What? No Cookies?

I have been working with some buyers for several months... We have looked, and looked, and looked at homes.... Foreclosures, Short Sales, Vacant Homes, Model Homes, you name it. From the time we first entered a model home, the client commented "What, no cookies?" It's true... gone are the days where you can count on getting fresh baked Otis Spunkmeyer cookies at any model home.

This became the joke... Every house we went in, someone would comment "It's nice, but there are no cookies." Or something like that. Earlier this week, I showed them 2 homes that they really really liked, especially the second one. Of course, I continued the joke... "Yeah, but there are no cookies, so we better keep looking."

We went back the next evening to show another family member... Guess what we found? Yep. There were more, but we ate them. I had to take a photo before they were gone. They were tasty, too.

And no, it was not an open house. But it was an owner that did absolutely EVERYTHING right as far as staging and making the home available for viewing. She gets an A +++ !

Anyway, it got me thinking... I wonder if there is a camera in here? You know, many people have them. I even noticed them in another home I showed the same night. So, let this be a warning Mr & Mrs Prospective Buyer - be careful what you say and do, you might be caught on camera. For us, I have no idea if there was a camera or not, and we didn't say or do anything that would be a problem, so I am not too concerned. But it's pretty ironic that the cookies were there the next night, don't you think?

Oh - and in case you're wondering... We're waiting on a response to our offer. Did the cookies seal the deal? Hard to say, but it certainly sweetened things a bit.

It's Show Time!

This is the final post in our series about getting your home ready for the market.  We've discussed curb appeal, when you might need to repaint (and how), how to create visual space, how to create focal points, and creating the not-so-lived-in look.  Now....

It's Show Time!

The first few days your home is on the market are typically when you get the most traffic through your home, so making sure your home is 100% ready is really important.  Buyers are not going to come back because your agent calls their agent and says "Sorry about that first showing... the owners have staged it now... I think your buyers will like it".  So, on day one and every day after that....

Homes must look good, feel good, smell good, and sound good.

Look Good

We've focused on a lot making sure the home looks good.  Before leaving your home, take 15 minutes to make sure the stage is set and everything is in its place.  This may include final touches like opening blinds, turning on lights, taking the trash out, turning the gas fireplace on, etc.

Feel Good

Make sure the temperature of the home is right - not too hot, not too cool.  The man on the right~he is not going to buy your house.  Also make sure (especially the surfaces most likey to be touched) are clean. Remember, woman are kinestetic evaluators - they will touch things....stick is a problem for them. 

Also in this category is neighbors... make sure you've appealed to your neighbors to assist you.  Nothing turns a buyer off faster than a neighbor that fusses at the buyer for parking in the wrong space.  No matter what is "right", no one can overcome an unfriendly neighbor.  This does not mean that neighbors should "interview" prospective buyers either... it's best that interactions with neighbors, even the well meaning ones, are brief and pleasant - a wave or hello - and nothing more. Hopefully, your neighbors will leave the selling to the sales people.

Smell Good

The biggest thing here is to make sure that your home doesn't have any bad smells... trash, garbage disposals, bathrooms, laundry areas, kitty litter boxes or pet areas are sources for bad smells; and some foods (fish, ethnic foods) create unpleasant odors.  Avoid and eliminate these kinds of smells.  Usually I do not like air fresheners in a home - some people are sensitive to these kinds of smells, and buyers could think you're trying to cover something up, so if you use these don't over do it.   No matter what the smell is - the man on the left... he is definately NOT buying your house.

During an open house, or perhaps on a Saturday morning before several expected showings, you might choose to bake a pie or cookies, or pop popcorn to give the home a "homey" smell.   Real candles create a fire hazard and I do not encourage them, even during open houses.  There are electric candles that can provide a nice visual affect and sometimes also offer a light scent....but again, don't over do it. 

Sound Good

Again, here the important thing is to avoid and eliminate negative sounds that can impact your buyers perception of the home.  Talk to your neighbors and let them know you're expecting a showing, especially when you're having an open house - hopefully it is not when they are having band practice next door, or cutting down the tree in their front yard; maybe they can even keep their dogs inside their home so they aren't barking at your potential buyers while they walk around the back yard.  Don't leave alarm clocks on, try to avoid setting home alarms that may be accidentally triggered, and turn off the children's cartoons, the teenager's stereo or Uncle Ed's opera music.

