Advice for One Potential Home Seller
Each seller’s situation is unique. Here’s one seller’s situation and how I suggested he proceed.
Palm Coast, FL – October 11, 2012 – A GoToby.com reader from Palm Coast called me this week asking for my advice. He owns a local rental home that he wants to sell. It’s not a short sale. His most recent tenant just moved out and he’s simply tired of being a landlord.
First question: Should he accept the more traditional 6% listing commission or look for someone who would take the listing for 5%.
My response: If you sell a home for $150,000, the 1% commission savings would be $1,500. The right agent/broker can have a far greater impact, affecting more important factors; final selling price, time on market, staging advice, the amount and type of marketing effort, attention to transaction details through closing and more.
Many believe that a 6% commission ($9,000 on a $150,000 sale) is too much to pay an agent for the sale of a single house. Actually, that 6% gets carved up. Typically, half goes to the listing broker, the other half to the selling broker. The brokers, in turn, split their shares with their respective agents. Agents often work in teams. It’s not unusual for commissions to be split between five or more brokers and agents.
Question: Is this a good time to sell or should I wait for the market to go up?
Answer: The Flagler market has entered its seasonal "slow" period. Fewer sales transactions close monthly between October and February. Peak closing months are March through September. Closings lag contracts by about 60 days, so March closings likely represent contracts signed in January.
Prices don’t drop during the lull, but there are fewer active buyers, so homes don’t sell as quickly. Locally, the shortage of homes for sale is putting some upward pressure on prices. I think the spring market will be strong. He’s not a distressed seller. He should wait till January.
Question: Should he look for a new tenant in the interim?
Answer: No. He just finished paying for cleanup after the last tenant vacated. He’d have to repeat that expense soon if he had a short-term renter. A long term renter is more problematic. Lease terms usually stipulate that a tenant must allow showings, but they can make them difficult to schedule. And they’re less likely to have the home in tip top showing condition.
Properties are sold subject to a lease. That means that the buyer "inherits" the lease and the tenant. Even if the lease has an early termination clause effective if the property is sold, a tenant can complicate the closing process.
I recommended that he go beyond the typical rental cleaning and spend the next few months preparing the house for sale. Consider sprucing up landscaping. Repaint the interior and install new carpet if needed. Then, look at the kitchen and bathrooms for improvement opportunities such an new doors and drawer fronts with updated hardware and tile grout cleaning. Consider replacing the front entry door and hardware. They are part of the "first impression." If the kitchen or other busy rooms are dark enough to need daytime lights, look into a solar tube.
Finally, discuss staging the home with the selected listing agent. Strategic placement of only a few pieces of furniture or accessories can soften the harsh impact of an empty house.
No Money For Fixing Up
Many sellers are loosing their homes because they do not have the money to pay the mortgage. They do not have money to fix up the house for sale, either. They are older and are not able to do many do-it-yourself tasks. Where can they get some money to hire some folks to make the improvements to fix up their house. Instead, some are selling the air conditioning, sink, refrigerator, etc and abandoning the house. What to do? What to do!