Pre-Sale Inspections
Home Improvement
Price Your Home
Prepare Your Seller Disclosure
Before you ready your home for market, it's a good idea to really get to know it by obtaining a
professional home inspection. A general home inspection is a lot like taking a car to a mechanic
to check it out before you drive it off the lot. With a house, the investment is much larger,
making the inspection even more prudent. The buyer is generally obligated to contract most
inspections so s/he knows the home's physical condition before putting down a deposit and signing
off on a commitment to buy.
The seller, however, also has a stake in knowing the home's condition.
In many states, laws dictate that you disclose known defects that could affect
the value or salability of your home. There are rules for disclosing the general condition of the
home as well as seismic hazards, geological hazards, environmental hazards (such as lead e.g.,
asbestos and radon), structural pest damage, and a host of others.
Certainly, what you don't know can't make you liable, but it can hurt you. Why
take a chance that the deal will fall through because you or the buyer discovers something you
overlooked?
A general home inspection will let you know well in advance what the buyer may
attempt to negotiate, and it will help you spot items inside and outside that need your attention
in your effort to make your home as marketable as possible in a competitive market.
As the seller, you won't be surprised by a buyer's inspection that could turn
up thousands of dollars of necessary repairs - and at the very least delay the sale. If the
report is clean, on the other hand, it can be a positive sales tool to reassure prospective
buyers of the home's condition. Some real estate experts say the $200 to $500 or so spent for
a general home inspection every once in a while is money well invested to keep you on top of
maintenance that your untrained eye may not notice. Local laws, your home's condition, location,
type, age and other factors will dictate what additional inspections are in order.
Tips
Look at your home as a buyer would. Be critical!
Make a list of everything that will convey (stay) with the house (appliances, etc).
If chandeliers or other attached objects will not convey, either put a 'does not convey'
tag on them or better yet, remove them and replace them with new - before you show the house.
To get top dollar and sell quickly, you must put your house in the best possible shape.
Generally, this includes some painting, landscaping, deep cleaning and small repairs. A
major improvement in the look of your property can frequently be accomplished with minimal
cost and effort. Think twice about making extensive or expensive repairs unless absolutely
necessary since you won’t usually get the investment back in your sales price.
The minimum you should do:
- Trim bushes, plant annuals, keep grass green and manicured - in Winter, de-ice the
sidewalks and driveway.
- Unclutter the house - remove all extra furniture and clutter. All rooms and closets
should look roomy and orderly.
- Clean relentlessly - especially the kitchen and bathrooms.
- Have the carpets cleaned.
- Repair small items such as leaky faucets, running toilets and torn screens.
"Curb appeal," the impression the exterior of your home conveys, is the first thing a
prospective buyer sees.
Studies show that 50 percent of purchase decisions are actually made during
the first 60 seconds, while the buyer is coming up the walk. Consider having a few real estate
salespeople come over before your open house to make some expert suggestions about improving
your home's curb appeal. If you've got to scrimp somewhere on getting your home ready for
market, pinch pennies inside. You want to be sure a buyer's first impression compels him or
her to take a further look inside.
The inspections are in and you've spruced up the outside, but you can't open the doors for an open house until you've put what's inside your home in order.
It's time to take care of all deferred maintenance and repairs, you must organize with military precision and render your home spotless.
Remember, when you conduct your open house, not only will you compete with homes on the resale market, you'll also be up against homes in new home communities.
There are many variables to consider when selling your home, but with just a little
bit of thought and planning you can have a successful and financially beneficial sale.
Pricing your home properly is possibly the most important thing you can do to sell it
quickly and easily. Overpricing is one of the most frequent reasons by owner sellers fail.
In fact, many times when a by owner seller gives up and lists their house with a real estate
agent, the house sells because the agent convinces the seller to reduce the price.
Since you will not have a real estate agent involved to provide this
"reality check" for you, you must perform the check yourself. Be realistic and do your
homework. Keep in mind one of the reasons buyers are interested in by owner properties is
because they think they will share in the savings of the real estate commission. If you are
not offering to share any of the savings, it is possible that buyers will simply move on to
traditionally listed properties. Pricing a house is one of the areas in by owner selling
where spending a little money up front to get the necessary information is very helpful.
There are many tools and methods to help you price your home:
- The common means of valuing real estate for all appraisers, lenders and real estate
agents is to base the value on comparables, also called comps. The best comps are similar
homes that have sold in the immediate area within the past six months.
