Hints For Selling Your Home On Your Own

Proper preparation is essential if you are to achieve maximum results . In this chapter we will be concerned with:

1. Gathering data

2. Proper pricing

3. Establishing your terms

4. Home preparation

5. The professional brochure

6. The sign

Gathering Data

Let's get off on the right foot immediately. For one of many reasons you have elected to try to sell your house yourself. I certainly respect that decision and wish you every success. In fact, I'm going to give you every tool necessary to succeed.

Assembling the necessary data is the first and most important step in the home selling process. After the data is assembled properly you will have the essential facts needed to deal with prospective purchasers.

Assessor's Office

Your first step is to call your county assessor's office for card information on your property

Identify yourself and tell them "I wish card information on_______" and give them your street address.

You will get:

1. The legal description of your property. Example: Lot 4, Block 13, Highland Place, 3rd Filing.

2. The schedule number for tax purposes. Example: 53230-04-034

3. The assessed value of the land and the improvements.

4. The lot size and the square footage of the house by floors.

5. The year the house was built.

All of this information is provided by the county offices. If you have the closing documents on your home handy, you may find a survey included. This will also provide you with the lot dimensions.

Ask for the taxes by your schedule number (obtained earlier from the Assessor). After a short delay, the clerk will return with the tax figure for the preceding year. Many New Hampshire Counties offer this information online. Try the clicking on the County link to see if you can obtain your tax amount.

Your next call is perhaps the most important of all. Call the loan service department of the company that holds your mortgage. Identify yourself and give your mortgage account number. This number is usually on the monthly loan statement that is mailed to you, or if you use coupons it will be on the cover of your coupon book.

Tell the representative you wish the following information:

1. Current loan balance 2

2. Term remaining on loan

3. Percent of interest on loan

4. Can present loan be assumed?

5. Can it be assumed at the current rate of interest?

6. If not, what rate will it escalate to if assumed by a new purchaser?

7 What is the amount of the assumption fee?

8. Must a new buyer qualify to assume your loan?

Don’t be disappointed if your loan is not assumable. Most loans or not assumable. Even if they were assumable, you are still liable for the loan, if the new buyer were not to pay it in a timely manner. It’s best to avoid loan assumptions.

9. In the case of a purchaser wishing to make a new loan on your home (a commonplace procedure if you have a lot of equity in your home) what is the pre-payment penalty, if any, to you. This is your expense at closing. Knowing of this expense in advance can save you hundreds of dollars when confronted with a prospective purchaser who wishes to purchase your home via new conventional financing. Most loan companies will waive this penalty if the new loan goes through them - so insist that new loans go through your loan company and thus save this expense.

So now, you have accumulated a wealth of information. How this information will be used will be explained in the section "The Professional Brochure."

Proper Pricing

No doubt, this will be one of the most difficult things to do and you should be letter perfect in your figures because you are going to have to defend this price to your prospective purchasers.

If you are priced too high, your phone inquiries or showings will be of a short duration. If you are priced too low, you might end up with a quick sale but lose many thousands of dollars in the process.

Unless you have documented information on the selling prices of similar homes in your immediate area or are abreast of current reproduction costs, it might be wise to have your home professionally appraised. This will cost you anywhere from $300 to $400 but it could be money well spent because it gives you an accurate report of the current market value of your property. Consult your yellow pages under Real Estate Appraisers for the names of these firms.

You might be able to command current market value for your home if it is in mint condition and enjoys a top location. However, more often than not, you will be asking for a figure lower than a real estate firm would ask to make things more attractive to the purchaser. After all, a purchaser looking for a home direct from an owner is looking for a break in price just as a selling owner is hoping to save on sales commission.

Establishing Your Terms

This section could be incorporated with Proper Pricing because the two are inter-related and the proper determination of terms can very dramatically affect your net proceeds. Since many of the words used in this section could be confusing to the layman, I'll define them in plain language and give illustrations where needed.

The following list shows the more common terms you can include with the listing of your house. Choose those terms that apply to your particular situation.

