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Home prices continue to move higher in 2014.
More and more underwater homeowners – trapped in their negative equity, upside down position for years – have a new choice: they can sell their homes the traditional way.
You list the home, you negotiate a deal with a potential buyer and you enter into a contract that closes escrow about 30 days later. You know, the way it worked in the good old days.
Hundreds of thousands of sellers from 2006 – 2013 are envious. They had additional steps to their selling process. Their negative equity meant that to sell traditionally they had to write a check at the closing table.
They were the unlucky ones. Many homeowners took income hits during the Great Recession too. They couldn’t afford to write that check to close. They had to pursue a much more nefarious task – the short sale.
Time-consuming, tedious and frustrating are all adjectives that politely describe the short sale process with most banks. No more though, the equity is back and buyers are beating down your door.
Good times. But wait. I have a warning: This is not going to be like it was the last time you purchased or sold a home, especially if mortgage financing is needed on either side. My friends, get your big boy britches on tight. It can be quite the adventure running the gauntlet that leads to the closing table.
Avoid mistakes and avoid blowing up your deal by following educated advice and the 6 steps listed below.
If your team – your mortgage lender and real estate agent – consists of qualified experts, you’ll be in good shape. They ARE aware of the pitfalls. They put checks and balances in place to protect you and the closing.
Most mortgage lenders and real estate agents are not experts though. In fact many are wholly incompetent. Do your homework. Never take the decision lightly, OR, even worse, make it solely based on the cost of services.
Steps outlined below will take you from the beginning of the process straight through to the end.
1. Not Getting Pre-Approved – Before you even think of listing your home you’d better make sure you can buy a new one. Even if you intend to purchase with cash, talk to a mortgage lender. You might find that a mortgage is financially wiser than depleting cash assets. If you know you need a mortgage, then skipping this step – or pushing back in the process – is closing suicide.
2. Failing to DE-CLUTTER or, if the home is empty, failing to STAGE it – a lot of buyers lack vision. They simply can’t picture what the home looks like beneath the clutter or beyond the blank look of an empty home
3. Pricing Your Home Incorrectly – a little research goes a long way here. If you and your agent do not agree on price, then compromise and remain flexible if feedback suggests it.
4. Using SUB-PAR Images to Market Your Home – you would think this goes without saying. Go see for yourself; how many homes have poor images? How many have NO images at all? Ask to review the images your agent chooses to market your home. Some people are not natural photographers. If your agent lacks that skill, then insist on a professional photographer.
5. Not Checking Potential Buyer Pre-Approvals – a huge portion of the pre-approvals and pre-qualification letters included in negotiations are worthless. They are non-verified, based on false information or distributed by an incompetent or overworked mortgage lender. Have YOUR guy, the professional you choose, check out potential buyers’ qualifications.
6. Refusing to Make Minor Repairs – failure to make minor repairs that the buyer requests could blow up your home sale in two ways: First they may simply decide to move on to another home with a more reasonable seller. More importantly, those minor repairs will nuke the buyer’s mortgage financing. Underwriting doesn’t play around here. Your home is their collateral and underwriters want mortgage payments paid. They do not want the buyer to have to fork over thousands on repairs before they even move in.
7. Acting a Fool – stay cool, stay calm, stay collected, stay friendly and you will get closed. Getting offended because a buyer hates your taste in paint color serves no purpose. It’s childish. Nobody told you it was time to loosen the big boy britches you were required to tighten up earlier in the article.
Hopefully, the collective wisdom of hundreds of closings passed along above will sink in and be heeded. I promise it will alleviate heartache and financial headaches. The expert team you carefully selected at the beginning of the process will, undoubtedly, agree.
If you are in market currently to sell your home or thinking of doing so, schedule a 1:1 consultation by sending me an email at [email protected]