Selling Your Home

When you're ready to think about buying or selling your property, you need to ask yourself the following questions: Do you have the time, energy, sources of information, and contacts to do the job yourself?

If you were one of the 'do-it-yourself' people, would the results be as good or better than they would be if you had professional assistance? Would it have gone smoother? Would it have given you more personal time? Would you have purchased for less, or sold for more, if a real estate agent was involved? There are obvious advantages to both.

What a Real Estate Professional can do for you, the Seller:

• She gives your property the largest possible exposure in the shortest possible time.
• She can tap into an even larger market through referrals and marketing techniques.
• She has a personalized Marketing Plan, tailored specifically to your property
• She knows current market values, thus can help you establish a realistic and competitive price.
• She knows how to “merchandise” the property to bring in maximum value.
• She recognizes the “qualified” Buyers.
• She knows how other agents “think” and can help you in the negotiating process.
• She can give you an up-front estimate of your net proceeds
• She can free up your time by scheduling showings, appointments, tours.

Pricing

This process generally begins with a determination of a reasonable asking price. Your real estate agent can give you up-to-date information on what is happening in the marketplace and the price, financing, terms, and condition of competing properties. These are key factors in getting your property sold at the best price, quickly and with minimum hassle.

Marketing

The next step is a marketing plan. Often, your agent can recommend repairs or cosmetic work that will significantly enhance the salability of the property. Marketing includes the exposure of your property to other real estate agents and the public. In many markets across the country, over 50% of real estate sales are cooperative sales; that is, a real estate agent other than yours brings in the buyer. Your agent acts as the marketing coordinator, disbursing information about your property to other real estate agents through a Multiple Listing Service or other cooperative marketing networks, open houses for agents, etc.

Advertising is part of marketing. The choice of media and frequency of advertising depends a lot on the property and specific market. For example, in some areas, newspaper advertising generates phone calls to the real estate office but statistically has minimum effectiveness in selling a specific property. Overexposure of a property in any media may give a buyer the impression the property is distressed or the seller is desperate. Your real estate agent will know when, where and how to advertise your property.

There is a misconception that advertising sells real estate. The National Association of REALTORS® studies show that 82% of real estate sales are the result of agent contacts through previous clients, referrals, friends and family, and personal contacts.

Marketing Plan

• Sign and Complete Listing Papers
  
• Order Appropriate Reports
  o Order 3R Report from The City of San Francisco
  o Order JCP Earthquake Hazards Report
  o Order Tank Inspection
  o Order Energy Inspection
  o Order Pest and/or Contractor Inspection
• Coordinate Advertising and Preparations (at agent’s expense)
  o Order Internet Virtual Tour advertising
  o Order and Mail “JUST LISTED” postcards (1000)
  o Order Photo for Multiple Listing Advertising
  o Upload Property Pictures to MLS
  o Order Signs and Lockbox to be placed on Property
  o Order Graphics for Property Statements
  o Order Cleaning, Hauling, Window Washing (if applicable)
  
• Obtain Complete set of Inspections and Disclosures
  
• Sign and Complete All Required Disclosures
• Make duplicate Packages for multiple offers
• Input Property into Multiple Listing Service
• Prepare Property Statements for Distribution
• Prepare Showing Schedule
• Place Advertising (at agent’s expense)
  o Deliver 900 Flyers to top 900 agents in San Francisco
  o Distribute Flyers to Neighborhood for Open House
  o Upload Property to Barbagelata Web Site
• Coordinate Open Houses and Broker’s Tours (at agent’s expense)
  o Place Open House and Broker’s Tour Ads in MLS
  o Place Open House advertising with SF Chronicle
  o At least 2 Sundays Open and At least 2 Tuesdays Broker’s Tour
  o Arrange for Special Wednesday Showing to Barbagelata Realtors
  o Arrange for Special Showing By Appointments
  o Order Broker’s Tour Catering
• Complete Agent’s additional Inspection Tour
• Review Offers, Coordinate Counter Offers]
• Review Pricing Strategy with Seller (if applicable)
• Order PENDING and SOLD Signs
• Successfully Close Escrow

Security

When the property is marketed with the agent help, you do not have to allow strangers into your home. Agents will generally pre-screen and accompany qualified prospects through your property.

