THE BOOK THAT REAL ESTATE AGENTS
DON’T WANT YOU TO READ!
By
“The For Sale by Owner Guy”
SMASHWORDS EDITION
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PUBLISHED BY:
The For Sale By Owner Guy on Smashwords
The Book That Real Estate Agents DON’T Want You To Read!
Copyright © 2010 by The For Sale by Owner Guy
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You can call me “The For Sale by Owner Guy.” I am a father, husband; former certified home inspector, former real estate salesperson, former real estate broker, a real estate CEO, and a real estate industry leader. My knowledge and experience in the real estate industry over the last ten years has taught me a lot about the greatest industry in the world – the real estate industry. I have gone through many ups and downs in the real estate industry. This book will allow me to share my wealth of expertise in the real estate industry with you, a For Sale by Owner person. I can help you become more knowledgeable and confident in your real estate transactions, and this book will teach you the facts, tips, and mistakes that real estate salespeople will not tell you when SELLING your property.
And just why am I qualified to pass this information on to you? More than twenty-six corporations and entities got together and tried to put me out of the real estate business forever. Why? They knew I had the best product and the most knowledge, and almost every real estate company, bank, and attorney in my area feared my potential success. If you are a “For Sale by Owner” yourself, my aim is to make you more successful in your real estate transactions so you can send your real estate salesperson to the unemployment line Remember, “if you have the knowledge, you have the power!”
To learn more about the information in this book, feel free to contact me:
Email: forsalebyownerguy@hotmail.com
Website: www.forsalebyownerguy.com
Mailing Address: PO Box 339, Broadalbin, NY 12025
****
To Heather,
If it weren’t for your backbone and support, my mind and spirit would have collapsed. Richard has a great wife with you by his side, and I am very thankful to have you as a true and honest friend.
To Ame,
You are a great mother, a great wife, and my true love. I cannot say “I love you” enough for being there to pick me up when I was down. You are the most important person in my life.. forever.
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Introduction
What makes me knowledgeable or so delusional (my daughter’s favorite word) to write this book and expose important facts and omissions of the real estate industry? Allow me to explain.
I first got into the home inspection field as a certified home inspector. During my time as a home inspector, I attended many inspections with real estate salespeople (members and non-members of real estate associations) on the premises. What I observed was that their jobs were way easier than mine. I had to crawl in basements and attics and do many other visual inspections of mechanical and other parts of a property while the real estate salespeople didn’t seem to know much (if anything) about most of the property or home components and asked me more questions than I asked them. I knew the real estate salesperson was getting paid approximately a whopping 7 percent commission of the probably inflated purchase price while I was only making $250 or so to do a lot of dirty work. I wanted in! One of my family members was a semi-retired real estate broker, and he offered to supervise me if and when I got my license as a real estate salesperson.
So, I was in. Not long after that, I finished the state requirements to get my real estate license, and off I went. There was a slight problem though. Being that my family friend had been out of the sales aspect of real estate for so long, he was lacking the up-to-date information and the paperwork needed to remain successful in the modern real estate market.
Conquer Problem Number 1. I knew I had to become a member of a real estate association and utilize their system and accumulated knowledge to get me started. I became a member of a real estate association in my area. The association had a highly regarded “Code of Ethics” that bound salespeople to certain standards of conduct.
In my ten years of experience in the real estate industry, I came across and worked against many real estate “buyer broker and selling” agents. I could not find one salesperson that actually had ethics, even among those who were members of associations with a written Code of Ethics. In addition to their lackadaisical attention to ethical behavior, most members of this association that I had experience with had little to no knowledge in the real estate business. These members were notoriously dumbfounded on how to fill out a listing or purchase contract. Most of these same members would step on or over another competing association member any way they could to get a listing or promote their own company. Members of this same association routinely bashed the living daylights out of me and my reputation with lies and erroneous statements. Why? Because they had a lack of knowledge and/or training – things their associations and companies should have provided to them. That is why any Code of Ethics advertisement should be taken with a grain of salt. While you’re interviewing any real estate salespeople who are members of these associations, ask them to recite their own Code of Ethics. If I were a betting man, I would bet maybe one out of a hundred would be able to remember the Code of Ethics and Bylaws their company advertises. These look pretty on paper, but they never quite make it to reality, and this is unfortunate.
Within two years, I realized that being a member of this association was not all it was cracked up to be. I decided to not associate myself with this or any organization. Instead, I opted to become a licensed real estate broker (a real estate licensee who qualifies to own his own real estate company) and start my own real estate company. Even though the association had not done much for me, I did gain a couple of benefits during my two-year stay. The first major benefit was that I had the ability to network and learn from and about many real estate attorneys, who were quick to point out to me all of the loopholes in the current real estate contracts related to listing and selling a property. The second benefit was that I saw the competition and realized that with the lack of many knowledgeable real estate salespeople in this same organization, I could step in and be the major player in the area once I gained more knowledge than them. Third and most importantly, I was not mandated to follow many of the association guidelines, a fact I believe affected my real estate clients in a negative way. Furthermore, I did not have to wait around for the right time to promote myself and my revolutionary concepts to the public. I was out on my own and determined to become the major player in the area, and considering the competition, it didn’t look like it would be much of a problem.
