5 Winning Homebuyer Tactics For Any Market

Regardless of the kind of market you find yourself in when buying your next home, there are key tactics buyers can use to make the process both more successful and considerably less stressful. What are these key homebuying tactics and how can you use them to navigate your next home purchase to a successful close? Find out in this edition of the Oregon Real Estate Podcast.

Listen to the audio podcast version of this article by clicking here or the ‘play’ button:

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‘The Thinker’ by Rodin

How Homesellers Think
There are plenty of factors that can influence how sellers think.  Among the most important of these is motivation, or a seller’s reason and/or need to sell. For example, expect different seller responses depending on if a homeseller is in no hurry, compared to other sellers needing a fast sale in order to purchase their ‘dream home’ or move for a job transfer. 
That’s frequently among the most frustrating elements for homebuyers, the variability not just in homes and seller pricing strategies, but navigating homeseller personalities and motivations.  

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Given the significant tasks involved with selling a property, some homebuyers may understandably wonder: Aren’t all sellers motivated?  Sometimes the answer is both ‘yes’ AND  ‘no.’  Consider a divorce situation, where one spouse desperately needs money and the other does not wish to move at all. Or consider an estate, where there are multiple family members, each with varying degrees of interest in selling; One family member may greatly need proceeds from a home sale, while the others are independently wealthy and perfectly willing to wait to sell, perhaps for tax purposes.

This means it’s helpful to first realize that as when fishing, you’ll never really know what you’ll be dealing with until you have them ‘on the line.’ Looks can be deceiving and no matter how a homeseller may outwardly behave, their motivation for selling is sometimes hidden and an important factor to determine as early as possible.  The situation can be further complicated if sellers have a large mortgage on their property being sold. In such a case, they’re not really negotiating with ‘extra’ money. They simply have little price flexibility in order to pay off their home loan and pay closing costs.  

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For Example
For an example of how disparately homesellers can behave, let’s say you drive up to a house your Realtor found for you. Walking up the steps to the porch, you begin your home tour. Upon entering, you immediately see the home is immaculate, the view grand, the layout ideal. It’s a great house. Yet compared to other homes you’ve seen, the price still seems a little high. In fact, you’re pre-approved, but purchasing the home at the seller’s asking price would be a tight squeeze.

Because it’s a great house and you’re ready to buy, you meet with your Realtor that night and write a ‘clean,’ yet not quite full price offer. Your Realtor forwards the offer to the seller’s Realtor and makes sure to include your lender’s pre-approval letter. The next day, your Realtor calls you with an update.

“Your offer was not accepted. But the sellers sent you a counteroffer at full price.” 

You’re stunned: “Full price! Why is that?”

“Well, they just placed the property on the market, are not in hurry and figured they could do better than your initial offer.”

Welcome inside the world of seller motivation.

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Knowledge is Power
Given situations like this, it helps to know as much as you can about the local real estate market, the property, the sellers and details about their situation. For example, sellers frequently exhibit less price flexibility early on in the listing period. That’s because if the property is new to the market, their opinion is often strongly in favor of their home’s benefits and sometimes they don’t even know where they will move yet. It’s also common for sellers to think ‘I can always come down in price if it doesn’t sell.’

Fast forwarding a month or two into a property’s market time, the situation and seller’s attitude can look considerably different.  By then, buyers have ostensibly toured and rejected the property as being ‘too high’ by a handful (or more) of qualified buyers. ‘Why doesn’t someone just bring us an offer,’ some sellers might then ask. The saying ‘Price cures all ills’ is sometimes hard for sellers to hear, but generally true.  Buyers are constantly comparing the home they’re looking at to others they’ve toured. One home may have a more desirable floorplan, another home may have a better view, another may have an extra bedroom, bathroom, or larger garage.

So why don’t some buyers write an offer for less than asking price? Here are just a few reasons: 

  1. Buyers not wanting to offend the seller
  2. Buyers not thinking the seller would respond favorably
  3. Buyers not even aware the property is for sale,  given the high price
  4. Buyers concerned that the property would not appraise high enough
  5. Buyers plan to make changes to the house, which requires additional cost

Inventory
Another independent, yet primary factor to consider when homebuying is inventory, or the amount of competing homes on the market. If the real estate market is flooded with properties, expect different behavior from most homesellers compared to a market where homes are scarce. Let’s briefly consider the concept of equilbrium,  buyer’s market and seller’s market.

