No matter how amazing your home is, let’s be honest: Real estate is a drag-down, stops-out, winner-take-all competitive market. It can take some true ingenuity to steer prospective buyers through your front door.
Well, to help get your creative juices flowing, here are some offbeat sales tactics that some slightly daring homeowners and real estate agents have tried. And they swear they work!
Offer a cash reward
If you use Facebook or Twitter to stay in touch with friends or share photos, then there’s no reason why you can’t use it to share the news that you’re selling your home!
In order to sweeten the deal, one Canadian family decided to offer a $1,000 “reward” for any “share” that led to the sale of their home. There’s no word yet on how well it worked, but it makes sense: Why not take that split second to spread the word to your pals if cold hard cash hangs in the balance?
Have an over-the-top open house
“The days of the wine and cheese open house are over,” pronounces Alexander Ali, CEO of the Society Group. What’s taken its place are open ceremonies—basically, open houses on human growth hormones, complete with live entertainment, catering from In-N-Out Burger, mermaids in the pool … you get the idea.
These bigger and usually more upscale parties are often pricey, but they don’t have to be. The key is to make it all sound unusual and fun—all the better to cut through the open-house clutter. Just ask Wendy Flynn, a Realtor in College Station, TX, who spent a mere $200 to hire a snow cone truck to park in the driveway of a home she was trying to sell.
“Instead of the typical two to five visitors, over 50 adults and countless kids attended the open house,” she recalls. “Of those who visited, five demonstrated serious interest in the property—proof that creative marketing can help garner attention for a home.” Hey, who doesn’t like snow cones?
Create your own reality show
You turn on a camera, set up a channel, and let people peek into your home—all in an effort to help them imagine what it would be like to live there in the future. Crazy? Maybe. But live-streaming is a way to get prospective buyers to see the inside of your property without ever leaving their couch.
“Live-streaming video is a great tool: Facebook Live, YouTube, Blab, Periscope, and Meerkat are all emerging big time for real estate use,” says Ellen Cagnassola, social media manager for HouseMaster Home Inspections.
Feel a bit awkward being the “star”? Hold an event such as a live show, or hire local talent like stand-up comedians to do a short skit in your home that you can publicize. It’ll get your home in front of more eyeballs, honest! Keep the adult humor to a minimum, please.
Play the celebrity card
Does your home have a celebrity who once slept there? Or perhaps it served as the backdrop for a movie at one point? Or maybe it evokes a certain TV show or movie? Whatever makes your property special, use it to your advantage. And if you don’t have any celeb stories, then consider hiring actors to set the scene.
Jaisa Bishop, an associate partner at Partners Trust, did just that when representing a Victorian house in San Diego that wasn’t getting enough attention.
“I employed my family members to dress in period costume and be in character. They sat in the garden while a local artist painted and brought a few of his pieces to sell. It was a great success,” says Bishop. “Guests were able to sit and have tea in the garden and eat finger foods with the characters while taking in the home. ‘Downton Abbey’ meets real estate!”
Try a little magic
When all else fails, it might be time to call in help from the invisible fairies or forces you believe in. Kooky, sure, but it can’t hurt and it just might help. Just ask Ellen Shaikun, a broker associate with Berkshire Hathaway HomeServices Parks & Weinberg Realtors, who had heard that burying a statue of St. Joseph upside-down in your yard is supposed to bring a quick sale.
“I had a client who did it. When the house was still on the market two weeks later, my seller kicked into desperation mode and dug up the statue—having determined that it was buried in the wrong place for maximum impact—and moved it next to the mailbox. My seller was correct: We got an offer almost immediately. As we all know in real estate, it’s all about location, location, location!”
Even in the hottest markets, selling a house is by no means a transaction that happens overnight. Every step—from listing your house to getting an offer to closing—takes time. But how much time?
To help you pace yourself, here are the steps to sell a house, and how long each one typically takes so you can plan accordingly. Depending on where you live, you may need to settle in for a long ride!
How long does it take to list a home?
Answer: 3 to 5 days
It will take your listing agent a few days or a bit longer to gather all the necessary info on your home (e.g., square footage, special features, and photos). But once your agent has it all, things generally happen fast. Your agent will then upload these details onto the multiple listing service, which will make the listing viewable to agents. A shorter, consumer-friendly version of the MLS listing will also appear on sites like realtor.com®—and since this site refreshes its data at least every 15 minutes, your home will be in front of plenty of eyeballs in no time at all.
How long does it take to get an offer on a home?
