So, you are contemplating selling your home or other real estate holding because you are relocating, want to move up, want to move down, or whatever the reason may be that places you in the market at this time. Once listed, most sellers want to sell their property sooner rather than later and for the most money possible. Unfortunately, all too many sellers oftentimes make some critical mistakes that significantly lengthen the days on market and actually lower the selling price that the property would have otherwise sold had the mistakes been avoided. Four of the most common mistakes are as follows:
- Overpricing the Property typically tops the list as the # 1 most common mistake that sellers make that adversely affects the seller’s desired outcome. The first 30 days of a listing is crucial because it is this time that the excitement is the highest and the “New Listing” factor is the strongest. If the property is viewed as overpriced by local realtors and potential buyers, the momentum is lost and showings will decline. If the property languishes on the market for an extended period of time, this is even more harmful, and to regain the momentum can become more challenging due to the perceived “bad reputation” that the overpricing has created. As a result of overpricing, the asking price will have to be reduced and then the typical mindset of a buyer is oftentimes, “I wonder what is wrong with this one that they had to reduce the price?”
There are many factors that go into the proper evaluation of the value of a property…location, quality of construction, type of construction, condition of the property, deferred maintenance, adverse material facts if any, age, square footage, upgrades, and view are some of the more significant factors. Virtually every resale property is unique due to the aforementioned variables; consequently, it is for this reason that it is possible for a property next door or down the street to have sold for wildly different amounts. Diligent research is necessary to properly evaluate the value of a property through sources such as the MLS, county tax records, builders, other realtors, etc. Appraisers take all of the previously discussed factors into account when arriving at an appraised value of the property.
You should expect your REALTOR® to prepare a comprehensive market analysis (CMA) considering the same factors that an appraiser would use in evaluating your property. By doing so, you can avoid overpricing your property. If you should decide to go it on your own and not obtain the counsel of a REALTOR® and base your price on an inflated opinion of your property’s value, you’re likely to end up selling after multiple price reductions for less than you would have if you priced it right at the start. Once properly evaluated the property should be priced no higher than 5% of the expected sale price to be competitively and favorably priced in the marketplace in order to ensure the most showings, shortest time on the market and the highest sale price.
- Lack of Attention to Sales Preparation / Repairs and Maintenance – is another seller mistake that is typically at the top of the list of the most common mistakes.
§ Curb Appeal – You don’t have to spend thousands of dollars; however, it is critical that the property have an impeccable curb appeal. Remember – First impressions can be everything …a poor curb appeal may not even get the buyer out of the car to even consider the property. Some definite things to consider in creating an attractive curb appeal are:
· Landscaping – mow, trim shrubbery, edge, freshen up beds with pine straw or mulch
· Add color with blooming plants
· Pressure wash the exterior, driveway and walkways
· If applicable, touchup areas that need painting
· Remove and temporarily store items of distraction such as boats, jet skis, trailers, etc.
§ Remove the Clutter and depersonalize the home - Many buyers find it next to impossible to visualize what a home would look like with their belongings in it. If they see clutter, then they see clutter as if it were their home and it is a definite turnoff. They see pictures of your family and other items of a highly personal nature and it is a distraction as they see your family in the home and not theirs.
§ Make needed repairs and perform necessary maintenance – Scuffed walls and trim are again a turnoff to buyers and they tend to automatically start making deductions to the price because their thinking is “How much is it going to cost me to correct this issue?” Oftentimes their opinion of cost is an inflated one and unrealistically affects their opinion as to the value of the home. When painting, neutral colors are the safe road to travel. Purple walls with border wallpaper may be exactly what appeals to you, but remember, you are attempting to appeal to as broad a buyer base as possible and you may be one of the very few that likes purple walls with border wallpaper.
Repair that leaky faucet, repair that damaged screen, replace those burned out light bulbs, have professionally steam cleaned that dirty and stained carpeting. All are common sense items and while they may be minor in nature they definitely create an impression on the buyer. Your mission should be to create the most favorable impression that is possible. Put yourself in their shoes as to how you would feel and remember the last time you were house hunting. What were the things that swayed you one way or another? If it gets down to choosing between your home and another, the home that is closest to mint condition will win out virtually 100% of the time.
§ Other important things to remember-
· Thoroughly clean – if you are not sure, use the “white-glove” test
· Eliminate bad odors such as pet smell, tobacco products, moth balls, etc. Bake some cookies, add a centerpiece of fresh flowers, burn some scented candles, but get rid of the unpleasant odors as many buyers will literally stop in their tracks and do a U-Turn if an unpleasant odor offends them.
