Home selling is not a transaction that occurs very often and, therefore, frequently results in mistakes that could have been avoided with a little research and planning. MortgageSaver provides you with some great home selling tips and advice. These tips have been used by top selling Realtors around the country, to get homes sold quickly and for the highest possible price in any given market and location.

Remember the “60% rule” when it comes to the home buyers decision-making process: It has been determined that 40% of the actual buying decision is based on “curb appeal”, the first look at a homes exterior from the street, as well as the property’s location and neighborhood. Another 20% of the buying decision is determined upon entering the home. In other words, sixty percent of the decision to buy or not to buy a home is made when the buyer enters the front door!

What is highest on the buyers “wish list” in today’s marketplace? Most buyers are looking for an uncluttered home with a free-flowing floor plan and a bright, clean interior that offers privacy, peacefulness, and security for the family. Many buyers also want a guest room, office space, an entertainment area for a big screen TV, and a comfortable area in which to enjoy the family gatherings!

Real Estate Closing Costs Explained

The following is for you to use as a guideline for closing costs. The fees can vary, so be sure to check them carefully. This list will give you an idea of what the closing costs are for, not necessarily the specific amounts.

Commissions:

When you have had your home listed with a Realtor, you will have a commission to pay. Always make sure it is calculated correctly (usually 5% – 7%) on the closing statement.

1. Taxes

You will be required to pay your portion of property taxes through the last day of ownership. It will be prorated. You should be entitled to a refund if you have paid your annual taxes in advance.

2. Insurance

Normally the buyer gets a new policy. If they decide to take over your existing policy, you should expect to receive a refund of the difference.

3. Assessments & Liens

Any time you have a lien or assessment against you and your property, you will need to pay them off before you can close escrow. This could be a back tax lien or judgment or whatever. Always make sure to double-check the figures so that you do not over-pay any items.

4. Escrow & Title Insurance

Normally, the seller pays the title insurance fee for the buyer which is referred to s the “owners Policy” covering the new owners interest and “title” to his new property. The buyer will pay for his “lenders” policy, which will cover his new lender’s interest in the “title” to the property.

5. Inspection Fees/Other

There are all kinds of inspection and miscellaneous fees that you could end up paying for. Be careful to check all charges on your closing statement. Nothing is always standard and most everything is negotiable. Make sure the service was done or provided before you agree to pay for it. Make sure the charges are fair and not excessive. The time to argue about who pays what is before you sign escrow instructions. Once you have signed, you have agreed. The instructions can not be changed unless mutually agreed by both parties, again in writing!

Termite inspection

Termite removal costs

Deed recording charges

Loan assumption fees

Home warranty

Attorney’s fees

Document preparation fees

Tax service fees

Other

The point to remember with your closing costs is to make sure you have “agreed in advance” to the validity of the charge as well as making sure the service was actually performed and completed to your satisfaction. This includes everything from termite inspections to their removal, attorney’s fees, etc. should you have any disagreement on closing costs, don’t sign closing statements until you are satisfied that all charges and fees are valid and correctly calculated. Your escrow officer should be able to correct most problems. All charges should be disclosed in writing, if there’s a problem, check the escrow instructions.

The Lender

There are many advantages of working with a reliable, professional mortgage company. Some of the very important services that I as your lender will provide are:

Pre-qualification of all prospective buyers: as your lending professional, I will pre-qualify each potential buyer in order to make sure that they are sufficiently qualified by thorough examination of their credit status and current financial situation. This is extremely important in order not to waste time negotiating with unqualified buyers. This will save valuable time.

Ability to find the right loan at competitive prices: as a full service mortgage broker, I am able to shop for the best loan and the best possible price. This allows the borrower the freedom to select the loan best suited for his needs at the best pricing without having to shop all over town.

Efficient follow-up and teamwork: once the transaction has been negotiated, I will work hand in hand with the other support team members in order to make sure that the loan is approved and funded in a timely manner. I am capable of locating and handling any unforeseen situations before they become a problem. I will keep you informed along the way of all-important details. I have the experience and knowledge to get the job done right!

As a service-oriented business professional, I will handle your potential buyers with care and confidentiality and make sure they are ell informed on all of their loan options. You can rest assured that your sale transaction won’t be held up in the loan process. I am committed to my customers and will do everything in my power to assist them with their success.

Title Insurance

Title insurance is the ultimate property protection. In real estate, “title” means a right to ownership. The title insurance professional you work with is very important to the sale transaction. If you have clear title to a house or property, it means that you own it free and clear. The document stating your right to a property is also called title.

Title Hazards

Various kinds of claims can exist to “cloud” a title.

Some examples are:

- Long lost relatives or heirs could show up with a

claim that supersedes your claim.

- Sometimes fraud is involved such as forgery on

recorded documents.