Once you receive the comps, you will have to assess the relative quality of the
location, condition and features of your house as compared to the comps. You should
be able to get a good sense of this from the comp report. For instance, if a 3 bedroom
home right around the corner sold for $5,000 less than a nearby 4 bedroom, the approximate
value of the extra bedroom is $5,000.
- After you have a comp report that shows what has sold in your neighborhood, spend a
couple weekends visiting open houses in your area. Go to neighborhoods that are very much
like yours, with houses of similar style and size and approximate price range. Although
appraisals are based on SOLD comps, it is useful to see what is for sale now to get a
sense of the current real estate market. For instance, if listing prices are lower than
what you think your home is worth, that is an indication that house prices may be falling
in your area. Conversely, if listing prices are higher than the sold comps indicate, that
is an indication of prices moving upward.
- Have a "desk appraisal" done which indicates a range of value. A desk appraisal means
the appraiser will not visit your home, but rather will pull comparables from closed sales
(they may well have more recent comps available than you can obtain from any source) and
assign a range of value. Where you price your home within the range is up to you. The
cost of this option is about $60, and you will have a formal document with which to
justify your price to prospective buyers. Appraisers can be located through the Yellow
Pages in your area.
- Have a formal appraisal completed by a licensed appraiser. The appraiser will come
to your home, measure it, inspect it, take pictures and assign an actual market value.
The cost of this option is about $300. A professional appraiser will provide you with a
formal document that you can use to justify your price to buyers. Keep in mind that
your prospective purchaser’s lender will have to order another appraisal and will
probably not be able to use yours. Appraisers can be located through the Yellow Pages
in your area.
- Another alternative is to ask a real estate agent in your area to do a Comparative
Market Analysis (CMA) for you. You probably receive cards in the mail from real estate
agents who cover your neighborhood or know of agents in the area. Obviously, you
should tell the agent that you intend to sell the house by owner, before they put in
any time on your behalf. The agent will then make the decision whether to help you or
not. Most agents will help because they want your listing eventually. Undoubtedly, an
agent will try to talk you out of selling yourself. Listen to all the information and
then make up your own mind.
Once you've got a range of value or an independent appraisal of the property, you will
still have to arrive at an asking price. Unless you are in a very fast market (houses sell
within 30-45 days), you should assume that you will get an offer for less than your asking
price. Generally speaking, most houses sell within 10% of a reasonable asking price. Set
your price at the high end of the reasonable range if your house is in excellent condition
compared to other houses for sale in your area, and if the market is fast. Set your price
at the lower end of the reasonable range if your house needs work, doesn’t show as well as
it could, or if the market is slow.
In many states sellers are required to disclose known defects about the property. Even
if not required by law, it is always good policy to disclose known defects. Some states,
most notably California, require the seller to provide environmental disclosure. As a
seller, it is your responsibility to understand legal requirements for your jurisdiction.
We suggest you hire a real estate attorney who can help you meet your legal requirements
and negotiate your purchase agreement when the time comes.
- Earthquake Fault Zone
A seller must disclose that a property is located within an Earthquake Fault Zone if
the maps or information contained in the maps are reasonably available; i.e., available
at county offices (Public Resources Code Section 2621.9).
- Seismic Hazard Zone
A seller must disclose that a property is located within a Seismic Hazard Zone if the
maps or information contained in the maps are reasonably available; i.e., available at
county offices (Public Resources Code Section 2694).
- State Fire Responsibility Area
A seller must disclose that a property is located within a State Fire Responsibility Area
if seller has actual knowledge or when a map is provided to county assessor (Public
Resources Code Section 4136).
- Mello-Roos Community Facilities District
If property is within a Mello-Roos Community Facilities District (CFD), seller must
make a good faith effort to obtain and deliver disclosure notice to the buyer from the
levying agency (Civil Code Section 1102.6b and Government Code Section 53340.2).
- Flood Hazard Area
Federal law requires federally regulated lending institutions making any loan secured
by real estate to notify the purchaser (or obtain satisfactory assurances that the seller
has notified the purchaser), in writing that the property for sale is located within a
Flood Hazard Area. Although federal law only requires lenders to make this disclosure,
common law principles of disclosure may impose a duty on the seller to make this disclosure
as well (42 United States Code Section 4104a; 12 Code of Federal Regulations Section 339.6).