Tuesday, April 17, 2012

Selling/Buying your home & saving a BOAT load of Dollars!

Hello All,

   first off, I would like to say "thank you" to all the loyal "Small Steps 2 Saving Big Dollars" blog followers that have not given up on me since it has been a while since my last post. Thank you!

It's spring, and this time of year brings around flowering trees, baby animals, allergies, spring cleaning, and believe it or not, the increased activity of buying and selling homes. Since it's that time of year I figured I'd share a little insight on how to save Big dollars when you are buying OR selling your home.

Some may ask, "what makes you an expert on the buying or selling of home" my answer would be that "I am a licenced REALTOR" as well as fireman (I do real estate on the side when I am not at the fire department). Other Realtors reading this may want to hunt me down and beat me for telling everyone some of the insights, truths and tips for saving big money that I am about to share, but it's extremely hard times right now and with home prices and values being A LOT lower than they have been in the past, most people cannot afford to pay their Realtors like they did when they actually made a profit selling their home.


The first thing I would tell you to do is to get your realtor's license, this is an expense of around $2,000 to get you started. Don't stop reading just yet....remember I am trying to help you SAVE money, not spend it. Here is why, lets say you are selling a home that is valued at $150,000 and lets say that you have hired a realtor to list your house at a rate of 6% commission (3% listing & 3% selling)...this means that you will be paying out $9,000 in commission! More than likely even if you have your realtor's license you will still pay out 3% to another realtor for bringing buyers to you (this is considered the "selling side" of the commission). Now the total you will pay out for having your own realtor's license will only cost you $4,500 in commission and if you add the $2,000 it cost you to get your real estate license you still have a savings of $2,500!  Not only does you having your own realtor's license save you $2,500 on the sale of your home, but when you go and buy your new (well, new to you) house YOU will get paid by the listing agent the 3% that they offer to other agents for selling their clients home....it just so happens that the buyers are YOU! So, let's say you sold your home, and after you factor the cost of getting your real estate license you saved $2,500, and now you are buying a new home that costs you $180,000 you will now make 3% or $5,400 in commission (before your split with the office) for buying your own house...this is a $7,900 savings!!! All this just for getting your real estate license and representing yourself just for these two transactions!!! Not to mention that if you wanted to represent friends, family or others you would get paid for helping them buy and sell houses as well...and you don't even have to quite your full time job, just do real estate as you have time! As a realtor you work when you want to, and you don't have to turn it into a full time job unless you want to. These figures were base on a 6% (3% listing + 3% Selling) commission rate that I applied to these numbers.

PLEASE NOTE: getting paid to buy your own house when you are a realtor is completely legal and is not in anyway considered to be "cheating the system", it's like a lawyer representing themselves in court...they are not charging themselves yet they are still reaping the benefits of being their own lawyer.

Tips when Selling:

Usually the first thing someone will or should do when they are ready to buy a house is to sell the one they are living in currently FIRST (unless of course you are a first time home owner, or are going from renting to owning). The LAST thing most people should do is try and buy a house before selling the one they are currently obligated to....in other word doing a "bridge loan" or some sort of creative financing in order to be able to buy the house that they want. This is just my opinion, but in most cases in is NEVER a good idea to be liable for two mortgages if you can't afford to continue to pay both mortgages for an extended period of time (example: 2 years). A lot of people think they will just sell their house...its not that easy anymore. The average days on market in the area where I live is 155 days, and that's with a realtor representing them! This is a lot shorter than most places in the U.S.
Go to a local sign shop and get yourself a nice sign made....do NOT use one of those wal-mart signs! Make sure your home is de-cluttered and the curb appeal is excellent! Do those things you've been meaning to do for a long time....just get it done! I'm telling you, it make a HUGE difference if you don't fix the little stuff, buyers are VERY picky and ofter won't look past the little stuff! If you are tech savvy create a website for your house, it'll cost you very little for the period of time you will be using it....for example if your address is 1234 pleasant way then have your web address be www.1234pleasantway.com and have it be on the sign that you have made. Make some nice fliers, go to Kinkos and have some nice color fliers printed off that you designed and put them in a flyer box on your new sign in the yard!

