How To Sell Your Home Like A Pro Insider Secrets Of A Rogue Realtor Another Real Estate eBook From: Richard Embro-Pantalony 1 HOW TO SELL YOUR HOME LIKE A PRO! Insider Secrets of an Rogue ex-Realtor Table of Contents Introduction 1. Are you ready for this? 2. Market conditions 3. How much is my home worth? 4. Prepare your home for buyers. 5. Marketing and Advertising 6. Dealing with prospective buyers on the phone. 7. The proper way to show your home to potential buyers 8. Reading your prospects buying signals 9. Negotiating the best deal 10. Conditional offers 11. SOLD! …or is it? Closing the deal. 2 INTRODUCTION Deciding to sell your home can be exhilarating, confusing, stressful and depressing all at about the same time. This book was written to help ease some of these reactions when you make that life altering decision to move. I spent more than 30 years as a professional realtor and real estate investor. For a great deal of that time I helped people sell their own homes commission free even though I was a realtor. Of course I was hoping they would fail and inevitably list their home with me on MLS. “Anyone can sell a home when the market conditions are booming” so they say. This isn’t true in many cases. I will show you how to sell your home for top dollar in a good or bad economy. There are many factors that come together when a house finally sells and I’ll show you how to “load the dice in your favor”. Funny thing about real estate, it’s the most expensive investment many people will ever make in a lifetime and everyone thinks they’re an expert in the field because they own a home. This over confidence has humbled many potential for sale by owners. Most people these days would like to at least try and save the high real estate fees associated with selling through a realtor. In fact nearly 25% of home sellers try and sell privately at least for a couple weeks. Only 5% eventually sell their own homes; a surprisingly pathetic number really. In this book I’m going to show you how to avoid the many common mistakes people make when they attempt to sell privately. I really believe that if someone is serious about selling privately then this book can help them do so and make top dollar doing it. That 25% - 5% ratio could easily be reversed. 3 Follow the instructions carefully and when you think you are ready to move forward with your sale take another hard look at your plan of attack. There’s always something else to consider. 1. ARE YOU READY FOR THIS? You’re thinking of selling your home. The kids are gone so it’s time to downsize. Maybe your spouse has been transferred and you need to relocate; or perhaps its just time for a change of scenery. Whatever the reason, you need to decide a few things quickly. Let’s look at some of those things. How much time do you have to sell? This is critical to the amount of money you may end up settling for. If you have time commitments with your move, new job, a conditional offer on your current home selling, you’ll need to sell quickly. This places you under pressure to accept an offer even though it may not be what you want. It will also determine how aggressive your marketing strategy will be. You will need as much exposure to buyers as possible. Can this exposure be achieved by doing the sale yourself? Maybe because of time constraints you would be better off having a realtor take care of all your selling needs. The multiple listing service may start looking good at about this point. If you make a plan to market your home and follow the plan of action precisely you can still do this yourself. If you are generally well organized, reasonably adept at meeting and conversing with strangers in person and over the phone and commit to the time and scheduling necessary you can do this! Can I make a commitment to being available? Generally speaking the first 2 weeks are critical to the sale of any home. That initial exposure will generate the hottest, most 4 desperate buyers who are also in a hurry to make a move. You will also interest those folks that are looking for the new listings to “arrive on the shelf”. Regardless, that first two weeks is critical to your success. Dedicate yourself no matter what your reason for selling to giving the sale your full attention for two weeks. No need to place added pressure with setting long term goals. Now that you’ve made that decision, the sale of your home should become the focus for your entire family for that two week period. One of the things that always amazed me when as an agent is I would call private seller advertisements from the classifieds in the evenings and 50% or more of the numbers I called had an answering machine taking calls! On average 8 out of 10 calls I was talking to a machine, a teenager, a toddler, senior relative with no information or I would simply get no answer. When you decide to sell make sure it’s a family effort. This means having everyone aware of how to handle phone calls when they come in. If your kids play soccer in the evening make sure someone responsible is available to show the home at anytime, If this means skipping a soccer game than so be it. The point is to BE THERE! Are you willing to spend money on advertising and marketing? If you aren’t prepared to spend approximately $1000.00 on generating interested buyers to your home than you shouldn’t bother trying. You could place a sign on your lawn and the first person driving by could buy your home and you’re ahead of the game. Chances are you will need to spend some money to get some eyes on your home. When you successfully sell it will have been worth the investment. If money spent is no object there are many things you can spend it on to help facilitate a successful outcome. The following is a quick list: - A professional appraisal from a licensed appraiser documented - A professional home inspection documented 5 - A cosmetic makeover of your home inside and out if possible. There are many things you can spend money on that will impress an anxious potential buyer. But you first need to attract that buyer and that’s what some sellers neglect to think about, advertising and marketing. Once you have convinced yourself in the affirmative to these things I’ve mentioned you need to consider something else. Call your lawyer and put them on notice that you intend to sell your home yourself and ask them to prepare some offer to purchase form sets specifically for you and your home. You will want the forms to include all relative articles and clauses to protect you and your potential buyer. Most offers are standard “boilerplates” with a few specifics that may be necessary depending on where you live and what type of property you have. Have numerous copies of the offer forms in hard copy and if you have a computer, have a digital copy in your hard drive so you can access it quickly and make any necessary changes. Now do you think you are ready for this? 2. MARKET CONDITIONS Most homeowners have a general idea of the housing market. Read the newspaper on most weekends and the Homes section will likely have an article about the housing industry. Some people think if they see a lot of sold signs on lawns things must be good. Don’t make this assumption. I’ve seen some of the best and worst conditions for a real estate market yet great looking homes sat unsold while some real dogs were snapped up. Your sale will go much easier if you avoid the big picture. Focus on your general area. Many things effect a local real estate market from mortgage rates to hydro right of ways; neighborhood politics to school availability. So its’ now time to do your homework and do it fast. Drive around your general area 6 and checkout the local competition. What else is on the market and what is the asking price? Are these homes comparable to your own? Know your competition. Good realtors have seen every home in your neighborhood and so should you if possible. Go to open houses, call listing agents and get information. Determining what the local market is like will help give you a good understanding of what you’ll be facing in the coming weeks. Remember that home buyers are much better educated than they were in the past. The advent of the Internet has opened up information channels not previously available to purchasers. Many do their homework online investigating property everywhere, not just your area. You need to be on the ball when dealing with them and have answers when asked. Pretending you are a buyer during this research phase is a good idea. Think like a purchaser you will understand the purchaser. Understanding market conditions will help you put a fair price on your home. We’ll discuss that later. Right now you want to determine if there are any existing conditions in your local market that may affect the sale of your home. An example of this occurred in my target market years back when the economy was coming out of the recession of the early 80’s. Interest rates were as high as 22¾ %!! This was a ridiculous time to be selling a home and an even worse time to buy if you needed to finance it. Yet there were properties moving. Slowly things started turning around as we lurched out of the recession. There was a newer area in our city that had affordable housing for first time buyers and those with a low to medium income. A large group of town homes were located here as well. They were a tough sell anyway because they bordered on a recently closed city dump that the city tried to spruce up with greenery and call it a future ski hill or some such thing. These town homes went for a low price at the time and people bought them up to live in and as investment rental property. Not long after these were all sold, a major methane gas problem was detected in these homes and many others that bordered on the old dump. Years of court battles and political feet-dragging later 7 these homeowners were finally compensated but at what cost. They couldn’t give their homes away in any market. 