Sometimes we'll suggest you leave music on in your home when you're expecting showings perhaps some light jazz or a holiday instrumental which "loops" (you don't want empty static playing when buyers are there).

Price and promotion are what get people to walk in your door.  Staging is what closes the sale.  Don't skip it. 

Ready to talk to me about listing your home? I will bring all of this knowledge, and much more, to the table and will help you acheive your goal - getting the most money for your home in the shortest amount of time.

Vicky Chrisner, Real Estate Sales Consultant

703.669.3142

VChrisner@KW.com

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Interesting Notes:  Sight and sound are the strongest senses for adults.  Women are more kinestetic (meaning they touch things to see if they like them).  Smell is stronger for men and children.  Men prefer vanilla, apple or cinnamon smells,  women tend to like fruity or flowery types of smell (i.e. berry, lemon, lavender).  The most widely appreciated smell is vanilla.  Understanding this is all part of understanding the psychology of selling, so that you can stage appropriately for all senses.  Details matter.

Create the NOT-So-Lived-In Look

So far, we've learned how to create visual space, to depersonalize and to highlight features and sell benefits with staging, but I have not mentioned the single most important thing you can do to increase the chances of your home selling. 

The home must be clean.  Dirt does not sell.  You knew that, of course.  Well, I hope so. (I am surprised sometimes.)

Not only does the home have to be clean, but it must appear "beyond" organized....It needs to look "lived in" as if life has no negatives. 

The typical "lived in" look does not sell. 

Ok, it will sell... but it will sell for LESS.

You know that line from the movie when the girl has been shopping for a week and trying on a million outfits and her date finally arrives and says she looks great and she replies: "Oh, (blushing) This old thing?"   It's the same concept as the model on TV that washes her face and still has make up on.  Yeah, right!  And yet, we buy the product.

That's what we're going for here.

When we sell homes we sell fantasy... and in a fantasy, the children never have homework to do, or bookbags thrown on the couch, the jacket is never draped on the kitchen chair, the laundry never stacked in a basket waiting to be put away, bills never come in the mail, the trash never needs to be taken out, there are never cartoons on and toys are never on the floor.  

Sure, all those things happen in life... but not in YOUR house.  NEVER in your house.  In YOUR house, life is perfect.  There are only features and benefits and solutions....no problems, tasks, work, challenges, chores or obstacles.  Nope. All that stuff might happen in the last house the buyer looked at, but not here.  Which house are do you think they are going to buy?

So unfortunately, before every showing, it is critical that you run around the home and be sure it looks like a commercial marketing space and not like your home where your family lives and has bills, and work, and school and homework and sick people and broken legs and cars that have flat tires and a big honkin headache. Nope.  NOT HERE.  

At YOUR house:

• Books and magazines are purposefully displayed properly and neatly, and have all the right titles.
• You don't get bills... so there's no mail on the counter top.
• Everything in your home works magically without the need to be plugged in... or at least that is what one would think because the surely don't see any chords, wires or plugs. 
• Kitchen appliances like toasters, blenders, etc. should be tucked away. The food here also magically appears when you're hungry.  In fact, there's probably a bowl of fresh fruit right there on the counter top.  Always fresh.  Not plastic. 
• Window blinds, when in place, are open evenly, to bring in natural light or otherwise create the desired effect.
• Nothing happens at your house that is accidental or by chance - everything is always perfect.  From the outside, if you see open windows, every single window is opened to the same level.  Always.
• Your home is so perfect that you don't even need a trash can... at least not one that people can see, and definately not one people can smell.
• Oh... and your closets?  They aren't cluttered or packed.  Your closets are SO BIG that you have an entire wardrobe in there and still have extra space.  How do we know it's your whole wardrobe?  Well, golly, you've got something from every color of the rainbow... in fact, it's actually in order by color.  Wow.  This is a house I want to live in.  What about you?

I think you sort of get the picture.  I know it is a hard standard but I am telling you it sells. Please understand, buyers have no idea that they are as critical as they are....nor do they realize psychologically how gullible they are to these tricks of the trade.  I have shown many homes to people that they think DO look past all of these things, but they don't.

I know trying to live like you're not living in a home is, well, darn near impossible.  The good news is that if you have priced well and you actually do most of the things suggested here, your home will not be on the market for very long.

