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Why sellers should continue to pay buyer broker commissions

May 7, 2024 by Jennifer LeBow Leave a Comment

Why sellers should pay buyer broker commission — With all the news on the topic of whether sellers should still pay buyer broker commissions, it’s easy to be confused. Read this post for clarification.

Benefits of Paying the Buyer Broker’s Commission

Historically, sellers have paid buyer brokers’ commissions. While it might seem odd for the seller to pay the buyer’s representative, there’s a reason that that model has remained in place. In short, it benefits the seller in several ways. When a seller pays the buyer broker’s commission, the seller:

Avoids lower offers due to the buyer needing to funnel available cash to pay the broker’s commission
Receives more appointment requests, and receives them sooner after the listing appears on the MLS
Is less likely to have to work with an unrepresented/under-represented buyer, which can be difficult and may result in fall throughs

What happens when a seller does NOT pay buyer broker compensation?

Buyer paying agent in cash will offer lower purchase price….lower net proceeds

In addition to lower prices resulting from less competition, the purchase prices for these houses will decrease as a reflection of buyers having to incur the cost of paying their own brokers. A seller who is deciding whether to offer buyer broker compensation might suggest one price if he is going to absorb it and a lower price (lower by the amount of commission he would save) if he is not going to pay it. The seller’s net proceeds would remain very similar in both cases, so, for the seller, it is roughly the same thing.
For the buyer, though, it is decidedly NOT the same thing. Realistically, the savings the seller will realize by not paying the buyer broker’s commission will be surpassed by the decrease in the buyer’s offer price. Why? Because the majority of home buyers don’t pay cash; they use a mortgage for part of the purchase. Mortgaged money doesn’t “cost” as much as cash.

Consider a buyer who is putting down 20%. That means that the buyer’s cash responsibility is 20% of the purchase price. So paying 100% of the buyer broker’s commission in cash is much different than paying 20% of that amount, which is what happens if it’s rolled into the purchase price. Yes, the mortgage amount would be slightly higher, but the additional monthly amount would be very small as it’s spread out over the life of the loan.
There are so many cash expenses associated with purchasing a house, including the down payment, the closing costs, the moving costs, and more, that the additional cost of having to pay their agent in cash could be the difference between a buyer moving forward on a property or not. Buyers relying on a mortgage for a portion of the purchase price can afford less (by a gap larger than the broker commission amount). Why should a seller care? Lower net proceeds.

Example of difference in cost when using a mortgage vs. paying in all cash

Commissions are negotiable. For the purpose of this example, the buyer’s broker commission is 3%, but it could be a different amount.
A buyer is considering buying a house priced at $500,000, but, at that price, she must pay her broker 3%, in cash ($15,000). Assuming she is put down 20% as her down payment amount, she’d have $100,000 in down payment and an additional $15,000 in cash for the commission. That is a total of $115,000 in cash.
If, instead, the seller covered that fee (and, therefore, charged 3% more for the house) he would price the house at $515,000. In that scenario, the buyer’s down payment would increase to $103,000. To be fair, there would be some additional costs at that higher price. For example, title insurance would be an additional $69, the additional transfer tax would be under $200 and the additional interest until the end of the month would be around $10 at the most. The
difference in the required cash if she covered her own broker’s commission would still be over $11,500.

For many buyers, this additional cash burden translates into an even lower budget for the purchase, which means the seller is offered a lower amount for the house (lower than the amount of the buyer broker commission). Therefore, the seller’s net proceeds would be less than if he had priced the house at $515,000 and covered the buyer broker’s fee.

Note: the seller does have slightly reduced fees at the lower sale price. The seller would pay transfer tax on a lower purchase price—in our example, it would be a $150 savings. He would also pay his own broker 3% of $500,000 as well as covering the buyer broker’s fee at $500,000, resulting in a savings of $900.

