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CASHING OUT
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CASHING OUT?
We can in most cases give you a FULL-PRICE Offer with
no Real Estate Commission.
To see if your house qualifies,
Call us at 650-643-5551.
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The reasons for selling a home are about as numerous as the people wanting to sell. Let’s explore some of them here:
NEEDS CHANGE
The house where you raised your family and currently live may no longer fit your needs. There can be many reasons why a senior homeowner or their family may decide to sell their home. If your family is unsure what to do with the house, this chapter will guide you through the most common ways to sell a home and out- line the pros and cons of each option.
Change in Health
When someone no longer has the mobility or confidence to live at home, they usually sell the house and move. It is wiser to sell if that person does not have a support network in place or knows someone who can move in with them.
Changes in health can be sudden. One day you can be active, driving your car, and doing whatever you want, and the next you can be in the hospital recovering from emergency surgery—some events are difficult to predict. We encourage you to plan and do as much as you can ahead of time. If disaster strikes, you and your family will be better prepared.
Death of a Loved One
For some, living in the house where their spouse passed away is an emotional burden. The pictures on the walls and memories are just too much to handle. In this situation, a change of location can sometimes help the healing process. Living in a house designed for a large family may be too much to handle.
Deciding When to Sell
When you sell depends on the situation and recent events. Quick changes in your health and well-being may require faster decisions. If everyone involved is healthy and feeling great, and you are only evaluating what may happen down the road, you do not need to make these decisions quickly.
What options are available for your (or your parents’) current house? It depends on how much time you want to invest, how soon you need to sell, how much money you have available for repairs and upgrades, and the condition of the house.
Whether you are in action or long-term preparation mode, do not wait until something happens to start planning. Dave Ramsey talks about financial planning and saving for things we know will happen in the future. If and when your family faces a health challenge, dealing with it alone will be difficult. By putting your plan in place, you can focus entirely on the health challenge and not worry as much about your housing options—that part of the plan will already be in place, ready to be implemented.
Benefits of
Having a Plan
Do you know how you will sell your home, who you will sell your home to, and when the plan will start? Are all your family members included in the plan, and is everyone in agreement about what will happen at each point in the journey?
Remember that you do not have to have everything perfectly planned out; there is no such thing as a perfect plan, but that should never be an excuse not to plan at all. The benefits of creating your plan early are significant. If you plan the sale of your home ahead of time, you can usually get more money for your house, which means more choices for a senior housing location.
The best senior housing facilities may have waiting lists, and you have to move quickly when there is an opening. You do not want to find out that your name is next on the waiting list and only have a few weeks to plan the sale of your home.
If you have already spoken with housing professionals, you will be in an excellent position for a smooth transition. The goal is less stress and better outcomes. The results can be less favorable if you do not plan.
For instance, homes in many states usually sell faster and at a premium in the spring and summer months. Selling during the peak season makes sense to get as much as possible for your home.
If you know that your house needs some work and want to update it to maximize your sale price, plan ahead to save money and reduce stress. Before spending any money on your home, call a housing professional and get an expert opinion. Avoid unnecessary repairs or making upgrades that aren’t consistent with other homes in your area.
THINGS TO CONSIDER WHEN SELLING YOUR HOME
Desired Outcome
What are your goals for when you sell your home? You and your family need to map out the desired out- come for the sale of your home. Most goals involve a timeline, the closing or move-out process, and the de- sired price range you will accept for the sale of your home. Consult with a real estate professional that shares your core values and is someone you know, like, and trust. In addition, make sure that you are working with someone who has real expertise in the area you need
help with.
Selling your home and transitioning to a new destination is a major life event. Make sure that you have the right team to help you with all aspects of this move.
Finances
Houses cost money, even after they are paid in full. All homes have maintenance, tax, and insurance costs.
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If your house is negatively affecting your finances, this could be a reason to sell it. Property taxes can be a serious problem for seniors who have purchased a home in an area where home prices have significantly in- creased in value. Many of our clients in such areas are on a fixed budget and cannot manage a large increase in their property tax bills—this is an area where seniors can get into trouble.