Answer: 65 days
The current average age of properties on the market is 65 days. That said, this varies greatly by location and time of year, so there’s no one right answer to how long you’ll wait for that blessed first offer. Is your market hot or chilly? San Francisco residents might sell their house in a hot second, but if your place is rural, expensive, or unique, you’ll probably wait longer.
How long does it take to close after we receive an offer?
Answer: 50 days
Currently, there’s an average of 50 days between when buyers apply for financing and when they get approved and can close on a home. Yes, that’s a long time, especially if you’re selling and eager to get on with it. But buyers and mortgage companies need to do their due diligence—and you certainly don’t want any last-minute surprises before the buyer takes possession. Closings fail for a number of reasons, like contingencies (perhaps the buyer’s home didn’t sell, or the bank rejected her loan). Whatever you do, don’t be a pain and not fix issues that arise during inspection (assuming, of course, you agreed to fix them). Final walk-through surprises can delay closing even longer.
How long before I get paid?
Answer: 0 days!
Here’s good news: Your money should be available immediately after you sign on the dotted line. Cash is typically disbursed by the title or escrow company, which will wire the money to your bank account or cut a check on closing day with little to no lag time. Make sure to check with your attorney or real estate agent, though—they’ll be able to provide specific details on the process for your sale.
How long do I have to move out?
Answer: 0 days, except by special agreement
Typically, sellers are expected to move out by the day they close on the home so the new buyers can move in as soon as they’ve signed on the dotted line. Most people move out in advance of the close, but if you need more time, you can negotiate a rent-back agreement, which allows the new buyers to essentially become your landlords for a few months while you find a new place to live. But considering how long the home-selling process takes, odds are you’ll be chomping at the bit to get out!
Spring brings out home buyers en masse. But in these waning days of winter, many home sellers are still hibernating. Well, it’s time to wake up! Although technically the peak home-buying period is still a few months away, the time to get your home in shape to sell is right now.
“Put in the prep work before the season starts,” says Peggy Yee, supervising broker at Frankly Realtors in Vienna, VA. If you dillydally, you risk having to scramble to get your house ready to list. Even though it’s a seller’s market in many parts of the country, you still need to bring your A-game if you want to get the most value out of your home.
Moreover, “you want your home to be ready to list at the start of the spring home-buying season,” says Lisa Cahill, co-owner of Evolve Real Estate in St. Petersburg, FL. “If you hold off on getting the process started, you may not be ready to put your home on the market until the late side.”
So what can you be doing now? Allow us to elaborate so you’re ready to roll once that wave of home buyers hits.
Find an experienced listing agent
Before you start making repairs or updates to your home, you’ll want to enlist an expert who can guide you through the process; otherwise you could wind up wasting cash on things that don’t improve your home’s sales value. You can find potential agents through word of mouth or on an online database.
Cahill recommends interviewing at least three agents before settling on one.
“You want a local expert,” she says. “Someone who knows the area and knows how to price your home.”
To ensure you’re hiring a neighborhood specialist, find out how many listings the agent had in your area within the past 12 months—and ask about the average days on market for the listings.
“Just because someone does a lot of business in your neighborhood doesn’t mean they’re necessarily good at selling homes quickly,” says Yee.
Statistics show that the median home spends 65 days on the market, from the instant it’s listed until the day it closes. But this number can vary widely. Use realtor.com®’s interactive map to find out the median days on market in your area and other local data that can help you determine how well your own agent should be performing.
Spread the word
By finding an agent early on, that person can then start marketing your home simply through word of mouth to other agents, letting them know that your house will be listed in the spring. Doing so creates buzz around your listing—and may even lead you to capture a serious home buyer before your home hits the market.
Plus, you can do some early marketing, too—by telling your friends and family that you’re hoping to sell. Go ahead and post some pics on Facebook and see what happens! Maybe your own social network will deliver a buyer right to your door.
When making repairs, focus on the interior
Curb appeal is important, but it doesn’t make sense to do exterior repairs until bad weather is over.
“If you replace siding in the winter, it could get wear and tear before spring,” says Yee. So if you live in a snowy city like Buffalo or Chicago, wait until closer to spring to do exterior work.
Instead, use that time to make updates to your home’s interior based on your real estate agent’s recommendations. Go room to room with your agent and create a list of things you need to fix. Even small repairs, like fixing chipped paint or replacing a leaky faucet, are good to get out of the way during the winter. Also, “when you repair surface issues, buyers are less concerned about finding major problems with the home,” says Cahill.
It’s also a good idea to have your HVAC appliances serviced by a professional now—“that way you can tell buyers that you’ve checked the system and everything is running well,” says Yee.
Dig into decluttering
Clutter can be a huge turnoff to prospective buyers. But even for nonhoarders, a thorough decluttering can take months, says Yee.