Fewer appointments….lower net proceeds

Some prospective buyers will not look at properties which require them to pay their own agents/brokers because they don’t have the extra cash on hand to do so, or at least not in the price range of homes they are considering. Fewer showings leads to less competition and, therefore, lower offers.

Buyers have, historically, not had to factor in the cost of agent representation as the seller has covered the buyer broker’s commission. Some buyers may instruct their agents not to show them properties that require them to shoulder that cash burden. Keep in mind: the fewer people who consider your property, the less competition for it and the lower the final price. And today, more than ever before, home buyers are engaging buyer agents to protect and guide them; they are not likely to be willing to forgo representation. Even buyers who do choose to request appointments for those houses may take some time to analyze the total cost difference as well as the out-of-pocket difference vs. a listing in which the seller is paying the buyer broker’s commission. That potential lag in setting appointments translates to less compeition and reduces the sense of urgency other buyers will feel when writing offers.

Remember, also, that it’s an uncomfortable conversation for the agent to have to tell the buyer that if they look at a particular property, the buyer will have to come up with the cash to pay their commission. Some agents will not be as enthusiastic about those kinds of properties and may steer their buyers toward others. Ethical? No. Realistic? Yes. The result of fewer appointments and less immediate requests to show the property? Lower net proceeds.

Buyers using discount brokers or representing themselves…lower net proceeds

Another potential effect of sellers not offering buyer broker compensation is a trend in which buyers, to save money, represent themselves or use a discount broker. In either of those two scenarios, the propensity for mistakes and the overlooking of details on the buyers’ side increases dramatically. Transactions in which buyers represent themselves or use discount brokers who may not be as experienced or professional as others have a much higher rate of fall through. Experiencing a fall through is not only stressful, but the houses that have to go back on the market almost always sell for less. The initial “buzz” and feeling of competition diminishes and, worse, some people mistakenly assume there is something wrong with the house, and the fall through indicates a lower value for it. Again, the bottom line is that the seller receives lower net proceeds.

Sellers who don’t pay buyer brokers will receive lower net proceeds

Not to beat a dead horse, here, but isn’t this the crux of the matter? With all of the talk and confusion around the National Association of Realtors (NAR) lawsuit, the burning question amongst prospective home sellers is whether they will save money by not paying the buyer broker’s commission. I hope the above discussion has successfully explained why, in my opinion, the answer is a resounding “no”. I come back to where I started this post: there’s a reason sellers have historically paid the buyer broker’s commission: doing so increases their bottom line (and makes for a less stressful transaction). I expect there will be sellers who insist on putting the theory to the test and opt out of covering buyer broker commission. I am confident that those sellers will realize lower net proceeds. Only time will tell!

I know this was a long post; thanks for sticking with me til the end!

What constitutes a bedroom?

April 5, 2024 by Jennifer LeBow 2 Comments

Does a bedroom have to have a closet? — People often think a bedroom needs a closet or a window to qualify as a bedroom from a legal perspective. Find out what the requirements in PA are.

What is a bedroom?

As a real estate agent, I get this question frequently. There is, to be sure, lots of incorrect assumptions as well as inaccurate information out there. So I am going to set the record straight. Please note: laws differ in various regions. I am describing Pennsylvania laws only!

Egress

While most people think a bedroom has to have a window, it does not. Clearly, a windowless bedroom is pretty depressing, but the rule is simply that there are two means of egress. One of those must lead directly outside. The law has to do with being able to get out in a fire.

Window

As I just explained, as long as there are two other means of egress, with at least one leading directly outdoors, a window is not required. However, if a window is the second means of egress, it must be at least 24 inches high and 20 inches wide with a minimum opening area of 5.7 square feet. In addition, unless there is a permanent step allowing for easy access, this window must also be no more than 44 inches from the floor. Windows also must open at least halfway.