But for those of you who are starting to think "Never mind.  I will just die in this house because selling it seems too darn hard.".... well the next post is for you.  Priorities, Priorities.

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Staging to Sell.... The Series Begins

You're putting your home on the market, you want the most money possible for your home in the least amount of time. I can help you get that. I've got a plan! But, I am going to need your help.

It goes without saying that if your home is obviously in disrepair then be prepared to sell it at a discount. Otherwise, make the repairs. Then, be willing to "earn" the extra dollars you wish to get from your home...

And with that little tidbit, I begin a series of posts about preparing your home for the market. Ready? Read on!

First up: Show Me The Space, I'll Show You The Money!

Also see prior posts:

Do We Need To Repaint?

Painting for the Market
Creating The Best Curb Appeal

The Long and Short of a Short Sale, Part 4

Continuing our posts on short sales, this post discusses the most common clauses in the contract, and how you, as a buyer or seller, should attempt to negotiate the clauses.  (Please keep in mind you need an attorney or a real estate agent, or both, to advise you personally.  I am talking here in very general terms.)

All real estate contracts have contingencies in them on both sides.  A contingency is the "if" in these statements:

I will sell you this house IF ______________.

I will buy your house IF ________________.

Contingencies can be for anything you can dream up.  However, most residential contract contingencies fall into a handful of categories.

Sellers Contingencies:

To protect the seller, the primary contingencies revolve around money and the settlement date.  The seller says "I will sell you the house IF you give me $___________ by__________(date)".  If the buyers don't bring the money to closing, or don't show up, the sellers can terminate the contract without penalty  (although there may be a penalty to the buyers). 

In a short sale situation, sellers should also have a contingency for "Third Party Approval" - meaning they need to get approval from their lender(s) to be able to sell the property, since the proceeds will not cover the mortgage.  If the sellers can not obtain the approval, then they can terminate the contract without penalty.

Buyers Contigencies:

To protect the buyer, contingencies almost always include: (a) financing (if they can't get a loan, they can't buy the house); (b) appraisal (if an appraiser doesn't certify that they are paying market value-or less-for the property, then they won't buy the property); (c) the dates, particularly the date of settlement; and finally (c) that the buyer needs to be getting the deed to the property, free and clear, with all rights and enjoyments of ownership (in Virginia, this is called a General Warranty Deed).  In addition, we often see buyers ask for a contingency to do a home inspection and/or environmental testing on the property; and, if the property falls in an area that has a Property Owners Association, then Virginia provides the right to buyers to receive and review a package full of information about the restrictions and fees associated with that POA.  In a short sale situation, we may also see language built into a contract that allows the buyers to terminate the contract because the "short sale approval" hasn't been received within a certain time frame. 

To improve chances of a short sale, sellers want a contract that has no buyer contingencies. 

To provide the maximum protection and lowest risks, buyers want maximum contingencies.

If I am representing a seller:

• 
  
  PRICE: I want a contract price that represents at least full market value; and in general, I want the highest price possible to entice the bank to approve the sale, and also because in some cases, sellers are being asked to pay the deficit between the mortgage payoff and the proceeds of the sale.  The higher the proceeds of the sale, the less my client would be liable for.
  
  
  
• 
  
  FINANCING: I will attempt to obtain a cash contract, with no inspection or appraisal contingencies for the buyer.  If that is not possible, I will want a full loan commitment, with the only contingencies being seller contingencies.
  
  
  
• 
  
  DEPOSIT: I want a high earnest money deposit, and I want it to be deposited into the escrow account as in a normal contract.
  
  
  
• 
  
  SHORT SALE APPROVAL: I want the longest possible timeframe to get the short sale approved.
  
  
  
• 
  
  PROPERTY OWNER DOCUMENTS: Since this contingency can not be waived by the buyers, I want any POA documents delivered to the buyer early on, with an addendum that they will pay the cost to replace them if they terminate the contract and do not return them.
  
  
  

If I am representing a buyer:

• 
  
  PRICE: I want a contract price that reflects no more than the market value in "as is" property condition...preferrably with a financial  benefit to my client because they are having to deal with the uncertainties and frustrations of a short sale.  (Generally, if the bank orders a BPO/Appraisal of their own, and the contract price is within 10% of the fair market value, then they will accept it; of course, I hope my buyer will be paying at least 10% less than fair market value).
  
