My Austin clients frequently have questions about who pays for what in a real estate transaction. In Texas, almost everything is negotiable; however, there are certainly norms and the promulgated forms used by Texas REALTORS naturally lend way to certain cost distributions.
In order to think about who pays for what is a real estate transaction, you first most consider what expenses are involved in a real estate transaction. One of the largest expenses in a real estate transaction is commissions. In Texas, real estate commissions are customarily a seller expense. It is most common to see the seller pay six percent of the sales price towards commissions, three percent to the buyer’s broker and three percent to the listing broker. However, this distribution is not set in stone. For multi-million dollar listings, the commission may be lower, and the seller ultimately determines the commission percentage as well as the distribution between the buyer and the listing brokers. Additional costs involved in a real estate transaction include marketing expenses, title policies, appraisals, surveys, inspections, energy audits, and loan origination fees. Good listing agents will usually take on the marketing expenses incurred to properly advertise a property. These expenses include professional photography, print marketing (including mailers), digital marketing platform expenses, and advertising fees. Staging fees may be paid for by the seller directly or the listing agent. The owner’s title policy usually costs a little more than one half of a percent of the sales price. Click here for exact title policy costs in Texas. The owner's title policy is typically a seller’s expense. However, with the competitive buying market it is not uncommon to see buyer’s incurring this cost to make their offers more appealing to the seller. The lender’s title policy cost is related to the loan amount for the property and is typically a buyer expense. Property inspections are a prudent decision for any buyer. These inspections can cost several hundred dollars, and additional specific inspections for items such as wells, septic systems, foundations, etc. may be needed as well. These inspections usually occur during the option period at the expense of the buyer. In certain situations, it may be beneficial to have a property pre-inspected. In this case, the inspection would be a seller fee. Lender related fees are typically paid for the buyer. In addition to the lender’s title policy, buyer costs associated with loans include loan origination fees and appraisal fees. These fees will vary based on both the property and the lender utilized. A survey is generally required for the sale of property in Texas. If the seller has an existing survey for the property, it may be used for the sale if it’s approved by the lender and the title company. The Texas Real Estate Commission’s 1-4 Family Residential Contract offers 3 options for how the survey will be obtained. Option 1: an existing survey will be used and it if is not approved by lender/title company you can elect for the seller or the buyer to pay for a new one. Option 2: seller pays for a new survey. Option 3: buyer pays for new survey. A condo does not require a survey for a real estate deal. However, there will be other fees associated with a condo sale. When you are involved with the sale of a TX condo, you will want to consider who is going to pay for the resale certificate and who pays for the transfer fees. Again, the Texas condo contract is written in such a way that lends way for the buyer to pay for at least a portion of the transfer fees. Thus it is common for the seller to pay for the resale certificate and the buyer to pay for the transfer fees but this in no way set in stone. Both fees are entirely negotiable. If a home warranty purchase is noted on a real estate contract, it is likely an expense to the seller. This part of the real estate contract states that the seller will reimburse the buyer X amount towards the cost of a residential service contract. Escrow fees, the fees paid to the Title Company, are typically split between the buyer and seller. You may also see legal fees, processing fees, and various fees imposed by municipalities on either side of the closing document. This list is by no means exhaustive. There are a variety of fees involved with a real estate transaction and who pays for what is usually negotiable. If you’re a buyer in a competitive market, the more “typical seller-related expenses” you agree to take on, the stronger your offer will appear to sellers. If this all appears to be a bit much to take in and you’d like someone to walk you through the details or if you have additional questions, contact me today.
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Your property is priced too high. If I had to guess, I would say that 99% of homes that sit on the market do so because they are not priced properly. Even if your home has a crumbling foundation, Formica counters, and a hole in the roof- if its priced correctly, it will sell quickly. If you price your property too high, potential buyers will never even look at it, and if they aren’t looking they aren’t making offers. If you must sell your home at a price that is higher than its market value, consider making inexpensive improvements that will have significant returns prior to listing your property. Even if you can’t afford it, there are often pay at close companies that can replace flooring for example and you won’t pay for the work until the property sells. Your photos are horrendous or you simply don’t have enough. There is nothing that frustrates me more than seeing a listing with only one crappy cellphone pic. Except seeing a listing with zero photos. Everyone starts their search online these days. If your photos blow, the buyer is never even making it to the property to look in person. Images from google and disposable camera photos dated 10 years prior are equally horrendous. I found these photos on the MLS today (these listings have been on the market for 300+ days) Your home smells. You and your family may have grown immune to it, but my buyers and I notice Rover’s smell the moment we walk in the home. Make sure to steam clean carpets before you list your home. In addition to pet smells, over powering scents of any nature can turn off buyers. If your home smells like a Bath and Body Works, we are going to wonder what you’re covering up. Your home isn’t staged. Staged homes spend half as much time on the market as non-staged homes. The reality is we really aren’t that good at imagining things. A buyer has a hard time visually arranging furniture in a blank canvas. Similarly, any minor imperfections stick out like a sore thumb when there aren’t pretty floral arrangements to detract. You weren’t coached on how to live in your home while it’s on the market. Since a staged home sells better than a vacant one, I often advise my clients to stay in their home while it’s on the market if it fits with their schedule and lifestyle. That being said, they must comply with a few rules if they are to stay in the home while it’s on the market. I tell my clients to pretend like they are living in a hotel. Imagine what the room looks like when you first open the door. The counters are clean and clear, beds are made, and knickknacks are minimal. I recently showed a home and there were feminine products