Equlibrium
When neither buyers or sellers dominate, a real estate market is considered to be balanced or in equilibrium. In our region, the range of 3 to 6 months of home supply is generally considered to be favoring neither buyers or sellers and otherwise ‘normal.’ Inventory figures are released monthly by multiple listing services.

Buyer’s Market
A buyer’s market exists when there are more sellers than buyers. Usually this means there is an abundance of homes to choose from, so it’s considered a market favorable to buyers. In our region, more than 6 months of home supply is generally considered to be favoring buyers. Home prices are typically falling, market times are longer and sellers are competing for buyers.

Seller’s Market
A seller’s market exists when there are more buyers than sellers. This is indicative when there is low home inventory to choose from, so it’s considered a market favorable to sellers. In our region, fewer than 3 months of home supply is generally considered to be favoring sellers. Home prices are typically rising, market times are shorter and buyers are competing for properties.

Interest Rates
A relatively minor shift in interest rates can price some of the properties a buyer might consider buying ‘out of reach.’ And while interest rates are a factor outside the control of both buyers and sellers, they remain part of the market landscape through which everyone needs to navigate. 

Market environments are important, but unless the element of seller motivation is well understood, you could even be dealing with an unmotivated seller in a buyer’s market and see poor results. That’s because the factors of seller motivation and home inventory, for example are not linked, but variables for homebuyers to consider.

If homes are scarce and prices are rising, understand that buyers are likely to feel pretty good about their property. As a result, presenting a clean and very strong offer is likely to work best in any market, but especially in a competitive situation with other homebuyers. Also include your lender’s pre-approval letter to confirm that you are able to afford the home you’re bidding on.

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In Real Estate, It Helps to Level the Playing Field

If the market is balanced, with neither buyers or sellers holding the ‘upper hand,’ the playing field is more level. But you still must deal with seller motivation. As a homebuyer, it’s to your advantage if the seller has a real, time-sensitive reason for selling.  If you’re buying in a buyer’s market with lots of homes to choose from, realize that while most sellers will adjust to the market with reasonable prices in order to compete, there are still ‘hold-outs’ who remain less motivated.

Dealing with marginally motivated homesellers can be frustrating, but sometimes helped by determining if there are any areas that matter to them.  For example, if your offer gives the seemingly unmotivated seller an extra two weeks to move out at no added cost for ‘rent back,’ he or she may then reconsider a less-than-full-price offer. Figure the ‘pain point’ of a seller and you may be able to craft a ‘win-win’ offer.

Keeping the important consideration of seller motivation in mind, here are five tactics to make your homebuying more effective and less stressful:

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Homebuyer Tactic #1: Do Your Homework
Have your Realtor research the property before you consider making an offer. The answers to certain questions can help reveal insights. How long has it been on the market? Have there been any price changes? How many different listing Realtors has this seller gone through? Observing that more than a couple Realtors worked with the same seller within a relatively short time period can suggest an unreasonable seller who is either not willing to seriously look at the market, or one that is simply ‘difficult.’

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Understand that even if a property is significantly overpriced, early in the process many homesellers remain enthusiastic about any interest in their property. In this situation, each showing early on confirms the seller’s belief that theirs is the best home in town. Experienced Realtors know the process well and by simple observation can become astute in understanding seller behavior. And sometimes the occasional ‘lightning strike’ will occur, where a seemingly above-market price offer is made for more than a property appears to be worth. But generally speaking, this is the exception and not the rule. And by staying with an above-market price over an extended period of time, sellers then run the risk of their property becoming ‘shop worn,’ with buyers wondering ‘What’s wrong with it? Why hasn’t it sold already?’