Negotiating

The negotiation process deals with much the same issues for both buyers and sellers, as noted above under the buying process. Your agent can help you objectively evaluate every buyer's proposal without compromising your marketing position. This initial agreement is only the beginning of a process of appraisals, inspections, and financing -- a lot of possible pitfalls. Your agent can help you write a legally binding, win-win agreement that will be more likely to make it through the process.

Monitoring, Renegotiating and Closing

Between the initial sales agreement and closing (or settlement), questions may arise. For example, unexpected repairs are required to obtain financing or a cloud in the title is discovered. The required paperwork alone is overwhelming for most sellers. Your agent is the best person to objectively help you resolve these issues and move the transaction to closing (or settlement).

How Do Real Estate Agents Get Paid?

Real estate agents or brokers are generally paid through the sales commission paid by the seller when a transaction closes. Agents have expenses and financial obligations just like you, so it will be to your mutual benefit if you choose a real estate agent and stick with that person. The agent will respect your loyalty and respond with a sincere commitment to you.

Getting Ready for the Move

With a little planning up front, your move to your new home can be surprisingly simple. Make sure you notify the following entities about your address change

• Post Office
• Charge Accounts, Credit Cards
• Subscriptions
• Banks
• Utilities
• Medical, Dental
• Friends , Relatives

Make sure you empty, defrost freezer, clean rugs or clothing before moving. Don’t forget your plan for transporting the most important members of the family, your pets. They can be poor traveling companions if unhappy…

What Sellers Need to Know (Expenses of a Sale)

Selling a home involves expenses, some are paid up front others at closing.

There are reports that are required and have to be ordered before the property goes up for sale:

• Energy Report - The property is checked for energy efficiency (water, smoke detector, water-heater, insulation)
• Environmental Report - This is a Geological and Environmental Hazard Report (flood, earthquake)
• Underground Tank Report - Checking for old and now obsolete underground fuel storage that if found has to be removed at seller’s expense.
• 3-R Report - Shows information the City and County of San Francisco has about the property on record (when the property was built, any permits taken out, completed or expired , etc.).

Expenses Paid at Close of Escrow:

• Escrow Fees (document preparation fee, notary fee, express mail and courier fee, title insurance premium)
• Recording and Transfer Fees (county transfer tax, city transfer tax, recording fees)
• Preparations (property taxes, homeowners dues, rents, home warranty)
• Payoff of Existing Loans (balance, interest, reconveyance fees, accrued late charges, prepayment penalty)
• Broker Commission (usually split between 2 brokerages that assisted in the sale)

* In San Francisco it is typical for the Buyer to pay escrow, title and loan fees.

What Influences HOME VALUES

What is the amount this home will sell for on an open market in its current condition? The main purpose is to estimate the property's Fair Market Value based on external (socio, economic, political, legal etc.) and internal factors (condition, use, style, quality)

Often, desirability is determined by the quality of schools, the availability of jobs or access to quality healthcare.

External factors that can affect property values

Most of us heard of the term the three most important things in real estate are location, location and location. The single most important determinant in appraising a property's market value is its location. The neighborhood quality and its influence on the property will affect the price. The neighborhood is defined as a cluster of properties with relatively similar land use and value. It is an area that is part of a larger community and subject to common physical, political, social and economic influences.

Lenders are particularly interested in the profile and quality of a given neighborhood. The profiling will consider such elements - beyond location - as; Built-up (% of improved), Growth rate (rapid, stable, slow), Property values (increasing, stable, declining), Demand (shortage, balance, oversupply), Predominant occupancy (owner, tenant).

The quality of a neighborhood depends on: Employment stability, Convenience to schools, shopping, public transportation, recreation, police, Fire protection, Adequacy of utilities (cost, quality water etc.).

The economic strength of a given neighborhood is judged by the income levels of the people living in that area. Social influences include commonality of interests, size of families and age of children, life-styles, values and standards of the occupants, percentage of ownership and the level of community involvement.