on the bed, clothes scattered all over the floor, and collection notices on the table- this is not the look we are going for. Your home is not being marketed properly. With most buyers starting their search on the internet, you want your home to be visible on as many sites as possible. You also want to make sure all the stats are correct and people can find your home easily. I recently showed a property that had been on the market for 104 days, that’s basically an eternity in the Austin market. I almost didn’t show this property. When I was mapping the showings through the MLS, it looked like this home was located in the middle of nowhere. I double checked and realized the agent had simply mis-mapped the property but this mistake likely cost them dozens of other showings. No one can schedule a showing at your property. We don’t want to disturb the tenants, showings only permitted with an accepted offer. Our child naps from 11-1 and 5-7 on weekdays, showings only permitted between 12-2 on weekends. Guess what? No one’s putting in an offer on your home because no one can see it! Also, if you or your agent isn’t easily reachable for scheduling showings, you’re missing out on potential offers. It’s really not rocket science. However, it takes a unique combination of ingenuity, resourcefulness, attention to detail, common sense, and knowledge of the market to sell a home. When you price your home correctly, market it appropriately, and it shows impeccably- you receive great offers quickly. When I’m preparing to list a property, I always take the time to chat with my seller and determine a few things upfront that will make the selling process easier once the property is actually on the market. If the listing is a house, I ask what attracted the seller to this area. If I am listing a ranch, I ask about utilities. If I’m listing a condo, I ask about HOA fees. I also always ask about showing instructions.
It’s important for sellers to know the pros and cons for different options. In Austin, listing agents have to select what type of showing instructions a particular listing requires. Whatever choice the listing agent inputs is what buyer’s agent see in the MLS, and thus, how they show the property. The easiest type of showing for a buyer’s agent is a “GO”. This means that the agent can show the home anytime they want. This is most commonly seen on vacant properties, and is also used when the sellers are out of town for a specified amount of time. From a seller’s perspective having a listing that is a “GO” is also good. It means that you are more likely to have the highest amount of showings. However, it is also oftentimes concerning for sellers because they worry about what could go wrong, and there is no way to prep the home prior to a showing. Additionally, when a property is owner occupied, it simply isn’t an option. The best option when you are listing an occupied property is to use the “call first, go” selection. This selection allows agents to call the owner or the listing agent first to schedule a showing. I find out how much time my client will need in advance of showings prior to the listing going live so that I can schedule showings accordingly when a buyer’s agent calls me. That way, when I inform my client of a showing, he or she can make sure the lights are on, clutter is put away, the dogs are in the backyard, and most importantly he or she is out of the house! The third option is “Appointment with Agent”. This is commonly seen on high price point homes. Unfortunately, many agents will choose to bypass showing these types of properties simply because scheduling showings is challenging. Sometimes, clients are only in town for a short amount of time or the buyer’s agent cannot reach the listing agent, and showings are impossible to coordinate. When you are considering listing your property, it is important to take these types of showings into consideration. There are other options as well, that may or may not be appropriate given your situation. It’s a good idea to have a conversation about the pros and cons for each type of showing instruction. Ultimately, you must consider that more showings are often a good thing, but you also want quality showings to buyers who have the means to purchase your property. The term comps refers to comparable properties. Whether you are buying or selling, you will want to know the sales price for similar properties. It's important to note I said sales price, NOT list price. You may think that the pricing of nearby properties is the only factor when you're looking at comps and trying to set a price for your listing. But, it's actually a bit more complicated. Here are five things that affect comps that you might not be aware of.
Often times my Austin clients ask me when the best time to sell a house is. This is a complex question with no one size fits all answer. The best time to sell your house depends on your needs. Some homeowners may not even have the luxury of asking when the best time to sell the house is. For example, if you are relocating for work and need to sell your house in order to purchase a new home, your options are much more limited.
That being said, there are certain times of year where home owners tend to sell for the most money. If you live in a family-oriented neighborhood with great schools, you likely want to consider selling your house in the summer which means listing your home for sale in the early spring. In Austin and elsewhere, families are often searching for homes in the spring. The home buying process from finding the right house, to getting an accepted offer, and financing can take a few months. People with children usually prefer to move in the early summer and not disrupt the kiddos during school year. If you are wondering when the best time to sell your Austin condo is, you will find vastly different patterns. I recently looked at the price fluctuations for condo sales located in downtown Austin near the University of Texas during 2016. Interestingly, I found that downtown Austin condos sold for the most amount of money in November. Alternatively, the best time to buy a condo in this area of Austin last year appeared in mid-March. I would hypothesize that these trends are similarly due to a correspondence with school calendars. Many investors and parents want to purchase these properties to rent to UT students. While you can get a great value in March, many students leave town for the summer break, and it will be more difficult to rent the condo. Another important component to consider when you are wondering if now is time to sell your house is inventory. Traditionally, at least in family-friendly Austin neighborhoods, we see more homeowners selling their properties in the spring. This is often due to one or both of the items noted earlier. The seller believes he/she will be able to sell the home for a higher amount in the spring, and/or the homeowner wants to move the family when it is convenient. Thus, often times there are less homes for sale during the non-peak selling seasons. When there simply are not any homes like yours on the market, you may want to consider selling your home. Determining the best time to sell your Austin area home requires a comprehensive understanding of the Austin area real estate market. Take a look at my video below in which my past client, Brittney explains her experience selling her Austin area home.