Heat and cooling

Due to our climate, all bedrooms must have a permanent heat source. Permanent means installed as opposed to plugged in. You can’t just plug in a free standing space heater. Air conditioning is not required. Pennsylvania decrees that as long as there is a door and/or window that can be opened to provide for the exchange of air, that space qualifies as a bedroom that has met the cooling requirement.

Electricity

All bedrooms must have a source of electricity. Light is considered a basic requirement and, of course, so many things we use need to plug in that a bedroom without electricity would be quite difficult to use.

Size

All bedrooms must be at least 80 square feet, with a minimum of seven feet in any horizontal direction, and have at least a seven foot high ceiling.

Location

Bedrooms in basements (any space below grade where an exit door is not at grade level) do not count unless they have egress windows that meet both the size requirements and have a permanent ladder installed so a person can reach them in the event of an emergency. NOTE: While the law may say these spaces count as bedrooms, most real estate agents where I work )in the greater Philadelphia metro area) do not consider basement bedrooms real bedrooms unless the basement is a walk out basement that has a door directly to the outside that is located at grade level.

Closets

Other than windows, this issue creates the most confusion. A bedroom does not have to have a closet to be considered a bedroom.

Keep in mind that legal requirements on this topic, while, obviously, good to know, shouldn’t be the only thing a real estate agent takes into account when determining which spaces in a home “count” as bedrooms. While none that fail to meet the criteria above should even be considered, even some that meet the criteria might be best omitted from the list. Why? Because, depending on the price point, type of house and local customs, you could find yourself the object of disapproval and anger if you call something a bedroom that buyers and their agents will clearly think doesn’t or shouldn’t qualify. So use common sense in addition to the law (always good advice)!

If you are relocating to the Philadelphia/Main Line area, please go to my blog page and search for posts using the relocation tag. Contact me to discuss your Philadelphia area relocation! jen@jenniferlebow.com/610 308-5973

Square footage: don’t count on it

March 25, 2024 by Jennifer LeBow Leave a Comment

Main Line Philly Relocation — Who counts square footage and what/how they count greatly impacts the information provided in an MLS listing for a house. Understand what you are reading!

Square footage: what counts?

When my clients are listing their homes or looking for new ones, the square footage/size of the house is one of the essential facts to provide. Sounds pretty straightforward, right? Well, sometimes it’s not. The first is understanding what counts as square footage. While I’ve been asked about garages, no, that square footage should never be included. Technically, even unfinished basements may be considered as part of the total square footage. The problem is that, at least in Pennsylvania, the tax records are inconsistent in how they record square footage. Sometimes unfinished basements will be included in the total, and sometimes they won’t.

Finished vs unfinished square footage

How to compare

Then comes the question of whether finished basement space counts “the same”. What I mean is that many buyers ask whether total finished square footage is the best criterion to use to compare different houses. While it’s better than considering unfinished space as equivalent to finished space (meaning it has sheetrock and heat, flooring and a finished ceiling and lighting, etc.), there is still a difference in finished space that is in the basement vs. above ground. Above ground square footage is a field in our local MLS that agents are meant to fill out. The most “apples to apples” comparison is above grade square footage. In a basement, the space is not usually as desirable, especially if it is not a walk out. Basements can be dark, with low ceilings and are rarely as nice as above ground spaces. Furthermore, they are separated from the other main living space.

Why the location of the space matters

The other reason why it’s so important to understand whether a property listing’s square footage includes or excludes the basement has to do with the size of the other floors and the rooms on those floors. This example should illustrate my point:

Listing #1 says a house is 2500 sq ft with 4 bedrooms.

Listing #2 says a house is 2250 sq ft with 4 bedooms.

When you read the fine print, you see that the square footage in listing #1 includes the finished basement, which is about 500 sq. ft. That means that the main two floors is each roughly 1,000 sq. ft. The size and shapes of the rooms on each of those floors is constrained by that total of 1,000 sq. ft. and bedrooms will be small.

