18 Questions For Every Home Seller (Part 4)

1.            Should I sell my house?

How motivated are you to sell?

You have to sell, or so you think. How urgently do you need to sell? The answer may affect not only the eventual price you realize for your property, but the method by which you sell your house as well.

Some sellers feel the time is right to sell because of market considerations. For example, a shortage of properties on the market might mean an unusually good price. Opportunistic sellers are not highly motivated to sell. If you are such a seller, consider setting an above-market price for their property.

Other sellers feel compelled to sell but may or may not do so with real urgency. For example, a retiree heading for a warmer climate may not see any reason to sell until a high offer 2.is received. Or a family may move to another city but retain the precious house as a rental unit during a poor market. Such sellers will often ask an above-market price for their property.

Finally, consider owners under immediate pressure to sell their property. Such sellers may feel they have no time to realize the full market value of their property, and out of desperation may even try to sell their home during the low-activity period between Thanksgiving and New Year’s. If selling via traditional methods, they will set a relative low asking price.

Alternatives to selling

If you feel highly pressured to sell but think the market is low or have another reason to avoid selling, consider your alternatives. Simply postponing the placement of the property on the market may see prices drop rather than rise, so consider the auction-based selling methods discussed in a later section.

Renting the property instead of selling could help you postpone the sale until the market improves.

To determine whether the rental option makes sense, estimate the expected cash flow. In other words, what is the difference between rental income annually and the expected expenses. Income can be estimated by comparing comparable rental properties in the area, less about 10% due to necessary vacancy between renters. On the expense side, count your mortgage, property tax, utilities not paid by the tenant, anticipated repairs, maintenance, and conversion costs to make the property in the rental in the first place.

Remember, even if the overall cash flow is negative, renting a property is a much better net loss than letting a property languish on the market because your major costs (mortgage, property tax) will be present whether you rent or not.

Real Estate Auctions Part III

 Auction Benefits

Auctions benefit everybody: buyers, sellers and agents. Auctions attract greater numbers of potential buyers because the starting bid is usually low enough to entice people to bid. Everybody is attracted to the lure that they can buy at a lower price. In fact, the more bidders you have, the higher the price is bound to go.
This is why marketing is a very important part of an auction. You should spread the news about your sale, everywhere, to generate the highest possible visitor traffic to the property previews. In our experience, we have managed to attract over 100 visitors to each of two open houses that we have conducted for our clients. Of these visitors, 5%-10% translate into bidders. An extra benefit for the seller is that the auction eliminates numerous unscheduled showings. The buyers come to the property only on the preview dates. When you have two or more people competing for the property, you may more easily obtain the true market value of the property.
An auction defines stricter rules with regard to buyer qualification. For example, the earnest money deposit for an auction is higher than for a traditional sale. If the high bidder backs out, in most cases, this deposit is non-refundable. This means that the bidder should conduct a more elaborate due diligence before bidding on the property, such as securing mortgage approval from the bank, conducting property inspections, and so on. If you do this, you will more likely be able to sell the property by the end of the auction. Also, please note that by signing the contract, the buyer agrees to eliminate all the contingencies, (not in a Short Sale situation) so the seller does not have to worry about them. Auctions also eliminate high seller carrying costs, such as interest, tax, and maintenance.