- Liens due to foreclosures.

Easements.

- IRS tax liens from the previous owner.

Keeping it safe: when buying a property, the best way to protect your investment is to obtain the services of a reputable Title Company to do a thorough title search, and insure you against the chance of some lien or claim being over-looked.

Seller’s proof: it is general practice in a real estate transaction for the “seller” to purchase the title insurance policy covering the new owner. The understanding is that the seller is proving to the new buyer that the property has clear and marketable title. The buyer receives an owner’s title policy from the title insurance company at the close of escrow to insure his interests. The buyer is generally required by the lender to provide an additional policy of title insurance covering the lender’s interest in the property for the amount of the loan he is taking out on the property. This is generally paid for by the new buyer and provided to the lender at the close of escrow.

Title claims: in the unlikely event than an unforeseen claim to a title shows up, your title insurance policy reimburses you for all losses covered by your policy, and may also provide legal support to defend your rights.

The Escrow

You may have already heard phrases such as “the house fell out of escrow,” or “we’re waiting for escrow to close.” So just what is escrow anyway? And what does it mean to a home buyer and seller?

Simply stated, escrow is the involvement of an impartial third party in a real estate transaction. This neutral third party acts as an intermediary between the buyer and seller, and also collects and remits funds as instructed. Generally, this means that when you buy a home, you do not pay the seller directly. Instead, you deposit funds with the Escrow Company, which then remits to the seller on your behalf. The basic concept of escrow is to ensure that both the buyer and the seller are protected during any real property transaction. Not only is “escrow” the concept of a third party receiving and disbursing funds, but it also includes other valuable transaction services. In order to facilitate the transfer of property from one owner to another, the best escrow companies will:

Prepare, review and/or revise escrow instructions

Determine the legal ownership and status of the property through a “title search”

Request a beneficiary’s statement if a debt is to be assumed by the buyer

Confirm that the buyer is “qualified” and meets the lender’s requirements

Confirm property meets requirements imposed by lender and/or buyer

Prorate all related financial matters involved in the ownership transfer.

Ensure all legal documentation is complete, including recording deed

Comply with time limits imposed in instructions

Close escrow when all instructions have been fulfilled

Disburse funds a s instructed, including all related fees

Prepare final statement for all concerned parties

Escrow companies are generally held liable if any instructions are violated during the course of an escrow. No changes may be made to any escrow instructions if changing them would be detrimental to any party involved. It is possible to change instructions once a property has “entered escrow,” however, but only by mutual agreement. Finally, all escrows have clearly defined time limits. If, for some reason, the end of the time limit cannot carry out all instructions, all parties involved are entitled to the return of documents, fees, funds and other related materials. They also may mutually agree to extend the time period by changing the instructions.

The term “escrow” has come to mean “neutral protection” for the seller, the lender and the buyer. All parties involved in the transfer of real property are impartially protected during the transaction, and are serviced by professional’s intent on ensuring a smooth, trouble-free sale. Look for an escrow company that clearly defines its services, and which lists all fees and charges “up front.”

Escrow is an indispensable necessity in today’s marketplace. If you need further explanations during the process, always consult your escrow officer. The Escrow Company is, indeed, a neutral third party, and its job is to make sure all sale conditions are met quickly and efficiently.

CHOOSING YOUR ESCROW COMPANY

Ideally, you should ask your real estate agent to recommend two or three different escrow companies. Then you would choose one. If you don’t have an agent, you’ll find escrow companies listed in the yellow pages of your phone book under either Real Estate Escrow or Real Estate Title Insurance.

In most cases, escrow companies work together with title insurance companies so you can kill two birds with one stone by selecting both the escrow and the title insurance company at the same time.

The Real Estate Appraisal

Having an idea of what is involved in appraising a piece of property can greatly help in maximizing the appraised value and avoiding costly details and re-inspections. The appraisal process consists of several steps. The following are major steps in the sequence normally followed by appraisers:

1. Research the subject property as to size, bedrooms, baths, year built, lot size and square footage

2. Gather data of recent sales in the subject’s neighborhood. The appraiser needs to locate at least 3 and preferably more similar-sized homes, which have sold and closed escrow in the neighborhood. The homes need to be within one mile of the subject and sold within the past 6 months. These homes are considered the “comparable Properties” or “Comp” for short.

3. Field inspection consists of two parts: first the inspection of the subject property, and second, the exterior inspection of the comparable properties which have been selected to estimate the value of the subject property.

The subject inspection consists of taking photos of the street scene, front of the home and rear of the home, which may include portions of the yard. The appraiser will make an interior inspection for condition, noting any items that would detract from or add to the value of your home. He will also draw a floor plan of the home while doing the inspection.