As usual, after I corrected all the mistakes all the other real estate companies were doing within my own company, I found myself still answering the same questions from potential clients:
How much is your commission?
How and where are you going to advertise the property?
What is my property worth?
These questions are what inspired me to jump out of the real estate line that had been going nowhere over the past 100 years and start my new direction.
Answer 1: I created a 0 percent seller commission strategy for sellers. What is better than 0 percent? Zero beats every competitor!
Answer 2 – With help from an out-of-the-area company, I created a website that does not disclose the Days On Market, otherwise known as a DOM. The same website allowed more than one picture of a property, as well as actual video footage (not cut and paste still photos pasted together) promotions of seller’s properties. The website does not install “Reduced” on any client’s properties.
Answer 3 – I realized very quickly that almost every potential real estate client wanted everything for nothing. I was bound and determined to change this give my expertise to potential clients for free way of thinking. We all know time is money, so I charged a consultation fee that was fully refundable once someone listed with my company. This consultation fee allowed me to spend more time with my family, business, and clients who were serious about selling their property.
Since, I had the answers and/or solutions to the real estate industry, my business started booming. If a person or business does not value their own expertise, knowledge, and the products or services they offer, how can a member of the public value this same person or business? The only ones who did not like me and the way I was evolving the real estate industry toward the better were my competitors, New York State licensing at the Department of State, and any potential clients that were wasting not only my time, but also the time of most real estate salespeople out there. Society becomes very jealous of people climbing the ladder of success. Money, name recognition, and a great product proved to be so successful for me that I started and almost completed all the documents required to franchise my company and strategy across the country. I purposely resigned my real estate broker license and promoted another individual in my real estate office to become the new real estate broker.
The real estate industry is changing at a snail’s pace. I was ready to set the real estate industry on fire until twenty-six entities and the judicial system blocked my efforts to succeed on a national level by slandering and defaming me and my corporation. This may have been a curse or a blessing in disguise; we will find out in the future. Until then, I am going to spread my real estate knowledge, experiences, and opinions to the many people who are looking to become more knowledgeable and want to pocket more of a profit.
If you are only THINKING about selling your property, this is the book that will save you a lot of money and/or help you make additional money. This book will also make you more knowledgeable in the practice of real estate.
When you are about to sell the most important asset you have, why not invest in a book that guides you in the proper direction? Real estate salespeople are making mistakes and omissions every day in the listing, buying, and selling of property. Now is the time to value, market, and sell your property the right way to gain the most profit.
The facts, experiences, and knowledge in this book will make you a near expert when dealing in the real estate industry. Kick your real estate salesperson to the curb and say goodbye to paying real estate commissions. You don’t need them. What you need is knowledge, and you will find that here, in these pages.
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Table of Contents
1. Are you in the real estate industry?
Disclaimer
2. Are you Ready, Willing, and Able to sell? Be RWA!
3. What is the value of your property?
A. Appraise Your Property
B. Have your property in Selling shape
C. Get the tax, electric, & heating/cooling bills in order
4. Should you utilize a real estate salesperson?
(Not an Agent)?
A. Do you need a real estate salesperson?
B. Real estate salespeople mistakes
5. Those darn TV shows
6. Do you need a real estate attorney?
7. How and Where to market your property
A. Signs, signs, everywhere there are signs
B. Pictures and Videos
C. Promoting your property on real estate
websites and in newspapers
D. Where and what does NOT work in
promoting your property.
8. Who’s calling you?
A. Statements/Questions from purchasers
about your property
B. Determine what type of deed you are selling
9. Showing your property to a RWA purchaser
A. Get the pre-approval
B. This is my property
10. I would like to purchase your property
A. Offers are coming in
B. Don’t be so emotional
C. No... You can’t have my dog but I will throw
in my mother-in-law
11. Real estate laws do not pertain to you. Wrong!
12. Legal Documents
- Disclosures
- Contracts
13. My property is in perfect shape... Trust me
- Inspections
- Testing
- Inspection report
- I am not fixing anything
- “As-is”
14. What is holding up my closing?
15. I will meet you at my attorney’s or closing agent’s
office for the closing
-Broom clean your property for the new owner(s)
-Bring your Id
-Sign some papers, just don’t read them
16. Let’s sell another property
17. Notes to remember-
18. Attorney/Purchaser information
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Chapter 1
Are You in the Real Estate Industry?
You may be in the real estate industry if you own or rent a piece of property. In fact, if you do own or rent a piece of property, you ARE in the real estate industry – yes, you ARE a small player in the real estate industry simply by owning property. The real estate industry is composed of very small to very large players that make it go ‘round and ‘round. In my opinion, the real estate industry is the best industry in the world. You do not need to be a kazillionaire to start, and you do not need to be an attorney to understand real estate potential. If you are motivated, ambitious, and want to succeed financially in life, the real estate industry may be the perfect career (or new career) for you.
