The Home Seller has three tools available to affect the marketability of their home: price, condition and terms. Price is the easiest to adjust for the competing properties, amount of inventory or market conditions. However, lowering the price is not necessarily the best decision when trying to maximize the proceeds of sale. So! Some Thoughts for You!
If a home is in poor or outdated condition, updating can be done to make it show favorably with other homes that are currently on the market. Sometimes, sellers rationalize not doing the work by saying they believe the buyers would rather make their own choices. The truth is that most buyers are using all their resources to get into the home and will have to live in its present condition until they can save enough to make the changes they want. Initially, they just want to Move In & Sit Down!
Another reason to go ahead and invest the money and effort into improving the condition is that it’s often times overwhelming for buyers to imagine the home in any other way than its current condition.
When comparing one home to another, buyers will sometimes refer to a home as the “stinky house” or the “old kitchen” which will put your home at a disadvantage if it hasn’t been updated. I have seen sellers invest $15,000 to $20,000 in upgrades, using a home equity line of credit before they sell, only to realize a $25,000 to $45,000 increase in the selling price. That’s a pretty nice return on a short term investment.
While price and condition are the main factors that control the marketability, terms can be equally effective. Terms relate to financial considerations made by the seller to induce a buyer to make a decision to purchase their home.
Specifically, these terms would be Seller-paid points or closing costs, interest rate buy downs and owner-financing are examples of terms that may increase the marketability of a home because of the additional benefits they offer to buyers if you’re selling your home in a Buyers’ Market.
Today, in the Las Vegas Valley, we are much closer (but not all the way) to a Sellers’ Market because of tight home inventories and low interest rates. The only thing holding us back is that the demand isn’t where it should be for a full blown sellers‘ market. I think that’s tied to a continued lack of confidence for some buyers in our current economy.
Benefits to selling your home in our current Sellers’ Market is that your home would be on the market for a shorter period of time, you should sell for closer to your asking price and buyers won’t be asking you to pay for some of their closing costs.
Another Idea is if you own your home outright and you don’t need to have all of the proceeds at close of escrow, as the seller you could carry a 10% second lien so that the buyer can get an 80% loan to value loan and avoid the expense of paying mortgage insurance. As the seller you would get most of their equity during the 3 to 5-year term, plus a fair interest rate on the loan that doesn’t have to be tied up for 30 years like the first mortgage.
Increasing the marketability of your home is a great conversation I like to have with my current and potential clients. My goal is to help you get the highest price in the shortest period of time with the least amount of problems. Just be aware that not all agents may be as creative as others.
I would like to have that interesting conversation with you so contact me when you are ready.
Click here to get an Idea of What Your Home May Be Worth in Todays Real Estate Market