As a result, most experienced agents understand a seller’s price that turns out to be ‘above the market’ can change with time, or until at least a few qualified buyers walk away without making an offer. Further complicating the situation is if a seller is not particularly motivated, which is sometimes difficult to address. This underscores the importance of homebuyers understanding the homeseller’s motivation. Does the homeseller have a deadline, such as a purchase agreement already in place, a time sensitive job transfer, or an expiring interest rate lock, in order to purchase another property?

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Homebuyer Tactic #2:  Write a Strong Clean Offer, with Minimal Contingencies
Offer close enough to avoid triggering a counteroffer. Sometimes a homeseller will not want to ‘rock the boat’ if an offer is fairly close to their asking, despite not being full price. Once a counteroffer is ‘triggered,’ additional items in the original offer may be changed, since a counteroffer essentially restarts the negotiation process anyway.

This is also where comparable research can be helpful. If you’re convinced that the property is overpriced and you’re unable or unwilling to offer what the seller is asking, consider including a market analysis with your offer and include truly comparable property information that shows why your offer is not for full price. 

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Back it Up
A pre-approval letter made for the exact purchase price can help make your ‘strong, clean offer’ stronger . You may not want to telegraph that you’re qualified for a home loan in excess of your offered amount, which is why lenders frequently will send your Realtor a pre-approval letter that precisely matches your offered price. Otherwise, if you show a seller you’re approved significantly above the offered price, the seller may simply respond with a full price offer, figuring you’ll pay more because you can afford it.

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Homebuyer Tactic #3:  Escalator Clause
If you expect the property you want to buy will have multiple offers, one way to both stand out and enhance your odds of success is by using what’s sometime known as an ‘escalator clause.’  Under this scenario, your offer is made and in it, you agree to beat any other offer up to a certain maximum dollar figure and usually in an increment of say, $1,000 or other specified amount. There can be various elements to an ‘escalator’ clause. If your ‘escalator’ offer is accepted, proof of the second best offer is typically provided to confirm the appropriate purchase price above which the winning buyer then must pay.

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Homebuyer Tactic #4: Activate ‘Stealth Mode’
If you’re a ‘choosey’ homebuyer, or seeking to buy in a certain area or neighborhood with few homes for sale you’re interested in, consider having your Realtor go into ‘stealth mode.’ This could mean having your agent knock on doors, collaborate with other Realtors having a ‘pocket’ or unofficial listing, or simply become hyper observant. Many buyers don’t even consider this approach, which while unconventional, can sometimes pay off with work, persistence and a little luck.

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The Pre-Listing Stage
In the early phases before a property is formally placed on the market, there are various pre-listing indications you might notice. For example, a location company is often contacted to spray paint where utility lines are located. This prevents a real estate sign placement company from digging a hole and hitting a gas or electric line. How does this matter? If you or your Realtor observe such ‘utility locator’ paint, or a dumpster, a storage ‘pod,’ a moving truck, a U-Haul van, or a ‘hanging signpost’ without a real estate sign yet placed, these hints can sometimes indicate a property is being put up for sale…giving you a headstart before other buyers find out about the home. If the average market time for a given area is weeks or months and you have a ‘heads up’ even before day one of the property hitting the market, you have a tactical advantage.

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Stealth Research Can Provide a ‘Direct Hit’ of Otherwise Little-Seen Information

For currently listed properties, other examples of ‘Stealth Mode’ could include your agent researching information on a property or homeseller for potentially helpful tidbits. This might be helpful legal information such as an estate, lawsuit, divorce or inheritance. Other possibly helpful records to consider may involve tax records, old listings from the local multiple listing system (or a separate more distant MLS altogether), since sometimes property history will not always be found in the usual multiple listing system.  

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Homebuyer Tactic #5: Prepare for a 2nd Bite of the Apple
Once your offer is accepted, that’s it, right? Not necessarily. A well-prepared homebuyer always keeps an extra tactic or two ‘tucked away.’

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So as ‘back up’ tactics go, one might consider such ‘deep concealment’ techniques much like an ankle holster: Maybe not your first line of defense, but nice to have, ‘just in case.’  What is an example of such a ‘back up’ homebuyer technique and why might it be considered so stealthy? 