“Getting rid of your stuff always takes longer than you think,” she adds. “Even decluttering just one room each week starting today will reduce stress later on.”
Depending on how many personal items you choose to keep (donate or sell the ones you don’t, instead of schlepping them to your next home), it may make sense to rent a storage unit for a couple of months.
Consider professional home staging
Over a third of real estate agents stage their listings, and the payoff can be substantial: On average, staged homes sell 88% faster and for 20% more than nonstaged ones. If your agent doesn’t offer staging services, ask for a recommendation.
Why do this in the winter? Because staging costs can potentially add up to thousands of dollars—staging for a 2,000-square-foot home, for example, would cost around $2,000 to $2,400, says Boca Raton, FL, real estate agent Crystal Leigh Hemphill. Knowing how much money you’ll need well in advance can help you develop a budget plan, since staging expenses are typically paid out of pocket, says Cahill.
The first step to getting buyers to make an offer on your home is to impress them with its appearance so they begin to envision themselves living there. Here are seven tips for making your home look bigger, brighter, and more desirable.
1. Start with a clean slate.
Before you can worry about where to place furniture and which wall hanging should go where, each room in your home must be spotless. Do a thorough cleaning right down to the nitpicky details like wiping down light switch covers. Deep clean and deodorize carpets and window coverings.
2. Stow away your clutter.
It’s harder for buyers to picture themselves in your home when they’re looking at your family photos, collectibles, and knickknacks. Pack up all your personal decorations. However, don’t make spaces like mantles and coffee and end tables barren. Leave three items of varying heights on each surface, suggests Barb Schwarz of Staged Homes in Concord, Pa. For example, place a lamp, a small plant, and a book on an end table.
3. Scale back on your furniture.
When a room is packed with furniture, it looks smaller, which will make buyers think your home is less valuable than it is. Make sure buyers appreciate the size of each room by removing one or two pieces of furniture. If you have an eat-in dining area, using a small table and chair set makes the area seem bigger.
4. Rethink your furniture placement.
Highlight the flow of your rooms by arranging the furniture to guide buyers from one room to another. In each room, create a focal point on the farthest wall from the doorway and arrange the other pieces of furniture in a triangle around the focal point, advises Schwarz. In the bedroom, the bed should be the focal point. In the living room, it may be the fireplace, and your couch and sofa can form the triangle in front of it.
5. Add color to brighten your rooms.
Brush on a fresh coat of warm, neutral-color paint in each room. Ask your real estate agent for help choosing the right shade. Then accessorize. Adding a vibrant afghan, throw, or accent pillows for the couch will jazz up a muted living room, as will a healthy plant or a bright vase on your mantle. High-wattage bulbs in your light fixtures will also brighten up rooms and basements.
6. Set the scene.
Lay logs in the fireplace, and set your dining room table with dishes and a centerpiece of fresh fruit or flowers. Create other vignettes throughout the home — such as a chess game in progress — to help buyers envision living there. Replace heavy curtains with sheer ones that let in more light.
Make your bathrooms feel luxurious by adding a new shower curtain, towels, and fancy guest soaps (after you put all your personal toiletry items are out of sight). Judiciously add subtle potpourri, scented candles, or boil water with a bit of vanilla mixed in. If you have pets, clean bedding frequently and spray an odor remover before each showing.
7. Make the entrance grand.
Mow your lawn and trim your hedges, and turn on the sprinklers for 30 minutes before showings to make your lawn sparkle. If flowers or plants don’t surround your home’s entrance, add a pot of bright flowers. Top it all off by buying a new doormat and adding a seasonal wreath to your front door.
Updates and home renovations are frightening to many homeowners. But improving your home doesn’t have to be a daunting task. Here are a few simple projects that will boost the value and looks of your home:
Try a Fresh Coat of Paint
Applying a fresh coat of paint can make a huge difference in the looks of your home. If you have children or rambunctious pets, consider a quick touch-up of nicked or damaged areas.
Update Your Hardware
Quality hardware can cost anywhere from $5 to $25 per piece. But, considering the cost of most home improvements, even more expensive hardware can be a bargain. You can update your hardware with classic designs, or go with a sleek and modern aesthetic. Always keep the old hardware in case you decide to sell your home.
Lighting changes the way a room looks and feels. When you want to improve the lighting in your home, focus on adding accent lighting overhead. Lamps, floor lights and even spots on your art and other collectibles can greatly improve a space. Ambient lighting like sconces can add a decorative and useful touch. Task lighting will also improve the usability of your home.
