Secrets for sellers to make more money

Everyone wants to make more money when selling!

While there are many ways to achieve a higher sales price, such as cleaning and making improvements, determining which improvements will give you the most bang for your buck isn’t always as straight forward as it seems. Getting the highest price is important but there are also several other less discussed, and indisputable opportunities available to realize more money that few people discuss.  In this report, I’m going to share some of the strategies that successful investors and banks have utilized for years. I’ll also show you how you can use these strategies to your benefit when selling your own home or investment property.

1) Repair / Renovate OR Sell AS IS?  

While there are obvious improvements that increase a home’s value, each situation can be unique. Generalizing which improvements to make without having your house independently evaluated,  often leads to excessive spending that may not show the expected returns. It’s easy to form an opinion of what needs to be done but often having fresh eyes on the project will deliver valuable insight.

Hire the right agent to look at your home before you start spending money. Agents with experience in renovation flips have a unique advantage in helping to determine which improvements will benefit you most. Some neighborhoods are filled with listings that have some work required after closing. In these areas, over improvement before listing will only encourage an unrealistically high price. If someone is willing to pay that price, finding the buyer will generally take longer and appraisal issues may ultimately can kill the deal. Other markets are very condition sensitive and simple improvements like decluttering, staging and paint typically pay back tenfold. The key is to look closely at the comparable sales as well as what is currently available when considering how far to take the improvements. How much more did the house with the new kitchen and hardwood floors sell over the comparable needing work? Working with an agent with experience specifically in answering these crucial questions can be extremely beneficial. The right agent will be able to see the post renovation value and can offer trusted resources to help with any recommended projects. Some agents will even help directly manage pre-sale improvements in order to help achieve a faster, less stressful sale. 

2) Listing Commission Savings

One secret that many agents will not openly discuss, is that even within the largest international brands, agents can be hired without paying a full retail commission rate. The truth is different clients receive different commission structures from many of the most successful agents. REO (Bank Owned Homes) and Investor clients that offer consistent repeat business benefit from lower commissions  compared to what a typical seller pays. Volume discounts are part of most businesses and Real Estate is no exception. What should you ask: Why do most agents charge their clients the same commission rate, even if they are selling multiple properties, or buying as soon as they sell?  

There are, in fact, select agents that will offer a discounted commission even for regular sellers.  

I’m not talking about the off-brand discount brokers you may have recently seen advertising!! Some of these companies offer reduced seller commission but don’t actually distribute the listing on MLS or most any of the major real estate listing portals. They don’t put your home where serious buyers are looking and they don’t offer any commission to buyer’s agents. This reduced exposure is absolutely detrimental to your sale price. Some discounters use MLS for exposure, but then assign a salaried agent to the listing, along with dozens of other listings at the same time. Professional photos are taken and the house is listed online, but the advice given (or not given) and overall attention to detail is often severely lacking. The business model of paying newer and / or low performing agents a salary to manage a huge number of listings isn’t a new one. Most sellers are very familiar with typical real estate commission numbers, but with these companies, other fees like escrow and admin fees become more expensive. After all, the discount brokers own the NON-discount escrow companies they suggest their sellers hire. 

3) Reduce Closing Fees 

Experienced sellers know that the service providers you choose can make a huge difference to your bottom line. As I mentioned above, most escrow companies are actually owned by the brokerage that the listing agent works for. The problem is that these companies are not always the most competent and almost never the most reasonably priced. Typically, escrow companies charge fees based on the sales price. A typical seller fee is $500 + $2 per 1000 of sales price. This means a $1.5 million sale will cost sellers around $3,500, just for the escrow fee! Not all escrows are equal, but, there are, in fact, very competent, independent escrow companies that charge sellers as little as a $500 flat fee, without increasing buyer fees. Sellers almost always choose which escrow company to use. Pick the right escrow company and you will be in good hands, while putting thousands of extra dollars in your pocket. 

4) Negotiate Terms 

When a home is prepared, marketed and priced properly, negotiations can begin almost immediately.  Even before an offer is made, buyers are wanting to know the seller’s story, why they are selling, and if there is any room in the price. Keeping the story simple without disclosing too much is generally the best strategy. If the house needs repairs, but is priced accordingly, a great way  to avoid later negotiations is to get a pre-sale inspection and termite report. Disclosing most everything buyers would find out on their own saves the seller and the buyer time, avoids further negotiations, and helps justify shortening inspection timeframes. 

The standard contract calls for 17 days to inspect the home before removing this contingency. The problem is buyers can cancel for any reason during this time, get their deposit refunded, and blame the inspection. -Even if they just found a house they like better! Keep inspection contingency periods as short as possible so buyers don’t have a chance to back out: 5-10 days, maximum. Loan contingency isn’t as easy to shorten because of lending regulations, but can be asked to cross qualify with a different lender upon acceptance. This insures that another lender can close the loan if the first lender fails to perform. Beware of buyers who ask for long contingency periods. All contingencies should always be removed within 21 days of opening escrow. 

Another common negotiating technique used by most banks and investors to their advantage is what’s known as a “per diem charge.” The seller negotiates into the contract a clause that obligates the buyer to pay a set amount of money for every day they are late closing escrow. This is set up most often during the initial negotiation in an addendum produced by the listing agent, but is sometimes introduced during the transaction, as a bargaining chip. While this fee doesn’t always come into play, it can be a substantial amount of money if the buyer or  buyer’s lender delays the closing. This clause can really be a life saver when sellers are carrying two mortgages. Surprisingly, very few agents use this strategy when selling, often at the expense of their sellers. 

5) Stay Informed   

Professional home sellers expect proactive transaction updates and a good agent   provides them. A centralized, user friendly tracking page that syncs to client calendars  makes the process more transparent, and completely transforms the experience. Everything from confirmed showings to inspection dates and contingency periods are all available on a dedicated web page, and automatically synced within the clients’ own mobile calendars. Escrow and title contacts, utility and HOA information and all other pertinent transaction details and documents are available for easy access from anywhere online. The agent you choose should never leave you feeling in need of an update. Informed, timely decision making requires seamless communication.