Listing #2 does not have a finished basement, so the 2250 sq. ft. amount constitutes only the two main floors. That means the footprint of each is roughly 1125. With 125 sq. ft. more per floor, the rooms in listing #2 will be appreciably more spacious (or could allow for a laundry room, larger closets, or other ancillary space). Please note: finished basements do have value! It’s not that they don’t “count”. They just don’t count on a psf basis the same way above ground does.

Who’s counting?

As I mentioned before, Pennsylvania’s tax records are not consistent in how the different square footages (total, total finished, total above grade finished) are recorded, but there is another factor: human error. It’s not uncommon for sellers to report inflated square footage amounts when they have built additions or finished previously unfinished spaces. Additionally, some agents who don’t read those already unclear tax records correctly, they sometimes add the finished basement space to the TOTAL finished square footage (not the above grade finished square footage). I don’t believe this is done to purposely mislead; I think it happens when an agent is not being careful. Either way, the result is that the total reported square footage is overstated. It’s a good idea to ask you agent to pull the tax record just so you can see the entries and decide what is the most accurate amount and how the space is carved up.

The takeaway

Remember that every buyer has a different set of needs and preferences.One buyer might prefer listing #1 above, if that finished basement would be perfect for an office or playroom or overflow space for their guests. Another buyer might prefer fewer, larger spaces. So it’s not a matter of better; it’s simply a matter of different. The important lesson here is to just understand what information you’re being given so you can make an informed decision about what space configurations work best for you.

If you are relocating to the Philadelphia/Main Line area, please go to my blog page and search for posts using the relocation tag. Contact me to discuss your Philadelphia area relocation! jen@jenniferlebow.com/610 308-5973

Caring for grounds of a home

March 21, 2024 by Jennifer LeBow Leave a Comment

Beautiful grounds require maintenance

Often, the cost and responsibility of a property’s grounds are overlooked, either because people are focusing only on the house itself, or because, as beautiful as the perennials/trees/shrubs looks, it doesn’t occur to them what is involved in their upkeep. As a gardener, I have more awareness than some, and I actually enjoy the process, but recognize that not everyone else does. So, if you are contemplating purchasing a home with a lot that has mature plantings, here are a few things to consider:

Grass–how much lawn is there to care for and does that mean just mowing, or also seeding and treating with weed-reducers?
Perennial plants may need pruning, mulching or cutting back in order to stay healthy year to year.
Perennials do have a life span, so realize that dividing or replacing them may very well be necessary during the time you own the house.
Fall/spring clean up–trees, shrubs and plants may look beautiful in bloom, but may leave a mess.

Grass

To some, “lovely grounds” means a massive expanse of green lawn. Keep in mind that maintaining that velvety surface takes time and money. First of all, you’ll need to water it, unless we have a very wet summer. Next, you want to keep the weeds down. There are several different methods of weed control, ranging from chemical and natural sprays to weed barriers on the surface of the soil. Additionally, there are usually certain areas of grass that, due to water erosion, shade or heavy traffic, die off and can be a bit of an eyesore if not replaced.

Maintaining existing perennials

Perennials often perform best when cut back in the later fall, mulched and fertilized in the spring. They, like grass, need varying amounts of watering during their blooming season. When they have finished blooming, most benefit from removal of spent blossoms/stems to maintain a neat appearance. Speaking of neat appearances, some plants become invasive and you’ll need to make sure those don’t overrun the others. Similarly, weeds are always going to try to take over, so controlling weeds will be a constant battle.

Perennial is not eternal!

While some perennial plants, like azaleas, pachysandra, forsythia, daylily, hosta and iris have long life spans, others, like hybrid tulips, columbine, lupine, daisies and black-eyed susans only last a few years. So pay attention to what is planted in order to budget for replacement of plants as they age. You might choose to plant longer-lived species, but, either way, there is time and money involved.