Vintage items, particularly those with a more rustic or lived-in feel, can make a sterile space feel more exciting. Also, many vintage pieces won’t cost as much as new or designer lighting options.
Extra items cluttering your home will detract from its charm and make it difficult to clean. Move excess items to a storage space in the garage or have a yard sale. You might even make money improving your home!
Updating your home can be a costly project. Use these tips to help you improve your home without breaking the bank. You’ll be surprised how much better your home can look and feel for just a few bucks.
Moving into a new house? Your task list doesn’t end once you pack up your old place – and we’re not just talking about all the fun unpacking you have ahead of you. There’s a few more things you’re going to want to do before you get in and start living it up.
Change the locks
It doesn’t make you paranoid to want new locks on the doors to your home. It makes you smart. “Who knows how many people have keys to what’s now your home? The fix is easy: ‘It’s usually a minimum charge for a locksmith to come to the house,” said Ron Phipps, principal with Warwick, Rhode Island-based Phipps Realty and past president of the National Association of Realtors, on Bankrate. Phipps’ advice: Don’t just re-key the locks – replace the hardware, too. You get a nice update, plus peace of mind.”
Don’t forget to change your garage door opener code, too.
Do an in-depth tour of the house
Do you know where the water and gas shut-off valves are? How about the electrical box and water heater? Any idea how to use your sprinkler system? Familiarizing yourself with all the ins and outs of the house and making sure key members of the household are also aware can help avoid disasters.
Seal off rooms you don’t use – or won’t be using right away
The first few months in a new home might be a revelation financially – and not in a good way. Between moving costs, new furniture, any renovations that need to be done, and the cost of turning on all your utilities, you’re probably going to want to save a few dollars where you can. Sealing off rooms you won’t be using for a while can help lower your heating and cooling costs.
Meet your neighbors
Your neighbors may be planning to come by once they see that you’ve moved in, but think about beating them to it. You never know where you might make a new best friend (or find one for your kids), and being friendly and outgoing from the get-go establishes good will.
At the very least, being able to see a friendly face or two in the neighborhood will help you acclimate – and it won’t hurt to have someone point out the neighborhood gossip, tell you which Starbucks makes the best lattes, and help you find the most traffic-free route to the elementary school.
Need a babysitter, a dog walker, a handyman, or a recommendation for the best Chinese restaurant in your new neighborhood? Nextdoor will help you find it.
Clean your carpets
A thorough cleaning of the home should have been done when the sellers were moving out. In some cases, it’s stipulated in the contract, and a seller who fails to live up to that aspect is “at risk for a lawsuit,” said Realtor.com. But unless specific cleaning tasks are called out, the house may not be as spic-n-span as you want.
Even if the house looks clean and tidy when you move in, they may have skipped the carpets. A good cleaning can extend their life, improve air quality, and remove allergens.
“Little do most of us realize that what we are seeing is only a tiny fraction of the soil that a carpet contains,” said the National Carpet Cleaners Association (NCCA). “The visible grime we notice is only the tip of the iceberg; up to 85 per cent of the dirt the carpet holds is buried deep within the pile. And when you consider that a carpet can eventually trap its own weight or more in soil – as much as 150 pounds for an average-sized living-room – you’ll agree it’s no trivial matter.”
Wipe out drawers and cabinets
This is another oft-ignored task, and one that could be responsible for leaving germs, or at least crumbs, behind.
Change your fire alarm batteries
The U.S. Fire Administration (USFA) recommends that fire alarm batteries get changed twice a year. Since you probably won’t know when the last time this was done, it’s best to change them when you move in. That way you won’t be awakened at 3am by a blaring alarm your third day in the house.
True or false: To invest in real estate like a big shot, you need boatloads of cash and large lines of credit.
False! Those who don’t have the salary to crack the top 1% (or even top 25%) can indeed become players in the world of home flipping and rental properties—but they’ll have to put in a lot of extra work, otherwise known as sweat equity.
This may appeal to the legions of cash-strapped wannabe investors, inspired by visions of big-time housing success, propagated by hugely popular reality TV shows like “Flip or Flop” and “Flipping Out,” or even the real estate career of our 45th president.
Here’s what it comes down to: forming a partnership with others (the ones with the cash) and trading some of your valuable labor involved in finding a place and nailing the deal for ownership shares in the property. It’s becoming an increasingly popular way to get into the game without needing to bankroll it.
That means instead of plunking down their own money on various deals, they’re scouring online real estate listings, driving through neighborhoods looking for “For Sale” signs, and attending auctions on behalf of their wealthy partners in search of a good deal. They may have to gather documentation on properties, compile reports on the pros and cons of investing in various neighborhoods, or even get their hands dirty cleaning out neglected houses.