My ad reads:
Want a successful career in a professional field with unlimited income and your own hours? No college or master’s degree is required (currently)! Must only be motivated to succeed.
Sounds like a great ad, doesn’t it? It’s all true, for if you have the above qualities, being involved in the real estate industry is a great career for anyone, for players large and small. There are a variety of TV shows involving real estate success. Just think of how many home renovation shows or house-flipping shows you scroll through every time you pick up your remote. In my opinion, the real estate industry is the BEST industry to become involved in. With good reason, there is a great deal of people with an interest or fascination with a little piece of real estate.
This book will cover many of the important and not-so-important tips and tactics it takes to sell a property, as well as warn you of the mistakes made by many real estate professionals, TV shows, and For Sale By Owners make in selling a property. I will include some samples along with analogies so the everyday Bob and/or Mary can understand and relate to the technical (or really not-so-technical) world of real estate.
Disclaimer
My stories and/or real estate knowledge are based upon my experiences in the real estate industry. My opinions reflect the positive and negative that has happened in my life in the real estate industry. This book is not to be taken as the REAL ESTATE LEGAL LAW GUIDE for everyone all over the world. If at any time you feel a concern or have a question, feel free to contact a real estate attorney (not a bankruptcy, divorce, or malpractice attorney) pertaining to the real estate law that affects your real estate situation in your area.
This book should make you more knowledgeable and comfortable in your real estate experience when selling a property. Don’t be afraid to kick your real estate salesperson to the curb!
Summary
If you have a roof over your head, you are somewhat involved in real estate
If you are unsure of anything you read in this book, consult a real estate attorney before you act.
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Chapter 2
Are you Ready, Willing, and Able to Sell? Be RWA!
I always asked potential clients many times when they called my office to list their property, “Are you sure you and/or your family members are Ready, Willing and Able [RWA, in real estate terms] to really sell your property and close this important chapter?” Selling a property is not like selling a car or having a garage sale. Most homes have emotional, family, and other important meanings that affect the seller when installing the “For Sale” sign on the front lawn. In addition to asking them if they are RWA, I also immediately tried to determine what of the many potential revolving scenarios might have caused them to make that ever important decision to sell their property. Was the decision based on a financial, personal, or career situation, or was it simply a “The market is good… let’s try to hit the lotto” decision (which is never a good idea)? Before I chose to work with a client, I realized that all family members affected by the sale of the property should be consulted with to be sure they were on the same page. I saw it happen a thousand times: the “For Sale” sign is installed on the property, and a couple days later, I got the phone call stating to me that the seller had changed his or her mind. There was always the apology for wasting my time, but while I was sympathetic, I couldn’t help being angry. Why? Because, time is money, and even more than that, my time was valuable to the clients who really needed to sell their property and to my family who needed me to be there as a father and a husband. My time – and yours as well – is more important than dealing with a seller who is only “thinking” about selling a home or dealing with someone who changes their mind within a couple days after I committed my resources to them.
In the attorney world and many other professions, there exists what is known as the “Retainer Agreement.” These Agreements state the professional’s hourly rate and/or the agreement of terms for the client to authorize monetary compensation to the professional for time spent with the client. A simple sample of a Retainer Agreement might read something like:
Upon my authorization, I hereby agree to compensate Mr. Attorney $200 per hour for the legal services that Mr. Attorney will dedicate to my situation. If I terminate and/or change my mind in the hiring of Mr. Attorney for this service, I will still be liable to compensate Mr. Attorney for time spent.
Signed,
John Doe, 3-10-2006
In my real estate office, I got so fed up with my time being wasted that I composed my own agreement and became one of the first real estate offices in the country to institute a Termination Agreement, which was basically, identical to an attorney Retainer Agreement. If attorneys and/or other professionals utilize this type of Agreement, why couldn’t I? Attorneys hated it, the wishy-washy clients who were just thinking about selling hated it, and the New York State Licensing at the Department of State even hated it. Nevertheless, I still used it. The Termination Agreement whittled down my thinkers to my serious clients, who really needed my services, and in the end, the initiation of the Termination Agreement made me more money than I lost from those who were disgruntled – not to mention it saved me a lot of misery and wasted time and effort.
Another decision I made was to charge a consultation fee. Refundable to those who followed through with listing with my company. I required this fee from potential sellers who didn’t know the value of their property and were just thinking about selling. I recognized this was where the greatest industry in the world – real estate – was still stuck in the 1900s. What professional commits time, gas, and knowledge (among other miscellaneous resources) for up to two to three hours at a time trying to get a listing or provide a valuable service for FREE? Do doctors come to your house for FREE when you are sick? Do attorneys come over to your house for FREE when you are in a legal conundrum? Does a dentist come to your home and diagnose your problem for FREE? To this day, almost every real estate salesperson (not agent) goes to the potential client and provides valuable
Real Estate Salesperson (not an agent) - A person licensed by the State to assist a licensed broker in the field of real estate.
knowledge, experience, and time for FREE.
