How To Sell Your House In 5 Weeks Or Less And Make An Extra $19,000 In Today's Market - Part I of 2

“My house will never sell.”

“It will take at least 6-months to sell your house in this market.”

“You’ll have to lower your price in order to sell your house fast.”

Are these some of the thoughts or conventional wisdom that you’re being bombarded with in a recent attempt to sell your home? Or perhaps you’re considering a big move, but are very uneasy to jump at your next home because of the screaming headlines of negativity in the media regarding the looming real estate “bubble”. Isn’t it expected that you would always make money from the sale of one of life’s biggest and most important purchases – your home? Well, this article will be both educational and biographical as you’ll see how I recently sold an investment property in 5 weeks once I put it on the market and made an extra $19,000. And although I don’t think I can necessarily guarantee you a sale or even profit on your home, I believe that with the secret hints and creative suggestions found within this article, you should be able to sell your home twice as fast as the market average and typically for more money.


The Basics of the Sell

So let’s first look at how the traditional methods for selling houses are approached. Most people in recent decades, and currently still, have used Realtors to assist them in the sale of their personal residences. The majority of Realtors are trained to do 2 primary tasks: list and sell. Now there’s a lot of activity and specialties that can go into these main jobs, but the end goal is always the same: to get out there and get listings and sell, sell, sell. Although most Realtors provide good service to their clients and customers, and provide some level of marketing for their clients properties; because of the way they are paid from a gross commission structure, they are less motivated to sell your individual home, than they are in moving inventories through transactions. In fact, the homes with the most activity can easily funnel all their energies away from your home if it has sat on the market too long (which in many areas is currently getting longer and longer).

The other basic method of selling a home on the open market is For Sale By owner, or FSBO. This is generally for those fearless do-it-yourselfers or folks who are trying to save (or worse, can’t afford) a typical 6% real estate agents’ commission. Depending on how someone goes about their FSBO, there is still a lot of work and education required to pull this off smoothly. There are some organized groups that assist homeowners with FSBO strategies, but they’ll usually charge a fee that is either staggered based on the home price, or a flat price. The downside to these are that it is definitely a lot more work to get your home prepared for showing, take the calls, make the appointments, handle extra paperwork, pay for the advertising costs and most importantly, not have access the MLS. And yes, there are a few places you can purchase MLS services a la carte, but in the long run – unless you have a strong back bone and don’t mind paying for a lot of things yourself, that a real estate agent may typically take care of, then FSBO may not be the quickest way to get your house sold on the market (at least not by itself). And yes, you can save 3-6% commission on the sale of your house, but you may pay that difference shouldering the other burdens of the process of selling a home and with possibly even slower results.

Now remember, the goal is to not only make money on your properties as you sell them, but I believe you can make up to $19,000 MORE than the fair market value on a fairly consistent basis. Just keep reading to learn how.


Getting Ready to Sell My Home

Here are some things to consider when selling a house. First thing to do in preparation is to de-junk and de-clutter your home. Yes, that’s right – get your house super clean! That may sound like common sense, but some people don’t define clean the same as others. As a general rule of thumb, once you believe your home to be clean, get it cleaner. Furniture, windows, doors, appliances, floors, carpets, basements, closets, garage, draperies and walls to get you started. If you need to, especially on mid to higher end homes, you may need to bring in a good cleaning crew – but only after you get rid of any unnecessary junk. Some folks may actually need to rent a storage unit to box stuff up and move into it, so that stowed items may be gone through at later date. I never said that you wouldn’t have to put in some sweat equity. Bottom line, you can never have a home too clean.

Always keep the goal of getting your house sold in front of you. You’ll have to think like a buyer. Also figure out how much your holding costs would be for each month you keep a property. You’ll have to pay the mortgage, taxes, utilities, lawn care, cleaning and maintenance to list just a few expenses. However much that totals to, multiply that by at least 4 to 6 months, or more for the current market trends. That dollar amount divided by 2 is how much you should be using as your fix up and staging budget, with a plan to sell your home in less than half that time.

Once your house is super clean, you’re ready to stage it. Now, there are some professional staging services available that you can use to help you with that – if you are stylistically challenged. They are well worth the investment (just do a Google search on home staging or home stagers to locate someone near you – a lot of times, real estate agents provide a fee based service for staging to supplement their income). Otherwise, get some good old fashioned home decorating magazines and try to mimic some of the designs you like that are within your budget. If your property is vacant, you should be able to even loan some of your own less used furnishings to help give the home a more appealing appearance. You can get inexpensive items such as basic linens, candles, dried flower arrangements, small pictures or mirrors, lights, floor mats, air fresheners, etc. will help to set the expected mood. Don’t forget, think like a buyer.

