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Because an owner of real estate may
be preoccupied with running a business he or she may not quite know what to expect or
encounter during the sale or lease transaction. This section is meant to cover some of
those bases which may have been overlooked during previous meetings. The question and
answer section to follow may give some insight to what to expect of your agent, other
agents, prospects, your attorney, the market etc.
Q. How long will it take to sell or lease
my property?
A. If you
allowed us to auction the property without price constraints you could almost be assured
the day of sale would be the day of the auction. Experience shows that if the price can
not be justified by the market comparisons the property won't sell at all. A property
deemed to be not in demand will not sell at any price; another way of saying there must be
a market for the property if it is going to sell. As a general rule, a properly priced
property will sell or lease within a one year period: generally within the first 3 months
if priced properly or in the last three months after the price is reduced.
Q. What is my property worth?
A. A property
is worth what someone will pay for it. Your agent will show you the history of what
properties like yours have sold for in the past; he will tell you whether there is
currently a market for your property and give you a range of values based on these
findings. He will also tell you where your property is positioned in the market of
currently available offerings. You should attempt to make your property the best value of
those to choose from; it will then sell before the others.
Q. Who does the appraisal?
A. Anyone can
pay for an appraisal to be made on a property and there are a number of qualified
appraisers available: there are many more who are not qualified to do
commercial/industrial appraisals. Ask your agent for a list if you need qualified
appraisers. However, it is the bank who orders an appraisal from their list of approved
appraisers for lending purposes. What this means, in the real world, is that for your
property to sell it must appraise at the sale price. If it doesn't then the buyer can't
get his loan, or he doesn't want to buy at the lower appraised price. This is another
reason why properties seem to sell for what they are worth; the banks won't lend on an
overpriced property.
Q. What can an owner do to increase his
property value?
A. A large
part of the value of real estate is location and unless you can change the access,
elevation or visibility of the property you can't change the effective location. However,
a buyer's perception of value is influenced buy the visual appearance the buyer receives
within seconds or minutes of first seeing the property. An Owner can increase the value of
a property by making sure that the property is well maintained inside and outside. The
value of an investment property is increased by increasing the net operating income;
practice shows it is wrong to assume you will be paid fully for potential income.
Q. Who sets the offering price?
A. The owner
sets the offering price; the buyer sets the purchase price. The broker works to obtain a
win-win situation between these two parties.
Q. How much is the real estate commission?
A. The real estate
commission is set by the salespersons employing broker. This compensation is generally a
contingent fee based on successfully completing the brokers assignment. Most fees fall in
the range of 6 to 10 percent of the sale price or gross consideration of the lease;
there are exceptions on either end of the scale for exceptional properties. The exact
amount of commission is defined in the listing agreement Schedule of Commission Rates and
Fees. Fixed fees are also available and sometimes more appropriate especially when the
home is located in a innercity area.
Q. What will I have to pay at settlement?
A. Typical
charges at settlement include all liens and mortgages, real estate commission, State and
municipality transfer taxes, attorney fee if you hired one, mailing expenses and recording
expenses for items on your behalf, inspection fees if called for in the purchase agreement
( termite, environmental, roof etc.), water, sewer, association or condo fees and other
charges you contracted for in the agreement of sale.
Q. Who represents my
interests?
A. Metro Realty Group Inc. And all of its agents
plus any subagent who does not declare to be representing the interests of the buyer or
tenant; these are the people who represent you. If you ever have a doubt who represents
you ask your agent; it will serve you and your agent well to review the players in any
transaction.
Q. What are the tax consequences of
selling?
A. Tax
planning prior to offering you property for sale or exchange may be the most important
step in disposing of your property. If you have a gain you will be required to pay taxes.
You pay those taxes when you regularly pay taxes unless you have sold this property on an
installment basis or have not sold the property but merely exchanged it for another. See
your accountant for determination of the amount of taxes and basis adjustment; if your
accountant is not qualified in this area get another: not all accountants are qualified to
analyze property exchanges.
Q. How long will I be tied up with a
listing agreement?
A. For the stated time in the listing agreement. Line 1.
Q. Can I cancel the listing agreement?
A. We
normally provide for a cancellation privilege. Because we work on a contingent basis we
insist on having a reasonable period of time to be successful. When an owner insists on
listing at a price which is unrealistic this increases the time we need to be successful
and therefore a cancellation privilege may not be offered in such an agreement.
Q. Do I need an attorney?
A. It's like
having a baby at home; most of the times you don't need a doctor but there are those cases
where if you don't have the doctor you will be sorry. A responsible real estate agent must
say that you should have documents reviewed by legal council. Under his breath he will
also say to keep the attorneys out of the business part of the transaction; they're not
good at that part.
Q. How many times will you show the
property?
A. Hard to
say, sometimes the first prospect buys the property other times a property will be shown
numerous times only to be rejected. An owner should be concerned if there are no showings;
this should be discussed with your agent. In all probability some marketing changes should
be instituted.
Q. How often will you advertise my
property and where?
A. Print media like the Detroit Metropoltian Airport News has proven
to be a great resource to find qualified prospects; some types of properties more so than
others. For this reason we normally advertise in the newspaper. The most effective
advertising is the sign placed on the property; these two forms of advertising will
predominately be used to promote your property. There is no set frequency to any of the
above advertising. Each property will command a certain mix of the advertising. You should
discuss the particular wants and needs with your agent. An owner may wish to bolster the
advertising by providing a budget to the agent in addition to that supplied by the broker;
much of the larger property advertising is fully funded by the owner. Our advertising
department is prepared to coordinate all of the above advertising.
Q. What can the owner do to help sell or
lease this property?
A. Price the
property correctly. Make the property presentable; paint, carpet, remove debris, etc. Make
all repairs to the property prior to marketing.
Q. How can I be sure that you are working
on my property?
A. If you don't know
this then the lines of communication with your agent are not open. If this happens, and
sometimes it does or at least feels that way, then call your agent and find out what is
happening. If that doesn't work call the broker JR at 734-941-7141.
Q. Can I keep the deposit if the buyer
defaults?
A. Yes, but deposits
will be held by the broker who listed the property. Your contract should provide that you
should receive the deposit in the event of a default. However getting possession of the
deposit is more complicated. The escrow agent holding the deposit has fiduciary
responsibilities and will probably require the forfeiting party to give written
authorization to release the deposit. In the absence of this written authorization the
escrow agent will turn the matter over to the court for adjudication. There is a cost
associated with this process.
Q. If I offer financing will it sell
faster?
A. Probably
and probably at a price that is at the upper end of the estimated selling range. The old
saying of "Your terms and my price" or "Your price and my terms" does
in fact hold up pretty well in practice.
Q. What assurances are there that I will
get paid if I lend the money?
A. Just those
that are probable. If you are trying to get repaid by someone who doesn't have the money
chances are you won't be repaid regardless of what the courts order. On the other hand if
the party has the money the court action can be successful in collecting the debt. Your
mortgage and note you hold evidencing the debt should represent only a portion of the
value of the property; you should require a down payment at least equal to the cost of
paying the outstanding mortgage debt, real estate commission and transfer tax plus the
cost of recovering the property and reselling it to a new buyer. There are advantages and
disadvantages to financing a property and you should be aware of each before making a
final decision and then sometimes you just have to take a leap of faith and choose the
least of two undesirable choices.
734-946-7141
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