20 years later there is still a stigma about that area. Anyone who questions the large man-made hill in all those backyards is probably doing themselves a huge favor in my opinion. My point is that some market conditions can’t be avoided and your home sale may indeed be a difficult one. Learning about your location and I mean everything from the warehouse facility ½ a mile away to the rental property down the street will mean you have to have answers to the inevitable questions from prospective buyers. These days’ buyers have access to neighborhood information at the click of a mouse. You have it as well. Do your homework. As for the economy, interest rates have been relatively low since those dark days of the early 80’s but even if the rates doubled from today’s rates, there are still things you can do to successfully sell your home. Creative financing techniques kept many realtors in groceries during this time including yours truly! We’ll discuss some of these later in case your purchasers need a financial hand. 3. HOW MUCH IS MY HOME WORTH? Understand from the outset that there is a buyer for every property and market conditions should not be high on the list of reasons why you can’t sell your home yourself. In fact, selling it yourself may be an advantage. In a tough market buyers tend to gravitate to the private home market thinking they will save the realtors fee and get a better deal. In theory this makes sense except most private sellers think the opposite. They feel that if the listed price for a comparable realtor listed home is i.e. $195,000.00 including 5% commission, then they should be able to list at $193,900.00 and still have more negotiating room than the realtor will. 8 Your potential buyers will evaluate things differently and feel you are saving 5% off the top and therefore will likely lowball their offer at say $180,000.00 and will go up to perhaps $185,000.00 as you “are saving 5% already”. Do not make the mistake of over pricing your home from the start. This will only delay the sale and make it more difficult as time goes on. I’m going to teach you how to arrive at a fair listing price and get it. Buyers aren’t naive and as I mentioned they have plenty of ways they can gather information to arrive at a potential purchase price. Don’t make the mistake of trying to bleed equity from your sale. Expect fair value for your home, no more, no less. If you insist on squeezing out every drop of equity and want to risk a lengthy listing period remember these points. - Make sure your home is in top notch condition. Not a paint peel or loose door knob anywhere! - Be sure you have as many positive market conditions as possible in your favor. - Be prepared to serve your sale. Be available and show your home anytime of the day or evening 7 days a week. - Have all paper work ready so there are no delays in putting an offer in writing. - Make sure you know in advance exactly what you will accept in price and terms from your purchaser. You can always adjust your plan later during negotiations. I’m not an advocate for overpricing a home and the greed factor can put you out of the market pretty quickly. However if you insist on trying this then limit your higher price to a two week period at the beginning of your sale and only advertise it with secondary advertising mediums. Prospects will still find you and you will get good feedback from these people if not an offer. Save the primary advertising mediums for later when you may need the extra wave of buyers for your potentially reduced price. Overpricing your home will create a perception with buyers that will be tough to overcome the longer you keep the high listing 9 price. So any longer than 2 weeks and you risk losing your target buyers to more fairly priced competition. When you decide to list your home fairly you greatly increase the chance for a more quality transaction all around. Your purchasers will not have any nagging second thoughts that could come back to haunt you. Their financing will go smoother as their will be no question of value by the future mortgagor. The purchaser’s lawyer can put all kinds of questions into a buyers head if they have been asked to review the offer as one of the conditions. So why add a concern about overpricing to the list of things the lawyer may warn them about. This could happen! Legal opinions are useful but ask any realtor and they’ll tell you a lawyer can be a deal killer so why heighten the anxiety by potentially overcharging someone. Start your evaluation buy combing the realtor advertising magazines, newspaper classifieds, open houses, and the Internet. Of these, the Internet will be your most valuable resource. If you use a search engine to find an electronic home evaluator you can avoid be bombarded by agent referrals from websites you visit. Many real estate web sites match you with an agent for an evaluation. Initially you want an electronic evaluation. Digital home evaluators are becoming quite a tool in the new age of real estate technology. They will give you a pretty good estimate of your homes value using an algorithm and home data entered by you and compared to other information previously compiled in their database. I don’t think this should be your only value source so again, do your homework. Everyone has some idea what they think their home is worth. How much money you need to see out of your completed deal will also have some bearing on your sale price. Now if you only have a small amount of equity in your home than be reasonable about things. In fact, you’re probably making the right decision to sell privately in the first place. 10 In the past I have been called to a listing presentation by a potential seller and spent time compiling a CMA (competitive market analysis) for them knowing full well they were probably going to try and sell privately. I would simply ask what their intentions were, MLS or private, and really didn’t mind helping them with their price. This is a route you can take if you feel comfortable even speaking with a realtor; many private sellers don’t. It probably is the most accurate way to price your home if you speak with several realtors in advance. The good ones are in the trenches daily and see the stats daily as well. These days with everything computerized it doesn’t take a realtor long to compile their data. You can probably make a few phone calls and have them email a list of recent sales comparable to your home and currently listed properties as well. Take advantage of the resources available to you when trying to arrive at a fair listing price. Market value is determined by the price a willing seller accepts from a willing buyer. It sounds easy enough but in reality if you don’t price your home fairly to begin with you will not achieve this true market value. Real estate commissions are another way that home values get artificially inflated. Realtors tack on 5 or 6% commission onto the price of a home when they sell it and this is in fact the selling price and “market value” of the home. As a private seller you are establishing a true market value for your home when you finally consummate a sale. It is literally like having 2 markets in the industry overall. When you arrive at a price for your home and you’ve calculated how much equity you want out of the deal, make that your bottom dollar. Of course you keep this price to yourself. The most important thing to remember when putting a listing price on your home is don’t be greedy. Be fair and your deal will happen quicker, with less hassles and you can move on with your life. Selling privately is a challenge you can handle but the higher you price your home the longer you will wait for the right deal. Some points to consider when pricing your home 11 - Hiring a certified property appraiser who will give you a document with a professional opinion to back up your asking price. This is a powerful tool when negotiating your offer. - Remember that you are already saving up to 6% on the overall price by selling without a realtor; reflect this savings in your price. - Your personal timing needs to be considered. How much time do you have to sell? The more time you have the less flexible your price has to be. - You will be leaving this home so try to remain objective in arriving at a price. You can always make up differences on your next purchase or by wisely investing your equity. - Short of hiring an appraiser you can call a couple of local realtors who seem to have a grip on the market and ask them for an email CMA report. You may need to give up some personal information to them or offer to pay them $50.00 each for the service. This will be cheaper than an appraiser. 4. PREPARING YOUR HOME FOR SHOWINGS When you decide to finally put your home on the market, you should take a good look at what you’re going to be selling. Potential buyers may want to see your home at a moment's notice, so reduce stress and be prepared to show it off. In general, for the term of your sale, keep your house in top condition, as this will increase the likelihood you’ll get top dollar. It will also help sell your home faster. The following list gives you a guide to follow to prepare your home for sale. Curb Appeal: • how’s your landscaping • Is your lawn in decent shape • Keep it mowed • In season is your walk and drive clear of snow and ice? • Are trees and shrubs manicured • How’s the gardening, does it need something ( don’t go overboard ) 12 • Keep your driveway swept and free of stains • Consider patching and resurfacing. • Do garage doors need paint or cleaning? • Repair concrete steps or walk. Entering the home: • Repair storm doors and windows if necessary • Paint front door or repair • Clean all hardware • Use common sense; take a hard look at what prospects will be seeing. • Check the roof, replace a few shingles if needed • Pay attention to your chimney, does it need work? • Check everything on the exterior of your home and put yourself in the buyers shoes Now for the inside: • Freshen all wood work with lemon oil • Clean all flooring- shampoo rugs, clean and or replace tiles or linoleum if needed • Wash walls or repaint if necessary • Clean your curtains if needed • Instruct your family to always keep home clear of clutter including hallways and stairways • Clean all windows and patio doors • Wash down cabinets and polish hardware • If your cabinets are older, sometimes a coat of paint and some new hardware will do wonders. • Polish all chrome faucets and repair drips • In bathroom and kitchen replace or clean tile grout • Keep sinks and toilets clean regularly • Patch all walls where needed • Replace old or broken electric faceplates • Clean and sweep fireplace 13 • Remove stale and musty odors from basement, white washing unfinished concrete looks amazing. • Check basement floors for watermarks and repair or clean • Paint concrete walls • Have furnace cleaned and surrounding area cleared • Tidy up your garage • Make a couple trips to the dump if necessary As we discussed earlier, if you are going to attempt to sell your home yourself, you need every advantage you can get. Start by inspecting every area of your home inside and out, with a critical “buyers eye” and fix what needs to be repaired, tweaked or replaced. If you had an agent list your house the good ones will tell you what work needs’ to be done to enhance your chances, not necessarily just what you want to hear. If you do decide to spruce things up please don’t go overboard. Try to keep colors neutral and if you do the cosmetic work yourself you may find the cost quite reasonable and the return dramatic. Don’t overdo it during this phase. Putting in a new furnace won’t help you but servicing the old one or having all the old service records available for buyer perusal will help. Now is also a good time to discuss the adage “from a home to a house”. When you are selling your property it becomes a house. When you purchase a property it becomes a home. Try and keep this in mind from the point you decide to sell and it should help you remain objective. Prospective buyers aren’t interested in seeing your bowling trophies for the past ten years in your living room. They will however want to see in their minds eye how THEIR possessions will fit in your rooms. One of the best things you can do for yourself is box up many of your knick knacks, accumulated stuff that hides your homes advantages and features. Pull down the 4 point buck antlers in the family room and replace it with a neutral landscape. Now would be a good time to discuss staging. 14 Every home has defining qualities that drew you to it in the first place. 