So you want to sell your house, "what do I do first?", this is the question I get a lot from friends. I tell them that if you are not in a hurry to sell, try "FOR SALE BY OWNER" first. Then they ask, "what should I list if for?"....if you are not sure what to list your house for, or if you've had your house "for sale by owner" for a while and you are unsure if you have it over priced, call a Realtor and ask them to discuss selling your house with you and make sure they bring a presentation....in this presentation they will/should have an average days on market sheet, along with "SOLD" comparables for houses in your area with similar features of the house you are wanting to sell...if they don't bring this stuff, then you know for sure that if you ever do want to list it that you better think twice....if they aren't going to show up to a presentation prepared, then you've got an idea of what kind of job they will do for you. Not always the case...but it's like a job interview and YOU are the boss! So now you know what price you should be asking for your house and you've got someone interested in buying your house, you are going to need an "purchase contract" which you can get from most mortgage brokers, so call your bank and get a purchase contract. Just know, it is lengthy and can be very confusing, if you are unsure on how to fill out this contract I would ask your mortgage broker. If they are unsure then call your local real estate attorney and have them help you fill it out and pay the one hour to them instead of paying a percentage of your house price to a Realtor...the attorney will be a lot less expensive.

So you've tried the FOR SALE BY OWNER thing, and it just hasn't worked for you, or you don't even want to bother with it, or you are in a hurry to sell. If you don't know someone or have a family member that is a realtor, do a little research on your local Realtors by asking your friends, co-workers, or neighbors about their experience with their realtor and/or if they recommend anybody. If you have a friend or family member who is a realtor, hire them (if you are going to pay someone to help you sell your house you might as well bless a friend or family member than hiring someone you don't know). THIS IS VERY IMPORTANT!....the commission is ALWAYS negotiable!!!! It is against the law for a realtor to tell you otherwise! When you are discussing the commission rate with your prospective realtor ask them "is that is the best you can do?", and if they say yes then tell them "sorry, but that is NOT good enough"....and if they still refuse to negotiate the commission rate with you then tell them the interview is over and you will be in contact with them....watch how fast they will lower their rate....it's amazing!" When your prospective realtor is going over the "listing contract" with you know, pay attention to all parts of the contract and have him/her explain everything! the term of the contract is also negotiable, now the office policy may set a minimum length, but know there is not set standard on minimum contract length. Ask your realtor if they would consider dropping the "selling side" of the commission if YOU, the home owner, brings in the buying clients. Most Realtors will do this for you....since it saves them a lot of work. Also, ask your prospective realtor how much he/she is going to charge if there is only ONE agent involved (in other words, if he/she brings the buyers)....the reason you should ask this question is because most agents will still charge you the full 6% (or whatever the commission rate agreed upon is), which all goes into their pocket if they bring the buyers, usually that is percentage is split between the two Realtors involved. Ask him/her to reduce that figure to, lets say 4% or 4.5% if they are the only agent involved, most Realtors will/should do this for you. The reason you should get a discount if they are the only realtor involved is because they are no longer representing just you, now, they are also representing the buyers....this means he/she cannot look out just for your interests alone!!! Doesn't mean they will not do a good job representing you, it just means that they are legally bound to look out for they buyers interests as well....think about it.....your SHOULD get a discount if that is the case, right?!

So you just can't sell your home...and you absolutely need to do something about it...RENT IT OUT! the rental market is really booming right now. Take your time to screen your applicants or hire a property management company to do all this for you.

Tips when Buying:

Try and buy a home that is "for sale by owner" if you cannot find one you like that is for sale by owner or if there is a house you really like that is listed with an agent get your own agent, don't just call the one on the sign, call your friend or family member that is a realtor and ask them to represent you.....YOU NEED SOMEONE LOOKING OUT FOR YOUR INTERESTS ALONE, not one that is also looking out for the sellers interests! Generally it doesn't cost buyers anything to have their own realtor, the listing agent of the home that you buy pays them...not you! Ask your realtor if they pay or give closing gifts (if may not be allowed where you live, check the local laws on "closing gifts") when you buy a house with them.

ALWAYS GET A HOME INSPECTION!!! I cannot stress this enough!! If your realtor says you don't need one, I would fire him/her on the spot! At that point it's obvious he/she is not looking out for you and are looking out for themselves, they would rather you buy a problem than to have to wait or risk the sale not going through. Even new construction homes should get a home inspection, I cannot tell you how many times I've seen new construction home come back with a long list of stuff to be fixed because the contractors cut corners to save money! GET A HOME INSPECTION!!!

Like always, thank you for reading, please feel free to contact me with any questions, comments, or suggestions! I hope you found this info to be helpful!

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