· Organize closets to create maximum storage capability
· If needed, consider staging your home to affect maximum space and superior flow
· Consider kenneling your pets during time on market as not everyone shares the same love of pets as you might
- Poor Showing Availability – Selling a home is not about your convenience…it is about the buyer’s schedule and availability. Many buyers have limited time to make available for purposes of viewing homes of consideration. Oftentimes a buyer is attempting to see eight or more properties in the space of a day….if your property is not available for showing due to the buyer’s time constraint, it is likely that the buyer will never view your home and move on to one of the others. At all times possible you should make arrangements to be away from the home during the showing…go to the grocery store, go shopping, go to the movie…most buyers want to be able to openly discuss the home without the seller being present for a variety of reasons.
- Electing Not to Have a Home Inspection Before Listing – While it is not imperative that you have your home inspected prior to listing it, by doing so it can potentially save you money and in some cases even save a deal. Once under contract, a buyer will most likely have their own inspection performed by a professional home inspector. Nevertheless, it is just good business practice for the seller to have an inspection prior to listing to avoid potential problems, expense and pitfalls.
Take for example the possibility that your home has termites or other wood destroying organisms. That discovery by the buyer could be a “deal killer”. Had the seller known about it beforehand, the problem could have been avoided and the expense absorbed by a termite bond and/or warranty should the seller have one in place. What about an HVAC system that is not heating and cooling properly? Maybe all it needs is routine maintenance and a thorough cleaning as opposed to replacing the system. What about a leaky roof? Again, maybe all it needs is minor repair as opposed to replacing the roof.
Sellers Take Note - There has never been a property, regardless of condition and other variables that will not sell at some price in any market environment.
Getting a home ready to market can cost a little money and elbow grease, but for those who do, the benefits can be substantial and well worth the effort. For the others who do not ready their home for market, the odds are that the property will languish and attract less than desirable offers.
Think of buying a car of the same year, make, model and equipment…. One car is in mint condition both mechanically as well as aesthetically, while another has fading paint, worn tires, a defective radio and smokes while running. Which one would you buy and which one would you pay more money? The real question is “Do you want your property to bring top dollar, or will you be content with a price in line with its market readiness and/or sub-par condition?”
Hilton Head Island Realty Plus and Its Value to the Seller – By listing your property with HHI Realty Plus, you become a client of the company and its licensees/agents and will receive the following client level services:
- Accounting of monies and other consideration received on your behalf
- Reasonable care and skill
- Advice, counsel and assistance in negotiations
A sample of the marketing services you will receive are as follows:
- Assistance in an accurate evaluation and pricing of your property
- Reliable real estate advice and counsel from highly trained, skilled and experienced staff associates
- Over a 100 years of combined real estate experience yielding a profound understanding of the buying habits and needs of out of area as well as local buyers
- A unique ability to attract local, regional, national and international qualified buyers through a comprehensive marketing plan that ensures extensive market saturation via the web and other traditional marketing tools. One such distinctive example is our affiliate relationship with Resort Rentals of Hilton Head Island, a locally owned and managed home and villa vacation rental company that literally has thousands of visitors each and every year from all over the world, many of which are buyers. Direct marketing materials are sent to each and every one of them on multiple occasions.
- Internet….Internet…Internet … No single method of marketing is more effective or provides more saturation and exposure than the internet; consequently your property will have exposure on multiple internet websites with particular emphasis on those known for their high viewership. It has been observed that approximately 75% of home buyers begin their search on the internet.
- Listed through the Hilton Head Island Multiple Listing Service (MLS) with over 1000 cooperating agents and brokers
- Networking with other top producing agents in and around Hilton Head Island and the surrounding lowcountry market area
- Carefully designed property fliers highlighting the features and specifics of your property
- Showing feedback revealing what buyers and agents like and what they dislike about the property
Closing Costs - Other than sales commission, closing costs that are typically routine and at the Seller’s expense are as follows:
- Attorney Fees - “ Do I have to use an attorney…do all real estate attorneys charge the same fees…do all real estate attorneys handle any and all real estate transactions?” The state of South Carolina is an attorney only closing state; consequently, an attorney is required to handle the closing of a real estate transaction. Fees will vary from firm to firm, but typically run between $550.00 to in excess of $1,000.00 dependent upon the firm’s fees and complexity of the transaction. Some firms are equipped and staffed to handle certain types of transactions better than the next.