5-10 or more years of accumulated “stuff” needs to be removed. Now reposition your furniture to open up each room. You have gotten comfortable over the years but now it’s time to clear things out. Less furniture is better in smaller rooms. If couches are against a wall (squared around inside a squared room) try angling your furniture in corners. Pull the furniture along one smaller wall out from the wall by a couple feet. This will give the impression of depth to the room. If you have hardwood floors and you want to show them be sure they are in good shape. Otherwise, get yourself some neutral area rugs to place in the middle of the rooms to give a look at the floor with or without carpeting cover. As a rule once you have cleaned up the clutter and staged each room for their best appearance, if YOU like what you see, the buyer may as well. You won’t please them all but you will certainly increase the odds in your favor. Some points to remember when preparing your home - Inspect with a critical buyers eye. Be objective. - Don’t overspend when doing your make over, no major renovations or improvements. Only do cosmetic work. - Box up all your knick knacks. Clear your fridge “art” and personal eye pleasers. - Rent a storage unit for extra stuff or box it and hide them in the basement provided you can still SEE the basement after things are stored there. - Don’t fill your closets up with stuff! - Women especially like the cleanliness of bathrooms and the utility and space of THEIR kitchens. Not to sound chauvinistic but in most cases this is true. Closet space is also quite important to them so make sure they can see what you have to offer. - As a rule men like to have a den/ office of their own, or a space like a workshop where they can tinker or retreat to; if you have this then clean it and promote it. Game rooms are important for family unity. A garage is also an important feature especially for 15 guys. Keep your garage tidy and if at all possible have it so a car can actually be parked in it. This means no clutter. 5. MARKETING AND ADVERTISING YOUR HOME There are numerous ways to market your home for sale. We’ll be discussing some obvious ones and some less conventional methods. Print advertising This would include your local daily newspapers, weekly community papers, shopper newspaper and magazines. These papers should have homes for sale section in the classifieds that you will want to utilize. These are the obvious places that buyers will look at during their search. Call these papers for a price based on a simple classified advertisement. We’ll discuss what to include in your ad later. You should always ask what their special rates are if any. Some will run a monthly rate of 4 weeks 5th week free or pay for 3 weeks and get 4th free. This can save you money and get you the desired exposure you’ll need. Don’t get caught up in the 1 day ad here and another in a different paper. Run your ad for at least 1 week and preferably 2 weeks in the same paper. If your ad is paying its way you’ll know it. Your response will depend a great deal on what information you include. Circulation is important. What days do they sell more papers and how many other homes are there in the same section? Will your ad be lost among them? Regardless, be sure to be prepared because your first day or two will be your best response. Lawn sign As a realtor I found the power of a lawn sign to be tremendous. Some sellers did not want a sign for various reasons but they are a great source for leads. Once the nosey neighbors finish calling you, you will get more serious calls. Even if your street is quiet, you still need a sign. DO NOT buy your sign at the hardware store. Spend some money and have a professional do 16 your sign for you at a sign shop. Its worth it especially if you live on a busy street. It would surprise you how many people just drive areas looking for properties for sale and if your sign is out you will catch some interest. Never say “By Appointment only” on your sign. Remember you are going to be in show mode at all times because you are committed to selling. Accommodate the walk up traffic the lawn sign generates. Your sign should say the following. HOME FOR SALE BY OWNER Privately 1- (598) -555-1234 This is easy to read and makes it clear that you are selling your home yourself. A professional can do the sign up in a timely fashion and provide you with solid ground stakes to secure it. By having a nice looking sign you will stand out from other private sellers and you’re attention to detail will not be lost on prospects. “They spent time and money on their sign they must be as meticulous with their home”. Yes, buyers look at every detail, especially if they are serious. Feature Sheets You should have some kind of handout to leave prospects with after they see your home. This is something you can do fairly easily with digital photos of your home and your computer. Print out a master copy of a nicely designed page of photos and property details including: - address - Lot size - Number of bedrooms - Major features like central air conditioning, Solarium, wrap around deck, etc. - Your contact information 17 - All the details of your home that you liked should be included within reason. Don’t be shy with details and talk about all features of interest in your location as well. Local school information private and public is important to families so call your area schools and see if they have handout information you can use or at least principals phone numbers. The more information you can provide for a prospect the more you will retain their interest in your home. This feature sheet will be an important tool. Internet Advertising Most people start their search for a home on the Internet. 75% of all homes sold were seen at one point online. Choose your web advertiser carefully. The more information you can provide online the better. There are specialty sites for private sellers online and you may have even purchased this book at one of them. It’s a fact that the more photos you have of your home online the more activity your listing will receive. The Internet is a visual medium and therefore people expect more than just text info. These real estate websites should provide you with some tools that will allow you to e-mail your listing to interested parties. If the online listing comes with an identifying listing #, place this web address along with your number in your print ads and flyers. You’ll redirect prospects to your online listing and in effect will be pre-qualifying buyers. When you create your web listing they will ask you for basic home information including your contact info. Give all your contact numbers if possible including home and cell phone numbers, e-mail address and your work number if appropriate. When you get to the section about property details place as much info as you can without giving boring details. One of the complaints about realtors from buyers is that they don’t give up enough information about their listings. This forces buyers to call them and a back and forth game of information gathering commences. 18 You should avoid this practice by outlining information in detail for buyers. Your objective is to generate a phone call or get a viewing appointment. Prospective buyers will be more inclined to give you their information than they would to an agent so be open with them and provide what they want, details! High traffic websites are of course important but find a real estate web site that caters to the local market from a national database. You want local traffic looking at your listing. It does no good going to a web site that gets a million hits a week and you get lost in the mob. Also how much of that traffic will be looking for a home in your neighborhood? Before you choose a web site to list with, do a search of your city online i.e. real estate+for+sale+South beach; the site that provides the most returns, if it is national, is the one you want. It should also look professional with an easy to navigate search capability. Online shoppers are not very patient people and they won’t hang around a site long if they don’t understand it or it takes to long to load and find homes for sale. Unique site features that promote your home in an exciting way are also recommended. I suggest that this may be the most important point. How your home is presented online is critical to your success. Buyers will find your home online if you lead them to it offline. By this I mean make sure your listing URL address is on all your advertising and promotion material i.e. http://www.yourwebpage.com/ID45678 Buyers can go directly to your online listing and presumably search by ID# to find your listing. Real estate is the most popular personal search on Internet today. Most real estate enthusiasts are using the Internet to research real estate. Today you can set up your own website with ease and for next to nothing. A company like www.godaddy.com offers domain names and simple websites that can be set up in minutes. Using your address for your domain name makes things easy. Try www.youraddress.com and you are on your way. Make sure you are able to load multi-media to your new website. A quick search 19 online should help you locate a website host that provides video up loads. Short of that you can post a video tour to www.YouTube.com and embed the code to your site or post a link of your video on the website that visitors can click on and view. Open Houses This method of showing off real estate has been around since the feather pen. I’m not a big fan of having complete strangers walking through a home sometimes unattended. If you are in a popular area and you draw well it will be next to impossible to control the flow of people and you will be unable to recognize buying signals from people as you’ll be to busy. I would rather you make all showings one at a time. There are web sites that provide walkthrough video tour services that are quite reasonable and act as a pre qualifier for buyers. If they see the home online on video, the interested parties will call for a personal showing. These video tours save you a lot of hassle and work quite well. If you insist on doing open houses follow a few rules to make your 3 hours more productive and less stressful. - Place at least 3 street corner open house signs out and 1 in front of the house on the curb. - Arrange to have more than 1 person available to host the open house. - Have a guestbook and highly encourage people to sign it with name and phone #. - A ½ hour before the start of your open house, place a pie tin with a half inch of vanilla extract in the oven on low heat (150 200). You want your house to smell like fresh bread so adjust the temperature accordingly. - I always had snacks for people and juice so we could stand around and discuss the home. - Make sure all your valuable are locked up and stored away. - Place an open house date and timeline in your main newspaper advert for one day (Saturday) and don’t miss the deadline for the weekend paper. You can then have your open house either weekend day. 1:30 – 4:30 pm is a good time. 20 - Make sure everyone gets a feature sheet when they enter the home and takes it with them when they leave. Marketing Material Have some professional flyers with a photo made up of your home and make it descriptive but easy to read. More sizzle than steak for this one. Have a couple hundred of these flyers printed up and make sure they are all distributed in a day or two. Chances are someone in your immediate area knows someone who is looking for a home in your location and if they know about