If your mobility is severely restricted, your current home may not be the right fit, which could have a physical, emotional, or mental impact. We work with seniors who have not been upstairs in months or even years due to mobility issues.
Mobility
Emotions are powerful forces subconsciously driving our decisions. The reasons you love your home may not be the same reasons that someone else does. Your emotions, memories, and attachments to the different parts of your home may be the opposite of what the potential buyer is feeling.
Emotional Ties
Condition of the House
Another step to successfully selling your home is getting an expert opinion on the condition of your home. Depending on where you live, some homes may sell well in any condition, while others really need to be fixed up to current standards.
When was the last time you remodeled your home? How does the condition of your home compare to the others for sale in your area?
Real estate is very localized, meaning that there can be a big difference in home prices and buyer demand in different states, cities, or neighborhoods. Even in your own neighborhood, it can be very different just one street over. So, when you are working with a real estate professional, make sure that they are an expert in your neighborhood. Choosing the wrong professional or trying to “go it alone” could cost you thousands of dollars, weeks of wasted time, and more stress and heartache.
Remember that when you are trying to sell, it is not about how you evaluate the home’s condition; instead, the sale is based on the perception of buyers in your neighborhood and your local market. Therefore, it is essential to look at the condition of your home through the lens of the buyers and how they will perceive it.
If your house needs a lot of updating, you may receive offers that you interpret as low. Sometimes it is challenging to know if someone making a “low” offer was trying to take advantage of your lack of real estate knowledge or if the “low” offer was really fair.
The Real Estate Market
As mentioned in the previous section, real estate is very localized, meaning that there are big differences be- tween states, cities, neighborhoods, and even streets.
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If you have lived in your house for a long time, you may not be familiar with your local real estate market. To simplify, we will cover the most important things you need to know.
Market Cycles
The real estate market is like the elevator business— very up and down. Sometimes, it is easy to sell your home for a great price, and sometimes it is very difficult to sell your home.
Partnering with a real estate professional who can help you understand the current market in your local neighborhood will really help to give you an idea of what to do.
Different strategies work at different points in the real estate cycle, and knowing these strategies gives you an invaluable advantage when making your plan.
Seller’s Market
In a seller's market, homes are in short supply, and there are lots of buyers that want to be in your neighborhood—it is easier to find a buyer. You can get a higher price and usually do not need to do as much updating to the home.
Buyer’s Market
In a buyer’s market, there are many homes for sale, and buyers are in short supply. Between 2008 and 2011, numerous houses were up for sale, and no one was buying them in the US.
Homes that are fully fixed-up for a great price usually go first in a buyer’s market. In a seller’s market, buyers will overlook cosmetic updates that are needed since they really want to get into a specific neighbor- hood and do not have many choices.
In a buyer’s market, there are so many houses to choose from, and buyers typically pick the houses that are already updated instead of those that need a lot of work. Since there are many housing choices, buyers are not limited to purchasing homes that may need work.
Knowing your strategy if you need to sell during one of these times is important for your outcome.
Physical Items
If someone needs to move quickly, what is going to happen to all the physical items in the home? If your senior gets sick, who is going to sift through all the items in the home? How long will it take?
Believe it or not, not all senior citizens are minimalists. Years and decades of memories and special belongings can slowly collect over time, creating a vast inventory of physical items to go through, regardless of whether the move is imminent or in the future.
After spending weeks or even months going through the items in their parents’ homes, my clients still feel like they are only scratching the surface. If you parents have been storing things up, what would happen to all of those items if your parent were to pass away suddenly or needed to sell their home quickly?
As you create your plan, start thinking about reducing your possessions now. The more streamlined your home becomes, the more you can easily see and enjoy the items you really love (currently hidden by things you just like or tolerate). You will have less to worry about in the future when you move.
Often, our residents will take only 10% or 20% of what they had accumulated—or only those things they consider special—to their new house, leaving the rest for their housing professional to donate or discard. Some housing professionals do not charge extra for this ser- vice—it is an added value that they extend to their sellers. If you are thinking about going down the investor route to dispose of your home, this might be an option to save you some time and energy. However, if you plan to sell your house to someone who will reside in the home, leaving your physical items behind will not be an option. Unless they are buying your furniture with the house, the home will need to be empty.