And how will this patient, flexible, hardworking real estate salesperson be repaid for their time and trouble? Possibly with a “For Sale By Owner” sign, another company’s real estate sign, or maybe the property will even be sold to a friend or a family member without any compensation to the real estate salesperson at all.
For Sale By Owner - A private person who wishes to sell an item by and for themselves.
I was the first to charge a consultation fee (minimum of $250), and I think I may have broken the barriers for real estate salespeople down the road. The smart real estate salesperson will value them selves, while the real estate salesperson who don’t value themselves will be used as a marketing tool by other salespeople. If a real estate agency does not value him or her self, do you really think the same real estate agency will value your property? I disclose my experience above because the FREE ride of values, knowledge, and marketing reports shall hopefully come to an end in the real estate industry.
To the real estate salespeople who still provide all the above services for FREE to a client on the basis of merely hoping to get the listing, please know that you are killing your own real estate industry salesperson by salesperson.
To the potential client, I say, be a Ready, Willing and Able seller, and there will be no necessity for any of the above Agreements and fees. Everyone in the real estate industry has better things to do than waste time. The economy is tight right now, and we all know that every dollar saved is better for the economy and the financial future of the real estate industry. Let’s concentrate on watching the real estate values grow.
Summary
If you are ready to sell your property, commit all of your efforts and emotions.
Don’t look back or waste anyone’s time.
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Chapter 3
What is the Value of Your Property?
Value in real estate is defined as “what a buyer will pay.” So, what will a buyer pay for your property? Will they pay what you paid for the property plus the investments you’ve made to improve it? Will they give you $1,000,000, $100,000, or $1? The truth is, it will probably be none of the above. Unfortunately, there are no mathematical formulas that allow a seller or real estate salesperson to determine the true value of their property. This is due to the many factors that change and can affect the real estate value periodically and economically.
Sample Conversation
A phone call comes in, and the seller relays they have a three-bedroom home on fourteen acres with a two-car garage. They ask, “How much do you think I can get for my property IF I decide to sell it?”
As a real estate salesperson, I answer, “Sir, I do not have the ability to see your home through this phone line. If you don’t mind, can I ask you a couple questions? First of all, how much do you want to get for it?”
He answers, “I don’t know. That’s why I’m calling you.”
“Is the property in excellent condition?”
“Of course! I have spent $30,000 on improvements. It’s beautiful.”
I continue, “Are any other real estate salespeople (not agents) coming over to provide you a value?”
He replies honestly. “Yes. I have four real estate salespeople coming over to do a Free Market Analysis.”
Free Market Analysis - Some form of report that validates a financial dollar value based on previous sales of similar properties in the same area.
“How much is your property tax assessed for?” I ask him.
He answers, “It’s only assessed for $50,000, but I paid $150,000 six months ago, and I’ve added all the improvements on top of it.”
Tax Assessed- A valuation placed on a property by a public officer or board as a basis for taxation. Your assessment is located on your tax bill.
“Again, sir, I would like to be short and brief and save everyone a lot of time. How much do you really want to walk away with when I sell your property?”
“I want to net $275,000.”
Wouldn’t it be great if we could all buy property for a lower price with an outrageous assessment and then turn it around in a short time, making a boatload of profit on real estate sale? This type of sale can happen, but only about as often as you can hit the local lotto. Generally speaking, the stars and planets must be in perfect alignment before any real estate transaction would go this smoothly and profitably for the seller.
There are definitely some red flags that will inevitably be raised. First of all, a red flag exists if we come across a seller who claims they don’t actually know how much they paid for the property and improvements. Most sellers and buyers are very knowledgeable about the real estate market. Sellers and buyers DO keep track of properties in their area that have just recently sold, and sellers themselves often toss out the biggest nets to catch the local sales rumors. In my experience working in a real estate office, it seemed like I was the only one that did not know what every area property sold for, along with what every seller’s situation was when the property sold. Nine out of ten times, the private sellers were wrong in their assumptions. It is best to let the local real estate salespeople and appraisers do their jobs without creating rumors and competition that push up the local values. Buyers are very smart these days, and they will determine the value of your property. Overprice your property, and it will sit on the market forever, just like the others you drive by and see every day!
Are you serious about selling your property, or are you a “Cloud Nine Seller”? A Cloud Nine Seller is the kind of property owner who says, “I don’t need to sell my home, but if I do, this is what I feel its worth, and I won’t take a penny less”? Some sellers list their property from $30,000 to $50,000 over market value or more, forgetting that buyers do know which properties are overpriced – especially when they have many homes to choose from. If you’re Ready, Willing, and Able to sell your property, do your homework, and market your property at a price comparable to similar property sales in your area. Look to see what properties are being marketed and at what price. Take your time and go to a few open houses (even thought I don’t condone the practice of open houses, which I will discuss later) of properties that fall within your listing price. Again, buyers are very smart, and they will find information on what you paid for your home, how much the assessment value is, and any improvements you may have done – all information accessible to any clever member of the public willing to spend the time to look for it.