yours, they’ll pass that information on to them. I can’t tell you how often I have sold homes because I distributed flyers after I listed a home. Have your kids or yourself drop off flyers between the doors up and down the streets in your neighborhood. When you tell people that your home is for sale you start word of mouth advertising (virus marketing) and this is valuable and inexpensive! Post flyers in stores and malls. Talk to your corner store owner where you buy lottery tickets. If you have a computer, print up business cards with your HOME FOR SALE PRIVATELY along with address, name and phone number. Pass this card out to whoever will take it. Remember everyone you speak with could potentially help your sale. The drycleaners, video store, corner pub, restaurants that you eat at and even at work, all can help you facilitate a sale. The following are some sample classified adverts and flyer ideas: 134 Sterling Avenue Private Sale. 2 storey, 3 bdrm. end unit semi, excellent location. Large private yard. Oversized garage/workshop/studio. Many updates. (624) 5552345 See video tour: www.yourvideoURLlinkhere.com/ 21 134 Sterling Avenue Private Sale. 2-storey, end unit, one owner semi in excellent location. Close to everything. Large private lot close to everything. Oversized garage, workshop or studio. Many updates including all windows, high efficiency gas furnace, newer -driveway. $152,500. See Video Tour www.yourvideoURLlinkhere.com/ Or Call: (624) 555-2345 The two advertisements above are both fine. One is going to be cheaper than the other based on the number of words. When you write an ad, always make an effort to keep it brief yet descriptive. Try to make it no more than 20 words initially; very few short forms if possible. The important thing is to have the highlights in the ad. Mention you are a private seller first. General location or address, house style, number of bedrooms, describe lot size i.e. treed, private, fenced etc. and if you’re confident with your price than add it as well. Add your phone number with area code, the style and garage and outbuildings and any income or potential income? You could blow the budget with one advert and all you want is that phone call. The more words you put in an ad the less reason a buyer will have to call you. Another reason why it helps to paint a picture with your ad is to direct them to a website to prequalify the buyer with a slideshow of photos or a video. All your details will be posted in your online listing so your ad should be designed to draw them to further information online or a phone call for a showing. When you call to place the ad, ask the newspaper if they will have a photo special on the weekends. This is well worth the price if you combine it with an open house announcement. I started out by saying you should approach selling in 2 week cycles. Your classified ads should run no longer than 2 weeks before you revise it or change it altogether. Running the same ad for weeks at a time will give the impression something is wrong with your house and that’s why it hasn’t sold. Remember to change your ad, your print medium or both. 22 Try to be creative in your advertising and marketing. An example of this creativity could be wrapping your for sale sign in white Xmas lights and have them on in the evening for a few hours after dark. My personal favorite is using a clear Xmas spot light aimed at your sign again after dark. This would be particularly effective if you live on a moderate to busy street. People still drive at night! The following page has a sample feature highlight sheet with all the details you need for buyers. You can make one up on your computer pretty easily or print one off your online listing. Your web site should provide this service as well as the ability to email your listing to prospects. Presented By: Don Truce Listed By Owner Don Truce Phone # xxx-142-8 Phone2 # xxx-142-8 Contact Owner Click Here 123 Lackner Street Winger, Ontario, Canada N5C 4G7 Property Information : One year old home in great location. Only seconds from the 401 and 25mins from Mississaugua. Quick access to both catholic and public schools. Less than 23 5mins from all amenities. Multi-level home featuring 2500sq.ft. with finished recreation room in basement. Over $30,000 in builder upgrades including; -3/4 bricked home -access door from garage to side yard -patio door to rear yard -automatic garage door opener -ceramic tile throughout -upgraded kitchen cupboards w/moveable island -gas fireplace in sunken living room -alarm system -water softener -built-in dishwasher -central air -interior doors -carpet and underpad Please call for more details or for viewing (634) 555-2345 6. DEALING WITH PROSPECTIVE BUYERS ON THE PHONE This chapter is devoted to the telephone…simple right? Think again. You’ve put time into writing decent classified advertising and spent money to generate some response. When your phone rings there are some simple rules to follow to ensure you aren’t wasting your time and budget. First of all make sure whoever answers the phone is prepared. Don’t let small children answer the phone despite how cute you think it is. Only adults should speak to prospects. The following are some simple points to consider: - Change your voicemail outgoing message to address your sale. “Hello, you’ve reached the Smith residence. We can’t answer your call just now but if you’re calling about the house for sale please leave your name and number and someone will call you soon with more information or go to www.yourwebsite.com ID# 23439 (if applicable) for further information” 24 Never miss an opportunity to inform about your house sale. - Your objective is to arrange an appointment to show the house. Callers will cut right to the chase and press you for information. It’s OK to tell them what they want to know about your home however make sure it’s a two way exchange of information. If you give info you should ask a question of them in return. The exchange should go something like this: Caller: “Hi I’m calling about your house for sale in the paper. Is your home located near the furniture factory near Elm Street?” You: “No that factory is a mile east of us and we’re not affected by it at all. Do you work at the factory? It would be a short drive to the plant.” Or: Caller: “Hi, tell me, that’s an older neighborhood, how old is your home?” You: “Only 35 years old but we’ve made many improvements. Are you looking for a newer home or one with a mature yard and numerous upgrades?” If you answer their question and follow up with your own you will learn pretty quickly what these people are looking for. You can have some control over the situation. You’re trying to arrange an appointment so don’t be afraid to get to that point in the call. The phrase location, location, location gets over used but it is true. If you have your address and price in the ad and they call you it’s a pretty good sign. Work that aspect with the caller. You: “Are you familiar with our area?” Caller: “Yes, I grew up in the area and always liked it.” You: “Do you have a family? As you know there are great schools within easy walking distance.” If they like the location of your home then that’s half the battle. Now you need to press for the appointment. They can ask all the questions they want but they will not be able to get an accurate picture of the home unless they see it in person. Based on the information in the ad you wrote, they called knowing the basic 25 details. They can’t possibly make a qualified decision without seeing it in person. Don’t be afraid to mention that if it sounds like they may be talking themselves out of a showing. If after answering several questions and the topic of price does not come up it could very well mean price is the 800 pound gorilla listening to your conversation. It may be a problem for them and they don’t want to address it or perhaps it’s not a problem at all. Only address price if they bring it up during the call. Even then remember that you must avoid discussing it in detail. Try something like this: Caller: “Your price seems a little high for that location.” You: “I suppose all prices are up for debate, that’s why we paid to have a professional appraisal done on our home before we put it on the market. If you’d like to come over this evening we would be happy to give you a tour and show you our appraisal.” BANG! Now let them answer. Stay quiet. You could get the appointment and you deflected the price issue because you had the foresight to have an appraisal done beforehand. There’s no dispute. Just ask questions and always ask for the appointment: You: “And we have a detached double garage where we have set up an art studio. It’s quite nice. We would love to show it to you. Can you make it over this evening at 7:00 pm or would 8:00 be better for you?” Give them a choice of times and it’s harder to say no. They need to see the home to make an educated decision. They know the price, the location, and the basic layout of the home and style. Now they need to see it and the closer a buyer gets to a home buying decision the easier it is for them to back away. Your job is to make them feel comfortable and build their anticipation during the course of the phone call. Quick Hits - Every one who answers the phone should be prepared. - Have a copy of the feature sheet ready by the phone so you have details handy. 26 - Change your outgoing voicemail message to address your home sale. - Since you will be marketing by more than one method, it might be handy to know how they heard about the sale. This way you’ll know what advertising is working best and you can maximize it. - Always make your conversation reciprocal. You give information you should get information. - The phone call should be about arranging a showing of your home so try and keep the call brief and to the point. 7. THE PROPER WAY TO SHOW YOUR HOME TO POTENTIAL BUYERS Every time you show your home you have your potential purchaser with you so focus only on the job at hand. It goes without saying that you need to have the home sparkling at all times. This is tough to do with a family but think of what is at stake. You may need to overcome the feeling of intrusion and this should pass quickly after a showing or two. You’ll begin to feel more comfortable and this will help your presentation. I think it’s a good idea to make sure the buyer can park their car in your driveway. This means perhaps parking one of your cars on the street up or down a couple houses; to give the outside a less congested look. Do not park a car or cars in the garage; they’ll want to see the inside. This is also when lighting your sign up will be appreciated as it will be easier to find your house and they’ll know you are taking the sale seriously. They’ll certainly remember they were there. Beforehand, make sure you open a couple windows if the season allows it. Be aware of cooking odors. It is always a good idea to clear the air in your home as it becomes stuffy and you won’t realize it. A couple minutes with all the doors open for circulation does wonders, again if the weather allows it. As I mentioned above, bring out the pie plate with vanilla extract for the fresh bread smell in advance of the showing. 