Trash or Treasure
An elderly lady had gone into a nursing home, and her adult son called a real estate agent to take a look at the house.
For two months before this, her son spent nights and weekends cleaning the house.
When the agent walked into the home, he could not see the walls since objects and belongings were stacked to the ceiling, with pathways forged through the items to walk to different parts of the house.
The agent turned to the seller’s son and inquired, “Jeff, how are you progressing?”
Jeff replied, “Slowly.”
His mom never threw anything away, and now her adult children had to go through it all.
MISTAKES TO AVOID
Too many of our potential clients waste time, energy, and money because they do not fully understand how to deal with a home that is no longer serving its purpose. These are the biggest mistakes made by adult family members in charge of selling the property.
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Mistake #1:
Picking the Wrong Person to Take Advice from or Not Taking Advice from Anyone
There are some great real estate professionals in all markets but finding them requires work. In some states, it takes 10 to 20 times more training hours to receive a cosmetology license than a real estate license.
Someone can cut your hair, make a mistake, and your hair will grow back. That person may be required to take 1000% to 2000% more training hours as someone who could be advising you on one of the largest financial transactions you may ever be involved in (i.e., selling your home).
On the investor side, it can be even worse. There are few or no state licensing requirements for an investor to buy your home. You could be working with a very reputable company or be approached by someone who has attended a three-hour weekend class and only knows the basics.
How will you know who to work with? The rest of this chapter and book will provide you with some strategies to help you make the right choices.
Mistake #2:
Working Nights and Weekends on Fixing Up a Home to Increase the Purchase Price
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This is a default decision for many well-meaning children who think that if they fix up the house, it will sell for a lot more. Although a fixed-up home can sell for more, the type of repairs and updates you make requires an in-depth knowledge of the local area.
Updating the home with more expensive materials than the area requires (over-improving) is a waste of money. If you use materials below the neighborhood standard, buyers will not like it, and you will either not get much for the work, or it will have to be redone to satisfy potential buyers.
Even if you predict the remodeling requirements and repairs 100% correctly, who will do the work? If you are doing the work, how long will it take you compared to a professional, and how much is your time worth? If you have a full-time job and are trying to help your sick parent, you may not have as much time as you think.
Some of our clients find out after months of work that their efforts have not yielded the results they had expected. Before starting work on a house, consult a trusted advisor.
Ways to Sell Your House
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There is no one-size-fits-all approach, so we are going to cover the three main ways you can sell a house and discuss the pros and cons of each.
Be cautious of anyone who tells you that their choice is the best in all situations. It depends on many factors, including your individual goals.
We are not trying to persuade you to pick a particular strategy but are giving you the information to let you and your team decide what is best for you.
How long have you been in business?
This is very important—there is no substitute for experience. Let us emphasize: There is no substitute for experience. There are some long-time agents who are not very good at what they do, and there are some un- seasoned agents who are very good at what they do.
Experience allows someone to see things differently. Work with an agent who has experience in similar situations. If an agent has been in the business for ten years but has only helped a few clients in your situation, that might not be good enough.
Are you a full-time or part-time real estate agent?
Don’t leave one of the most important financial deci- sions of your life—selling a home—to an agent who has only sold a couple of houses and works part-time. Would you want a part-time medical doctor who also has a day job doing something unrelated to working on your heart?
We recommend you find a full-time agent who will be available when you need them and will likely have more experience.
Which neighborhoods do you specialize in?
Real estate is very localized. What works in one neighborhood may not work in another. Find an agent that knows your zip code and neighborhood and understands what buyers in that area want.
Have they helped buy or sell a house in your neighborhood in the last 12 months? If so, what was the outcome?
Can I contact your references?
Get references from people your agent has worked with in the past. How they treated their previous clients is likely an indicator of how you will be treated. You do not want to work with an agent that is hard to reach when you need them.
This is how most people sell their fixed-up, fully updated homes. Below are some sample questions to use when you are interviewing an agent. A short explanation of its importance accompanies each question.