The inspection of the comparable properties is limited to an exterior inspection. For features which cannot be seen from the street, the appraiser has reports from Multiple Lists Services (MLS), county public records and appraisal files along with other sources to help determine the condition and amenities of the comparables. After the field inspection has been completed, the appraiser must determine which comparable properties most resemble the subject, making slight adjustments in value for any differences between them. After making the required adjustments, the appraiser must go throughout the reconciliation process with the three comparable properties to determine a final estimated value. This method of estimating value is called the “Direct Sales Comparison Approach to Value,” and it accounts for nearly all of the considerations in determining value of single family homes.

It is important to consider that the appraiser will be taking photos of the street scene and the front of the subject. The street scene gives the lenders some kind of idea as to the type of neighborhood in which the home is located. The photo of the front of the home gives the lender an idea of its condition and its curb appeal. And lastly, a photo of the back of the home and part of the rear yard is taken. Many homeowners don’t take care of the rear portion of their homes and back yards, so for this reason the rear photo is required.

In most cases, what you see in the condition of the exterior of a home will be repeated almost exactly in the interior. So one of the most important things you can do to enhance the value or perceived value is to improve the curb appeal of your home.

An appraiser will call in advance to set up the appointment to inspect your home. At that time, offer to supply any information about the home’s size, number of bedrooms, bathrooms, pool, enclosed patio, etc. the more that is known about the property prior to inspection, the better the appraiser can focus on researching the most similar comparable. “Doing your homework” will maximize you chances of having a good appraisal.

While your home is being inspected, don’t follow the appraiser from room to room causing distraction. Instead, allow the inspection to go smoothly. In case the appraiser has any questions, be close by to answer them. The time to mention the things you think are important is either before or just after the inspection.

Home Inspections

You need to know a great deal about your house when you sell it, usually more that the average seller knows or wants to know. So, how do you handle disclosure without spending the next six months learning about construction? Many sellers use an inspector. The inspector solves a whole series of problems. If the inspector you use is bonded, and a problem arises after the sale, it is easy enough to say to the buyers, “I didn’t know there was a problem. I had the house inspected and I trusted the work of the inspector.

That, of course, does not get you off the hook, but it does help things. In addition, if there are damages to be paid and the inspector is to blame and is bonded the inspector may have to pay them instead of you. Thus, using an inspector can be very worthwhile.

Finding a reputable house inspector

Almost anyone can inspect a house but that does not mean they are qualified. In recent years, contractors without enough work have taken to house inspections to supplement their income. A house inspection usually costs between $250 – $400. A contractor can walk throughout your house, check little boxes on a form, and charge you several hundred dollars for few hours’ work. But are contractors qualified? Some are and some definitely are not. A contractor who builds new homes may know very little about older homes. A plumbing contractor does not necessarily know about electrical. A cement contractor probably is not an expert on roofs. The value of their inspections is questionable at best.

The real problem is that housing inspections are relatively new. In a few years, states will undoubtedly begin licensing and testing housing inspectors. But as of now, few states are doing this. So sellers are on their own. One way of qualifying a potential inspector is to insist that he be a member of ASHI. This is the American Society of Home Inspectors. It is a trade organization, which has been endeavoring to raise the standards of house inspectors in general. ASHI sets standards for inspectors and makes an effort to see that its membership follows those standards. ASHI, however, does not require its members to be contractors. Having a contractor’s license does not necessarily qualify someone to be a house inspector. For more information about ASHI, you can contact the organization at Ste 630, 101 Wisconsin Ave, NW, Washington, DC 20007. Their telephone number is (202) 842-3096.

Beware of contractors who offer to do a home inspection for a nominal fee, then find something wrong and offer to fix it, usually for a high fee. Some unscrupulous contractors have been using home inspection as a way of procuring business. A good rule of thumb is to never have the inspector do the repairs. Also, don’t ask the inspector to refer you to someone. That someone could be the inspector’s brother-in-law or sister who is on the team.

Always insist on getting a written report from an inspector. An oral report is useless to you if there should be a problem from the buyer later on. Then problems occur. Everyone seems to remember things differently. You may say the inspector told you the house was perfect, but the inspector may say that the defects that the buyer is now complaining about were disclosed in the inspection. Get it in writing.

TERMITE INSPECTION

This is just a quick note to point out that termite inspections are not really a new part of the home inspection process. Lenders have been requiring termite inspections as a condition for approving a new home loan for decades. A termite inspection and the repair of damage have been a requirement of home sales almost as long. In almost all states, termite inspectors are licensed, and their written reports are required to be registered.

Home Warranty

In addition to inspections, you can also obtain a home warranty, which will over the major systems for the new buyer. These will include heating, air condition, electrical, plumbing, appliances and more. The typical home warranty costs approximately $275.00 – $400.00 per year depending on what additional items you may choose to have covered. For an additional fee, you may choose to have coverage for pools and their associated electrical appliances as well as other items usually not covered such as washers, dryers, refrigerators, etc.