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Being ‘En Garde’ Helps to Prevent Needless Surprises

‘En Garde’
First, it’s important to understand that like homebuyers, homesellers are typically most ‘on guard’ during formal negotiations. This period usually begins once an offer is written, plus during any ‘back and forth’ by buyers and sellers. Once an agreement is reached, even though there remains significant time, work, patience and even negotiation until the sale is officially closed, most buyers and sellers relax a bit psychologically.  But therein lies the problem, since realistically, two key factors usually remain that could interrupt, or even destroy the existing sale now in place. 

These two key factors include the inspection and appraisal, both which the seller has little control over. So if the home inspection reveals there are now plenty of heretofore unknown repairs, there are several possible scenarios on the inspection alone:

  1. Seller pays for everything
  2. Buyer pays for everything
  3. Buyer and seller negotiate

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Assuming any home inspection items are successfully ironed out, this still leaves the appraisal. What could go wrong there? Two of the more common appraisal ‘minefields’ are (a) value and (b) additional repair and/or code factors. If a barn does not have a permit, the home inspector missed an issue important to the appraisal, or the appraisal comes in low, expect more potential negotiation between buyer and seller to close the transaction.

Most buyers don’t necessarily focus on getting a ‘second bite at the apple.’ But if you feel your initial negotiation in purchasing a property didn’t go perfectly, sometimes the inspection and/or appraisal provides a renewed source of redress. And if the property has material defects, the seller is required to either disclose or fix them, in the event your transaction doesn’t go through. And regarding the appraisal, there is no guarantee a different appraisal will come in much different. So if the appraisal is low, renewed negotiation can occur here, as well.

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Do you have questions about buying or selling Oregon real estate? Contact Realtor Roy Widing using the convenient form below or call 800-637-1950 for a free consultation.

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7 Strategies to Sell Your House Sooner!

Homeselling Strategies
There are key strategies for homeseller success. What are these strategies and as an Oregon homeseller, what is it that you might need to know? As an Oregon homebuyer, you may find it helpful to view the following insights on the homeselling process with an ‘insider’s’ view.

Strategies that Benefit Homesellers
There are some proven strategies that benefit homesellers. Chief among these is the appropriate mindset, even before implementing a well thought out ‘plan of attack.
‘  Experienced Realtors routinely guide homesellers through a ‘minefield’ of common and avoidable missteps in their many forms.

Click here or on the ‘play’ button below to hear the audio podcast version of this presentation.

Proactive awareness is one mindset that can significantly benefit homesellers. Proactive awareness includes addressing potential problems before they disrupt or delay a home sale. Specific examples might include items buyers expect to be addressed or lender required repairs :

1. Making sure required permits for any prior remodeling are ‘finaled,’
2. Replacing leaky gutters,
3. Trimming shrubs that touch the house,
4. Confirming there is no obvious peeling paint, or
5. Replacing windows that have broken seals.

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Besides removing such items as a possible source of contention, proactively addressing relatively simple maintenance items helps to alleviate buyer concern. That’s because if a house has numerous obvious signs of deferred maintenance, buyers may wonder about other, less obvious repairs.

Proactive awareness can also mean that you understand homebuyers have options and that as lovely as your home is, some homebuyers may prefer to live elsewhere. This mindset provides a homeseller with fortitude and the advantage of not being crestfallen when their home doesn’t sell the first week on the market.

Homesellers also benefit from strategic thinking. Based on your needs and pricing strategy, for example, this might mean setting up alternative schedule scenarios for homebuying, moving and budgeting,  depending upon whether your home sells in 10 days or 100 days.

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Thinking Ahead is Beneficial for Homesellers

Combining proactive awareness with strategic thinking provides the kind of forethought that allows fewer surprises throughout the already stressful process of selling a home. Then, given the reduced stress that comes with having to react to negative news, you’re (1). able to focus on those issues that matter most, (2). spend less time worrying and (3). possibly even enjoy the homeselling process.

Strategy
The word ‘strategy’  is derived from the Greek word strategia, meaning the ‘office of general, command, or generalship’ and as such is considered to be a high level plan to achieve one or more goals under conditions of uncertainty

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Degrees of Uncertainty Exist in Gambling, Battle and Homeselling

The Certainty of Uncertainty
As we saw in the Oregon Real Estate Podcast program titled The Art of War for Homesellers,’ selling a home is frequently conducted under conditions of uncertainty. Awareness and anticipation helps homesellers to better predict and influence their real estate outcome, as situations dictate, often in ‘real time.’ 