Option 1: Sell the House with an Agent
Things to Avoid When Selling with an Agent
Pricing the House Too High
This can happen for a number of reasons. It is difficult to know exactly what the perfect price for a house will be.
Sometimes, a seller wants a certain price, and the real estate agent does not challenge them, there is a change in the market, or everyone is overly optimistic.
Once you list your home on the multiple listing ser- vice (MLS), that price is on record. If you have to lower the price, your listing may appear weak and cause offers to come in lower than expected.
Picky Buyers
When you accept a buyer’s purchase contract, the buyer has a certain number of days to have an inspection completed (typically three to seven days). The buyer then has the option to cancel the contract.
After viewing the inspection report, the buyer may ask you to make a lot of repairs or substantially lower the price.
Hiring a Family Member to be Your Agent
Hiring a relative to sell your house can be good or bad. You need a real estate professional who knows what they are doing and understands the local market.
The most significant risk in hiring a family member to represent you is that if things do not go the way you want, you may not be comfortable firing them, which would be detrimental. How would that affect other family members?
Also, some homeowners do not like to disclose finances to other members of the family.
Final Thoughts on Using a Real Estate Agent
If you sell with an agent in some markets, you will need to make repairs or upgrades for the house to sell at top dollar. Consider working with the best agent available. I work with only the top agents in the Peninsula - agents who can help you position your property for the best price. After I’ve had a chance to see your property and understand your own unique situation, I can help you pick the right agent for the task. Just give me a call at least 4 to 8 weeks before you would like to put the house on the market.
Deciding whether to use a real estate agent can be determined by market conditions, your needs, the amount of money you have available to put into the house, and how quickly you need to sell your home.
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Typical clients that use an agent want to get the ab- solute most for their home. They are willing to wait a little longer if needed for the house to sell, and their homes are usually updated. If required, these clients have the time and money to make repairs or updates as the buyer demands.
Option 2: Update Your Home Before You Sell
TV shows do a great job of fueling the popularity of this strategy. Beware! Rehabbing your home is not as easy as they make it seem on TV house flipping shows. If your senior needs to move quickly, this strategy is no less enticing but much harder to execute.
Professionals who rehab several homes each year follow a detailed process with many steps. Homeowners who attempt to fix and flip their homes on their own are usually not satisfied with the results. What sounds like a good idea at the time rarely leads to the desired outcome.
Sometimes homeowners get halfway through making updates, become frustrated, and sell their homes to a local professional “as-is.” If projects have not been carried out correctly or are unfinished, it can be more difficult to sell the house than if nothing had been done.
Understanding a Home’s Value
Remember that every neighborhood is unique. The right flooring or finishes in your neighborhood may be a waste of time and money in a different neighborhood.
Certain repairs increase the value of your home more than others. For example, if you replace the air conditioning unit, you will generally get a small premium above what you paid. Homebuyers like to buy houses that have a new A/C unit, but it won’t yield the seller much more when compared to the cost.
The Speed of the Repair Work
If you are doing updates to the home yourself, you probably do not have as much time to devote to it as a full-time contractor. Also, you likely work a lot slower than a professional contractor. While it might take a three-person crew (charging $400) one day to install new flooring, it may take you three to seven days or even an entire month.
Do you want to invest your time and energy fixing up a home or spend time with your loved ones? Your return on time invested will not be very high unless you are an expert.
Consider spending time with your aging relative in- stead of rehabbing their home. If your loved one has just moved into an assisted living or senior facility, remember that the average stay in an assisted living center in the United States is around 28 months.
Option 3: Sell to an Investor
A good real estate investment company will share your core values and provide you with a real service. Make sure to work with a company that has high standards. Like real estate agents and contractors, real estate investors seek to profit from their work. Real estate investors take the most risk.
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A real estate agent can tell you that your house will sell for any amount you want to hear. When the house does not sell for that amount, they’ll be continually coaxing you to drop the price. When a reputable real estate investor buys your house, you’ll know exactly how much you’re going to get and when you’ll get it. Remember, the investor who buys your house takes all of the risks with the project costs and management and what the house will actually sell for.