Spring and fall clean up

With grounds comes clean up. There is no way to avoid it. Flowering plants look ugly once they have finished blooming if they are not tidied up/cut back (different plants require different treatment, so be sure you know what you’re doing or consult an expert). Trees and ornamental shrubs will also need continual pruning and maintenance so they stay well-shaped and healthy.

Again, I’m a gardener and a huge fan of properties with gorgeous plantings. My goal in writing this post is not to dissuade anyone from purchasing a home with attractive grounds. It is, rather, to alert you to the cost and effort in maintaining them so that you are not disappointed or unpleasantly surprised once you own the property. Good luck!

Can’t move directly from one house into the next?

March 14, 2024 by Jennifer LeBow Leave a Comment

When you can't move right into your new house as soon as you sell your old one — Think about the challenges and options in order to be best prepared if you will need to settle on yor current house before you can move in to a new one.

When you don’t have “back-to-back” settlements

Back-to-back settlements describes the situation when someone closes on their old home on the same day they settle on their new one. In theory, they can avoid being “homeless” altogether. Not being able to move directly from one house to the other on the same day is certainly inconvenient. However, not everyone has that option. Many people need to sell their current home in order to have the cash (or be able to qualify for a mortgage) to buy a new home. Even if you don’t need to sell before you buy, it is challenging to align settlement dates on the old and new properties on the same day. So even those who can buy prior to selling may find that they need to vacate their current home before they can move into their new one.

Considerations

So what do you need to consider if you can’t move from one house right into another?

Where you can stay–The most significant issue is where you and your family can stay. Maybe a friend, relative or neighbor can house you. If not, you might think about an extended-stay hotel or an AirBnb or VRBO. You may even need to sign a short-term lease. When deciding where you can go, don’t forget to allow for pets! If they can’t accompany you, you’ll have to figure out accommodations for them as well.
Storage of your belongings–When you can’t move your furnishings and personal possessions into your new home, where will they go? If you have a short “layover”, like a few days, the moving company will often store your things for a fee. However, if it’s more than a couple of weeks, that cost becomes prohibitive. At that point, it might make more sense to rent a storage facility. And remember, you’ll need to arrange for a truck to both pick up/deliver to the storage facility as well as deliver it to the new house once you can move in.
School transportation–Remember that if your kids are bused to school, if you have a temporary new location, especially if it’s outside of the school district, you will need to find a way to get them to school.
Logistics–think about mail forwarding, changing utlities, getting renter’s insurance if appropriate, etc.
Bridge loan–If the only reason you can’t do a back-to-back settlement is financial, it might make sense to investigate whether a bridge loan is an option. Talk to a couple of lenders early on in your home search.
Home sale contingency–When you put a home-sale-contingent offer on a house, it protects you from having to lose your deposit money in the event your home does not sell. To be honest, this continency is rarely accepted by sellers, because it puts them at risk of having THEIR sale (and then their future purchase) fall through if yours does. However, depending on the market, it might be worth considering.
Rent back–While uncommon, some buyers will allow sellers to rent back their home, after the settlement has taken place. In this case, you would have the money to put toward a new property, but would need time to not only find a new house, but also to allow for the lender to process all the paperwork. That period of time would be when you’d rent back the house from the new owners (who wouldn’t move in until you move out).

As I mentioned, being able to afford and schedule back-to-back settlements is a luxury. Many circumstances, though, can eliminate that possiblity. Before you are too far along in the home buying process, I’d recommend exploring your most likely sequence of events. Determine what choices you have and then do your homework understanding what each would entail. Then you can make a more informed decision about your timing, what kind of offers to write, and you’ll have a better idea of what to expect.

Why you need a buyer’s agent for new construction

March 8, 2024 by Jennifer LeBow Leave a Comment

New construction buyers use the builder’s rep

New construction communities always have agents on site. Lots of prospective buyers wander into those sales offices, take a tour (given by the on-site agent) and move foward with a purchase, never bringing in their own buyer agent. In most cases, this scenario happens because buyers don’t know any better and because the builders consciously try to take advantage of that lack of knowledge. Those on-site agents want to represent potential buyers (as well as the builder) because they make more money that way and because they often lead buyers to believe that there is “nothing to negotiate” when it comes to new construction. While sometimes, true, there are circumstances where a good buyer agent can negotiate successfully for a new construction buyer.