27 If at all possible, tell the other family members to take a walk for half an hour so just the buyers and sellers are at the home. This will accomplish several things. Your buyers will feel more comfortable if they aren’t bumping into people as they walk through your home and the home will show better when the rooms are free of family members. Before your guests arrive you should turn on every light in the house. Let there be no dark hallways, stairways, rooms or closets if possible. Turn off all television and games sets and turn the stereo on low and slow. Set the mood with just the right sound. You want your home to be inviting. If you have pets now would be a good time to send them to the neighbor’s house or send them out with the rest of the family. Spray air freshener around the dog’s bed and hide the litter box. Speaking of cats, if your buyers have allergies you’ll know it in a matter of minutes as they tour your home. There are anti allergy spray fresheners on the market that may help in this regard as cat dander causes one of the more severe reactions in people and your deal will be dead before it has a chance. Carpets should be vacuumed daily with Carpet Fresh as they collect odors like a sponge to water. These animal smells are in your home if you have pets and they will deter your buyers even if they are animal lovers. Vanilla extract can only help you so much! Try to greet your visitors at the entrance door closest to the basement stairwell if possible and start the tour in the basement and work your way upstairs. I suggest that you and your spouse alternate the tour by floors. This way each of you can get a read on the buyers and you can comfortably discuss the buyers and the showing afterwards. You should know in advance that some people will comment on your Aunt Pearls “tacky” wall tapestry or the “ugly” flower arrangement in the bathroom. Let them make their comments and bite your tongue. Every ones taste is different but you better 28 bet that if you’re hearing these comments you should take heed and replace the wall tapestry, the flower arrangement is fine. Something that always worked well for me was feature cards throughout the house. Get yourself some 3 x 5 index cards and with a black magic marker write a description of certain features on them. Display these around your house i.e. SOLID OAK WOOD CABINETS placed on your kitchen cupboards or ITALIAN MARBLE COUNTER TOP etc. You can do this right down to the basement, on the circuit panel say 200 AMP SERVICE. NEW 1998, or HIGH EFFICIENCY GAS FURNACE WITH AIR CLEANER AND CENTRAL AIR. You get the idea. Even though the buyers should have a feature sheet with them as they walk through; these cards will serve as a great reminder for them after they leave. When you show people through your home be careful what you say. You should be doing more listening than talking. When you speak you should be trying to paint a picture of comfort, and hominess. Walking through you want these people to be putting themselves in your place. You can make them feel this way by speaking of your family in this home over the years and how it served you well. 8. READING THE CUSTOMERS BUYING SIGNALS Always let the buyers walk in front of you so you can see their reactions. Speak only if they ask you questions or if you are pointing out something of importance. Let them talk and you then react to them. Give them some space as you progress through the home but never let them out of your sight. When you do speak let it be something like “do you think your furniture would fit in here?” or “do you have your own appliances?” Listen to their comments like “Your workbench would fit nicely along that wall” or “this would be a great room for Sarah.” or “this room would make a great office for me.” These are all 29 buying signals and you can start to close these people with subtle suggestions about what you were planning for an area and that you never got around to it. As you show your home listen carefully to what they are saying. They may be talking about their kids a lot. You should discuss where YOUR kids play and the advantages of your neighborhood and how its kid friendly. Schools will be important so ask the ages of their kids so you can discuss what schools their children will likely attend. The may mention they care for an elderly parent in which case things like bright hallways, fewer stairs and nearby bus stops become important. Maybe gardening is something the senior would enjoy and you have a great garden with lots of sunshine. The point is to adjust your answers to what they want to hear. These buying signals will help you to make the best of your showing. The biggest mistake even professionals make is missing these buying signals and failing to act on them when they hear them. There is nothing wrong with asking questions like: - Do you have a home to sell first? - How soon do you want to buy a new home? - When were you looking to move into a new home? - Did you want to assume an existing mortgage, because we know ours assumable without approval with an adequate down payment? It won’t be easy to get financial information from a stranger but by asking certain questions you may get them to lower their guard. These are basically set up questions so you can qualify your buyer. They are designed to get them to open up to you and if they do you need to recognize this quickly. If you feel good about their reaction, then it’s time to act. When you finish the tour simply say “if you like I can pour us some coffee and we can sit in the dining room and discuss some further details.” If they accept your plan then you’ve earned the coffee! Now the critical negotiations begin. 30 9. NEGOTIATING THE BEST DEAL Be sure to have a few things prepared for your negotiations in advance and keep these things very handy, perhaps in a briefcase nearby: - A calendar - A calculator - Several black ink pens and pencils - A writing pad - Your appraisal or CMA’s from realtors - Copies of the offer to purchase with all legal clauses and conditions pertinent to your city and State/Provincial laws. - Copies of conditional clauses you may need to add to the offer (It would be handy if your lawyer could place these standard conditions in your offer and you merely select which ones you need. - Mortgage payment statement - A property tax statement - An existing survey (these are expensive and can be a deal breaker or affect the price in the end if you don’t have one) - Your home inspection report if you have one. It quickly becomes apparent why these professional reports were so important to obtain in the beginning as now they become negotiating tools. The buyers are welcome to have their own independent reports done but if yours are professional how can they be disputed and why would they spend the money on new ones. The best deal is the one where everybody is happy. In order to achieve this you must realize a few things. Start by assuming the buyers have done their homework and have likely seen at least 3 other properties by the time they are ready to speak to you about an offer. Also understand that just as you have a final selling price in mind, assume these folks also have a top price they are willing to pay. Obviously you have to negotiate to the medium acceptable price by both parties and you have a deal right? 31 Wrong! Price is only part of the negotiation. An important part for sure but not the only consideration. In fact when negotiating there are other things you should look at first. Closing Date You know what your ideal moving situation is but what about the buyer? Do they live in a home that needs to be sold first? Is it currently on the market or is it sold and they need a fast closing. Ask yourself in advance how flexible you can be on a closing date if it means you get what you want on price and other details. If your buyer’s offer you a fair price and they come with a clean offer (no conditions other than financing approval) can you move in a month rather than 3 months as you had planned. Have you found another home to move into and is the closing flexible with it? It’s easier to buy a home than to sell one so you should already have played out these scenarios on your own. You need to remain flexible for your buyers whoever they end up being so you can overcome closing date conflicts for the buyer. As a side note you should be actively looking at potential homes to purchase for yourself if not actually making an offer on one in particular. Your mortgage company can assist you and your buyer with bridge financing on one home or the other to help you meet your closing. This type of financing should only be used if the conditional seller feels their home is priced well and will be a relatively easy sale. Whatever you decide it’s up to you to speak to a mortgage professional in advance of your sale to become informed of your options. You can then offer these as suggestions to help with negotiations. Knowing if the buyers are pre-approved for financing is a major step in negotiations. Existing Mortgage Will the buyer be assuming your mortgage or arranging their own? By understanding the current interest rates and comparing them to your existing mortgage you can determine whether it would be a good deal for any buyer to assume your current mortgage. If rates have risen since you financed your 32 mortgage than it would behoove the buyer to take over your mortgage. If the buyer is pre-qualified for a mortgage with a different lender then step back and let them handle it. If your buyers are trying to do a high ratio deal (low down payment) they may be better off assuming your existing mortgage and dealing with your company as they may be more amenable to approval as they want to keep the mortgage business. While we’re on the topic of mortgages I thought I would discuss a creative way to help a cash short buyer purchase your home. The VTB (vendor-take back) is a way for you to sell your home and receive a monthly income at a great rate of interest. It works like this – if the selling price of your home is $200,000 and your purchaser finances 75% this means they need a down payment of $50,000. If they only have $30,000 cash but yet they qualify to carry a $170,000 mortgage, you could hold a 2nd mortgage for them for $20,000 from your homes equity. You can charge a premium interest rate and register on title as the second mortgagor. The worst that can happen is that you claim the property back on foreclosure of the second mortgage and resell it. Best case means you earn a nice income from your invested equity. If you speak with a mortgage broker rather than a financial institution they can offer other creative ideas such as selling your second mortgage for cash out. Look into it as a potential selling option. In a tough market these creative financing ideas are quite useful. How ever the financing works out be sure to educate yourself on possible scenarios so you have answers at the table. Inclusions Your pad of paper is so you can write down anything the two parties are negotiating over. This will include what they want included in the sale. Another reason you have the pad of paper is so you can write instead of speak. If they want your antique armoire in the hallway included since it “fits” in nicely, don’t over react and get emotional, just write it down and it becomes a point of negotiation. This is true of all appliances, maybe a 33 workbench, certain wall and floor coverings and window treatments. Your buyer can ask for what ever they want. It remains up to you if they get it. Don’t over react to