Political influences can be summarized by regulations that enhance or reduce value (rent control, taxes, special assessments, zoning, property taxes etc.).

We should also consider the maintenance and condition of the houses in an area. Do homeowners take care of their homes? Homogeneity is always a plus when it comes to evaluation. A neighborhood has a better reputation where the homes are generally in the same price range or have the same age. Also, districts with three lined winding streets and cul-de-sacs carry higher values than areas that are laid out in a so-called grid pattern.

Adverse circumstances can affect the desirability of a home. Close proximity to one or several major freeways, navy base, a home that sits right under the flight path of a major airport especially with lots of overnight cargo flights, or a chemical refinery nearby can adversely influence the price buyers are willing to pay for a property.

Trend analysis is also an important component of valuation when Buying or Selling a home. This is a very important factor in ascertaining the future value of a property and the neighborhood's desirability where this home is located. Every neighborhood follows a "development lifecycle". In any city different neighborhoods have different maturity levels. When we see new constructions or remodeling taken place, this usually means an upward movement in the local economy. Jobs are created, people are moving in, buyers are looking to purchase their homes and property values are going up. This neighborhood is improving and growing. A stable neighborhood is a part of town where few new home constructions can be seen, but existing homes are well maintained, the streets are in good condition, the local businesses are well established. This area is mature and provides a generally stable feeling about the neighborhood. On the other hand, when the economy is in a downspout that can affect the local neighborhood also. Certain industries suffer from downsizing or close down that will hit the local job market. As a result of all these foreclosures are showing up, property values decline and fewer buyers are looking for homes in the neighborhood. Such area can go through a short or long term decline phase. These factors should be considered very carefully when Buying or Selling real estate in a given geographic area.

Internal factors that can affect property values

The floor plan of a property greatly influences the value. For example, some layouts provide access to bedrooms through the kitchen only or some baths open into the kitchen directly. Homes in the 1930s were built this way. Also, there are homes - in desirable neighborhoods - with a few thousands sq feet living space but only one bedroom. Working appliances can be rather outdated, unappealing, less sophisticated. All of these can be interpreted by buyers as functional obsolescence which in return will affect marketability. Moisture, mildew, mold are common problems in certain areas where the air is damp or where the area is woodsy. Today, buyers are very sensitive about these issues, even lawyers and insurance companies get involved. Structural problems such as a leaky roof, cracked foundation or walls, floor settling are either deterring factors for buyers or major bargaining chips when it comes to offering a purchase price. These are signs of physical depreciation.

The Bay Area Real Estate Market in the Next 5 Years

Our Bay Area has the most expensive housing market in the U.S. The constant influx of immigrants and others who want to live here makes this place a very desirable location. Between 1980 and 2000 California’s population grew by about 11 million. At the same time the Bay Area is short of about 60,000 housing units - with the most chronic housing shortage in San Francisco. So, the demand is there – if the shortage is not lifted - prices will increase significantly. California continues to build insufficient amount of housing mostly by choice. There are several reasons for this:

• Limiting Growth. Bay Area cities often allow only a limited number of units to be built and it does not bring in enough revenues in taxes to support the local police, fire, and other services. Commercial development on the other hand will generate sales taxes.
• Control of Land. Every city sets its own controls, sometimes to the expense of the whole region. Their policies control the land use to protect homeowner’s wealth.
• Scenic Beauty. Residents are determined to protect the beauty of the environment and this attitude has contributed to a 30 years long anti-growth atmosphere. Large areas have been set aside by choice for open space or parks.
• Proposition 13. City and county revenues have been dramatically dropped since this law came into effect. Municipalities are forced to come up with creative revenue financing and this had a major impact on developer fees.
• Strict Environmental Review. California has a lengthy process to review the impact of new developments on the environment. This in return ties up builders’ money longer and this increases the risk involved.
• Strict Construction Laws. In California homeowners are allowed to sue insurance companies and builders up to ten years over construction defects. As a result of this, developers stopped building as many affordable condos and town-homes as they used to. In fact, production of such homes has dropped by 90% since 1994.
  

These facts affect not only current but future housing market conditions as well.