Another red flag is that the seller wanted more of a return based on the improvements that have been done to the property. Just because you have spent $30,000 on improvements does not mean you are entitled to the $30,000 on top of the purchase price you initially paid. Did you hire a contractor that charged you too much for average work? Were the improvements you made something the general public would find useful and enjoyable, or was your $30,000 spent on installing a Jacuzzi off the bedroom? The simple truth is, most improvements do not net you the same amount back when selling your property.
Another red flag was the seller’s question, “What is the value of my property?” Another interpretation of this question might be, “Can I get a real estate salesperson to solidify my pipe dream price? The lotto ticket just has not been working lately.”
Based on these red flags, we could safely determine this seller is NOT a RWA seller. This person is just shopping for some FREE advice and knowledge from a professional, and there is no way I would waste my time visiting the property. However, there are ways to find out if the seller is actually serious about making a sale.
“Sir,” I say, “I would like to come over and provide you with a Broker’s Price Opinion (BPO) for the fee of $250, which I will refund to you after you list with me. You can use this unbiased, professional report in any way you see fit to help sell your property. What would be a good time for me to come over to get you a BPO?”
Broker’s Price Opinion (BPO) – An unbiased report composed by the real estate brokerage. The report is based on all factors of the seller’s property combined with the selling factors within the similar area of similar properties. The report should be based on the presumption that your real estate firm is not getting the listing, and no bias should be placed in the report for the actual value that you are being hired to compose for your client.
He answers, “None of the other real estate salespeople I talked to are charging me, and I’m not about to pay you,” and promptly hangs up.
So, did I lose this client? No. Instead, I saved time, gas, knowledge, and know-how that I can utilize elsewhere with a more serious client who plans on following through.
Bear in mind that when a purchaser comes to view the property, the tax assessment issue will be raised. A property with a low assessment and a high “offered at” price (which is different from an asking price) will cause concern to the purchaser.
Purchaser - A person who is serious about compensating you for your item and will actually set the value.
Ten out of ten times, the potential seller did provide me with a net amount they wanted to achieve, though this sometimes required that I asked the same question in two or three different ways. Remember that almost every serious potential seller DOES know the figure they are seeking and is just looking for a real estate salesperson to justify their dream profit. If you’re that dreamer, this book isn’t for you. You need to contact a real estate salesperson who is willing to waste your time – someone who will eagerly try to sell a property neither you nor they are really serious about selling.
You might wonder why the above seller wouldn’t call a real estate salesperson and ask the same question. It’s FREE, it doesn’t cost the seller a dime, and the seller gets valuable knowledge and experience from so-called professionals. Heck, if I did not know what goes on in the real estate industry, I would do the same thing. But does it really work? The simple answer is NO!
Think of it this way: if you had a serious physical problem, would you seek FREE advice on the Internet and trust your health to it, or would you see a doctor for an unbiased, professional (albeit it expensive) opinion and advice? If you were seeking legal counsel for an issue that could very well affect yours or your family’s wellbeing, would you go to the Internet for FREE advice or visit a professional attorney who will probably bill you for their time? For most sellers, their property is the most important investment they will ever make in their lifetime, so why NOT seek the best person(s), knowledge, and experience? There are plenty of “yes-men” out there who will do all they can to appease you and get their signs on your front lawn, but if you want to get true value from your property sale, you should seek advice that is truly of some value.
Did I answer the most important question you have for me as a real estate salesperson? Not a chance but let me put it in simple terms. Value is what a purchaser will pay for an item. Whether it is a property, a car, or a video game, if it is priced too high as compared to other items like it in the same area, it will not sell because its value will be perceived as less than what you are asking. Your only option? Adjust your price. By the same token, if the price is too low, you will have too many people coming over to buy it, and there may be some perception that there is something wrong with what you are trying to sell. Your only option in this case? Adjust your price – yes, you CAN raise your price, legally and ethically. Your “value” is somewhere in between these two. When a purchase is made, the purchaser has set your value. Never does the seller, the real estate salesperson, or the appraiser set the value. Value is always set by the purchaser, even if you did spend $30,000 adding that Jacuzzi to your bedroom.
Summary
The value of your property is what a potential purchaser will pay, not the amount you hope to get on the off chance that all the planets are correctly aligned.
DO price your property with a fair value.
DON’T overvalue and overprice your property. If you do, it will be on the market longer and can cause a plethora of negative consequences for you in many ways.
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3A
Appraise Your Property
One of the best ways to get near the true value of your property is to hire (and this means pay or compensate) an unbiased appraisal BEFORE you list your property.
Appraisal - An estimate of a property’s valuation by an appraiser who is usually presumed to be an expert in this work and is licensed within your area to transact appraisal reports recognized by the Appraisal Institute.
While the appraiser is at your property conducting their appraisal, DO NOT TELL THEM YOUR PRICE. Remember that you are compensating them to do the best job they can do with your money. Trying to influence them with your pipe dream price is not good for you or your money. If the appraiser is also a licensed real estate salesperson, don’t hire them. There is a very slight chance they can be unbiased, but it is not a risk worth taking. Would you hire a doctor who had a vested interest in a pharmaceutical company or a doctor whose only duty was to care for your wellbeing? Only hire a licensed appraiser who is a professional in the field of appraisals – not a person who will give you the number you want just because they want your listing.