A. Cash: Where the purchaser comes in with the agreed purchase price in cash at time of closing. It doesn't happen frequently but it does occur more often in private sales as a device used by the purchaser to motivate you to lower your price.

B. Cash To Loan (Assumption): Where the purchaser assumes your existing mortgage and pays the difference in cash. This happens quite often where a relatively high loan balance exists and the cash requirements are not too high...For instance - you are asking $300,000 for your house and your loan balance is $281,200: The purchaser will take over this loan and pay $18,800 in cash at closing (plus or minus closing costs).

C. New Conventional Financing: Where the purchaser applies for a new loan with a lending institution and you are paid out of the proceeds of the new loan. This is the most normal procedure you will encounter if you have a low loan balance or own your home free and clear. Example: You are asking $300,000 for your property and receive an offer for this amount. Your loan balance is only $252,000 leaving you with $48,000 equity. The purchaser applies for a new 80% loan on your house ($300,000 x 80% equals $240,000) and therefore comes up with the remaining $60,000 in cash at time of closing. The lending institution pays off your loan of $252,000 and remits the $48,000 to you at closing. This is a simplified example because you actual net figure will be subject to standardized closing costs, title fees, attorney fees, tax pro-rations, etc.

D. Owner Carry: Where you, the seller, become the lender and carry either a first or second deed of trust on the property. Example: You are asking $300,000 for your house which is free and clear. With a $30,000 down payment you agree to carry back the $270,000 balance in the form of a first mortgage for a period of 10 years at 9% interest (amortized over 30 years), thus receiving $2172.48 monthly in principal and interest payments for 120 months.

E. VA and FHA Financing: These are Government approved loans to accommodate veterans and families with limited amounts of money for the loan payment. These loans enjoy a more favorable rate of interest than a conventional loan and are made through mortgage companies and many savings and loan companies.

The thing to remember here is the lending institutions balance out the inequities between the prime conventional rate and the lower VA or FHA rate by charging "points" Each point represents 1% of the new loan - so if the current points are 3 1/2% and you had a veteran wishing to buy your home $280,000 VA with nothing down, this would cost you $9,800 if you were paying the points. Please note: It is no longer a requirement that the seller pay the points. Points are negotiable and can be paid by either side.

F. Down-payment Assistance: Today’s buyers have many options open to them when purchasing a home. Many sellers are offering Down-payment assistance through programs like the Ameri Dream Down-payment Gift Program. Sellers can contribute up to 10% of the purchase price of a home to a third party progrm that will gift the down-payment to the purchasers in order for them to qualify for the loan. Variations of this program are abundant. Sellers many times look at it as a cost of doing business and are willing to help a buyer out that otherwise could not afford to purchase a home.

Home Preparation

Suffice it to say that a well cared for property is going to command a price commensurate with its current market value while a badly neglected property is only going to sell at bargain prices.

There are certain things of a spruce-up nature that have to be done. Most of this work is labor; trimming lawns, pulling weeds, painting inside and out, faucet repairs, tidying basements, etc. Plan to spend a weekend or two getting everything in order. This effort will pay off in either a higher price or quicker sale.

Here is a check list of some critical areas:

1.         The front door will be the first impression made on a prospective purchaser. Be sure it is newly painted or fresh looking and is in proper working order. How embarrassing to have this door stick or not close properly when a couple arrives to view your home.

2.         Paint rooms needing repainting should be done completely and not just touched up. The removal of existing wallpaper will work magic. Go over all woodwork with Liquid Gold Scratch Cover. It will cover scratches and restore the wood grain to its original beauty.

3.         Be sure the bathrooms sparkle. Repair or replace loose tiles and re-caulk where necessary. Any plumbing leaks should be corrected.

4.         Remove the clutter from basements, attics and garages.

5.         Be sure that all appliances remaining with the property are in good working order. The same would apply to the electrical and heating systems in the house.

6.         Spend a weekend on the landscaping and gardens. Many buyers are highly motivated by the curb appeal of a property. If it looks great on the outside they presume it will also show well inside.