“You don’t need money or even a real estate license, because that’s not what you’re bringing to the table,” says Sue Nelson, CEO of REO Note Profits, a real estate academy in Burlington, CT. “What you need is time to scout potential property acquisitions and connections to wealthy investors who will trust you with their investment money.”
The former teacher’s first acquisition was a Nashville, TN–based 104-unit apartment complex which she bought in 2006 with a group of 12 investors who included doctors and lawyers. To become a partial owner without putting any money down, Nelson had to find the property, hire the management company, coordinate the investors, produce a summary on the investment, and collect the investors’ signatures by email and FedEx.
Today, she and her partners own 12 apartment complexes in eight states, including Texas, Louisiana, Tennessee, Mississippi, Ohio, and Georgia.
So here’s how to do it:
Step No. 1: Finding investment partners
The first step to becoming an investor without any cash is hooking up with those who have loads of it. Preferably investors should have a net worth of at least $1 million or an income of more than $200,000 a year for two years. And that’s just for starters.
Potential sweat equity partners meet more established investors by attending real estate networking events, sometimes held at a local chamber of commerce, joining a local real estate investors club, or even taking real estate classes.
The best option: “Find a wealthy person who has worked in real estate for more than 10 years,” says Scott Whaley, CEO and founder of the Real Estate Investment Funding Association, a nonprofit based in Phoenix.
But since all that glitters is not gold, newcomers are advised to carefully vet potential partners. Start by making sure the investor is accredited, and therefore legally enabled to invest their funds. Ask for a proof-of-funds letter from a potential partner’s bank or accountant.
Step No. 2: Become a real estate expert
To ensure they’re getting a good deal—and just know what they’re doing—newbies can take classes in property management, investing, and how to set up individual transaction business partnerships properly on behalf of their business entity, says Bruce Kirsch. He is the founder and CEO of Real Estate Financial Modeling, a commercial real estate financial analysis and marketing platform in Atlanta.
Newcomers need to know enough about the market to know what they don’t know. Before closing on a sale, new investors need full due diligence—for example, always making sure to have properties inspected by a professional to make sure they’re really getting a good deal.
Step No. 3: Protect yourself in real estate deals
Another pitfall for newcomers is lack of legal protection—sweat equity rookies are easily taken advantage of. That means they need to dot their i’s, cross their t’s, and have an attorney pore over any contracts before they sign anything they might regret.
Aspiring investors must also figure out at what percentage they want to be cut in to make all the hard work worth their while. Starting out with 50% may be the dream, but earning a share of 10% or lower of the total project is more realistic, according to experts.
But those seeking to get into the real estate investment game who don’t have buckets of cash don’t need to be discouraged. Although it may not be as easy as seen on TV, making a profit is possible with some good old-fashioned hard work.
If you’re a newbie home buyer, you may be confused by what you need to do to snag a mortgage. We’re here to help! So let’s start with the basics: What exactly is a mortgage?
Since you probably don’t have hundreds of thousands of dollars lying around, a mortgage is a loan that enables you to cover the cost of a home. You pay back the loan over the course of years or even decades. Consider it the biggest, longest, most life-changing IOU you’ll ever give out!
But there’s a surprising variety of choices available. Here’s an introduction to everything you need to know about mortgages.
When to apply for a mortgage
Believe it or not, you should shop around for a mortgage even before you start hunting for a house. It might not be as fun as checking out open houses, but it’s way more important.
You’re looking to get a mortgage “pre-approval,” which serves two main purposes: One, it will show the sellers that you are serious about buying a home, which is particularly crucial in a hot housing market, says Chantay Bridges with TruLine Realty in Los Angeles.
But more importantly, it will let you know how much home you can afford. Before you start browsing online listings or visiting open houses, take a look at our home affordability calculator, which will give you an idea of how big your mortgage will be.
Where to get a mortgage
Here are the main places you can get a mortgage:
Banks: This can be a great place to start if you have an institution you work with that already knows you and your finances. That said, banks typically have only a few loan options so it’s smart to talk with your banker, and then compare the programs with a couple more options before settling on one.
Nonbank lenders: These companies (e.g., Quicken Loans or PennyMac Financial) are often willing to work with borrowers that banks avoid due to their riskier profile. If you have a poor credit history or some other blemish in your financial past, you may have better luck landing a loan with nonbank lenders, which now provide more than half of all loans.
Mortgage brokers: These advisers are specialists who can help walk you through a much wider variety of options to find a loan that’s right for you. They often work with many different lenders so they can help identify different rates and programs based on your specific situation.