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One of the main advantages of selling to an investor is certainty. You’ll know right away how much you will net for your house. You won’t have to pay real estate commissions. And since an investor buys your house in “as-is” condition, you won’t be waiting for your buyer to get termite, home, roof, sewer, or electrical inspections or present you with a huge “Request for Repairs” addendum. Another advantage of selling to an investor is that you can close quickly or on the date you choose.
Selling to an investor has other benefits as well. Homeowners who are a good fit for a sale to an investor are those who:
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Need a quick sale
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Need to sell with the certainty of knowing how much they’ll net from the sale and exactly when
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Have a house that needs upgrading or repairs
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Don’t want to open their houses up to a bunch of prospective buyers or neighbors traipsing through their homes on the weekends
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Want the convenience of a quick hassle-free sale
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Don’t have extra funds to make repairs or upgrades
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Don’t have the time or inclination to invest in making repairs
How do you determine a fair price for the home?
The biggest problem with the term “fair price” is fair for whom? A “fair price” typically represents a range. A client wants to get as much as they can for their house, and a business wants to make as much as it can for its bottom line.
It seems like the client and investor are on opposing sides. There is a way to engage in this price topic so that the client and company are on the same side.
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The price has to be a win-win for both parties. The homeowner needs to get a fair price they are happy with that reflects the current condition of the home and the amount of time, energy, and money required to get the house to market standards. The person who does that work (the investor) needs to make a fair profit for that type of risk.
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The fastest way to get the price you want for your home is to tell the interested party what you want for the home or what you think a fair price is. Be open to information about the true fair market value of your home.
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Sometimes, homeowners will not say what they really want for their house, worrying that it will be lower than what the investor will offer. Nine times out of ten, however, the number the client wants is higher than the actual value. Communicating this to your investor is a great way not to waste time and move on to finding the right solution for you.
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While price is important, there are other things to consider, such as time and energy. How much is your time worth? The most important thing to consider (other than price) is who you are working with. If an investor says they will buy your house for a great-sounding number, but they don’t show up at the closing, what did that great number really mean? Nothing!
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It’s important to understand why the investor needs to make a profit. Working on a house as an investor carries a great deal of risk. For example, house prices could go down by the time the house is ready to sell.
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There are factors you cannot see that affect the value of your home. Are there termites in the walls or under the pier and beam foundations? Is there an undiscovered plumbing issue that could cost $10,000 to fix? Is there mold in the bathroom that requires special services to treat? If an old home is being sold, there are things no one knows about until repairs start. Do you want to take that risk on, or do you want to transfer that risk to an investor?
If I make repairs to the house, can that increase the value, and by how much?
Most investors can get the work done on houses much cheaper than a homeowner can. When a client does the work on a house that they plan to sell to an investor, it is usually not worth the time, energy, or money.
In what condition can we leave the house if we sell to you?
Many sellers do not realize that most investors will not charge additional fees if you leave items in a house. Ask the investor if their price includes leaving extra furniture, household items, or trash behind.
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Usable items that have been left behind can be donated to local charities. If you are selling a house to an investor while other important events are happening, you want to be present and focused on those—do not clean out the entire house if you do not have to.
When can we close?
This is important to know if you are selling the home to buy another home or pay medical bills. Most investors can close on a home within 30 days, depending on the condition of the title.
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Investors generally pay all of the closing costs. The homeowner would be responsible for paying the taxes on the property and any liens or mortgages.
Do you have any references?
Investors who have been in business for any substantial period of time should always have clients who will share their experiences.
Who pays additional lawyers or closing costs?
Probate or other legal issues can result in additional closing costs. Know who will be responsible for paying these costs. If someone with a power of attorney is in- volved, make sure that all relevant documents are presented to the title company or attorney. The title company will review the documents, confirm the documents are valid and verify that the person has the power to sell the home. If the documents are not valid, the clos- ing could be delayed.
Questions for Real Estate Investors
In Summary
Joe and Dean has more than 30 years of experience helping homeowners make the right choice when it comes to selling their homes and can provide references from many happy sellers.
When the time comes for you to sell your home, call him for a free, complete, no-obligation consultation. Joe takes a consultative approach to the home-selling process and can help you list your home on the open market or buy your home privately and off-market. Call Joe and book your free consultation today.
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