Jennifer LeBow

Selling your house? Evaluate its condition

This afternoon, I received a phone call from a client who will be listing her condo for sale.We spent 10 minutes talking about her options regarding a window shade that was broken. Thinking about it after the fact, I realized that the discussion was a vivid depiction of just how many tiny decisions require a seller’s consideration when listing a property for sale. While you can make any choice you like, the point is that you should understand which things merit your decision-making attention and evaluate your options.

A summary of our conversation will best illustrate my message:

Identify the problem

The seller told me that she had a (large, expensive) window shade that had a broken string. She also mentioned that it was faded and looked a little dirty, despite efforts to clean it. She asked if she should leave it as-is, have it fixed, replace it or remove it entirely. She said that she could just leave it (and disclose it was broken) because a buyer might want to replace it. In that event, she said, it wouldn’t make sense to spend money to fix it if the buyer were planning to get rid of it anyway.

Consider the options/scenarios

I couldn’t fault that reasoning, but, I said, many buyers are turned off by things that are disclosed as broken, because they not only know that they have to repair/replace something, but it can also negatively color their view of the general condition of the property. So, from that perspective, it might make sense to repair it. She had been quoted about $250 for a repair, IF it could even be fixed.

She expressed concern that it might still look a little dirty/shabby–was she better off spending a little more and replacing it altogether? Maybe. Again, though, was that money “thrown away” if a buyer were planning on getting all new window treatments?

Then I mentioned that she could just remove it which would have no cost to it. Then the buyers wouldn’t see anything broken or in less than perfect condition. She pointed out that the window in question is very large and that any savvy buyer (or buyer agent) who noticed it had no window covering would realize the cost of purchasing a new shade/blind, which might be a turn-off, especially if it might not match.

Lots of small decisions

As “down the rabbit hole/in the weeds” as you might characterize the above conversation, the reality is that the seller DOES need to make a decision about the shade. It will come as no surprise that this example represents only one of several issues that will come up and require her to make choices. Selling a property “as-is” is absolutely an option. However, you should be aware of which aspects of your property might deter a buyer and consider ways in which you could remove or mitigate those obstacles. Then, think about time, effort and money/return on investment and make informed choices.

When your bottom line is truly a line

All home sellers want to net as much money as possible. Sometimes, though, there are situations in which a seller will have major consequences if she walks away with less than a specified amount. Maybe she can’t pay off the mortgage otherwise. Or she might not be able to cover the costs for the purchase of her next home if she accepts a lower offer. In these scenarios, it’s vital to negotiate with a focus on other factors that carry weight for the buyer. Ask yourself how you can sweeten the deal for the buyer, without lowering the price you’ll accept?

Flexibility of settlement date

For some buyers, having flexibility in when they move can be tremendously important. Many buyers are afraid to list their homes for sale before they have found a new one. For a buyer like that, a seller who is willing to entertain an offer with a home sale and settlement contingency would be offering an enormous benefit. (Clearly, any seller Consider this example: a buyer is moving across the country and starting a new job in six weeks, but they don’t settle on the sale of their current home for eight weeks. They need the money from their existing home to purchase a new one. If you are able to offer them a pre-settlement rental for two weeks (and you have a place to go during that time, prior to receiving the money from your own settlement), it could be hugely valuable to that buyer.

Addressing repairs

Allowing an inspection contingency

Many buyers feel pressured to submit offers without inspection contingencies in order to be competitive. If you feel confident that any inspection will come back with very little of significance and consider an offer with an inspection contingency (or, even better, if you have a pre-listing inspection done), a buyer might be more likely to honor a higher price. You can add some language to protect yourself from being nickled and dimed (for example, you could require that the buyer absorb any and all issues that are estimated at below $4,000 to remediate).

Remediating existing problems

Making repairs, if you can do so in a cost-effective way, can help a buyer justify a higher price. Maybe you replace the old carpets, or take care of painting the interior rooms that need it most. Remember that most buyers use a mortgage, so when they pay more for the house, their monthly payment goes up a little bit, but their cash out of pocket to make the purchase usually only goes up around 20% of that increase in the price. However if they have to come in and make repairs, the cost of those repairs is paid in cash, not financed. You might also consider offering a home warranty which can reduce the cost of any repairs they do need to make.

Accepting mortgage-contingent offers

Some sellers avoid mortgage-contingent offers. This situation reflects concern over whether a buyer will actually qualify/obtain the mortgage as well as whether the property will appraise. If you, as a seller, can offer the buyer some level of comfort by taking an offer contingent on a mortgage, again, you might demand a higher price. When it comes to the appraisal, again, you can try to mitigate a major loss by requiring the buyer to cover a certain amount of appraisal gap.

Other pain points

The art of negotiation revolves around identifying the other party’s pain points and reducing/removing them. For example, for a buyer moving from a smaller home, the cost of furnishing your house may be one reason he doesn’t want to meet your price. What if you could offer to leave certain items behind? That cost savings to the buyer might make all the difference. Or, as I mentioned previously, you might consider a home sale or settlement contingency (but be careful!). Be sure your agent asks the buyer’s agent what, other than a lower price, would provide value to the buyer. That way, when you counter an offer, you will be better positioned to close the deal without sacrificing your bottom line.