Mortgage payments explained
When you apply for a mortgage, here are the main terms you’ll need to know:
Down payment: This is the money you must put down on a house to show a lender you have some skin in the game. Typically lenders like to see home buyers make a down payment totaling 20% of the price of the home (e.g., $40,000 on a $200,000 home), although in some cases they’ll take less.
Principal: This is the amount of money that you are borrowing and must pay back, which is the price of the home minus your down payment (taking the above example, you’d subtract $40,000 from $200,000 to get a principal of $160,000).
Interest: Lenders don’t just loan you the money because they’re good guys. They stand to make money off you, too, since you pay them back plus interest—a percentage of the money you borrow.
Types of mortgages
There are two main types of loans:
Fixed-rate mortgage: This is just what it sounds like. The interest rate will not vary over the life of the loan. While rates might be slightly higher overall, they are a good choice for someone who likes the certainty of knowing their payment will never go up.
Adjustable-rate mortgage, or ARM: These mortgages start with a lower interest rate for the first few years, and then they will “adjust” after a predetermined period (typically five years) based on market indexes. Borrowers enjoy the initial lower payments, but this type of loan can feel risky if interest rates rise a lot. However, there is a cap that can prevent too much damage.
Loans also have different “terms,” which means how long you’ll make monthly payments. The two most common terms are 30 years and 15 years. The payment on a 15-year loan will obviously be higher each month you have it, but it will ultimately save you money in interest over the life of the loan.
How to shop for a mortgage
Since loans come in all shapes, sizes, and interest rates, you should definitely shop around, much like you’d compare different laptops before settling on the best one for you. And, since interest rates fluctuate daily—which will have a direct impact on what you ultimately pay—you’ll want to do all your research during the same time period as much as possible, says Brandon Haefele, president and CEO of Sacramento-based Catalyst Mortgage and a member of the board of directors of the California Mortgage Bankers Association. That way, you know you’re making a valid comparison.
Working with a qualified (and patient) loan adviser can help you sort out your options. They can help you determine which type of loan is best for your situation and walk you through what your payments would be for different types and terms of loans. They’ll also break down the various fees that come with each loan.
By understanding what a mortgage is and all the different types available, you can make the choice that’s right for you and your budget.
What is a short sale? Let’s break it down. Say you’re selling your home; however, the offer you get is so low, it won’t cover the total amount you owe on your mortgage. But you need to unload it, so you’ll take it. This is a short sale—simply put, you end up “short” on paying back your lender, and the bank agrees to accept less than what’s owed on the loan.
According to the most recent data from real estate information company RealtyTrac, 5.1% of all single-family home and condo sales in early 2016 were short sales. Often homeowners are pushed into a short sale by personal financial troubles that make it impossible to pay their monthly mortgage. At the same time, they find it hard to sell at a price that would enable them to pay off their loan—especially if local real estate market trends have driven down their home’s value. This happened in many communities across the nation during the housing bust of 2008.
While selling a home under such circumstances is hardly ideal, many experts argue it’s smarter than pursuing more drastic measures like bankruptcy or foreclosure. Here are a few of the benefits of a short sale for a distressed home seller:
Short sales do way less damage to a homeowner’s credit report and credit score than a foreclosure. This means they’ll be in better shape to apply for a mortgage and buy a new home down the road.
Homeowners have the dignity of being able to sell their own home. This is no small thing.
Short sales enable homeowners to stay in the home until the sale is completed. Foreclosures force homeowners to vacate.
While a seller typically pays all real estate agent commissions and other closing costs, in a short sale the seller pays nothing; the bank foots the bill.
How short sales happen
They start off just like any other home sale: You contact a Realtor® (ideally one who specializes in short sales), list your home (mentioning that it’s a “short sale/subject to lender”), then wait for an offer to come in. But once you accept, things get tricky. You’ll need to get your bank’s blessing—and since lenders lose money with short sales, they’re rarely eager to hop on board.
“Some banks may even prefer to foreclose, since they not only assume ownership of the property but may receive bailout money from the homeowner’s mortgage insurance policy,” says Marlene Waterhouse, a Realtor and the owner of Short Sale Solutions. On the other hand, a short sale may appeal to a bank, since owning and selling property are hassles it may prefer to avoid.
To assess whether to approve your short sale, banks will require you to submit some paperwork, including your offer letter as well as a “hardship letter” explaining why you can no longer make your mortgage payments, along with financial documents such as income statements or medical bills to back that up. At that point, they will most likely have your home appraised to determine if the offer you’ve received is fair. If it is, they may allow the deal to go through, although they may have some stipulations (more on that next).