7.         Roof, gutters, down-spouts and exterior trim are most important to a looker driving by. If your house needs repainting have it done. It will more than pay for itself by commanding a top price.

The Professional Brochure

By preparing a neatly typed or printed brochure that can be given to a prospective purchaser, you will be a step ahead of most "For Sale by Owners". 6

You will rate an A+ if you attached a nice colored picture of your home to the brochure. This picture serves as a reminder of what your home looked like, and to a buyer who has seen four or five houses on a given day it will stamp a permanent impression of your property in the buyer's mind.

After neatly typing your brochure it would be money well spent to bring it to a rapid copy shop and have 100 copies made. They will be as fresh and clear as your original.

Here is where you put the gathered data to use. Your final brochure can take many forms but should include the following information.

Information for brochure:

  Street Address

  Legal Description

  Price and terms

  Area (Name of Subdivision)

  Style of Home (Ranch, 2-story, Tri-level)

  Age of Property

  Square Footage (Best done by floors, and remember to exclude garage space, patios and open basements)

  Type of Construction (Brick, Frame)

  Number of Bedrooms

  Number of Baths

  Dimensions of Bedrooms

  Dimensions of Kitchen, Living Room, Dining Room, Family Room, Rec. Room, etc.

  Details of Basement (Whether open or finished. If finished - what percent. Also list rooms and room sizes in basement.)

  Inclusions; List items to be included with the price of your house. Wall to wall carpeting, draperies, range, dishwasher and permanently attached fixtures usually go with the house. If you have a treasured chandelier hanging in your dining room and you wish to take it with you, I'd suggest you remove it and hang something else in its place. Some purchaser's seem to feel that what they see is what they get. In any event, spell out what is included or excluded.

  Water and Sewer Districts

  Information of Fencing, Landscaping and Patio

  Information of garage (1 car attached or 2 car detached)

  Lot size

  Zoning 7

  Information on sidewalks, alley, street (paved or not) mention cul-de-sacs if applicable

  Amount of taxes. List yearly figure

  Date you can give possession

  Remarks: References as to what makes your house such a great buy. You can mention upgraded items, custom features, unseen details of construction such as 9" attic insulation

  Your name and telephone number

The Sign

So far you have proceeded in an orderly fashion and things are beginning to fall in place. You are ready for your sign. Please, don't run out to the garage with a piece of cardboard and a can of paint and exercise your creativity. Home made is great for jams and jellies but not very impressive when selling something as important as your home.

You needn't go to the expense of a metal sign but do have it made by a print shop. Your sign is going to be your most effective sales tool - even more important than your advertising. Be sure your sign is visible. If you live on a corner lot order two signs. If your back fence borders another street put a second sign there.

Your sign should read:

FOR SALE BY OWNER

By Appointment

599-0000

Nothing else is needed. Sometimes you will see signs or read some For Sale By Owner Ads where they include the phrase "No Agents". It really doesn't mean a thing because you will be having other real estate agents calling on you whether you include the phrase or not.

Also, reflect on this for a moment. Suppose a REALTOR® has been looking for a home for his client in your area. He sees your sign and from the looks of your house he feels his customer would be interested. Wouldn't you allow him the courtesy of showing your property if he could net you the same dollar proceeds that you would realize by selling the house yourself?

Your preparation is now complete. You've spent the last few weeks sprucing up the yard, painting, taking the squeaks out of the hallway.

Your brochures just came back from the printer. You are ready to meet Mr. and Mrs. Homebuyer.

Stick that sign in the ground and let's go!

Knowing Your Customer

Before we proceed with the first showing you should gather as much information as possible concerning your purchaser. The more you know about him, the better job you are going to do in reaching the closing table.

We don't know the actual percentages, but a sizable portion of homes purchased are by "out of towners" who are moving to New Hampshire. You won't be seeing many of them because they don't know areas and are unfamiliar with property values. This group generally works with real estate firms because they want and need the security that is inherent in their expertise.

