Today, I’d like to share with you a few little things that you can be doing right now to make your home sale go much more smoothly. As with most home sales, the lions share of the work up to the buyer. You sit, fingers crossed, waiting for them to do the inspection, get appraisals and above all get qualified financially. All of these things are out of your control but, what if I told you that you could make things go faster and smoother if you simply took these 3 steps.
- Get a Pre-Inspection Done
- Handle Known Issues Ahead of Time
- Sell Your House “AS IS”
I’m going to take a moment to give you my thoughts on these three items in a moment but, I want you to realize something as we go. I’m in the same boat that you are. I’m planning to sell my house very soon. It is 12 years old now and I don’t want any surprises when it comes time to list it. I’m going to mitigate any issues by handling these three things on my end first. Here is how I plan to do it.
This one is a hard pill to swallow however, I’ve been through many situations whereby we have a great offer and it comes to inspection time then Wham. All bets are off. The inspection reveals some major issue that is going to cost a bundle to fix. Some sellers try to anticipate this by adding a few extra dollars to their acceptable sales price so that they can offer a reduction to the buyer if necessary. You could get lucky with that but, you may not. I’ll give you an example. I was selling a house that was about 40 years old and it was in really decent shape or so we thought. We came to terms on an offer and went under contract. An inspection revealed that there was some fungi growing under the house in the crawlspace and the buyers withdrew their offer. In this case, the homeowner took the inspection report and had a contractor correct all of the major issues listed. It cost them a whopping $11K to do it, but, that was how they wanted to handle the situation. This is where a pre-inspection would have come in very handy.
We could have gone into the listing knowing these issues ahead of time, handled the fungi problem which was the biggest issue of all and put it on the market knowing that there were no other major hang-ups to getting the home sold. This would have been important when it came to the buyers ordering their own inspection because we would have indicated that there was an inspection on the home prior to the listing date and that they could have access to it after we had a ratified contract. Now, let me bring this picture into focus. By doing the pre-inspection, we would have put ourselves in the driver’s seat for negotiations. No surprises, just facts, and figures. Chances are that when they had the fungi addressed, the contractor would have also estimated how much it would cost to fix the other minor issues so now we have a complete picture. Let’s say that the house was listed at $325K and the seller was happy to let it go for $320K. We would already know that any inspection report the buyer could come up with would not add up to more than $5K in additional repairs right? Then it becomes more of a take-it-or-leave-it situation for the buyer. The seller is in the driver’s seat with respect to this negotiation.
Handle the Issues
By handling the big issues ahead of time, you are mitigating any fall-throughs that may arise. Ladies and Gentlemen, I’m here to tell you that I’ve seen some stuff come back on the home inspection report and it’s never pretty. As I mentioned in Negotiation Strategies… Double Down or Fast Friends? it’s the inspector’s job to find issues and if he or she doesn’t, they are not going to get paid. After you receive the results of your own pre-listing inspection, you have two decisions to make. First, you should decide what you are willing to fix and second, you should decide what the true price of the home is. With these things in mind, here is an example of what I mean. Let’s say that your home inspection reveals rodents living in your attic space. The cost to remove them is a whopping $900 plus we see that there are condition issues in the crawlspace with moisture which will cost another $1300 to address and last but not least you know that you need new carpet ($4000) to get it sold for the right price. The grand total of all major repairs is $6200. If we leave these things untouched and the buyer’s inspection reveals them then guess what would happen? Well for one, they would have the upper hand in a potential renegotiation but, for two, they could easily pull out of the deal altogether because who wants to buy a new house with dirty carpet, rodents in the attic and moisture issues? No one. The answer is not one person.
It’s Your Job
So, let’s backtrack a little bit. Instead of leaving the inspection to the buyer, it costs you about $400 to get it done. You sink the $6200K into the repairs and voila your house is market ready. You might say, “Yeah but, it just cost me a small fortune just to list it.” To this I say,” Yes, but, now you have two more things that you didn’t have before. Number one, you have a house that is market ready, can pass a buyers inspection and is priced correctly. Number two, you have peace of mind which is actually priceless. You see, if you go under contract without having your own inspection and your contract falls through because of the buyer’s inspection findings, guess what? You’re on the hook to fix those things anyway. Pay me now or pay me later as they say. Who wants to buy a new house with dirty carpet, rodents in the attic and moisture issues? When in doubt, please refer to the last sentence of the previous paragraph. Wink. Nod.
Selling Your House “AS IS”
Now that we’ve done the first two items on our list of three, this one is super easy and very important. When you list your house to sell, make sure your agent states that it is being sold “As Is” in the remarks section. Why? Because it’s kind of a catch-all. People who know what “As Is” means generally won’t come back for a renegotiation on the price after an inspection. For the purpose of this discussion, selling your home “As Is” means that you have no intention to spend another dime on fixing anything in it before moving on. Again, there are two ways to do this but, the first is a real roll of the dice. One, you could opt for not having an inspection or fixing anything at all and seeing how the cards fall. If the inspection is fairly clean, chances are your deal will hold and you will not have a second renegotiation because you stated that it was an “As Is” sale. But, and I hate to sound negative, chances are that there will be something that the buyer isn’t willing to deal with as in our last example and they will pull out altogether. Put yourself in their shoes. If you were buying a $300K house and it had $6200K worth of repairs needed the minute you walked in the door what would you do? Keep shopping. Yes, you would move right along and find another one that didn’t require anything but your family and some decorations to make it your own. Or number two, you could take the road less traveled which puts you in the drivers seat the entire time. You get the inspection yourself, fix the major issues and then list it “As Is.” This way your bases are covered. There will be no crushing blows with regard to the findings and you won’t likely have to come to terms again on price because you already told them, “Hey, I’m not spending another dime to sell this house.” Since your agent stated that it was an “As Is” sale. Win-win? You must decide for yourself but, don’t say that I didn’t warn you.
I’d like to share one more thing with you before we close. Selling your house is very emotional. You might think that I’m speaking to the ladies here but, I’m telling the guys also. Now, this is going to make you laugh… or cringe but, I once met a couple in their home for a listing appointment and I told the husband that his house wasn’t going to sell for the price he wanted to get and he threw me out. He was so angry. It’s my job to be up front and honest. He wanted his house to sell for a price that was higher than what he owed on his mortgage and it wasn’t worth that amount at that time. It’s emotional. I get that. No matter how you think you’re going to handle it, I’m willing to bet that you will be shocked by how your feelings change your behavior. This is the #1 reason that you should hire a real estate agent. You can’t make logical, practical and reasonable decisions nor can you see 4 or 5 steps ahead in your negotiations when you’re angry or offended that someone would offer you $50K less than your asking price but, your agent should know how to deal with it. That’s part of what they get paid for. Now, I’d like to end this by telling you that I was right. I didn’t get the listing for the house where the guy threw me out but, it sold for exactly what I told him that it would sell for. And that was enough satisfaction for me.
In the meantime, if I can help you sell your house I’d positively love to do that. I’m never too busy for you or your referrals.