their comments, just write them down. Certain items will not be included because of sentimental value. Place an x beside these on your list. Other items you can include in the sale if the price is right. Appliances, blinds and curtains always seem to get included if they “fit”. Understand you can purchase new ones and make them “fit” in YOUR new home. Try not to hang to tough to some of these items as they could be a deal killer. When the cards are on the table you now have a foundation to start your negotiations. Leave the closing date for now and work on your list of inclusions. Start by explaining the value you place on these things and which ones simply can’t be included. Once you have a finished list of what you are willing to include, bring out the offer to purchase. Tell them you would like to “document this in writing”. Add your names as the sellers and you should already have placed the house description on the offer. Slide the offer form across the table and hand them a pen so they can write their names to the offer as the purchasers. Now tell them you will list the inclusions in the offer and see if you can come to some terms. There are several techniques used by professional negotiators that come in handy during this potentially stressful period of discussions. Keeping things calm is not always easy and either party can ruin the deal at anytime. When ever you are making a final offer on a certain term of the deal – take it or leave it – remember that whoever speaks first after the point has been tabled generally loses. Or to put it another way, the party that blinks will generally be accepting the terms presented. Make your offer than shut up is a good rule of thumb. I mean if it takes five minutes of silence than you know they are seriously playing this deal out. If the tension gets to difficult, don’t speak to them just get up and grab a glass of water or ask your partner to get it for you. Every negotiation I’ve ever 34 participated in I’ve won my terms because I didn’t speak first; uncomfortable yes but worth it. Being reasonable is the first step to getting what you want from the buyer. Consider their position carefully and try to deal fairly with them and have an open mind. When it comes to price, simply ask the buyers “You probably have a number in mind so let’s discuss it”. Again when you hear it do not over react either way just write it down on your pad. If it’s a low ball and it likely will be, explain to them that you need a certain amount of money from the selling price and this isn’t close enough to your figure. Then before giving them a chance to speak, calmly place all your house evaluations side by side in front of them and show them how much they are off the mark. If they offer $182,000 and you’re asking $209,000, they may think this is all they can qualify for. You need to know this for certain so ask them outright if that’s the case. You should be able to tell if they are being truthful. Now is the time to put your next to best price on the table. Say you NEED $200,000 from your deal, than come down to $205,000. Consider giving them the appliances in return. Reiterate to them the many features they commented on and add a couple of your own as they need to be reminded here why they have gotten to this point of making an offer. If they continue to dither and refuse to come up from their original offer than you can finally tell them your final acceptable offer is 200,000 and they have until tonight at midnight to consider it and sign your name to the offer and make the deal irrevocable until midnight of that day. They may just walk out at this point but leave them with the offer anyway. You may also want to consider the VTB 2nd at this time and remain firm at $205,000. Before you go this route make sure it serves your timing and needs. You only gave them a few more hours to decide because they probably were out of their price league and you now put the onus on them to find a way to make the deal work on their own. If they say they need more time to think about it then change the irrevocable date and give them 24 hours only. You don’t want to hold up your sale any longer than necessary but at least you 35 have an offer out there at an acceptable price to you. If it works fine, if not, you haven’t wasted a lot of time. When buyers dither you have every right to push the offer to this point. Some people just can’t make a decision so you need to help them. Also remember to initial all changes you make to the agreement. If they accept your terms then they should also sign and initial where you made the changes. The right buyer, the ones that feel right to you are the ones that will negotiate freely with you and are eager to make a deal with you. They are self assured and also have their ducks in a row for financing and instinctively know at the table what they want included. This kind of buyer exists in the marketplace and you may want to wait to find this type of buyer before you put an offer in writing. I believe in putting every offer in writing because it could be your only offer. Following your instincts in this situation is a good approach. Multiple offers This happens more than you think. In a good market you could get more than one offer and all bets are off. Your buyers could take it upon themselves to have their own offers written up and then call to present it, if you know there are other potential offers coming in tell them this and to make their absolute best offer and you will give it fair consideration. Try to have all the buyers deliver their offers one after the other and tell each of them that you will be calling them soon and to keep themselves available for a call back. Don’t be surprised if they line up outside your house or ask to wait for a decision in your family room! Now it’s up to you to choose the best deal that suits all your needs. Choose the cleanest offer with the least conditions in it and sacrifice on the closing date if the price is better etc. This windfall is not just about getting the best price but the best overall terms and conditions. Be sure to choose the offer that you feel has the optimum chance for closure. When you feel you have negotiated the best deal possible, make sure you have it signed sealed a delivered to each party of the negotiations. Every detail should be double checked. In the 36 event that someone gets cold feet, the slightest irregularity has the potential to kill the deal. Also be sure you receive a deposit or earnest money from the buyer at the time of offer acceptance and this check should form part of the offer when it is presented. The deposit usually is for $1000. This is to show their genuine intent and is refundable if the offer isn’t accepted, conditions aren’t waived or for some reason it falls apart. There are disclosure issues to deal with as well. It’s important that you don’t knowingly hold back any pertinent information about your home that the buyer has a right to know. For example in some jurisdictions you must disclose to the purchaser if you know or think you know your house is haunted of all things! Another more likely example is if you have a toxic agent of some kind like asbestos or UFFI insulation, this must be disclosed beforehand even if it costs you the deal. Speak to your lawyer about these disclosure issues and they can provide you with a disclosure document to form part of the Agreement. 10. CONDITIONAL OFFERS Most offers these days are conditional on something. Rarely do you see a clean cash offer anymore. Conditions are added so the purchaser can do their due diligence of the home to satisfy themselves and comfortably move forward with the deal. The most common condition is for financing. Other conditional clauses could be for the sale of a purchasers existing home, having a lawyer look at the offer, a home inspection takes place etc. A condition may be placed on an offer for any number of reasons. Your objective is to see to it that all the conditions in your offer are waived by the purchaser in the time period given. Each condition will have a time limit to clear and be waived. This brings up a point about considering cooperating with a buyer’s agent only. You can sell your own home but you’ll still have realtors calling with potential buyers. If you can arrange an 37 acceptable commission payout to the realtor (2 -2.5%), they will be responsible for the purchasers and will deal with all the paperwork including waiving any conditions in your offer. If you and the purchaser are working without the realtor net then it’s up to your buyer to fulfill the terms of the conditions themselves. You should give all consideration just now to the purchaser to assist them with fulfilling these conditions in time. Make your home available for an inspection by either a home inspector sent by the buyer or for an eyeball appraisal from their financial institution. If the purchaser needs to fulfill the financing condition than you make sure you see a letter of approval from their financial institution. It’s critical that you and the purchaser work together to waive the conditions in the offer. Remember you have a home to sell and these purchasers better seriously attempt to close the deal. Have your lawyer ready to help with writing up these conditions especially if they are not the normal “boilerplate” clauses. Offers in writing can be tricky and let me advise you now that if you don’t feel comfortable working with the legalese than refer it all to the lawyers. I’ve included an offer worksheet that can be used in lieu of a purchase agreement while negotiating. The last thing you want to do is get sued for something you neglected putting in the offer. On the same token if the parties to the deal are taking the completed offers to their lawyers anyway then your lawyer should be expected to work in your interest. When the offer is written and finally accepted and firmed up (all conditions satisfied) you must get in touch with an escrow company or your lawyer to fulfill the closing commitments. They can also hold the deposit check in trust for you. In the event you are not comfortable working with an actual Agreement of Purchase and Sale, the following is an intent to purchase which you can use to document your offer and then take to a lawyer to have the actual Purchase Agreement drawn up. 38 INTENT TO PURCHASE REAL ESTATE Contact Information Buyer: ___________________________________ ___________________________________ _________________________, ph #___ __________ Date: __________________ Seller: ___________________________________ ___________________________________ _________________________, ph #___ __________ Dear Seller: The purpose of this letter is to set forth some of the basic terms and conditions of the proposed purchase by the undersigned (the "Buyer") of certain real estate owned by you (the "Seller"). The terms set forth in this Letter will not become binding until a more detailed "Purchase Agreement" is negotiated and signed by the parties, as contemplated below by the section of this Letter entitled "Non-Binding." 