Another purchaser is one who is moving because he needs a larger or smaller home. His problem is that he too has a house to dispose of and needs that cash equity to purchase your home. He will make an offer contingent on the sale of his home. How do you handle such an offer? If you agree to it as presented, you are taking your home off the market. If you pass up his offer you could be losing a potential sale.

First, set a time limit of 30, 60 or 90 days for the sale of his home and secondly, make his offer which contains the contingency, subject to "first right of refusal" for a period of 48 or 72 hours. This allows you to continue to market your property and if another acceptable offer comes your way, you merely notify purchaser number 1 (in writing) that you have another acceptable offer and he now has the 48 or 72 hours to either remove the contingency and proceed with the sale, or to waive his original offer, thus allowing you to proceed with purchaser number 2.

Most of your dealings will be with the following classifications of buyers.

1. Transferees - People who have been transferred to the area and initially elected to rent rather than buy so they could get a feeling for the town. Your could consider them very likely prospects by the very fact of their presence. You have a home and an area that has caused this buyer to make an inquiry. Remember, he and his family have probably been driving through various subdivisions for months. Give these people "The Grand Tour".

2. Locals - Locals who have always rented and are purchasing their first home because they have accumulated the necessary savings for a down payment. Aside from the fact that they might be more discriminating and bargain conscious you should proceed as with type 1.

3. Lookers - This person's form of entertainment is spending weekends looking at houses. REALTORS® frequently meet them at open houses. They have a tendency to linger and chat. After being exposed to a few, they are easy to spot. You'll be doing yourself a disservice if you give them a lot of your time.

4. Newly Married Couples - Somewhat similar to number 3. They would like to own a home but aren't ready for it financially. However they are out constantly looking at houses and gathering ideas for their dream house. By all means be courteous to these folks but don't consider them serious buyers.

5. Bargain Hunters - They'll ask you a million questions. Remember, they have been around and really know values and how to deal sharply. They are looking for a steal. They are easy to spot and can be easy to handle if you have done your homework. You better be sure of your facts and figures or else you could end up selling at a loss. Be firm and stick to your guns.

These are generalities, not 100% accurate but simple guidelines to help you judge. The main point is to make you aware of their various characteristics. Ask such questions as:

* Do you own a home now?

* How many children in the family?

* Have you lived in this area long?

* What brought you to our area?

* Why are you moving?

* Where are you employed - what is your position?

The answers you get will help you to determine the buyer from the looker and give you the opportunity to act accordingly.

Advertising

We've discussed the merits of preparing a good brochure and the manufacture of a professional sign was stressed. These could be your most important advertising tools but we should go a step further.

Newspaper Advertising

This can be a powerful sales vehicle if you use it properly. Give some thought to the newspaper and to the day your ad appears. Weekends are usually best but you are competing against a multitude of ads and also against family recreation time.

If your ad is not distinctive it will get lost in the maze of real estate ads and you will get little return for your effort. Think out what to say and how to say it. Go with two headlines in a bolder and larger type face than the body of the ad. Make these headlines attention getting, then include enough copy to tell your story. Do it with a flair - make that telephone ring.

How many times have you seen a small two line ad that reads like this:

By Owner: 3 bedroom ranch near schools $89,900 call 599-0000 or 266-0000

You usually see that ad on the bottom of the page, out of sight for most readers. It generates little in the way of pizzazz and is money down the drain. Better to advertise less frequently but on a grander scale than to run frequent meaningless ads.

Open House

Another fine vehicle because it allows you to set the time and date most convenient to you is having an open house. If your home is located on a through street with average traffic, simply put up an Open House sign on the designated day and keep yourself available. You can run a newspaper ad with an Open House Headline.

Be careful! Get information from all visitors: Name, Address, Phone Number, etc. Make sure you are with the folks throughout their tour.

