Note: This is the next post in my series The ABC’s of buying, selling and investing in real estate. This week I am centered on the letter D with a fictional character, Darren, that wants to put his home on the market, but is worried about what dangers might lie ahead.
Darren is a bright young guy in his late 20s. He bought a house in the suburbs five years ago and now wants to sell it so he can get a downtown condo. All his friends are warning him that selling a home is a complete chore requiring him to put up with a lot from the realtor, the buyers and the attorneys. His parents told him he would be better off just staying where he is versus selling his house. “Enjoy your life while you are young.” they told him on numerous occasions. He called me to find out what dangers lie ahead for him if he does decide to put his home on the market.
Here is what I told Darren….
I told Darren that there is always risks, both small and large, when it comes to any real estate transactions. Selling a home carries its own unique set of dangers and challenges. Darren and I discussed his short term and long term goals with his real estate. With anything in life, you need an idea of where you are going and what you hope to accomplish. Whenever my beautiful wife is facing a tough choice, she always puts down on paper a benefits and minuses in two columns. If the benefits outweigh the minuses, she will move forward. If the opposite is true, she will take a step back to reexamine what she is doing. I told Darren he needs to do the same. Does the benefits of selling his home now for a fancy condo downtown outweigh any of the dangers he will face by putting his home on the market? To help him in his analysis, I told him three dangers all sellers might face in selling their home. These dangers are real and possible, but if you know how to limit the risks that come with them, you put yourself in a much better position to meet them head on.
1. His house will not sell – This is the obvious danger in putting your house on the market. You take the time to work with the realtor to get it on the market. You allow strangers to come into your house to see your home. You get one offer after another that does not work for you. It takes a huge time investment to put your home on the market. It also can take some money as well if you plan to do any rehab or updates before putting your home on the market. To say the least, you stand to lose a lot if you home does not sell. How does one minimize the risk of this danger? First, you have to make sure you are really mentally ready to sell your home. If you are not a 100% into the idea, I would not do it. Although your agent will do most of the work to sell your home, you still play a large role in making it happen. For example, you are the only one that can make sure the house is clean and tidy for every showing. You are the only one who can make sure you make the house available for showings to buyers. The next way to minimize damage is make sure you are doing what is needed to present your home to the buyer in the best way possible. Home selling is like everything else in sales: presentation matters. You need to have a nice clean home without clutter. Rooms need to show how the space can be used to its maximum intent. If you are not sure how to stage your home, speak to your realtor. He or she can give you some ideas. Finally, don’t overprice your house. Your agent will give you some ideas on the price point to consider when thinking about sales price. If you do overprice your home, it can sit on the market for a very long time with a good chance it will never sell.
2. People might steal his personal belongings – Believe it or not, there are petty criminals who make a good living at stealing things from people’s homes during showings and open houses. Some people will go after prized possession like jewelry, silverware or pricey collectibles. Drug addicts will look for any drugs in the house that they can use to give them a nice high. Personal information like Social Security numbers and driver licenses can be taken if not properly stored. Agents have been mugged in the home during open houses and locked in closets while the thieves take off with everything in the home. If stealing wasn’t enough, some very petty people just like fooling around with your things or vandalize rooms. How do you minimize this risk? You need to make sure all valuable and important family heirlooms are safely put away in a secure spot. If need be, put them in a security box or storage facility while you home is on the market. Sensitive information need to be kept in a locked location with nobody but you with the key. Don’t make it easy for identity thieves to do their dirty work. As far a vandalism, you could set up some security cameras in the home to make sure that if someone does break or destroy your belongings, you have some evidence to take to the authorities. It is also a good idea to tell your agent to use a lock box that tracks showings so you can act on this information if necessary. If the agent insists on using a traditional lockbox, instruct the agent to get the license number of all visiting agents along with their clients names. In this way, you can hold someone accountable if they decide to make trouble.
3. The contract could go sideways and legal action is required. Ok. Raise your hand if you have an attorney on retainer somewhere that you can use in case your run into legal trouble during the sell of your home. I bet very few of you actually had your hand in the air. We are lucky in Texas that we have a nice board of attorneys down in Austin designing promulgated forms for us to use when making any kind of real estate transaction including selling your house. If things go smoothly, you won’t need much more than these forms to get you through the real estate transaction. However, not all real estate transactions are routine and some can get dicey fast, so you are looking at legal issues. How do you minimize this risk? Get an attorney! I know that is much easier to write than to actually do, especially if you don’t have 10 grand put down as a retainer. Realtors can take advantage of the free Texas Association of Realtors Legal Hotline. If you want to talk to an attorney yourself for free, try one of the numbers listed on the Texas State Law Library’s website.
Darren came to me to seek my advice on the dangers with selling his home. I told him he needed to be fully committed to the idea to sell his house, otherwise it might not sell. He needed to be sure to secure all his personal belongings and sensitive information before allowing showings. Finally, he needed to minimize his legal risks by having an idea on who to call if legal issues did come up while selling his house.