  
  
• 
  
  DEADLINES: I want a full home inspection and financing and appraisal contingencies, and I don't want my buyer paying any of those "hard costs" (out of pocket) until we've gotten the approval from the seller's lender (which is the thing that takes the longest in this process).
  
  
  
• 
  
  DEPOSIT: I want the "consideration" for the contract to be in the form of a Note Payable, rather than actual funds, until the seller's bank has approved the sale.  This is because EVEN if my buyer defaults, their money is still in their own pocket - and the seller will have to sue them to get the deposit.  Most sellers in this situation will not take court action to obtain cash from a buyer that didn't buy the house.  However, if my buyer DOES NOT default, but has made a hard money deposit into an escrow account, and the buyer choses to exercise a right of walking away from the contract under one of the contingencies, then my buyer may have to fight the seller - perhaps even in court - to get their money back.
  
  
  
• 
  
  SHORT SALE APPROVAL: I want a short timeframe to get the short sale approved, in an effort to increase the speed of each action on the other side of the transaction.
  
  
  
• 
  
  OUT CLAUSE: I want an addendum that says my buyer can serve a UNILATERAL notice to the seller that he is terminating the contract FOR ANY REASON, up until the time that the short sale approval is received.  This is so that my buyer can continue looking for other homes while he waits for the approval on this short sale.  That way, if it is not approved, the buyer didn't miss out on anything (interest rates, pricing, market supply) while he waited.  (Please note this is not part of any standard addendum in our region... and many agents will wrongfully tell you it is implied.  Again, your agent matters. Read what you sign - regardless of what your agent says, the written agreement dictates the enforceable terms.)
  
  
  

In this post, I sound a bit like a 2 year old, I want what I want....and I do put up a good fight if it seems reasonable.  However, in the game of real estate it is not about getting all of what you want, it is about getting enough of what you want and all of what you need; and about balancing the needs and wants of the primary parties. 

Balancing the two sides is where an experienced agent with good negotiation skills comes into play.  But, sometimes you simply don't know how good your agent is until it is too late.   So, in my next post, I will share examples of things I have seen, failures and successes.  These examples will help you know how to balance your interests.

I invite you to read the earlier posts in this series.  Start with this post:  A Short Sale, Anything But Short.  Then, stay tuned to The Real Estate Whisperer for important real estate news from the front lines...Get your news AS the market is changing!

***

It probably goes without saying, but, if you are thinking of buying or selling in Northern Virginia, I hope you'll call ME first to see if I can assist you. Also, no matter where you are in the country, feel free to contact me. While I can not give real estate advice outside of Virginia, I can connect you with a proven professional in your area. I belong to many networks, including REO and short sale expert networks, and we have members throughout the country.

I can be reached at:

http://www.vickychrisner.com/

703-669-3142

VChrisner@KW.com

The Long and Short of a Short Sale, Part 2

Since the homeowner is the one who initiates the short sale process, let's look in more detail at the selling side.

In this post, I will talk about who should and should not consider a short sale; and WHEN they should take action.

Why consider a short sale? Anyone who thinks they may end up allowing a home to go into foreclosure should seriously consider this option.

• CREDIT: With a short sale, your credit is damaged, but not nearly as badly as it would be if the home went into foreclosure.
• LIVING SITUATION: With a short sale, you are not evicted (like you could be if your home was foreclosed), and you look like a better prospective tenant to future landlords if your credit shows a short sale, rather than a foreclosure and eviction, on your record.
• PRIDE: You are cutting your losses and controlling the damage....making the best of an otherwise uncomfortable situation. Your neighbors and co-workers probably already know you owe more than your house is worth - so do they... but you're showing them that you are the kind of person that works with everyone involved to find a satisfactory resolution; that you are responsible.
• SECURITY CLEARANCES/JOB REQUIREMENTS: Especially true in the Washington DC Market, many people have security clearances required for their jobs. In these cases, foreclosures can be very difficult to explain, and short sales are are considered much more favorably, especially when they are coupled with a true hardship (see below). Foreclosures can put your current or future job options in jeopardy.
• DEBT FORGIVENESS/AVOID BANKRUPTSY: In most cases, you can negotiate debt forgiveness as part of the package; and therefore, do not have to worry later about collection activities, which otherwise could force you into bankruptsy to protect the assets you do have.