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Kicker Tom Dempsey Accomplished his World Record Field Goal with Half a Foot!

Goals
Goals can come in many forms. A primary goal for homesellers is often a prompt, uncomplicated transaction. Reasons cited by sellers for wanting a fast and easy sale include feeling like ‘living in a fishbowl,’ or the need to constantly be ‘picking up’ to keep the home ‘show-ready.’  Other reasons might be a time-sensitive job transfer, or a firm deadline to purchase the next home before a favorable interest rate lock expires. Whatever your goals, some homesellers benefit by prioritizing them early in the process on a sheet of paper or computer printout. This roadmap can help to track progress and maintain focus on the desired outcome.

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Missions, Strategies & Tactics
First, it’s helpful to know how missions vary from strategies and tactics.  If the overarching mission is to move in a timely manner while selling your home for the most money possible, then a variety of planned strategies to sell your property faster and for top dollar could employ numerous, effective and specific tactics.

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One If By Land, Two If By Sea
Think of it this way: Tactics are specific, detailed actions that often use diverse, pre-planned strategies to accomplish your mission.  For purposes of this article, we already know the mission: Selling your home without needless delay at the highest price. This means that in order to enumerate tactics to sell your house sooner and for the most money, it’s helpful to first arrive at appropriate and achievable strategies to accomplish such a mission. Let’s begin with the immutable real estate characteristic of location.

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Strategy #1: Address Your Home’s Location
Your property’s location is a key factor to consider when you sell your home. It is also the one element which cannot be changed. To properly determine real estate value, location must be considered and accounted for with respect to what buyers are willing to pay for like homes in similar locations.

Mission:
Sell your property faster, for the highest price.
Strategy:
Maximize your property’s locational advantages.
Tactic:  It’s helpful to know that many buyers for your property may not be far away. Ensure awareness among local or even hyper-local buyers, who may either have relatives already living in the area, or existing residents who may sell and wish to remain in the neighborhood. While it’s true that buyers frequently appear from outside the area, some neighborhoods have an inordinately high ‘retention factor.’ Such homebuyers know the area and are already living there ostensibly because they like it. They may want a larger or smaller home, but don’t wish to move away from their family, friends or desirable commute. Generating a ‘bidding war’ among buyers likely to strongly desire your property can be very successful.

The good news is that even homes in areas generally considered to be sub-optimal (near loud factories or industrial parks) sell. The market for these buyers may be skewed toward a particular price bracket or the hard-of-hearing, but when the locational aspects are acknowledged and adjusted for, buyer resistance to a poor location can be overcome.

If location is a major objection, it becomes especially critical to match the home to what the market will accept. Otherwise, sluggish showing activity, low offers, low appraisals and potential sale-fails are common outcomes.

Similarly, a property on a busy street may have less demand from parents with young children. However, to a disabled person whose requirements include close access to public transportation, this same property could be ideal. Some locations are more challenging than others. When dealing with high power lines, nuclear waste contamination or crime infested areas, location is more of a major limiting factor.

Secret #1: To determine an accurate list price, review comparable properties with locations that closely match the subject property. Make certain that the location of each comparable is truly similar. When performing a market analysis on your property, your real estate professional should compile a list of comparable sales that take location into account.

Specific criteria among similar homes assist in evaluating exactly what constitutes a comparable location to the subject property. This is accomplished by determining whether these residences share the same neighborhood, school district, zoning/land use restrictions, view, commute time, park proximity, street condition and volume. Only by utilizing accurate comparable sales information can maximum accuracy be achieved to understand how locational issues affect your property.

Recent, accurate and supportable market evidence is therefore essential. Real estate is unique in that it is considered “non-fungible.”  Unlike a textbook, no two homes or properties are considered identical. This being the case, a degree of professional judgment must be exercised when establishing real estate values. Once your home’s actual market value is determined, you can then proceed to maximize other advantages through the remaining “7 Strategies to Sell Your House Sooner.”