Other Tips

If you have a strong neighborhood paper, this can often be the source of inexpensive advertising. If your home is located near a large place of employment you may be granted permission to place an ad on their bulletin board. Do this with your brochure. Include a picture of the house. Let your neighbors know your home is for sale and the asking price. Many times they have relatives or friends they would want to bring in as neighbors.

Internet advertising

75% of all buyers start there search on the internet. You need to have your home in a place that it can be seen. The most likely is the MLS service of your local real estate office, but with out that you can set up your own site for your home. Domain registration and site development and hosting can be as little as $30 and as much as $3000. This is a very important step and should not be left out. Once you build your site, you have to get traffic to it. Links from other sites, Google, Overture, MSN adds work well but may be costly. ( If you want to know how to get on this website, just email barry@housenh.com )

Handling Showings

The moment you put up your sign or run your first ad, you are open for business. You must be ready, on call, 24 hours a day, 7 days a week. Unfortunately you are fair game for all kinds of strange people.

Remember...your sign reads:

For Sale By Owner

By Appointment

599-0000

Many drive-bys are going to see your sign and want an immediate showing because they are in the neighborhood and conveniently missed seeing the phrase "By Appointment". This can be most awkward for many reasons; the beds aren't made, there are dishes in the sink, you forgot to dust and you need to pick up the kids from school and drop them at practice. You're going to offend some people and you're going to miss a number of showings but be firm and insist on having an appointment. Get their name and phone number and call back to confirm appointment. That way your showings will always be under optimum conditions. If you are dealing with worthwhile prospects they will respect you for this. Also, by confirming their appointment, you are checking that they are in fact at a working telephone number. A wife home alone should not allow strangers in without her husband or someone present. Without some type of screening and information you risk your family's safety.

Before your appointment you should check out the following in order to assure a smooth showing.

*           Send the kids out to play. Sure they're lovable but they are a distraction and sometimes have a way of saying the wrong thing at precisely the right time.

*           Ditto for the dog. Put the pooch in the yard or have the kids take him for a walk.

*           Get everything tidy. Aromas are important - a good clean smell, free of pet odor or strong foods.

*           Make sure that the home is bright and cheery. Open the draperies and be sure the hallways, bathrooms and bedrooms have the lights on (even during the day).

*           Turn off the TV

*           Turn on the stereo. Use music to set a mood.

*           Dress appropriately. Casual clothes are OK but don't get down to the grubbies.

*           Be sure closets and pantries are neat and tidy. No place for Fibber McGee here. If you have accumulated a lot of white elephants over the years, you'd be wise to have a garage sale prior to putting your house on the market.

*           Calm your nerves

When the doorbell rings and your first lookers are waiting to enter there are a lot of do's and don'ts to be aware of.

DO greet them at the door and invite them in.

DO try to get them seated for a short chat initially. You can invite them to be seated while you get them a brochure on the property.

DO Ask them a few preliminary questions to determine their buyer classification and perhaps their qualifications.

DO Invite them to inspect the house and accompany them on the showing.

DON'T over show or over talk. Remember, a house showing is a visual thing and if you accompany this visual experience with a constant line of chatter you will be confusing your client and detracting from their visual impressions. Rather, choose one or two strong tested phrases for each room as you go through the house. If what they see intrigues them they will automatically go through for a second more thorough inspection.

At this time you can amplify and point out any hidden features.

DO answer questions truthfully and quickly. Keep it business like.

DO ask if they have any questions before they leave.

DON'T press for an immediate decision. If they are really interested they might make an offer on the spot. Usually they will want to discuss it between themselves first.

DO try to find out what pleased or displeased them about the house so that you can make improvements in future showings.

DO constantly evaluate your showings.

The Sale Process

After you've had a few showings and received favorable comments on your house, you may be perplexed because you haven't received any follow-up phone calls. This happens quite often with sellers and it happens primarily because you are the selling agent and people basically do not want to offend you by saying things like:

I couldn't live with your shag rugs.

Your colors are all wrong.