Why should an owner NOT consider a short sale?

• NOT ENOUGH TIME/LENDER WON'T AGREE: If any of lenders advises the owner that there is not time before the foreclosure, or that for other reasons they will not work with the owner in a short sale process (this is increasingly rare, but it happens).
• TOO COSTLY: If the homeowner has so many layers of liens and mortgages against the property that professionals are telling you that it is not likely to be approved and/or they will only attempt it with a large, non refundable deposit or fee. (Small non-refundable fees are reasonable, especially if your case is a complicated one. A small fee is a couple hundred dollars - not thousands.)
• DON'T NEED TO: When the owner CAN continue to make payments as agreed for the duration of the loan; even if it is uncomfortable. Or, when the owner would prefer a loan modification and the lender has indicated a willingness to work with the owner for a loan modification.

A short sale should be the last alternative to a foreclosure, not a knee jerk reaction to falling real estate values and overleveraged homes. With each short sale request, the lender will require a "hardship letter". This is a letter that explains why you, as the homeowner, have a hardship and why they, as the lender, should work with you and forgive part of your debt.

Hardships include:

• Involuntary job loss or unexpected loss of substantial income that prevents you from making payments or from making the full payment.
• Involuntary change in family situation due to death, divorce or other unexpected changes, like becoming the Octo-mom.
• Involuntary relocation (i.e. military relocation).
• Medical situation/disability that either results in a decrease of income, and significant increase of expenses, or the need to move elsewhere, or a combination of these things.
• You could never afford the mortgage in the first place, and you can show that by the continual use of your savings (which is rapidly declining or depleated) and credit lines (which are rapidly increasing or maxed out) to pay the mortgage.

What is NOT a hardship:

• You pulled all the equity out of your home to purchase another piece of real estate which you still own, free and clear from any liens or mortgages. (Cure: sell that second property and pay down your current mortgage; or sell the primary property and take a mortgage on the second property to pay the deficit on the first property.)
• You like going out to dinner every night and shopping at the best stores and that makes it hard to pay your mortgage...besides mom said you can live with her for free.
• You don't really want to work anymore.
• The value of your property declined, like everyone else's, and you don't think you should have to suffer that loss.

While it is true that in some (non-recourse) states, like Nevada, you may still get a short sale approved even if you do not have a hardship.... most of the time, banks are looking for your sob story here. Give it to them.

When do you throw in the towel?

Going through this process is very difficult emotionally. Let's face it, when you started this journey, you had a very different outcome in mind. This was to be your home; or the investment that was going to solve your future financial woes. Now, those dreams are not being realized and you're suffering a very real financial loss and that goes hand and hand with emotional loss.... not to mention that this hardship is generally because of another hardship (like job loss or divorce). Given that, you are likely to go through all five stages of grief:

• Denial (we can do this);
• Anger (if the real estate agent/lender/spouse/child/etc. hadn't...fill in the blank.... I wouldn't be in this situation);
• Bargaining (maybe if we...);
• Depression (it's hopeless);
• Acceptance (OK, let's move on).

You should call the a real estate agent and perhaps an attorney or financial advisor when you are in the "bargaining" stage, assuming (at that time) that you are still current on your mortgage. That's when we can help you examine options. Talk to consultants that you trust, who have your best interest at heart and who are not charging you for their advice at this stage of the game. Be wary of their interests - if they get paid only if you do one thing, expect them to want you to do that one thing; especially if they are pushing you very hard rather than trying to help you. For example, respect a real estate agent who asks you if you've attempted to have your loan modified so you can stay in the home.

DEFINATELY call a real estate agent no later than when you realize you can not make the next mortgage payment. The further behind you are in your payments the harder it is to have a successful short sale, and you may have eliminated other options at that time, too.

******

In the next posts, we'll talk more about the selling side - about what the ingredients are for a successful short sale, and about about the role of the real estate agent, attorney or third party negotiator in the short sale process. Then, we'll talk about the buying side, and what risks buyers have and the countermeasures they should take to reduce risks. Stay tuned!

If you are wondering if you should consider a short sale, call me. I am happy to provide a free consultation any time.

Vicky Chrisner, Keller Williams Realty

Ofc: 703-669-3142

Email: VChrisner@KW.com

www.VickyChrisner.com