Home Selling Tips

Is the buyer's agent your friend?

Buyer's agents know more about negotiating a real estate contract than 99% of all sellers. Some buyer's agents, usually from the big name companies, are downright aggressive, mean, pushy, and arrogant! As a co-owner of the ADDvantage Real Estate Network, I do battle with 100's of buyer's agents each year. My skin is tough and my skills are honed because I use all my skills to move these buyer's agents towards my seller's price while they use all their skills to counter my efforts. Buyer's agents represent their buyer and your home is what they want for the least possible price. When making an offer, typically, buyer's agents will present to you with a list “comparables” of recent sales in your neighborhood and attempt to convince you that their offer is reasonable. While this is understandable considering they represent the buyer, it is just as smart to consider allowing a professional real estate negotiator to represent you. You may consider the ADDvantage Success listing plan $699 plus 1⁄3% at close ($699 min) where your best interests will be cared for every step of the way to ensure the contract is worded correctly, that there are no expenses pushed onto the seller's side that belong to the buyer and we don't engage a buyer that can't close.

What if the appraisal fails to meet the contract price?

The art of negotiations when representing the seller is to reach a contract that pushes the upper limits of the appraised value of a home. If the home doesn't appraise, the seller or buyer can cancel the contract or negotiate the appraisal short fall. When negotiating the short fall, there are a few solutions. One possible solution would be to split the difference with the buyer. This assumes the buyer likes the home enough to pay a premium over appraised value and has the extra cash to do so while keeping their loan to value ratio in line. Of course, we are assuming they are not cash buyers. Another seller technique is to request the buyer pay all or some of the seller's traditional closing costs to offset the appraisal shortfall. In today's buyer's market, appraised value is a great deal for the buyer so the buyer should be the more willing “giver”. You would think, anyway!

The inspection and who is paying for the inspection related repairs?

The buyer pays for the building inspection, mold inspections, and other buyer requested inspections. It is up the buyer's agent to schedule these inspections within the time frames mandated by the contract. Once an inspection is performed by a licensed home inspector, an extensive report is made available to the seller. Each contract has different language relating to how much the seller maybe be responsible for inspection related “warranted items”.

The buyer's “pre-approval letter” is dangerous

One of the most important aspects of negotiations is “who the buyer is”. Some buyers present “letters of qualification” that are not worth the paper they are written on. Unqualified buyers can tie up your property for 30 days or longer and not close the deal. To prevent this, thoroughly investigate the buyer and the mortgage broker/lenders credibility. Lenders don't care about sellers as they only care about closing their loan. ADDvantage Success, our discount full-service listing plan, provides protection from this happening to you.

Who Pays for Title Insurance, the buyer or seller?

This depends on local customs and which box is checked on the contract. It can be the buyer or the seller.

Can a Seller request that the buyer to pay all closing costs?

Yes. Typically, seller closing costs are title policy and doc stamps on deed. Use our closing calculator for an estimate of these costs.

Can a buyer request that the seller pay all or a percentage of the closing costs?

Yes. This a typical request when the sales price is $180,000 and less. Especially first time buyers.

Does adding buyer's closing costs to a contract increase the risk of not appraising?

Yes. When a seller pays for a buyer's closing costs the hope would be for this request to be passed onto the buyer by merely adding the 3-6% “buyer closing costs request” onto to figure that the seller was looking to net. But, if this seller's “net figure” is at the high-end of appraised value, then by adding the buyer's closing costs onto the seller's “net” the contract price may exceed appraised value. This will result in renegotiations with the buyer. The alternative would be for the seller to say “no” to the buyer's request to pay closing costs, or attempt to negotiate a lower request from the buyer. Patience when accepting the “right” buyer often pays. It's all about the right buyer and appraisal.

What happens if the real estate tax proration calculated at closing turns out to be incorrect once the tax bill comes?

Many sellers feel apprehensive about the process of how real estate tax proration at closing. Protocol is that the buyer receives a credit from the seller at closing for a tax year that is not billed. In most cases, the seller is selling for less than what they bought and often wonders if the new buyer's tax bill (paid in arrears) will be less than what is being held back at closing. The solution for this problem is to have the buyer and seller sign an affidavit at closing stating that either party will compensate the “shorted” party for any real estate tax inequities. Seems the buyer will be unmotivated to pay the seller if the sellers concerns materialize especially if the value of their new purchase has declined. After a nicely worded certified letter, consider a not-so-nice attorney letter and then small claims court.

Chasing the market?

Ever wonder why your home hasn't sold while you have had 40 showings with no offers? It's all about the Realtors! Even a $5,000 decrease in price can ignite the interest of the buyer's agents. So, what are they looking at that has prevented an offer from coming forward? It is usually their expectation of where appraised value is v. your list price. Realtors, compare “list price” to what they believe is appraised value and make offers on those properties that are closest to the “appraisal envelop”.

What is an “appraisal envelop”?

It is the range of where several independent appraisals would create an envelope of value.

As a Buyer, what are my typical costs to close?

If paying cash, just the title service fee which ranges from $150-$500. If a mortgage is involved, the borrowers' settlement charges are near 6-10% of the loan amount. (see FHA Loan Limits)

On a recent FHA $72,000 transaction where the loan amount was 71,500 (30 yr/5.5%/$405.97 PI) the following costs to the borrower were noted:

ADDvantage Flat Fee MLS


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