A buyer will want to see a very clean, bright, neat home that has a fresh, crisp, inviting atmosphere. No strange odors or dark and damp places. The first thing they’ll want to see when they drive up is a clean cut lawn with trimmed shrubs or trees if there are any, and it’s always a plus to have fresh mulching and colorful flowers if your lawn permits. Where I live, I can get mulch for $25 per truck load, which is a great deal for that fresh smell and appearance to your house from the outside. Also, if the front or side door the potential buyer is walking into is dated from the sixties or seventies, regardless of how clean it is, it will probably need to go. Look at other better homes in your neighborhood, and try to match them. A decent glass screen door is around $200 installed. Watch out for door stoops and thresholds too. You may want to paint or replace those. If you can, match the shutters to the home – if that’s common in your neighborhood. There are so many inexpensive things you can do to enhance the curb appeal of your property, that will pay you back many times over for that unforgettable first impression.

Now this article is not intended to be a long dissertation on every possible intricacy of buying, selling or rehabbing – but something you can use to jog your own memory or get your own mind thinking about how can I make my house ‘pop’! Whatever you establish as a first impression, you’ll want to keep that expectation up throughout the entire tour of the house (make sure it is good – and be sure to get outside opinions from someone who doesn’t care if they’ll hurt your feelings). I firmly believe that there is no such thing as a perfect house, but our job in selling homes are to maximize the good qualities and minimize the less desirable, without over-investing or losing money. Do your best not to give people an excuse not to buy your property. Be better than the next guy down the street, but don’t try to be the best house in the entire market – unless you know you can get that top dollar back.

The things I am getting ready to share with you next will show you how to maximize your return on your investment, without having to have the perfect home. You’ll be able to sell quality homes you can be proud of in less time than the market average and without spending too much money on them. Most of the times people spend too much money on their investments is because they get emotionally involved or because of pride. Don’t get caught in that trap. That’s too expensive of a lesson (one of those real live seminars I talk about).


Establishing Realistic Market Value

There are 3 main ways to determine the fair market value (FMV) or after repair value (ARV) of a property. The first I’ll mention is the replacement value, used primarily by insurance companies, and determined by the actual cost in today’s dollars that it would take to replace your home if lost completely to fire, flood, natural disaster, etc. This value typically does not include the value of the land your house is setting on. The next value you may hear mentioned in investing circles is known as the economic value. This value is primarily used on income producing properties, and is a rough value determined by the monthly income of a property divided by .01. (Example, a home that brings in $1,200 per month in rent is roughly worth $120,000 in economic value.) This number can fluctuated greatly depending on things like the market conditions, capitalization rates, etc. But for the purposes of this discussion, we will not go any further with that.

The last and most common way to determine FMV is based on true recent sales of comparable properties within a .5 to 1 mile radius of the subject property (sometimes further out if in more rural areas). Often call “comps”, this method will tell you within a few percent of the realistic sales price. Many people ask me how to get good comps for their potential investment properties. Other than being a real estate agent in your locality to have access to the Multiple Listing Service (MLS) to get those most recent sales, there are some other good tools that can give you a pretty close FMV for your property. I highly recommend using as many of these techniques in order to get the most accurate expectation of value.

First, you can always attempt to establish a cordial relationship with a local real estate who would be willing to perform occasional ‘ministerial acts’ for you in the form of pulling comps from time to time. This may be okay starting out, but unless you are also willing to provide this friend with listings as well, you may quickly wear out your welcome. As I prefer to be able to pull several comps a day and at my own leisure, I use more accessible online resources. The best place to start is to locate and use the local Geographical Information Service (GIS) or tax assessors office. Most of these are available online now, you may occasionally have to go to the local courthouse (or pay someone to do it for you). Depending on your specific market’s conditions, properties will conservatively appraise 10-15 percent more than their assessment. Next, I like to use other free online services such as zillow.com or housevalues.com, and paid services such as realtytrac.com and foreclosure.com. If you are only researching a couple of properties a month, don’t pay for these service, unless you have nothing better to do with your investment money.

Finally, the other 2 things I like to do for analysis is to get a look at the property location on Google maps and get a feel for the monthly principal and interest payments using bankrate.com’s mortgage calculator. For me, coming from a value investing standpoint, I want to buy property at a discount – either at or below the tax assessment value, minus any expected reparations and buy-hold-sell costs.

This is part 1 of a 2 part article by Charles T. Dudley, Sr. - Real Estate Agent, Investor and Coach - Executive Director of the Roanoke, VA Regional REIA and Founder of the real estate inveting training company, REI Most Wanted (www.reimostwanted.com). For FREE teleseminar training, go to www.reimostwanted.com or email reimw@cox.net for more information or to schedule a free consultation.