The kitchen is much too small

Rather they mislead you in their intentions by routinely complimenting your property. You feel they are really interested, you are tempted to give them a call. However, think about the bargaining position if you make such a call. Where you were calling the shots at the showing, you are now reversing this position with a phone call. Unless you have something very constructive to say (and I can't imagine what it would be) refrain from calling.

If your buyers are sincerely interested in purchasing your home they will get in touch with you and request a second showing or try to feel you out over the phone. Let them come to you.

Hopefully, the time will come when one of your showings will produce an offer. Most of the time this will be in verbal form. They will say, I'll make you an offer of $289,950 for your house and since this is the asking price or close to it, you agree. You shake hands and after they leave you give your spouse a hug because you just made a deal. Right? Wrong!

Remember oral contract are not binding. After you have agreed on a price and terms you should ask the purchaser to draw up a written offer to be presented. If they are smart they will have their offer drawn up by an attorney on a standardized receipt and option or specific performance contract form. This document will spell out the terms of purchase, the items included and excluded from the property, dates of closing, possession and review of the title commitment. It will also include a provision for earnest money, means of financing, pro-ration of taxes and escrow, etc. Mainly, it will be a binding document with the purchaser's signature attached.

Now, we are presuming you are as smart as your purchaser. In that case, present your offer to your attorney and have it explained in detail. Many times there will be provisions in the offer that don't meet with your approval. Your attorney will suggest a way to make a counter proposal which will save you both money and inconvenience.

When the offer is signed by you or the counter proposal approved by both of you, then and only then, do you have a valid contract. At his time you may hug your spouse. Right?

Well maybe - if the offer is for cash on closing, you're practically home free. If the offer is contingent on purchaser qualifying for a new loan or to assume your present loan, then he will have to make loan application and it will be a few weeks before you hear the results. In any event, the best time to be enthusiastic about your sale is at closing.

Important Contract Provisions

Title Insurance - When a property is being sold, the lender and the buyer need a preliminary title commitment that will indicate exactly what recorded liens and encumbrances and recorded easements are currently in effect on the property. The title commitment will also indicate the vested owner of record and any restrictions on use of the subject property.. The buyer is required to furnish the lender with a lenders' policy showing the lender as a lien holder on that property. These charges will be incurred at the time of settlement as a part of your closing costs. When the sale on the property is final, the title company records the necessary documents and then will issue a title insurance policy to the new buyer and the lender showing clear title to the subject property. Your attorney should be able to handle this.

Structural Inspection - The sales contract provides for certain inspections be made which must satisfy the buyer before it is fully enforceable. A structural inspection will determine the condition of the structure and foundation and any defects that may need to be corrected. The cost of this service generally runs from $250 to $450 depending on the size of the home and is normally a buyer's cost.

Home Inspections - Another type of inspection is a home inspection. Included in this type of inspection are: appliances, water or plumbing lines, electrical, heating and ventilating, bath and kitchen fixtures, crawl spaces, basements, garages, roofs, attics, and general maintenance of the home. The cost of a home inspection is based on the size of your home, usually starting at $200.

Radon Test - Radon is a radioactive gas which occurs in nature. You cannot see, smell or taste it. Exposure to radon increases the risk of developing lung cancer. Special equipment is needed to detect radon and testing normally ranges from $100 to $150.

The Closing

Your final meeting with the purchasers of your property will probably be at the closing table. If the purchasers are securing a new first loan, the closing will take place at the offices of the lender. Otherwise, it will take place at the office of your attorney or at the offices of a title company.

In any event, you should have your attorney present to see that all documents are signed properly and all figures are in order. He will lead you through the closing and represent your interests.

At the closing you will be required to sign certain papers, turn over the keys to the house if they are to take immediate possession, and to receive your proceeds check. When all of this is handled satisfactorily you will have finalized the experience of selling your property yourself.

Good luck to you, I hope you have found the material in this booklet helpful! Please remember it is only meant as a guide and may not to be full and complete advice for every individual case.

Barry Miller & Bruce More

http://www.housenh.com/

199 Main Street

Rindge NH 03461

603-899-5444