Don’t use the listing agent

Remember that the agents who are on site have a confidentiality and fiduciary responsibility to the builder. They are NOT going to be working in your best interest–and this fact is true with any home sale, not just new construction. Buyers should never expect the same kind of representation from a listing agent as a buyer’s agent who has no obligation to protect the seller’s interest.

Advantages to using a buyer agent for new builds

A buyer agent:

Should point out hidden costs. New construction hides a slew of hidden costs. From lot premiums to upgrades to HOA fees and high taxes, uninformed buyers take a major risk of missing important fees if they don’t have a buyer agent representing them.
Is not employed by the builder. A buyer agent owes no allegiance to the builder and will, therefore, be more likely to provide an honest opinion of the builder’s reputation. Along the same lines, many buyer agents encourage pre-drywall inspections. These inspections are done to be sure the plumbing, electrical and other systems are installed correctly, without cutting corners, before the drywall covers them up. Listing agents representing the builder don’t suggest these.
Will explain about upgrades and the “model”. Most builders build a model home, purportedly designed to enable prospective buyers to get a feeling for what they could build if they chose that model. The issue I have is that, while the sales rep (the builder’s agent) always says that their base model (with no upgrades) is quite well -appointed, that model inevitably reflects tons of costly upgrades–often up to 40% or more of the base price. So the model does NOT accurately represent what you would get unless you are prepared to spend way more than the base price. A good buyer’s agent will find out how much in upgrades the model home has and what the average buyer spends on upgrades (usually around 20% of the base price). Furthermore, she should be able to recommend which upgrades will hold their value and which might not provide a good return on investment. Finally, savvy buyer agents can tell you which upgrades are better done after the home is built, by outside contractors. For example, paying the builder to add a patio/deck or finish a basement is usually more costly than having it done by a separate contractor.
Should explain lot premiums. Most builders have lot premiums on most or all of the lots available. This additional cost (which could be $30,000 or more) reflects the desirability of a lot. It may have to do with location in the development, the hilliness of the site, whether it has a more or less private back yard, if it’s in view of concrete water management pipes, etc. You’ll want to fully understand what the lot will look like, especially because what you see prior to construction is often very different that what you see once it’s been excavated and the house has been built. Most buyers are not familiar with reading the site plans showing the elevation changes and don’t know how to interpret them. Your buyer agent should help with that.
Will find out what the HOA fees and rules are. Sometimes builder’s agents gloss over extra fees for certain amenities leaving new owner suprised that they are not covered by the HOA cost. Furthermore, you’ll want to be very clear about what is and isn’t covered by the HOA. Glass sliders to your deck? Snow removal of just the street or your driveway, too? Plantings or yard maintenance? Also, there are rules about what your mailbox can look like or what color you can paint your shutters. Some communities don’t allow spot repairs on roofs; they require the owner to pay for a whole new roof. Many development prohibit parking RVs or boats in the driveways and often don’t allow parking along the street (think of where your guests can park). Lot a to find out as far as rules/regulations and fees associated with an HOA.
Will explain what builder’s warranty does and doesn’t cover. A good buyer agent will ask for a copy of the builder’s warranty before having you sign the commitment to purchase. He will make sure you understand what is covered and what the time periods for coverage are.
Will review the Agreement of Sale with you. Builders don’t use the standard state Agreement of Sale used in most resale transactions. They all have their own and they are heavily skewed to protect the builder. For example, most have a clause stating that the buyer agrees that the builder can have up to at least a year (sometimes more!) past the agreed upon settlement date to deliver the home. They cite that they cannot be responsible for delays cauased by weather or supply chain problems. They do not address the fact that a significant delay could result in a major financial setback to the buyer (what if you have to rent a house or something due to a long delay?). They also mention that they can subsitute materials for the ones you’ve chosen in the event the original ones are no longer available. However, you have no recourse in these situations–what if you dislike the replacement? So make sure your agent thoroughly reviews the agreement with you. I guarantee that if you work with the builder’s agent, those kinds of points will NOT be highlighted.
Should ask about taxes. New construction listings only show taxes on the land, as the taxes for the property once the home is built is only assessed AFTER it’s completed. Therefore, you may see a listing and think, “Oh, what low taxes!”. That’s because it’s only for the land. Your agent will find out what the tax rate is and ask if people have been successfully appealing their taxes. Tax appeals on new construction in PA are often successful. To understand how and why you would appeal taxes, click here.
Will address other new construction in the area/on site. Your agent should find out if the area where the new development is will be growing and what new retail/schools/services might be coming in. That information may affect your decision about whether to build in the development. Additionally, you’ll want to know, within the community itself, how much construction will be happening and for how long. Are they expecting to be building continually for the next 18 months or are they nearly finished? Note that there are pros and cons to being one of the first sales or one of the last in a new community. You will usually have better pricing and lot choice early on, but you’ll have to live through construction of surrounding homes for longer. If you buy when most of the homes have already been built, you’ll have less choice as far as site and the prices will be higher, but you won’t have the noise and mess associated with construction.
Will negotiate for you. While it’s true that you can rarely negotiate the price of new construction, it is sometimes possible to negotiate to have certain upgrades thrown in for free or for a reduced price. The builder’s agent has no incentive to try to reduce your costs, but a buyer’s agent who doesn’t work for that builder has nothing to lose by at least trying. There may be specific changes or extras that they are willing to do if expressly asked, but they won’t offer them. Your agent should be willing to go to bat for you to see if the builder will accommodate your needs.
Should help you with the punch list. Most buyers don’t know that they have the right to delay settlement if there are things that have to be corrected–if trim is missing or something needs to be repainted, etc. Your buyer agent can help you identify the concerns and be sure the builder makes them right before you settle.