How buyers can benefit
Short sales can be bargains for home buyers, but prepare to jump through a whole lot more hoops than with a typical sale.
“I wouldn’t recommend them for first-time buyers, who may get frustrated with the extra paperwork and long waits,” says Waterhouse. “A traditional sale takes 30 to 45 days to close after the offer is accepted. A short sale typically takes 90 to 120 days, or even longer.”
The reason for these holdups is that the lenders—which are stuck paying for closing costs that a seller would typically cover—will often counter with their own demands in an effort to raise their bottom line. So, buyers might hear, “We’ll accept your offer, but you’re responsible for all repairs, wire transfers, and notary fees.” Go ahead and negotiate, or walk away if you aren’t satisfied with the terms of the deal; ultimately it’s up to you to decide whether it’s worth it to absorb these extra costs. When in doubt, ask your Realtor to help you crunch the numbers.
Bottom line? Short sales can be a viable solution for some. Done right, sellers, buyers, and the bank can all walk away happy.
1. Prepare to sell your house
Home selling has become more complex than it used to be. New seller disclosure statements, longer and more mysterious form agreements, and a range of environmental concerns have all emerged in the past decade.
2. Find a Realtor®
In the maze of forms, financing, inspections, marketing, pricing, and negotiating, it makes sense to work with professionals who know the community and much more. Those professionals are the local Realtors who serve your area.
3. Set the list price of your home
Several factors, including market conditions and interest rates, will determine how much you can get for your home. In other words, home selling is part art, part science, part marketing, and part negotiation.
4. Market your house for maximum exposure
Your Realtor should share a marketing plan with you, but the more you know about the process of selling your home the easier it is to support your Realtor’s efforts. Make your home sell fast with these tips.
5. Negotiate a real estate offer
Perhaps the most complex moment in the sales process comes when you get an offer for your home. Whether you have one offer or several to consider, these tips will help you navigate the negotiation.
6. The art of settling
When you have a signed contract with the buyer for your home, you may feel as if you can breathe a sigh of relief. But before you can completely relax you need to get to the settlement table.
7. Plan your move
Some of the activities required to sell your home can actually help with the moving process. For example, by cleaning out closets, the basement, and the attic, you will have less to do once the home is under contract.
We posed the following question to agents across the country. Below are the responses we received…
While looking for homes for sale in the Florida area, I realized that I do not know what all the real estate status terms mean…active, contingent, etc. Could you explain them to me?
Each MLS has a different status list, but here are some general definitions:
Active: Active for sale listing.
Active Short Sale: Active for sale short sale listing.
Contingent: In my area, this means a short sale with a seller-accepted offer but short sale not yet approved by sellers lender.
Pending: Accepted offer, in escrow.
Pending Taking Back-up: Accepted offer, but still accepting back-up offers.
Back on Market: The home was pending sale but fell out of escrow, now it’s back on market
These terms vary from MLS to MLS. Times when the status changes (say from active to pending) also may vary, so check with a local Realtor® to confirm.
—Teri Andrews Murch is a Realtor® with Lyon Real Estate in Auburn, CA.
Active means a home isn’t under contract and is still for sale. When a home is active, it may have received offers. But if a home is active, an offer has not yet been accepted.
If you find a house you like, it’s in your best interest to see it as soon as you can. There are a couple of different terms out there in different areas. Contingent could mean a home is under contract, but a buyer has to sell their house before purchasing.
A pending sale means a house is under contract and working towards a closing. Some may be pending and still accepting back ups. So if you become a back up, then you’re in line to go under contract if the first sale falls through.
—Tara Tronson is a Realtor® with Montana’s Premier Real Estate in Great Falls, MT.
An active listing is just that—one that is available. A contingent listing has a sales contract on it that has been signed by both buyer and seller. Usually, there are contingencies regarding inspections and financing. Once all the contingencies have been removed, the status shows as pending sale until closing. Often a property will continue to be shown when it is contingent, but sellers stop showing the property once it goes pending.
—Nancy Clark is a Realtor® with Prudential Snyder and Company Realtors in Ann Arbor, MI.
Here’s how I’d explain these terms. Any Realtor® would be glad to help you—even if you were months from moving.
Active—Property is for sale and is not under contract
Contingent—Property is under contract, and the sale is contingent upon any number of items (financing, inspections, repairs, appraisal, title search) but a backup offer may be made.
Pending—Property is under contract and all contingencies have been removed—it’s ready for closing.
—Larry Simons is a Realtor® with Century 21 Maselle & Associates in Flowood, MS
Congratulations on your decision to move to beautiful Florida!
ACTIVE: This status means that the home is currently available for sale.