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Strategy #2: Address Your Home’s Condition
The condition of your home greatly affects how fast it will sell. One reason for this is that many buyers lack the “vision” required to imagine what a minimally maintained home could look like in its improved state. Another reason is that bargain hunters are always eager to point out deficiencies to justify their “low-ball” offers. Don’t give the bargain hunters ammunition!

Mission: Sell your property faster, for the highest price
Strategy:  Minimize negatives of your home’s condition and enhance the positive features.
Tactic: Address all significant and obvious needed repairs. Consider paint, if needed.

You can sell sooner and avoid headaches if you take the following steps:

  1. Focus on “curb appeal” – Step out to the street and take a long look at your home. Try to view the home through a buyer’s eyes. Are bushes overgrown? Does the lawn need mowing? How’s the roof? Are the gutters drooping? Is there an old car up on blocks in the driveway? Your initial task is to enhance the appearance of the home’s exterior, including the yard. Secret #2: Realtor studies confirm you won’t get the buyers inside your home if they don’t like it from outside.
  2. Clean & uncluttered inside – Everyone prefers a clean home. Buyers will forgive clutter before they’ll forgive dirt. A thorough housecleaning is advisable prior to putting your home on the market. Be sensitive to odors in the home and neutralize them. Get rid of the clutter by storing any non-essential items which do not enhance the appearance of your home’s interior. One helpful ‘trick’ is to remove half of the items in your closets to make them look bigger. If you lack storage space, consider renting a mini-storage unit on a short-term basis. It could be a great investment!
  3. Light and bright – Dim lighting and dark colors can dissuade buyers from considering your home. If you decide to re-paint and re-carpet the interior prior to selling, choose light colors. Off white paint and light, neutral-colored carpeting have the broadest appeal. Avoid white carpet, as dirt shows more readily.
  4. Remedy deferred maintenance – Almost every home that’s more than a few years old needs a repair or two. Fortunately, many home repairs are minor and require little time and effort. Those little jobs around the house that you’ve been meaning to get to – the leaky faucet, the loose handrail, the cracked light switch cover – all could be seen as “trivial” items by a seller. Yet to buyers, these may be viewed as signs of neglect and symptomatic of larger, unseen problems.
  5. Disclose all known property defects – Don’t try to hide your home’s defects from the buyers — It could come back to haunt you.

Oregon-01 Strategy #3: Address Your Home’s Price
You don’t determine the sale price.

Your Realtor doesn’t determine the sale price.
Your well-intentioned relatives don’t determine the sale price.
Sentimental value doesn’t determine the sale price.
Your financial needs don’t determine the sale price.
Your investment in the property doesn’t determine the sale price.
You get the point.

Mission: Sell your property faster, for the highest price.
Strategy:
Maximize your seller’s net proceeds at closing by provoking a bidding war.

Tactic: Aggressive pricing at, or barely under, the current market value.

Secret #3: The market determines the sale price. Your home is worth what buyers are willing to pay.  Listen to the market. The strategy of aggressive pricing is one method to provoke a ‘bidding war’ and make buyers compete for your property. Banks sometimes use this tactic and it sometimes means not taking the first offer that comes in. What you want are clean offers, preferably cash if possible, with minimal offer conditions and a short closing timeframe.  

oregon-real-estate-podcast-24Strategy #4: Address the Marketing of Your Property
The maximally effective marketing of your home requires a multi-pronged approach. This includes not only featuring your home in the local multiple listing system, but how it is featured, including quality photos and compelling remarks in both the ‘public’ and ‘Realtor only’ versions. In addition, even if the property is correctly entered in the MLS, if showing access is limited, expect a damper on showing activity. For example, if you require 24 hour notice to show the property, then some agents working on short notice simply won’t be able to comply and there will be a missed opportunity.

Secret #4: Put the ‘Multiplier Effect’ to work for you. This means ensuring your property is promoted in the most effective venues and to the most logical buyer groups for your property type. For residential homes, this includes professional signage, flyers, plus at least one multiple listing system along with an advanced web presence. Each marketing ‘mix’ can vary, depending on factors like property type, price range and location.