The list above is by no means exhaustive; I’m sure there are plenty of other reasons it makes sense to use a buyer agent who is not affiliated with the builder when purchasing new construction. These points were simply the ones that occured to me immediately. As I stressed at the beginning of this post, using the listing agent is always risky as he or she is already committed to protecting the financial interests and privacy of the seller. In order to fulfill those responsibilities, it is nearly impossible for that person to warn you of all the potential pitfalls and considerations you should be thinking about. I don’t ever recommend using the listing agent if you are a buyer.

Historically, people have been led to believe that with new construction, there’s no negotiating and no reason to use a buyer’s agent. I hope that this post has challenged that belief!

Home sellers: de-pet your home

March 4, 2024 by Jennifer LeBow Leave a Comment

Make your home seem pet-free — I am the first person to say every home should have a dog, but I admit that showing/selling pet-friendly homes comes with specific challenges.

Why do I have to de-pet my house to sell it?

I love dogs. I have dogs. I can’t imagine my home without them. That said, I know that, no matter how clean you keep your animals and your house, there is usually a certain pet smell that our houses have. As a home dweller, that’s fine; if it doesn’t bother you, it’s not a problem. However, as a home seller, it is to your advantage to erase as much evidence as possible that pets have lived there. Primarily, it’s an odor issue, but pets can also cause damage to flooring, baseboards, etc. Their hair can impact the HVAC system and cleanliness of the air in the house, which is of particular concern to people with allergies or asthma. Their toys, beds and bowls can also make the house look less pristine than it should/could for showings and pictures. So, my recommendation is to de-pet your home as much as possible when you are trying to sell it.