Take a look at my seller page if you think now may be the time to sell your Austin area home. You can learn more about the exceptional service I deliver to all my Austin clients. Alternatively, give me a call today and we can discuss your unique situation. Erika 512-779-7597.
Everyone knows that having a remodeled kitchen or a large backyard will affect the resale value of your home; however, did you know that being closer to a Starbucks correlates with a higher sales price? According to research from Zillow, “Between 1997 and 2014, homes within a quarter-mile of a Starbucks increased in value by 96 percent, on average, compared with 65 percent for all U.S. homes”
Having your morning cup of joe close by adds value to your home, but there are a number of items that may negatively affect the value of your home. You may want to use caution when considering a property with electrical poles on the lot. Many buyers fear electrical poles; be particularly cautious when purchasing a property with transformers on the lot. Some people believe these are linked to certain health risks. Others simply don’t want someone entering their property every time a major storm causes a power outage. I also recommend looking at the title policy closely when purchasing a property. Keep an eye out for any easements noted. These may be for utility companies or a variety of other reasons. Convenience to local transportation can also affect the value of your home. I have heard horror stories of people purchasing a home and later realizing that a daily train made such a racket they could not live comfortably in the house. Also be cautious of purchasing a property on a busy street. That being said, in some areas, being close to public transportation may actually be positive, thus, increasing the desirability of the property. These tips are good eye openers. However, they are not all encompassing. If you are considering making a purchase and resale value is important to you, contact a real estate professional for an in-depth analysis. Do you want to sell your home for the most money without spending a fortune preparing your home for the sale? Take a look at these 9 tips to increase your home’s value without breaking the bank.
1. Spruce up your front yard The first thing a potential buyer is going to see when they look at your home is the outside. You want to deliver a great first impression. Plant flowers in the front yard, power wash your sidewalk and porch leading up to your front door, and make sure leaves are raked regularly. It's also a good idea to put a fresh coat of paint on your front door. 2. Paint! A fresh coat of paint can do wonders for your home value. Paint the inside walls of your home a neutral color to brighten the room and make it appear larger. Cans of paint generally cost around $25, so grab a few and start sprucing up those rooms. If you don’t want to paint the entire wall, make sure to touch up any scratches or dings. 3. Replace handles and knobs You might not be able to afford brand new cabinets in every part of the house, but you probably can afford some new handles. Purchase new handles or knobs for your cabinets in the kitchen and bathroom to give the rooms an updated look. 4. Re-Caulk the Kitchen (and Bathrooms) Caulk can get yellow and brittle after a few years, especially around sinks and bathtubs. Make your kitchen and bathroom look like new by re-caulking. A tube of caulk costs around $5 and can update a home's look (and value!) 5. Match your Appliances Is your mix and match kitchen giving you a headache? Did you know, you don't have to buy brand new appliances that are all in the same hue – most appliances have front panels that can be removed and replaced. Give your appliances a facelift by buying matching front panels to give your kitchen a consistent feel. 6. Clean! I mentioned the first impression at the beginning of this post. If a buyer enters a home that's dirty, it will be hard for him or her to look past the state of the home. Clean your floors, windows, walls and baseboards. Give your home a good scrubbing. This will let in light, allow buyers to see the views and increase the marketability of your home. You will also want to de-clutter and de-personalize. Remove family photos and religious items. Another trick I like to tell my Austin sellers is to remove about half of the items in your closets and pantries so they appear larger. 7. Lighting Outdated fixtures can make a home less appealing to prospective buyers. You can spend a decent amount of money replacing fixtures, but you don't have to spend so much to get the same results! Purchase discounted lampshades to perk up an older lamp, and change switch plates on your light switches to give your home an updated look. Make sure your switch plates and outlets match throughout the home. 8. Replace faucets Purchase a new faucet for your sink and shower in your bathroom, and you'll increase your home value. Make sure the faucets for the sink and shower match – most of the time new faucets will cost around $30 to $60. It's not a bad idea to update your kitchen sink faucet, too! 9. Update your flooring Another part of the home that ages a house is the flooring. You may want to have wood floors refinished or concrete floors polished. Rugs or carpet that have gone out of style or seen better days can decrease your perceived home value. If you have enough money to replace the carpeting, go for it! However, if it’s not in the budget, you may want to display a sign with carpet swatches that advertises an allowance will be given to buyers to replace with their preferred carpet after closing. |
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