Another good way to get a value of your property is to go to your local county filing office. Real estate transactions are filed here with almost all the pertinent selling information. This information is public and FREE. Inquire, make copies, and ask questions of the people who work there. Your local, public, county office is the real estate Bible of what properties have sold for within the timeframe you need (usually the past three to six months), the addresses of the property locations in your area, and the tax assessment on all properties (if these are not on your local tax bill or you need assistance understanding your tax bill). Check to see if the county office in your area is accessible on the Internet, for you might be able to save time and gas by accessing and printing off all the information you need.
You might say, “Wait a second… the county has already assessed my property, and I do have a value.” This is something I frequently heard from potential sellers, especially when the assessment was higher than the fair market value. Every local municipality has assessed every single piece of property in order for taxing that same property to raise income for local services. Most assessments from localities are usually close or right on the mark of a fair market valuation, but only for a short period of time. After a year or so, the fair market value of that same property is not the same as the property assessment a year earlier. Most localities decrease the equalization rate to fair market value each year. The first year your property is assessed at 100 percent value is the most likely time period that your property was assessed with the correct fair market value. After the initial year of 100 percent assessment, your percentage of your valuation is decreased almost ever year until your local municipality imposes another revalue of your property’s assessment (usually every three to five years).
As an example, I once came across a lakefront property with a newer four-bedroom home, an attached two-car garage, and approximately 100 feet of direct lakefront. This property was assessed at or about $250,000 with a fair market value of $700,000. This was the perfect scenario for the seller, whereas the seller only paid taxes on the $250,000 but tried to sell the same property for much more. The opposite of this same scenario also happens in that the property is sometimes assessed at the higher amount, but the fair market valuation is lower than the current fair market value of the property.
To reiterate the initial point, assessments for a fair market valuation are usually correct only for a short period, but usually incorrect for a longer period of time, especially if your municipality does not hire revaluation companies to bring the assessments back up to 100 percent of fair market valuations.
Lastly, a tool I liked and utilized often for clients (who were Ready Willing and Able sellers) was a website that allowed the access of a municipality’s assessment records via computer. If you search the Internet, you will find many of these websites out there with public real property services for a fee. These websites offer Internet access to the public real estate records needed when making a professional decision to get a property near the value it needs to be for selling purposes. Bedrooms, lot size, tax assessment, past purchase prices, school district, and other pertinent information is there at your fingertips, and this information is well worth the site membership fees.
By far, the worst place and/or person to get a valuation from is a real estate salesperson (not agent). Under real estate law within every state, your salesperson has a fiduciary duty to represent your interests first, foremost, and forever – even after your sale is completed. While this sounds all fine and good, 99.9 percent of the time, this does not and will not happen. Why? A real estate salesperson’s real goal (in most of their minds, anyway) is to get as many listings as they can, practicing the mindset of “List to Exist” instead of the idea of “sell, sell, sell,” as they should be.
Fiduciary Duty- The specific legal duty an agent owes to the principal.
Listing properties is where most of their money can be made, and it’s the name of the game. If a real estate salesperson (not an agent) can list and sell their own listings, they have made the most money on your property they were allowed to make under their listing agreement. In my real estate experience, the seller(s) almost always wanted a real estate salesperson (not agent) to solidify their pipe dream price. The salesperson who was quick to say yes to the sellers’ needs got the listings. This is one of the worst ways to list and/or try to sell your property, and it is a tactic I highly do NOT recommend.
Also, don’t fall for the Fair Market Value Report that a real estate salesperson may provide you when a value is requested on your property. Such a report from a real estate salesperson has little to no value for any seller who is looking for guidance.
Fair Market Value Report – An unregulated report provided by the real estate salesperson to the potential seller that seemingly shows what other similar properties have sold for in a similar neighborhood. This report has no national criteria for all other real estate professionals to follow, and almost no municipality or other legal entity accepts these reports for legal or technical reasons.
There are no criteria in real estate for any real estate salesperson on creating Fair Market Value Reports. What this means is, you can contact as many real estate companies as you wish, and each Fair Market Value Report will look different than the others. These reports have different information, comparables, guidance, and variables, and they may actually confuse sellers. These reports are usually generated for no cost from the real estate salesperson. There are no local, state, or federal association standards to create one of these reports (unlike a certified appraisal), so expect little to nothing when you get one. How much valuation can anyone expect from a report that the same real estate salesperson themselves installs no value in for the actual cost to provide the report to the seller? If you want a report for free, it will be well worth only what you paid for it. If you have a Fair Market Value Report from a real estate salesperson, make sure the garbage can is nearby, because that is the best place to file it – in the trash.