ACTIVE WITH CONTRACT (AWC): This is a newer term that has become quite prevalent in the last few years. It’s used a lot with short sale homes. It means that there’s already an accepted offer. However, the seller is looking for back-up offers in case the primary one falls through. Short sales tend to fall through and it’s helpful for everyone involved if there is a ready buyer waiting. It’s now also being used on homes that are not short sales. It just means the owner is looking for back-ups.
PENDING: This is a home that has an accepted, executed contract and is in the escrow period.
SOLD: My favorite status!
“Contingent” is not a status but it is a word that is used frequently. It means that there is something that the buyer/seller has to complete before the sale finishes. Home sales can be contingent on inspections, financing, or 3rd party bank approval (short sales) among other reasons. These “contingencies” fall away as tasks are completed.
—Melanie Atkinson is a Realtor® with Coldwell Banker Residential Real Estate in Tampa, FL.
An active listing is one that is fully available for making an offer.
A contingent listing is one in which an offer has been accepted but is subject or conditioned upon certain criteria such as obtaining financing or home inspection. Another offer may be considered and even accepted as a backup offer.
A pending listing is one in which all contingencies have been met. It’s just waiting for the closing to be done.
—Joyce Mitchell is a Realtor® with Mitchell & Associates Real Estate in Bigfork, MT.
Different local multiple listing services may use slightly different status terminology, but I think they can be covered by the following..
Active – The property is currently available and is not under contract.
Pending – The property is under contract, but the sale has not closed.
Contingent – There is some contingency that may hold up the closing of the existing contract. In the case of a buyer contingency, there may be a kick-out clause that would allow the seller to sell the house to another party if the buyer is unable or unwilling to remove the contingency within a specified time period.
Sold – The sale has closed.
—David Welch is a Realtor® with RE/MAX 200 Realty in Winter Park, FL.
New Jersey MLS Services Use these Status abbreviations:
AR—Attorney Review (Contract is in)
Contingent—Sale of home is contingent on a buyer completing a specific task.
—Carol Donatelli is a Realtor® with Robert DeFalco Realty in Colts Neck, NJ.
Active means the property is available for sale.
Contingent means the property has an accepted offer, but there are still things that have not been settled or finished. Examples of contingencies are: home inspections, attorney review, or buyer needs to sell current home. Best to place a call to your agent and ask exactly what the contingency is. Your agent can guide you as to if you may still want to view the property.
DP means Deal Pending—the property is sold, but not closed. Usually, all the contingencies have been met.
CL means closed and the property is no longer available,
In all cases unless the property is closed, you should ask your agent to inquire if there’s a chance the property will become available.
—Lynn Walters is a Realtor® with Coldwell Banker Honig-Bell in Morris, IL.
ACTIVE: property still available.
CONTINGENT: The sellers have accepted an offer but the offer is contingent on an item being completed. It’s usually the buyer selling their current home, but it could be something else too.
PENDING: the sellers have an accepted offer.
PENDING SHOW FOR BACKUP: Sellers are taking backup offers (in case the one they have falls through).
PENDING SUBJECT TO LENDER APPROVAL: Sellers have an accepted offer, but are waiting to see if the bank will agree to it.
—Dawn Rivera is a Realtor® with Realty World-Viking Realty in Fremont, CA.
—Active means the property is live on the market waiting for a buyer.
—Contingent could mean the property is under contract but back-up offers are ok to be submitted.
—Pending sale means the property is already under contract
—Closed means the property is sold
—Expired means the property listing has expired because it didn’t sell.
—Aram Shah is a Realtor® with Florida Capital Realty in Doral, FL.
Active should mean that the home has no offers and is open for an offer. Contingent means there is an offer on the house—but tests and inspections need to be done. It may also be contingent on the buyer’s loan or the buyer successfully selling their current home.
Pending means there is an offer and most items are already done—don’t waste your time writing an offer—it looks like this one will close.
Sold means the offer went through—the transaction closed and all is well.
—Lana Lavenbarg is a Realtor® with RE/MAX Ideal Brokers, Inc.in Grants Pass, OR.
Statuses can cause confusion these days, especially in Florida where I work and play.
In theory, “active” means the home is actively on the market and are looking for offers to purchase.
“Contingent” means the sellers have accepted a contract and are waiting for the contingencies to clear.
Pending means those contingencies have cleared and the home is “pending sale” and just waiting for what must be done to get it closed.
In today’s world, things can get complicated. Active on an REO bank sale can mean the bank has received multiple offers and hasn’t agreed to any of them and hasn’t signed any of the contracts.
—David Congdon is a Realtor® with Islands International Realty in Satellite Beach, FL.