Departure Services

Pricing Your House to Sell

Overpricing your house and paying the carrying costs can use up whatever equity you have in your home. In order to provide an example of home pricing and carrying costs and for purposes of rounding, let us assume you have a $150,000 property. The home has a 80% loan to equity value, which means there is a $120,000 mortgage and $30,000 in remaining home equity.  If listing with a REALTOR®, they have the tools. If you are selling on your own as a FSBO (For Sale By Owner), evaluate and purchase the House-in-the-Box® real estate program, access to which is offered below the Cost Comparisons section.

For definition purposes, carrying costs constitute the fixed carrying costs of property maintenance whether you are living in the house or the house is vacant. These costs include taxes, mortgage payments, electricity, and heat. For example purposes our carrying costs are $1000 per month for this house after you vacate it.

Let us assume that you have worked an average of 6 hours per week over the past 5 years and made both small and medium improvements (not renovations or additions) to your house. You believe the value of your house is $165,000 and not $150,000. You have decided to firmly price your house at $155,000 to $160,000 using your local REALTOR® as a listing broker. Also, you will be moving in about 60 days to a new job and state. Your company’s real estate relocation firm is not going to purchase your old house. You must either use a REALTOR® or sell the house on your own.

Comparative pricing upon a sale with choices ranging from using a REALTOR® and full commission, holding costs, cross-over point, and choices are important to consumers.  When moving out of town, a transferee many times should carefully choose a REALTOR® whose listing and home sale capabilities protect equity when you are out of town.  Other alternatives, may be preferable given different situations.

Cost of Not Selling

In many cases the failure to use a REALTOR® results in significant costs for not selling:

The High Cost of Not Selling

When considering who to use to sell your property you must factor in these costs associated with not selling quickly. If you are moving out of town, a full service listing with a REALTOR® is often the best choice. If you are staying in town there are many choices as the comparison below points out.

Cost Comparisons

In other cases where full service is not required, here is a comparison of costs, services, and savings:

* % figures used for comparison only. All commissions are negotiable.

• MLS = Multiple Listing Service
• CMA = Comparative Market Analysis
• BPO = Broker Price Opinion

In summary, pricing your house correctly from the start and having either a REALTOR® or REALTOR®-like tools and technology to help you sell your house and save money are keys to a successful experience.

What Is My Price?

There appears to be a tendency for homeowners to price their houses above the market. In order to avoid this tendency, which delays or even cancels a successful sale, and to get a realistic assessment of your house’s value, you can use several approaches individually or together.

These include a Competitive Market Analysis (prepared by a REALTOR® from available sales data), a Comparative Market Analysis from an appraiser, a Fannie Mae/Freddie Mac electronic appraisal (offered by a mortgage banker or equivalent) or an electronic equivalent by a third party appraisal company equivalent to a Fannie Mae/Freddie Mac appraisal.  Appraisal types such as these are commonly referred to as “desk appraisals.

The manual from which this excerpt was taken contains a check-off chart which should be filled in as completely as possible. Remember, the more realistically priced your home is, the sooner it will sell and the more net proceeds you will receive.

Understanding the Term “Value”

Selecting a realistic and subjective value in order to properly price your house can be a very difficult task. After all, look at what you have invested, the meticulous care with which you have maintained your house, and the problems that other comparatively priced houses have in your area. Value is almost always reflected in the actual purchase price. Therefore, it is in the eyes of the beholder (buyer) not the seller. When looking at value, there are some guidelines:

• Properties are unique; no two are identical.
• Each opinion of value obtained could be different.
• Location, interior, and exterior condition increase or decrease value.
• Maintenance and fixed operating costs affect value (e.g. electric heat in the Northeast; no air-conditioning in the Southwest).

The more your subjective or personal value equates to a realistic value, the better your pricing of the property will be and the faster your property will sell.

Propery Selling Tips

There are proven tips and references when guiding a prospective homeseller to how to save money and sell your house. The considerations are:

• Whether or not to sell your house yourself
• Whether to use discounted commissions and menued services.
• Whether to engage a full commission, full service REALTOR® and list your house with the listing broker’s real estate agency.

A Consumers who are exploring the home selling market deed to examine the various markets as presented in this book.   Prospective homesellers need those tools and references necessary to make an informed decision about how to proceed with the sale of their home. As a concept, For-Sale-By-Owner (FSBO) requires the homeseller not be mis-informed. The sometimes mythical belief in a way to have massive savings without much work must be eradicated.

The misinformed, who embark upon this process, are at their own risk, because in reality good things generally happen only to those homeowners who are prepared for the rigors of selling their houses themselves. Tips the manual covers to let us determine who FSBOing is not meant for. No amount of help can be given to save any FBSO candidate who believes in the folklore that says, "Buy a sign, post it in your yard, run an ad, and sell your house." This serendipitous approach rarely works, except in a "hot" seller’s market. The occasional serendipitous success may be inflated to certainty by homeowners considering the FSBO process.

A homeowner’s commitment to selling a house involves all of the following:

• Preliminary investigation
• Establishing objectives
• Availability of time and money, and what you can afford
• The commitment to FSBO
• Drafting a plan
• Preparing for negotiation
• Understanding the basics of finance

General considerations for selling a house

• Location
• Condition
• Demographics
• Price

When choosing the method for selling your home, consider the type of person your are.  Note, however, that you must address the need for screening visitors before opening your home for showing and be mindful of such other security related processes as are necessary to protect you from intruders as carefully as a listing REALTOR® might screen interested buyers.

The Squires manual explains and leads the reader through the process necessary to having the best chances of effecting the home sale. The homeowner sale must be transacted at an acceptable cost in time and money.

This manual is organized so that homeowners can determine the following:

• If they are up to the task of doing FSBO.
• How and where to get information required for being a FSBO.
• How to examine markets and become familiar with the tools required to sell a house, how to help find the type of professionals who are available to help, and when or if to call a real estate agent.
• How buyer and seller philosophies differ, and explanations as to possible motivations and techniques used by both buyers and buyer representatives.
• What consumer real estate services packages are available in the Full Service, Discount Service, FSBO consumer marketplace and what are the cost savings.
• What options and backups are available to the consumer wanting to participate in listing or alternatively an organized and centralized FSBO marketplace that features MLS® listing as a feature.
• Security required for home showings.