1. DESCRIPTION OF PROPERTY. The property proposed to be sold is located at ___________________________________, _________________________, _________________________ and is legally described as _____________________________________________ The Real Estate is subject to public highways, covenants, restrictions and zoning, if any. Restrictions: _____________________________________________ 39 Included are all permanent fixtures and all property that integrally belongs to or is part of the Real Estate, whether attached or detached, such as light fixtures, shades, rods, blinds, awnings, windows, storm doors, screens, plumbing fixtures, water heater, water softener, air conditioning equipment, built-in items, outside television antenna, fencing, gates and landscaping. 2. PRICE. The proposed purchase price is $0.00, of which $0.00 would be deposited with Seller, or Sellers agent, upon acceptance of a binding Purchase Agreement. Buyer would pay the balance to Seller at closing. 3. POSSESSION. Possession would be given on __________________, or sooner by mutual agreement. Settlement would be made at the closing, immediately prior to possession. 4. INSPECTION. After the final acceptance of a binding Purchase Agreement, Buyer may have the Real Estate inspected by a person of Buyer's choice to determine if there are any structural, mechanical, plumbing or electrical deficiencies, structural pest damage or infestation, any unsafe conditions or other damage, including the presence of radon gas, any leadbased paint hazards, and inspections for other conditions that are customary to the locality and/or that are required by law. 5. CONDITIONS. Buyer's obligations under the Purchase Agreement would be subject to: a. Receipt by Buyer of financing, in the amount of $0.00, and at an interest rate not to exceed 0.00 %, financed over a period of 0 years or more, to finance Buyer's purchase of the Real Estate. b. Sale by Buyer of Real Estate located at ___________________________________, _________________________, _________________________ on terms reasonably satisfactory to Buyer. 40 Buyer would agree to satisfy or release such condition(s) by __________________. 6. STANDARD PROVISIONS. The Purchase Agreement will include the standard provisions that are customary to the locality and/or that are required by law. 7. ADDITIONAL PROVISIONS. _____________________________________________ 8. STAND STILL. Seller shall not initiate or carry on negotiations for the sale of the Real Estate with any party other than Buyer unless either (1) Buyer or Seller fail to enter into a binding Purchase Agreement by __________________, or (2) Buyer and Seller agree in writing to abandon this Letter of Intent. 9. NON-BINDING. This Letter of Intent does not, and is not intended to, contractually binds the parties, and is only an expression of the basic conditions to be incorporated into a binding Purchasing Agreement. This Letter does not require either party to negotiate in good faith or to proceed to the completion of a binding Purchase Agreement. The parties shall not be contractually bound unless and until they enter into a formal, written Purchase Agreement, which must be in form and content satisfactory to each party and to each party's legal counsel, in their sole discretion. Neither party may rely on this Letter as creating any legal obligation of any kind. Notwithstanding the provisions of this paragraph to the contrary, Seller and Buyer agree that the above paragraph entitled "Stand still" shall be binding, regardless of whether a binding Purchase Agreement is entered into by the parties. If you would like to discuss a sale of the Real Estate with the undersigned on these general terms, please sign and return a copy of this Letter of Intent to the undersigned at your earliest convenience. Sincerely, 41 BUYER: ____________________________________ ___________________________________ The above Letter reflects our mutual understanding and sets forth the basis for proceeding to negotiate a Purchase Agreement as outlined above. SELLER: ____________________________________ DATE: _____________ ___________________________________ Make It Legal The Intent to Purchase Real Estate should be signed by the buyer and submitted to the seller for the seller's consideration and signature. The Letter should be signed by all buyers and by all sellers. It is not necessary that the document be witnessed or notarized. Copies Give a signed copy of the letter to each party to the pending Agreement. Other Information After all parties have signed the Letter of Intent, it is expected that they will continue negotiations to finalize the details of the proposed sale. Such final details should be included in a new document, the Purchase Agreement, which will be a binding contract, obligating the seller to sell and the buyer to buy, although it may be made subject to certain contingencies. As the seller you aren’t obligated to have the offer to Purchase Agreement drawn up. The Buyer may want to do this and have their lawyer give them the green light on the deal at the same time. 11. SOLD! Or is it? CLOSING THE DEAL Now that you have a firm offer completed time is of the essence. As mentioned earlier you have more at stake presumably than the purchaser as you have trusted them to make all attempts to close the sale. You have basically taken your home off the 42 market and in so doing, have lost any momentum you may have gained. So now all your effort goes to completing this sale. Canadians need to get their offers to their lawyers – both buyers and sellers – as quickly as possible because depending on the closing date, there is a quite a bit to be done. The lawyers will be in touch, each doing their necessary jobs to complete the transaction. In the U.S. you need to contact your escrow agent and open an account with them so they can take charge and do the necessary steps to complete the sale. These people are professionals and will see to all the details such as title searches, verifying conditions, documenting mortgage information etc. It’s a good idea to keep in touch with the escrow company during this phase to ensure your hard earned sale is progressing as expected. Both parties to the transaction will have various fees to pay and your lawyers can inform you of how much and when these fees are due. From you the seller’s standpoint, you shouldn’t feel the pinch out of pocket as they will just deduct your disbursements (closing costs) from the proceeds of the sale. The following work sheet is intended to act as a reference guide to help you as the private seller keep track of all the closing details. Using this work sheet will help you converse with the lawyers and escrow agents more intelligently. HOME CLOSING WORKSHEET __________________ SELLER INFORMATION 43 Name: Address: ___________________________________ _________________________ _________________________, ___ __________ SSN: ___________ Home Phone: ______________ Work Phone: ______________ Extension: ______ Name: Address: ___________________________________ _________________________ _________________________, ___ __________ SSN: ______________ Home Phone: ______________ Work Phone: ______________ Extension: ______ REAL ESTATE AGENT(S) IF ANY. (LEAVE BLANK IF PRIVATE SALE) _____________________________ ------------------------------------------------PREPARATION OF HOME – CHECKLIST (BUYER REQUESTED FOR SALE COMPLETION) INTERIOR: Fireplace Cleaning Painting of Walls Carpet Cleaning Window Cleaning Drapery Cleaning Closet Cleaning Bathroom Cleaning Floors Polished Appliance Cleaning Kitchen Cabinet Cleaning Operation of Stove Operation of Oven Operation of Disposal Operation of Light Switches Repair Faucets Repair Door Knobs Repair Doors Replace Light Bulbs COST $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 PRIORITY __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ 44 Replace Doormats $0.00 __________ EXTERIOR: Lawn Mowed/Watered Shrubs Trimmed/Watered Flowers Trimmed/Watered Trees Trimmed Driveway Repaired/Cleared Sidewalks Repaired/Cleared Windows Repaired Mailbox Repaired Garage Cleaning Chimney Cleaning Painting of Walls Animal Deposits Removed $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ MISCELLANEOUS: CLOSING COSTS WORKSHEET SELLING PRICE: SALES COSTS: Real Estate Commission if any ______________ SELLER BUYER N/A_______________? ___ LOAN COSTS: Loan Origination Loan Discount (Points) Appraisal Credit Report Lender's Inspection Mortgage Insurance Application Assumption $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 TITLE CHARGES: Settlement/Closing Abstract/Title Search Title Examination Title Insurance Document Preparation $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 45 Notary Fees Attorney Fees Survey $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 INSURANCE: Property Insurance: 0 month(s) at $0.00 per month = Total $0.00 $0.00 $0.00 Mortgage Life Insurance: 0 month(s) at $0.00 per month = Total $0.00 $0.00 $0.00 TAXES: Local Property: 0 day(s) at $0.00 per day = Total $0.00 $0.00 $0.00 County Property: 0 day(s) at $0.00 per day = Total $0.00 Special Assessments $0.00 $0.00 $0.00 $0.00 RECORDING CHARGES: $0.00 Mortgage $0.00 $0.00 $0.00 Deed Mortgage Mortgage Release Transfer Taxes $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 TOTAL SETTLEMENT COSTS: $0.00 $0.00 NET PROCEEDS TO SELLER: ____________________ $0.00 MISCELLANEOUS CHARGES: PROGRESS CHART 46 SCHEDULED DATE DATE COMPLETED PRIVATE SELLERS CHECKLIST : Buyer's Offer to Seller __________________ __________________ Acceptance from Seller __________________ __________________ Counter Offer from Seller __________________ __________________ Acceptance from Buyer __________________ __________________ Final Acceptance By Buyer & Seller __________________ __________________ Earnest Money Deposited __________________ __________________ Release of Contingencies __________________ __________________ Closing Date __________________ __________________ LENDER: Interest Rate/Points __________________ __________________ Credit Report Received __________________ __________________ Loan Sent to Underwriter __________________ __________________ Appraisal of Property __________________ __________________ Survey of Property __________________ __________________ Loan Approval __________________ __________________ Title Examination/Report __________________ __________________ Title Insurance __________________ __________________ Property Insurance __________________ __________________ Final Instructions for Home Closing Worksheet __________________ 47 The Home Closing Worksheet is not a legal document and does not require any signatures, witnesses, or notarization. This worksheet is designed to help the potential seller prepare the home for closing and is meant as a reference guide only. You may want to give a copy to the sellers so you can be assured they know what their responsibilities to the completed sale are. As you can see there is much to think about after the Purchase Agreement has been signed and copies delivered. Make sure the lawyers and or the escrow company has the paperwork in a timely fashion because they have quite a bit of work to accomplish before closing. When the transaction is in the hands of the professionals you can begin to breathe easier. Provided you meet your responsibilities to the purchaser such as repairs, inclusions in place etc. (they will likely request a personal inspection before closing to verify you’ve done what they’ve asked of you) then the closing should continue without any hitches. Closing a sale can be very stressful especially for the purchasers. Try to make them feel comfortable at all times and cooperate with attorneys and escrow agents