Home Seller FAQ’s

 

Why shouldn’t I price my house a little high, since I can always drop the price later?

That’s a strategy that sounds good – but, in fact, is more likely to result in a lower price. Here’s why. The first few weeks a house is on the market is when it will have the most activity. If a house is overpriced, it has to compete with houses at that higher price level, which are almost certainly larger or have newer/more luxurious features.

So the overpriced home is unlikely to attract an offer. Worse yet, those first weeks are when real estate agents preview the house. If it’s overpriced, they may not even bother to show it to their buyers. Eventually, the seller will have to drop the price – and may end up with an even lower price because buyers will wonder why the house has been on the market so long and may factor that into their offer. A Weichert Price Trend Analysis provides a unique method for arriving at a selling price that takes your local market situation into account.

What is meant by the term “contingency” in a sales contract?

Sales contracts typically contain several “contingency” clauses, or stipulations that the sale is subject to. For example, with a mortgage contingency, if the buyer is unable to obtain financing within the specified timeframe, neither the buyer nor the seller is required to complete the purchase. Among other common provisions in the “subject to” section are termite and other inspection issues and the purchaser’s need to sell a current home first.

What is an escape clause?

An escape clause, also known as a kickout or knockout clause, is a provision that allows the party to void the contract. For example, the seller may retain the right to look for a more favorable offer, with the original purchaser retaining the right, if challenged, either to firm up the first sales contract (such as by waiving a contingency) or to void the contract. As another example, sellers might insist upon an escape clause in a contract that hinges on the buyers’ selling their home.

What are methods to determine value?

A Comparative Market Analysis (CMA), which is an informal estimate of value based on the recent selling price of similar neighborhood properties.  And an Appraisal are the two most common and reliable ways to determine a home’s value.

How do I determine how much my house is worth?

Simply stated, a home is ultimately worth what an informed and unbiased buyer will pay for it.  Everything else is really an estimate of what a buyer might pay.  The Fair Market Value, or worth, is established when a meeting of the minds between you and the buyer takes place.

Why Shouldn’t I price my home higher so I can leave room for negotiation?

The first few weeks a house is on the market is when it will have the most activity.  If a house is overpriced, it has to compete with correctly priced houses at that higher price level, which are almost certainly larger, newer, higher in quality, superior in location, view, etc.  Those first weeks are also when real estate agents preview the house.  If it’s overpriced, they may not even bother to show it to their buyers.  Eventually, the seller will have to drop the price – and may end up with an even lower price because buyers will wonder why the house has been on the market so long and may factor that into their offer.

Do I have to disclose information about my house?

Property Disclosure could protect you from a lawsuit.  Today, home sellers are required to fill out a form disclosing material facts about their homes.  Material facts are details about the home’s condition or legal status, as well as the age of various components.  If your state does not require a written disclosure, the real estate laws probably require sellers to disclose any known problems with the home they are selling.  Information about the major components of the home including the electrical, plumbing, appliances, HVAC, and the roof are usually included in these Property Disclosure Forms to make the potential buyer aware of any structural or safety issues.

What are examples of “Material Facts”?

The following examples include details that would qualify as “Material Facts” that must be revealed by sellers about their homes:

  • Damage from wood boring insects.
  • Mold or mildew in the home.
  • Leaks in the roof or foundation walls.
  • Amount of property taxes paid annually.
  • Problems with sewer or septic systems.
  • Age of shingles and other roof components.
  • A buried oil tank.
  • Details about any individual who claims to have an interest in the property.
  • Information about a structure on the property that overlaps an adjacent property.

Things that may or may not be material facts: whether a death took place in the home or whether a home is considered haunted.

Are Real Estate Agents required to disclose material facts?

Agents and brokers can be held accountable, especially if they had prior knowledge or should have known about any Material Facts. Although agents or brokers are not home inspectors, they are expected to use their best judgment when something is evident or appears suspicious.

What is “Staging a Home” for Sale?

Think of “staging” as preparing your home to star at a big event.  As the star, your home should be dressed in a tuxedo (or ball gown), rather than appearing too casual, as if wearing sweats and a t-shirt.

What are contingencies?

Sales contracts typically contain several “contingency” clauses, or stipulations that the sale is subject to.  Both Sellers & Buyers may have contingencies in the contract.

Seller contingencies for example may be a mortgage or financing contingency, if the buyer is unable to obtain financing within the specified timeframe; neither the buyer nor the seller is required to complete the purchase.  Among other common provisions in the “subject to” section are termite and other inspection issues, appraisal, closing date and the purchaser’s need to sell a current home first.

Are home sale costs deductible?

If you sell your home and realize a taxable gain even after the exclusion, you can reduce your gain with selling costs.  Your gain is defined as your home’s selling price, minus deductible closing costs, minus your basis.  The basis is the original purchase price of the home, plus improvements, less any depreciation.  Real estate broker’s commissions, itle insurance, legal fees, administrative costs, and inspection fees are all considered to be selling costs.  You should consult with a tax advisor or Certified Public Accountant (CPA) to determine what will be deductible.