- South Carolina Deed Recording Fee (formerly referred to as deed stamps) – This fee is collected on each and every real estate transaction that has a recorded deed and is routinely a seller’s expense. ( Ex: A property selling for $100,000 would have deed stamp fees of $370.00, a $200,000 sales price would be $740.00 and so on)
- Wood Infestation Report (CL-100 Report) – This inspection is for the purpose of determining whether or not there is any damage caused by termites or other wood destroying organisms as well as wood destroying fungi below the level of the first main floor of the structure. In most cases the expense of this inspection is customarily a seller’s responsibility. If a mortgage is to be obtained on the property, most lenders require that this inspection be performed within 30 days of the closing date. The typical cost of this inspection routinely runs between $150.00 to $225.00 primarily depending on the size of the property)
- Prorations - The two most common are:
o Property Taxes – The county bills for property taxes in arrears. The current year’s property taxes are billed in December and payable in January of the following year. This tax is pro-rated to the date of closing; consequently, the amount of time the property is owned by the seller during the year of sale is the seller’s expense and the amount of time the property will be owned by the buyer during the year of sale is the buyer’s expense.
o Homeowner’s Association Fees (HOA) and/or Regime Fees (condo fees)- HOA fees and/or Regime fees are paid in advance rather than in arrears; consequently, any such fee paid in advance by the seller will be prorated to the date of closing and the seller will receive a credit on the closing statement for the period of time that the buyer will be the owner.
Under certain circumstances you should also know…..
- What if the property I am selling has short-term rental bookings or I have a long-term lease in place with a tenant?
o Short-term rental bookings / South Carolina Vacation Rental Act: If you are utilizing the property as a vacation rental property and you have short-term rental bookings in place beyond the date of closing, the South Carolina Vacation Rental Act provides that “the grantee (buyer) of residential property subject to a vacation rental shall take title subject to the vacation rental agreement and the vacation rental management agreement for all vacation rental periods that begin no later than ninety days after the date the grantee's interest is recorded in the office of the register of deeds.”
At the time of closing the rental income for the current renter will be pro-rated between the buyer and seller subject to the terms and conditions of the vacation rental agreement and the rental management company unless otherwise agreed upon by the parties. All rental income generated beyond the current renter will be the grantees’ (buyers’) subject to the terms and conditions of the vacation rental agreement and the management rental company.
o Long-term lease agreement: If the property you are selling has a long-term lease agreement in place that you have entered into with a tenant, the “devil is in the details” so to speak. Does the lease agreement provide that the tenant must vacate with 30 days’ notice from the landlord, or does the language of the lease agreement provide that the lease term may not be altered without the landlord being in breach of the contract, etc.? If the terms and conditions of the lease agreement provide that the lease must be honored, then the grantee (buyer) of the property will become the new landlord and the lease payments will be pro-rated to the date of closing. Example: Monthly lease payments are $2,000.00 due on the first of the month….closing date is the 15th of the month…seller would receive $1,000.00 of the monthly lease payment and the buyer would receive $1,000.00 of the lease payment. Additionally, any security deposit made by the tenant would be transferred to the grantee (buyer). You should have your realtor and/or attorney review the lease agreement to make sure that you are not in danger of breaching the contract, and therefore exposed to any consequences that might arise as a result of such breach.
- 1031 Tax Deferred Exchange – “What is a 1031 Tax Deferred Exchange…do I qualify for it…will it be to my benefit?” A “1031 Tax Deferred Exchange” is a simple strategy and method for selling one’s property, that's qualified, and then proceeding with an acquisition of another property (also qualified) within a specific time frame. The logistics and process of selling a property and then buying another property are practically identical to any standardized sale and buying situation, a "1031 exchange" is unique because the entire transaction is treated as an exchange and not just as a simple sale. It is this difference between "exchanging" and not simply buying and selling which, in the end, allows the taxpayer(s) to qualify for a deferred gain treatment. Stated in simple terms, sales are taxable with the IRS and “1031 exchanges” are not. - US CODE: Title 26, §1031. Exchange of Property Held for Productive Use or Investment - Dependent upon your circumstances, the utilization of a “1031 Tax Deferred Exchange” could potentially be a huge benefit to you, or it may not apply and/or be worth the effort.
So Why Choose Hilton Head Realty Plus as Your Selling Brokerage?…. Skill, experience, training, professionalism, etc.…Yes, we have those attributes, but so do many other real estate brokerages servicing our area. In fact those are measurements that you should expect every Hilton Head Island real estate firm to be able to attain.
- TRUST: “Assured reliance on the integrity, ability, strength, or truth of someone or something”
Trust is something that cannot be purchased or mandated, but rather it must be earned and can only be given by those to whom they believe have earned it. HHI Realty Plus does not claim to be all things to all people, however; we do strive to excel in the services provided to those clients to which we do minister in a diligent manner that does earn us that most coveted relationship in which we seek …. “Your Trust”.
For over 30 years HHI Realty Plus has serviced the Hilton Head Island, South Carolina market area as well as the surrounding market area of Bluffton, SC and southern Beaufort County. This has been made possible by the Trust that we strive so diligently to earn and maintain. It is this Trust that keeps our clients coming back and feeling secure in referring their friends and family into our charge. We respectfully ask that you allow us the opportunity to earn “Your Trust” as well.