The
Eight Key Questions Sellers
Hope Buyers Never Ask
Another title for this column could be "Why hasn't my
home sold yet?" Don't worry -- I'm not going to repeat the details about
home selling basics. Instead, I'll focus on the eight key questions home
buyers want answered, one way or another, before they are ready to buy your
home. When sellers (and their realty agents) have the right answers to these
questions, the house will sell quickly.
- Why is the
seller selling?
- How much did
the seller pay?
- How did you
arrive at the asking price?
- What adversely
affects the desirability of this house?
- Is there
anything planned for the neighborhood that I should know about?
- Are there any
"problem neighbors?"
- What past
problems have you had with this property?
- Are the public
schools here getting better or worse?
Question 1:
Why is the seller selling?
This is the key question every home buyer should ask!
But it is the question many home sellers (and their agents) dread. Buyers
ask the question because (a) they're curious, and (b) they hope they can
spot a desperate seller who will accept a rock-bottom purchase offer.
Many agents think it is none of the buyer's business
why the seller is selling. But concealing the reason for the
sale when a buyer asks make is look like there might be something
undisclosed wrong with the house.
In addition, the more a buyer knows about the seller's
reason for selling, the better the buyer can structure a purchase offer that
will meet the seller's needs. If, for example, the sellers are facing
foreclosure, a prospective buyer needs to know so a purchase offer will meet
both the seller's financial needs and the time deadline of the pending
foreclosure. Similarly, if the reason for the sale is a divorce, that can
affect the time needed to present the purchase offer to two sellers who
often aren't speaking to each other.
Question
2:
How much did the seller pay?
When I list a rental house for sale, some prospective
listing agents I've interviewed ask me how much I paid for the house. I
politely reply "The price I paid for this house has nothing to do with
its market value today, especially since I've added so many improvements."
So why is the seller's purchase price important to a
buyer? The smartest home buyers want to learn how much a seller paid for the
residence so they know how much room the seller has to negotiate. If the
seller paid $200,000 for a house and is asking $225,000 a few years later,
there isn't much room to negotiate. Although buyers should remember that the
price a seller paid for the residence has nothing to do with today's market
value, if the purchase offer can be structured to save face and avoid a loss
for the seller, the buyer's offer has a good chance of acceptance.
Question
3:
How did you arrive at the asking price?
If the home is badly overpriced, this can be an
extremely embarrassing question for both the home seller and the listing
agent. Some listing agents will list a home at any asking price the seller
wants. Later, when the residence doesn't sell, the list agent will suggest
the seller reduce the asking price. Using this overpricing technique is
usually a major mistake for the home seller. If a house has an inflated
asking price, buyers often won't even inspect it because they think the
seller isn't serious about selling. To get the attention of the local real
estate sales marketplace, a substantial price reduction is often necessary
-- sometimes below the home's true market value.
When I've asked sellers how their asking prices were
determined, I am frequently amazed there is no justification. They are
called PFA (plucked from air) listings. Unique, one-of-a-kind homes often
have PFA asking prices because their market values are hard to estimate.
The best real estate agents, when taking a listing,
prepare a Comparative Market Analysis (CMA) for the seller. This form shows
recent sales prices of comparable nearby homes, the asking price of
neighborhood residences currently listed for sale and the asking prices of
recent expired listings that didn't sell. Armed with this valuable
information, smart sellers and their listing agents set realistic asking
prices so the home will sell within 90 days for close to the asking price.
Question
4:
Have you prepared a written disclosure of all material facts adversely
affecting the desirability of this home?
Most states now require such a disclosure. The
smartest home buyers ask for a copy of these disclosures before making their
purchase offers. Some defects are difficult or impossible to correct, such
as drainage problems if the house is on a flood plain. Other defects can be
corrected, but the seller may refuse to pay because the cost is prohibitive.
When a residence is for sale "as is," that means the
seller must disclose all known defects, but will not pay to have them
corrected. "As is" also means the seller makes no warranties or
representations about the property's condition.
Question
5:
Are there any existing or planned neighborhood-adverse material facts
outside the property boundaries affecting the desirability of this
residence?
This open-ended question can be especially revealing.
Example: Twelve years ago I bought a rental house on a busy street where the
city had plans to widen the roadway and all the houses on my side of the
street. I knew this, but an out-of-town buyer may not have.
Question
6:
Are there any neighborhood nuisances or problem neighbors causing
disturbances -- how many times have you called the police each year since
you've lived here?
This is an especially important question to ask if the
house under consideration is located close to another residence. A noisy or
unpleasant neighbor might, in fact, be the undisclosed reason the seller is
selling.
A visit to the local police station will reveal if the
residence is located in a high crime area, but asking the seller how many
times the police have been called might reveal if there are any troublesome
neighbors.
Question
7:
What past problems have you had with this residence?
Although most states now require the home seller to
provide a written disclosure of existing defects to the residence,
these forms usually don't include past problems with the property,
such as hill slippage or flooding.
Question
8:
Are the public schools here getting better or worse?
Smart home buyers, before starting their search for a
new residence, check the area school district statistics to find the
highest-quality school district they can afford. Even if you don't have
school-age children, top-quality schools are important because good schools
help homes appreciate in value.
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