Another negative way of installing a value on your property is by listening to your uncle, aunt, grandmother, mother-in-law, or real estate friend located in another area across the country. Every person has an opinion in real estate because every person has been or knows someone who has been touched by the real estate bug, sold a property, or is a fan of the latest house-flipping real estate TV show. As much as you love these people, don’t take your real estate advice from them. It is by far the most emotional and wrong way to install a near value on your property.
Unless you live in place where there are brand new condominiums selling at the exact same market time, do not expect to get the same exact final purchase price as a similar property may have sold for. There are so many factors that affect the sale of a property; location, upkeep, area, crime, school district, taxes, and number of bedrooms, just to name a few. Among these factors, timing is the most crucial. If the economy or situation is not right, do not expect top dollar for your property. If the timing is right in your local and the national economy, try to combine all the selling factors into your property to get the best and most dollars in return.
Summary
If an investment broker asked you to spend $250 to $400 to possibly earn thousands, DO hire an unbiased, licensed appraiser BEFORE you list your property and call the real estate salesperson.
If you want to get value without spending a lot of dollars, go to your local county office building and spend the time. See for yourself what the neighbors’ properties really sold for instead of relying on what they told you.
If you want a fair valuation of your property, DON’T ask a real estate salesperson to come over. The majority will only confirm a high price for you and not provide you with the expertise and unbiased advice you are seeking.
Remember that Fair Market Value Reports from a real estate salesperson are free, and they’re worth every penny, which isn’t saying much.
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3B
Have Your Property in Selling Shape
The above statement never seems to click with most sellers. Sellers want the most money and the best terms. It would seem, then, that common sense dictates that the property should be in the best shape possible to get the best value. This requires a little time and labor to take care of the obvious items on a property that any purchaser will notice, absorb into their mind, and spit back to me and/or my seller when negotiations of a purchase offer begin on a property. Don’t provide purchasers with any ammo to lower your offered-at price. The purchaser is responsible for themselves.
Offered-at Price- A command statement that contains a value the seller would like to be compensated for.
I provided my sellers with tips on making their property a little nicer before we took pictures and videos or placed signs on the property. Once the sign is placed on your property, a lot more attention is also placed on your property by everyone in your neighborhood. If the property needs major attention and is obviously a money pit, it is best to disclose the obvious and price the property accordingly, noting the factors that might require intensive labor and monetary attention. Most sellers do not do the minor upkeep around the property for the same reason I do not. I get lazy every now and then, or I have better things to do with my life other than working on the honey-do list. Do I mow the lawn or take a nap? Hmm… let’s see. The lawn will still be there tomorrow, and a nap is good for you. Raking leaves or watching football? Well, if I can do a quick leaf blowing over into my neighbor Joe’s yard instead of spending the time to rake, I can probably get done by the end of half time. The fact is, maintaining our real estate is sometimes a bit cumbersome and unappealing, but anyone thinking of selling a property must do what they can to make it look its very best – naps and football aside.
When you are selling a property, your property needs to appeal to the majority of purchasers – not the minority. The most important single decision of a purchaser is, “Does this property have curb appeal?" Curb appeal, curb appeal, and more curb appeal is good, so forget the Sunday afternoon nap and head to the nearby construction supply store, or your nearest landscaping or home improvement place and get that property into shape.
To give your property the best curb appeal in order to attract purchasers, there are many things you can do and many things you should avoid doing.
Do…
Patch all holes and/or dents or gashes in the walls or ceilings.
Use white paint to paint any walls that require painting. White is a neutral color that can also be used as primer, leaving the purchaser to decide what color they want to go with once they own the property. White also gives the appearance of cleanliness. If you do need to pick a color while painting a room, utilizing soft colors is also recommended.
Shampoo and clean the carpets and/or hardwood floors.
Organize the inside of your property. Get rid of your junk and make your rooms, closets, and property bigger by doing so.
Remove garbage, cat litter, and any other odorous items out of the house. Replace them with a scented candle or another item that smells nice.
Mow the lawn, pick up yard debris such as leaves and sticks, trim the shrubs, and weed any flower gardens.
Paint any small outside area of the property or garage that states, “I need to be painted.”
Organize all your outside items. There really is no reason for the snow blower to still be sitting on the patio in the middle of August.
Freshen up any problem areas in your lawn – like that patch of grass that has been missing for five years since Fido decided to take up track and field and run laps around his dog house.
There is a high probability that one or more of your potential purchasers may be male, and most males salivate at the thought of a clean, organized garage, workshop, or storage shed. Tidy up by storing things in tubs and boxes.
Don’t…
Don’t leave the junk car or other large debris in the front yard. Just because it is difficult to find a way to haul away a broken toilet does not mean it should become a front-yard planter.
If you need a major renovation somewhere (roof, chimney, broken glass), take care of it if you can financially afford to do so.
If you are selling a property, move all your outdoor social activities to the back of the home. Some purchasers will be too intimidated to drive up in the driveway just to look if there is someone on the front porch or lawn.
Remove all dead plants, trees, and shrubbery.
Remove all team, sport, and logos, other than your country’s (which is most likely something everyone has in common). Remember, you must appeal to the majority, and not everyone likes the football or auto racing.