What you should do

A caveat: if you are still living in the house, it might be difficult to fully eliminate any and all signs of your pets; often pets are crated on site for showings, so their presence will be obvious. Nevertheless, try to address as many points on the following list as possible.

Deep Clean: Start by thoroughly cleaning your home, including carpets, upholstery, and any pet bedding. Use pet-specific odor neutralizers to eliminate any lingering smells. Be sure to take this step in advance of showings, so there is no cloying “cleaning” smell.
Repair Damage: Repair any pet-related damage to the property, such as scratches on doors or floors. Repaint walls if necessary to cover up any pet-related stains or marks. If your upholstery shows signs of pet damage, consider covering it,
Remove Pet Items: Clear the home of all visible signs of pets, including pet toys, food and water bowls, food containers, litter boxes, and pet beds. Even if you are using them while living there, store these items out of sight during showings and open houses.
Air Out the Home: Allow fresh air to circulate throughout the home by opening windows and using air purifiers (but not scented air fresheners!) to help remove any pet odors.
Be sure to clean up your yard–this step includes not only the obvious piles, but also and holes that have been dug or fences that have been damaged. Toys should be stored out of sight as well.
If you (or a neighbor/friend/relative) can remove the pet during showings, vs. leaving it crated in the house, it will improve the showing experience for the buyer.

The dangers of overpricing your house

February 19, 2024 by Jennifer LeBow Leave a Comment

Why you shouldn't overprice your house — While it might be tempting to price your home above what the market indicates its value is, beware: it’s a strategy that usually fails.

What’s wrong with overpricing?

I often encounter home sellers who suggest we price their property a little higher than the market suggests it will sell for. Their rationale is: you can always bring the price down if it doesn’t sell. On the surface, that argument seems sound, and it’s perfectly accurate; lowering the list price is always an option. However, statistics show that overpriced homes (those listed at above market value) end up selling for less, on average than those priced at or even slightly below market value.

Dangers of overpricing

Bringing in the wrong buyers–when your property is egregiously overpriced, the buyers who come to see it are not likely to be interested in it at any (reasonable) price. That comment may sound illogical, but consider this: a buyer who is looking at other properties priced similarly will find your house delivers less value. You might suggest, “Well they can offer less, then!”, but here’s the key issue: they are prepared to spend the money the house is priced at, but not for a house that doesn’t meet their criteria or isn’t enough of a step up from what they currently have. You might also have buyers come to see the house who are looking at other homes that are similar, but if your house is priced appreciably higher than the others, these buyers will also not be interested; they will pursue a lower priced property. So neither group of buyers is likely to bid on your house, which is why I’ve labeled them the “wrong buyers”.
Few showings–remember that the overwhelming majority of home buyers browse on line listings prior to making appointments to view properties in person. In an echo of the previous point about the “wrong buyers”, if someone looks at what your property offers, then determines the price is higher than what similar properties are listed for, they won’t even bother to come see it. And people who are looking in that price range will feel it offers less than competing homes. It will be dismissed out of hand and you will have very few showings. Fewer
No offers–if you haven’t received offers on your property, it sit on the market longer. Both agents and buyers can see how many days it’s been on the market and that statistic shapes their buying strategy. Their thought is: “It doesn’t seem like there’s any competition to get this house at the current price, so I’ll lowball.”
If you lower your price, people still usually lowball you–you’ve played your hand when you lower the price. You’ve admitted it was too high and that you need to sell it. And since the property has already been on the market a while by the time you lower it, the initial excitement surrounding a new listing has worn off. New listings are most likely to have the most activity/showings and the highest number of bids. If a house remains on the market, it indicates that there’s not much competition for it. Buyers often presume a bit of desperation of the seller’s part and offer less than even the new, lower price.

Understanding current market value is vital when you are deciding on a listing price for your home. There are certain circumstances where a seller might consciously choose to price a property above market value, but it’s rarely a successful strategy. In most cases, overpricing is a bad idea.