As a for sale by owner, you may want to advertise that the home warranty will be included with the home sale and the money will be well spent. Once a buyer takes possession of his new home, it can be very troublesome and expensive if major systems break down. The home Warranty Company covers these items just like an insurance policy and the coverage can be renewed each year if desired.

In the event of a problem, the home Warranty Company will charge a deductible, usually $25 – $50 per claim. Then they will send out their approved repair companies to take care of the problem I personally save almost $4,000 in repairs the first year I bought my own home due to air conditioning and plumbing problems that needed repair.

Consult your local yellow pages for listings of Home Warranty Companies or ask your local real estate company. You can also contact some of the larger air conditioning and heating companies who contract with these home warranty companies. They will be happy to give you the names of the ones they are dealing with.

Be careful to select a reputable home warranty company. Check out their track record with your local realtor or the better business bureau.

Preparing Your Home for Market

You know the feeling well. You see a beautiful house, and you just know that you’d like to live there. That’s what you want prospective buyers to feel when they see your home. The deciding factor in most home sales is the “Curb Appeal” and attractiveness of the house.

Do the repairs that are necessary in order to make your home look it’s best. Be careful not to invest in overly expensive or large scale improvements like room additions and new plumbing systems. Making these major repairs will only return you a fraction of their cost. It would be much better to disclose the problem and adjust the sales price accordingly.

Instead, you should invest your improvement dollars and energy into cleaning and painting. You will definitely realize more cash at closing time than you will have spent for the cleaning and painting supplies!

Be as objective about your property’s appearance as a buyer will be. Does that little crack in the wall really need to be fixed? Yes! It may cause doubts about how well built the house is. How your home is decorated is not as much a factor as being clean, neat and in good repair.

The first look a prospect will have at your home is when they pull up in the driveway. Be sure the landscaping and general appearance is attractive and neat. A trimmed lawn, cut shrubbery, trees free of dead limbs, weeded flowerbeds, a swept and stain-free driveway, clear sideways and gutters etc will assure a pleasant first impression. Put in plenty of flowering plants. It’s the easiest, least expensive way to beautify the exterior of your house.

As they approach the front door, little things will mean a lot. A clean, freshly painted front door, polished doorknob and knocker, clean surrounding windows, screens and windowsills will all be notices. Once inside, the senses take over. The prospective buyer will notice odors and light. If possible, open curtains and drapes, blinds and windows to brighten and freshen the house. In winter, a fire in the fireplace lends warmth to your home. Fresh cut flowers add color & appeal. If the interior of your home needs painting, consider white or a light, neutral color making the house appears larger, open and bright. Good aromas include fresh baked breads and cookies. A trick that works well is to place a few drops of vanilla on aluminum foil and place it in a low temperature oven. Turn on soft music and turn the TV off.

Make sure all rooms are clean and neat. Fingerprints, cracked plaster and clutter should be eliminated everywhere. Fresh paint and polished woodwork will always improve the look and value. Kitchen and bathrooms are the rooms that can really sell a house – or turn a buyer off. Make them sparkle. Fresh, plush towels, cut flowers or silk flower arrangements, new shower curtains etc will add luxury and glamour to the most ordinary bathrooms. To make dining room, living room and bedrooms look big and airy, remove some furniture. The rule of thumb is to remove approximately 1/3 of your furniture. Also consider putting away cluttered looking knick-knacks, collections, toys and other unnecessary items. They just draw attention away from your home’s other features and make the house appear smaller and messy.

Put away dishes and store counter-appliances. Have carpets cleaned. Remove throw rugs and area carpets if possible. Visit a local model home tour for other ideas. Do everything possible to make your home look its very best. It doers’t really take much money, just your time and energy. Get rid of the junk and anything you have stored in closets and garage. Have a garage sale if necessary or give the stuff away to friends or charity. You’ll probably be glad you did it now rather than having to move it all to you new home. To add warmth and charm to your house when buyers visit, play soft, romantic music. Turn on all lamps and chandeliers to make the house glow even in daytime. Also, whenever possible, pets and children should not be around. An important point to remember is to never have to apologize for the appearance of your home.

Make sure you disappear! When prospective buyers are viewing your home, give them the privacy to discuss your home freely among themselves. They need to feel at home in your home. A fast way to lose a buyer is to make them feel as if they are intruding–interrupting your dinner, your ballgame, or whatever. So, take a walk or visit a neighbor while the buyers are touring your home and you.

We hope you have enjoyed these home selling tips and remember keep your home ready to show at all times!

Apply Now for a no obligation mortgage loan quote.