to ensure a smooth transition. If any last minute glitches occur, remain calm and let the attorneys deal with it. If necessary you can contact the purchasers directly to try and rectify any last minute problems as you’ve presumably gained their trust and this should assist matters. You will be asked to meet with your closing professional to sign paperwork and transfer keys etc. and the only thing left to do is CONGRATULATE YOURSELVES ON A JOB WELL DONE! 48 Appendix A REAL ESTATE TERMINOLGY • • • • • • • • • • • • • • • • AMORTIZATION - The number of years it takes to repay the entire amount of a mortgage. APPRAISAL - An estimate of a property's market value, used by lenders in determining the amount of the mortgage. APPRECIATION - The increase of a property's value over time. ASSESSMENT - The value of a property set by the local municipality, for the purposes of calculating property tax. ASSUMABLE MORTGAGE - A mortgage held on a property by the seller that can be taken over by the buyer, who then accepts responsibility for making the mortgage payments. BLENDED MORTGAGE - A combination of two mortgages, one with a higher interest rate than the other, to create a new mortgage with an interest rate somewhere between those two original rates. BLENDED MORTGAGE PAYMENTS - Equal or regular mortgage payments, consisting of both a principal and an interest component. With each successive payment, the amount applied to interest decreases and the amount applied to the principal increases, although the total payment doesn't change. (Exception: see Variable-Rate Mortgages.) BUY-DOWN - When the seller reduces the interest rate on a mortgage by paying the difference between the reduced rate and market rate directly to the lender, or to the purchaser, in one lump sum or monthly installments. CLOSED MORTGAGE - A mortgage that cannot be prepaid, renegotiated or refinanced during its term. CLOSING - The real estate transaction's completion, when the parties involved agree that all legal and financial obligations have been met, and the deed to the property is transferred from the seller to the buyer. CLOSING COSTS - Expenses in addition to the purchase price for buying and selling a property. CLOSING DATE - The date on which the title and keys to the property are transferred from the seller to the buyer, and the money is paid. COMMON ELEMENTS - The portions of a condominium development owned in common (shared) by the unit owners. CONDOMINIUM - Shared ownership in property. Owners have title (ownership) to individual units and a proportionate share in the common elements. CONVENTIONAL MORTGAGE - A first mortgage issued for up to 75% of the property's appraised value or purchase price, whichever is lower. COUNTEROFFER - One party's written response to the other party's offer during negotiation of a real estate purchase between buyer and seller. 49 • • • • • • • • • • • • • • • • • • • CURB APPEAL - How your home shows to a prospective buyer from the street. Is it eye-appealing from the curb? DEBT SERVICE RATIO - The percentage of a borrower's gross income that can be used for housing costs, including mortgage payment and taxes (and condominium fees, when applicable). DOWN PAYMENT - The difference between a property's purchase price and the amount financed. EASEMENT - A legal right to use or cross (right-of-way) another person's land for limited purposed. A common example is a utility company's right to run wires or lay pipe across a property. ENCROACHMENT - An intrusion onto an adjoining property. A neighbor’s fence, storage shed, or overhanging roofline that partially (or even fully) intrudes onto your property is examples of encroachments. EQUITY - The difference between a property's purchase price and the amount financed. ESTOPPEL CERTIFICATE - A written statement of a condominium unit's current financial and legal status. FIRST MORTGAGE - The first security registered on a property. Additional mortgages secured against the property are "secondary" to the first mortgage. FORECLOSURE - A legal process by which the lender takes possession and ownership of a property when the borrower doesn't meet ("defaults on") the mortgage obligations. F.S.B.O. - For Sale by Owner HIGH-RATIO MORTGAGE - A mortgage for more than 75% of a property's appraised value or purchase price. INTEREST - The cost of borrowing money. JOINT TENANCY - A form of ownership in which two or more individuals (often spouses) have an equal share in the ownership of a property. In the event of one owner's death, his or her share is automatically transferred to the surviving owner(s), apart from the deceased's will. LEVERAGE - Controlling a large asset with a relatively small amount of cash. In real estate, $25,000 down payment (or less) can be used to purchase (control) a $100,000 home, for example. LIEN - Any legal claim against a property, filed to ensure payment of a debt. LISTING AGREEMENT - The contract between the listing broker and an owner, authorizing the REALTOR to facilitate the sale or lease of a property. LISTING BROKER - The REALTOR who signs a contract with an owner to sell the property. MAINTENANCE FEE - A monthly fee paid by condominium owners for maintaining the development's common areas. MORTGAGE - A contract between a borrower and a lender. The borrower pledges a property as security to guarantee repayment of the mortgage debt. 50 • • • • • • • • • • • • • • • • • • MORTGAGE BROKER - A licensed individual who, for a fee, brings together a borrower in search of a mortgage and a lender willing to issue that mortgage. MORTGAGEE - The lender. MORTGAGE INSURANCE - Government-backed or private backed insurance protecting the lender against the borrower's default on high-ratio (and other types of) mortgages. MORTGAGE LIFE INSURANCE - Insurance that pays off the mortgage debt, should the insured borrower die. MORTGAGE PAYMENT - The regular installments made towards paying back the principal and interest on a mortgage. MORTGAGE TERM - The length of time a lender will loan mortgage funds to a borrower. Most mortgage terms run from six months to five years, after which the borrower can either repay the balance (remaining principal) of the mortgage, or renegotiate the mortgage for another term. MORTGAGOR - The borrower. MULTIPLE LISTING SERVICE (MLS®) - A system for relaying information to REALTORS about properties for sale. OPEN MORTGAGE - A mortgage that can be prepaid or renegotiated at any time and in any amount without penalty. PARTIALLY OPEN MORTGAGE - (Also called a "partially closed" mortgage.) Allows the borrower to prepay a specific portion of the mortgage principal at certain times with or without penalty. PORTABILITY - A mortgage feature that allows borrowers to take their mortgage with them without penalty, when they sell their present home and buy another one. PREPAYMENT PRIVILEGE - A mortgage feature that allows the borrower to prepay a portion or all of the principal balance with or without penalty. This privilege is frequently restricted to specific amounts and times. PRINCIPAL - The mortgage amount initially borrowed, or the portion still owing on the mortgage. Interest is calculated on the principal amount. RATE (Interest) - The return the lender receives for advancing the mortgage funds required by the borrower to purchase a property. REALTORS - Real Estate Professionals who are members of a local real estate board and the Canadian Real Estate Association. Only these professionals can call themselves REALTORS. REFINANCING - The process of obtaining a new mortgage, usually at a lower interest rate, to replace the existing mortgage. RESERVE FUND - The portion of a condominium maintenance fee that is set aside to cover major repair and replacement costs. SECOND MORTGAGE - A second financing arrangement, in addition to the first mortgage, also secured by the property. Second mortgages are usually issued at a higher interest rate and for a shorter term than the first mortgage. 51 • • • • • • • • • • • SECONDARY FINANCING - Second, third, fourth, etc. mortgages, secured by a property "behind" the first mortgage. SELLING BROKER - The REALTOR who actually finds the buyer. TAKE-BACK MORTGAGE - See Vendor-Take-Back Mortgage. TERM - See Mortgage Term. TITLE - The legal evidence of ownership of a property. TITLE SEARCH - A detailed examination of the ownership documents to ensure there are no liens or other encumbrances on the property, and no questions regarding the seller's ownership claim. UNIT - Term used to describe the individual home or apartment held by the owner within a condominium development. VARIABLE-RATE MORTGAGE - A mortgage for which payments are fixed, but whose interest rate changes in relationship to fluctuating market interest rates. If market rates go up, a larger portion of the payment goes to interest. If rates go down, a large \ portion of the payment is applied to the principal. VENDOR-TAKE-BACK MORTGAGE - When sellers use their equity in a property to provide some or the entire mortgage financing in order to sell the property. WEEKLY PAYMENTS - Mortgage payments made weekly or 52 times per year. ZONING REGULATIONS - Strict guidelines set and enforced by municipal governments regulating how a property may or may not be used. The Rogue Ex-Realtor Richard Embro-Pantalony had been involved in real estate as an agent, investor and real estate Internet entrepreneur for more than 30 years. During this time Richard has interacted with and represented homebuilders and developers as well as many Real Estate brokers from different International and Independent Companies. He is an experienced real estate investor and proved that you really can buy property with little or no money down. He also studied as a Paralegal and started a small legal practice specializing in small claims court representing corporate client collections and claims as well as landlord and tenants litigation representing builders, landlords and property management companies. He is a qualified law clerk and has extensive sales and marketing expertise gained from years of building and maintaining clientele in these specific industries, particularly business-to-business direct sales. 52 Richard has gained experience advertising and marketing on the Internet as he produced and marketed his own automobile advertising magazine and owned one of the first used automobile websites on the Internet over 14 years ago. The Internet has become an informative source for the public to educate themselves before making a major purchase. Richard researched the latest Internet technologies available and by merging the new technology available online with his unique home selling business model, he intends to shake up the real estate industry. It is intended as a potentially explosive wake up call to change current real estate business practices. His purpose is to change the way all real estate is bought and sold. In the past, Richard spent many hours helping people sell their home’s privately with the understanding if they didn't sell it, he would market their homes through MLS. It was during this period that Richard began seeing the need for an alternative to the MLS system. Agent and Broker fees were a constant complaint during the home selling process for many of his clients. There had to be a better way to assist the home seller market their house without having to pay thousands in brokerage commissions. 53
© Copyright 2024