffee is greater now than ever. And guess where that spilled liquid goes…Right, through the console to the floor, or between the seats where you can’t dry it up.

Whatever the reason, liquids make their way to the carpet and interior of the vehicles exactly where we don’t want it…mixing with the electronic control module.

Here’s what happens when water and electronics mix. These pictures capture the inevitable results of ignoring the problem of a wet floor. Over time, water can turn the part on the left into the part on the right. Which one is in your car?

The owner of the vehicle this part came from suffered serious injuries as the airbag deployed immediately upon starting her car one morning. She wasn’t belted in place, nor was she prepared for the impact of the airbag. She was just starting her car to go to work when she was hit in the face and jaw by an airbag at 200 mph. (General Motors Safety webpage)

Airbags are designed to protect us from injury, but just like so many other conveniences in our lives, they need care and maintenance to insure their reliability. Most car manufacturers recommend servicing the airbag systems every 10 years. Checking the floors for moisture buildup should be included in that procedure and done more often. As a vehicle owner though, it’s ultimately your responsibility to care for and maintain your car. After all, it’s you who is at risk.

Here are some simple things you can do to identify if your car is at risk. Be aware of any of the following indicators. They may indicate a serious problem brewing:

  • Dampness in the floor and carpeting; moisture on the inside of the instrument panel
  • Rust on interior screws and other metal parts
  • Mildew, debris and mold in places where it shouldn’t normally be found
    • under the seats or carpeting,
    • in the trunk, or
    • in the rear floor wells
  • Water stains or discoloration of seat belts and door panels
  • A moldy odor or an intense smell of Lysol or deodorizer being used to cover up an odor problem

Sure Fire Tenant Screening

Aside from negotiating and sales, tenant screening is the most profitable skill a landlord can have. Why do I say that? Because if you don’t screen tenants you won’t have a profit. This month we are going to discuss how to properly screen a tenant. I have purchased several homes from beat up and tired landlords and it almost always was because they did not screen the people they put into their homes. It is important to understand that as a landlord you are providing a significant amount of credit and you need to protect yourself like any other creditor would.

It all starts with a good application. The one I use is not the best but is really simple, I try to get the vital information while keeping it really short and easy for my prospects. I also use my application as a marketing tool for people who may want to turn into buyers or may qualify as buyers. These are good leads for mortgage brokers, real estate agents or for your own rent to own properties. I also want to know what skills they have and what tools they own. If they don’t check the box for owning a vacuum we may have a problem!

The screening really starts on the first phone call which we talked about and continues with them showing up on time to the property. I always try to sneak a peek inside their car either when they first get there or when I walk them out. If their car is a disaster what do you think your unit will turn into? I also ask a lot of questions once I get the application. This really accomplishes two things; it puts you in control and makes your unit a scarcity increasing their desire to have it AND allows them to talk about themselves. Some of the things I am listening for include:

· Do not get along with previous/current landlord

· Did not get along with neighbors

· Landlord does not take care of anything (I will call the landlord and ask about this but I don’t want a needy tenant)

· New jobs

· New relationships

· Bad relationships (domestic issues)

You will be surprised at what prospects will tell you. They will say things like drug addictions, criminal history, problems with kids or others and much, much more. I also hate it when they tell me how good of a tenant they are and how clean they are because that normally means they are messy and a pain in the ass.

I have a pretty good feeling about a tenant before I get back to my office. When I get back I pull credit and criminal back ground. Almost all tenants have bad credit so I am not overly concerned with that. What I will deny an application for is past due rent to other landlords. I also don’t like to see small collection accounts like utility bills and cell phones. The service I use also pulls a check writing and an eviction report. If there are confirmed evictions in the last three years I will not rent to them. I also don’t like to see bad check writing history although I normally will rent to them if they set up an auto pay service or only pay by money order. Finally when it comes to criminal records, drugs or domestic violence is an automatic denial. I have had a drug house once before and do not ever want that again. I don’t care if the drug offence is very minor, if they got caught with it there may be a bigger issue there. Other offenses I can look past with good explanations. I rented to a man that got in trouble for assaulting a police officer and he has actually turned out to be a great tenant. He is still in one of my duplexes today. I decided to rent to him because he told me the story and I believed him. He did make a mistake but is not a bad guy.

The most important part of the screening process is the past landlords. They will tell you how it really is. I want to know if they have a lot of people in and out of the unit, if they pay on time and if they have ever had a problem. My final question is always “would you rent to them again?” If you don’t believe that it is really their landlord (i.e. they are writing a friend’s name down to act as the landlord) you may want to ask them to confirm the rent amount but mention a different number than what is on the application. If it is a phony landlord they will agree with you but a real landlord will correct your mistake. I always check county records to see who actually owns the house they are moving from.

Finally, it is not a bad idea to call the previous two landlords, which is why I require it on my application. Occasionally a landlord will want a tenant out so bad they will tell you anything just so you will rent to them. This has not been my experience but I have heard of this type of thing going on. If you call the last two landlords you should not encounter this problem. Stay on top of tenant screening and stay on top of your profits.