Put the dog, giraffe, elephant, or other pet out back.
Be sure there is no leftover food or dirty dishes in the sink of the kitchen or other areas.
Unless you have absolutely no choice, send the kids out for ice cream or to a friend’s house or over to Grandma’s during all showings. Remember, kids say the darnedest things, and it is not worth the risk.
Don’t forget to clean your bathrooms, particularly around the toilet and tub. Buyers WILL move your shower curtains to see where they might be bathing. For a few dollars, a new caulk job around the tub can work wonders.
If your property needs a little paint around the windows, paint them. A can of paint nowadays costs little more than $20 – a relatively inexpensive investment that might prevent you from losing thousands in the deal when the purchaser uses that crackled window seal as an excuse to claim the whole house needs repainted. Remember that purchasers will magnify any repair expense because that is their job. They are, after all, setting value, and they want that value to work in the favor of their own wallet. Sellers, on the other hand, always minimize the cost to fix or repair items. The best solution for the seller is to remove the potential fixes or repairs in entirety. Do them yourself if you have the capability and save yourself thousands of dollars in the process.
It is not uncommon for a seller to hire a professional to come over and provide advice to them about major revisions “needed” before the property is listed. In fact, some of my potential clients have informed me they were told they might have to spend anywhere from $5,000 to $50,000 before they could list the property. I found this shocking and wondered what professional would have told fed such nonsense.
There is no reason a seller with a property currently valued at $100,000 should spend another $10,000 to $20,000 just to get $130,000 from the property. The whole idea is simply absurd. Why? Let’s clarify a couple things. Most of my sellers are NOT contractors. Most of my sellers are not mechanically inclined enough to construct a major addition to a property, and most of my sellers do not have the most important feature needed in undertaking such a large project: TIME.
Why wouldn’t a seller accept the $100,000 from a purchaser, and save themselves not only the $10,000 to $20,000 in extra repairs and upgrades, but also the time, inconvenience, and worries involved with contractors and major decision making? Listing the property at $100,000 is a better option than spending time and money just in the sheer hope that the seller might get $130,000 at the end of the selling rainbow, of which there is no guarantee. I almost always advise my clients to forego the additional investment, time, and emotions in lieu of taking the current fair value and pocketing the additional money they were about to spend. The reason that clichés are clichés is because they are often true, and the two that hold water in this case are time is money and take the bird in the hand. Just say no to that major addition before you sell – unless, of course, you’re being offered a spot on the latest show on TLC.
Summary
Get off the couch and clean the inside and outside of your property. The nicer your property is, the more potential for a higher selling price.
Spend a little money and time to fix and clean up your property.
If your property needs major renovations, reduce the fair value of your property for the same amount and save your time, money, and personal emotions.
DON’T invest your time, emotions, and hard earned money on your property for a large project ($5,000 or more) with a minimal percentage return with no guarantees.
Remember that there is actually very little reality in so-called reality TV. If you watch too many TV shows and believe in them, you may not be the one living in reality.
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3C
Get the Tax, Electric, and Heating/Cooling Bills in Order
Let’s take all concerns about owning your home away. If your property taxes are high, it is usually the same for everyone who lives in the area. The purchaser needs to know the approximate yearly taxes. This expense should be disclosed honestly to all potential buyers who inquire so that the buyer can better judge the property’s affordability. The tax payment is an added expense on top of the mortgage (if applicable), and they must be able to determine if they can afford it. If you quote the potential purchaser a tax amount that is too low, they may have their mortgage approval declined right before the closing (where you get your money). This can be very emotionally disturbing from both sides of the process. Sellers need to be upfront about the current taxes on their property. If you do not receive a tax bill (you can have mine!) and your taxes are paid through escrow (extra payments within your actual mortgage payment applied to your annual tax bill), take a local trip to your local county office building and get a copy of your yearly tax bills so you will know you are giving your potential purchaser a truthful amount.
Another common question from purchasers is, “How much is the average heating (during the colder months), cooling (during the summer months), and electric bills on this property?”
I usually answer, “Every person is different. Some people like it warmer or cooler than others. Some families are large, and some families are small.” I answer this way because it is the honest truth; the utility bills can vary significantly depending on the person(s) who use the utilities.
I do ask my clients for copies of their latest PAID utility and fuel/heating bills because I have no problem showing these paid bills to prospective purchasers, as long as personal account information has been marked out. This is pertinent information that anyone will have to consider when buying a property.
Potential purchasers must be have information on utilities and taxes because affording a home and keeping it long-term requires budgeting for all the expenses involved with that property; this is much better than going in unaware and enduring foreclosure, which will reduce the property values of others within the similar area, not to mention ruin the financial standing of the potential purchaser.
Summary
Being forthcoming with tax and utility information and documentation in the beginning is a good thing – it saves time and reduces emotional distress for both the buyer and seller.
DO have all your utility, tax bills, and any other necessary documents available for the potential purchaser.
DON’T reply, “I don’t know how much the taxes or utilities are. The bank pays them.” This is a red flag to everyone.
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Chapter 4
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