Mission: Sell your property faster, for the highest price.
Strategy: 
Maximize your home’s marketing advantage to make it more attractive to buyers.
Tactic:
The larger your ‘buyer pool,’ the faster your home will sell and for the most money. To accomplish this, have your Realtor include the use of key ‘searchable’ phrases referencing your neighborhood, district or other recognizable words denoting where you live in the remarks section of your property’s listing. If seller financing is an option for you, consider offering ‘seller terms’ to further broaden your buyer base. Also helpful are yard signs and directional signs.

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Selecting the Right Buyer Pool for Your Property Could Mean Rewarding Yourself at a Pool Like This One

Strategy #5: Address the Buyer Pool of Your Property
Mission: Sell your property faster, for the highest price.
Strategy: Increase the buyer pool of qualified buyers for your property in order to potentially increase your net proceeds at closing and sell your property faster.
Tactic: Offer as many terms as possible;  The more terms a seller offers, typically the faster the sale and higher the price

“Terms” in real estate parlance refers to the form in which consideration or payment is made. Common terms include cash, conventional loan, seller financing, 1031 exchange and other trade methods, a government insured loan, non-conforming loan or private investor and assumptions. Below are explanations for a few of the most commonly used terms in real estate transactions. Secret #5: Higher sales prices and shorter marketing times are benefits of offering the greatest variety of terms.

TRUE CASH BUYERS are able to close transactions rapidly without the usual lender requirements such as loan underwriting or an appraisal. Buyers also have no loan fees. Cash buyers may expect price flexibility in their negotiations with home sellers. Cash purchasers are a minority of buyer types.

CONVENTIONAL LENDERS are the most common source of residential real estate loans. Lenders assess purchaser qualifications through income, credit history and tangible assets. They also routinely require appraisals, a pest & dry rot report and other inspections, depending on the property. Most conventional loans are 80-95% loan to value, which means the buyer has a 5-20% down payment. The majority of home sales involve conventional loans.

SELLER FINANCING involves sellers willing to act as the “bank” when selling their property. Payments can be made directly to the seller, or through an intermediary, such as a collection escrow account. Often a substantial down payment is expected with a balloon payment due on the remaining balance at a pre-determined date. Because of the seller’s willingness to assume a degree of risk while also offering serious savings (buyers have no loan fee or appraisal to pay), seller financing tends to deliver higher sales prices. Interest rates vary depending upon the motivation of the parties involved and other negotiated factors. Typically, seller financing is secured with a trust deed or land sales contract. Unless the property being purchased has either no loan remaining or little owed on it, a current lender’s “due on sale” clause may prevent seller financing as an option.

NON-CONFORMING LENDERS are a financing option for those unable to secure financing under conventional guidelines. Many are willing to waive a purchaser’s debt rations if net assets are considerable. Home equity loans are a popular market for these lenders. Interest rates tend to be higher than conventional loans, plus various up-front fees and points are often required.

PRIVATE INVESTORS assist in financing real estate transactions to receive greater returns on their investment. For instance, most lenders will not loan on homes lacking a foundation. Private investors are often eager to fill this gap and loan the money to the purchaser, thereby “cashing out” the seller. Payments from the purchaser are then made to the investor. To ensure an attractive return, significant penalties for prepayment are common.

GOVERNMENT INSURED LOANS (FHA/VA) are government-backed loans requiring additional paperwork and documentation. These programs frequently offer significantly lower loan limits, longer processing times and more stringent home condition requirements than conventional loans but by agreeing to sell your home under these conditions can be helpful in enlarging your pool of potential buyers.

ASSUMPTIONS involve a buyer taking over the seller’s prior obligation by making a payment or securing financing for the difference between the selling price and the assumed amount. “Qualified” assumptions typically require that a buyer who assumes an existing loan first be qualified by the existing lender. “Blind” assumptions require few qualifications, sometimes necessitating only that the purchaser pay a set fee.

You’ve Heard the First Five Strategies. For the entire power packed list, just complete the convenient form below to receive the full report, “7 Strategies to Sell Your House Sooner!”

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