When Henry David Thoreau said, “Simplify, simplify,” he probably was not referring to the process of buying or selling a home since such transactions often prove to be some of the most complex.
For many, buying or selling a home is a transaction they may undertake only once or twice during their lives. Therefore, it is important to solicit the assistance of a Realtor, gain an understanding for the process, learn the basics and be attentive to the details. Collectively, this type of preparation will provide for a smoother transaction and reduce the anxiety often experienced when buying or selling a home.
Selling a Home
Choosing a Realtor can serve as an excellent beginning for both buyers and sellers. Realtors are specifically trained to facilitate real estate transactions, providing experience and understanding of the process and ultimately saving clients both time and expense. While sellers do sometimes opt to market their homes themselves, the Realtor offers a marketing plan, advice on preparing a home for sale, consultation as to the appropriate sale price, and assistance in identifying any repairs or maintenance that may be necessary.
Determining a competitive sale price involves developing an awareness of the strengths and potential weaknesses of a particular home. It is commonly noted that the three most important factors contributing to real estate value are, “Location, Location, Location.” Certainly, the area in which a property is situated is a major factor in its value. Further, the floor plan, style, number of rooms – particularly bedrooms and baths – must be considered. A review of the prices of comparable homes already on the market and of those which have recently sold will also assist in the establishment of a sale price.
“You’ve got to do a lot of preparing and staging to sell a home,” says Jennifer Grayson, a Realtor with Fletcher Bright Company and president-elect of the Chattanooga Association of Realtors. “All sellers want their home to sell fast and to bring top dollar. It takes careful planning. The first thing I tell people is to make a mental decision to let go of their emotions. If you really want to sell your house, you’ve got to mentally prepare and get it ready for the market.”
In addition, Grayson advises that a seller put their home in tip-top shape. “Declutter the home because a buyer needs to start mentally placing their stuff in the house,” says Grayson. “You want the buyer to say, ‘I can see myself living here.’ Pack up personal photos and family heirlooms. If a potential buyer gets caught up in other stuff, they will look at those things and not the floor plan. Clean the kitchen counters and rearrange the cabinets and the closets because people will look inside. Really, then just make minor repairs. Appearance is a big thing. Fix that leaky faucet or cracked tile. Replace burned out light bulbs. Wash the windows, and make the house sparkle.”
Spending a little money up front may add to the appeal and sale price of a home in the coming days. “A $20 repair to a toilet to keep it from running will net you $100 or more when selling,” advises Vicki Trapp, president of the CRS/CRB (Certified Residential Specialist/Council of Real Estate Brokerage Managers) Council of Chattanooga and the Broker for the downtown Chattanooga Crye-Leike Realtors office. “Not everyone can afford to have a decorator come in, but if a house is clean and neat and everything is working well, you will get top dollar. Make sure there is plenty of light, that the curtains are open, and that the house smells good. Make sure your pets are outside. People love animals, but they don’t all like them being in the house.”
Buying a Home
For home buyers, an important initial step is to determine how much they can afford. Mortgage lenders are willing to assist in prequalifying purchasers. This process generally includes providing personal financial information so that a potential borrower’s credit analysis and ability to pay may be measured in comparison to industry standards. Lending professionals and Realtors may also advise buyers on interest rate programs, required cash down payments and other loan terms.
“I talk with clients about preapproval and help them choose a lender,” says Grayson. “They need to know what their buying power is, and when we write an offer, we want to provide a letter to the seller that says we are preapproved and ready to go.”
Trapp agrees: “For buyers, the first thing to do is to go to your bank and ask them to qualify you to purchase. After you determine how much you can spend, you should start looking in real estate magazines, looking on the Internet for homes, and checking the open houses in the Sunday newspaper. What most people will do is drive the area they want to live in. Then, they will call the listing agents who have placed signs in the yards of houses that are for sale. Some people may have a friend who is a Realtor or know someone they go to church with who is in real estate, but most call the name on the sign.”
By the time a buyer is prequalified, has identified an area, and has evaluated some homes that may be of interest, a Realtor is already engaged, offering suggestions, arranging appointments for showings and then writing the offer. Of course, negotiation often ensues. Sellers may accept, reject or make a counter-offer. At this stage, an experienced Realtor provides insights and options that can be used to reach an agreement.
“I advise my clients not to make an emotional decision,” says Grayson. “Sometimes when they find a house they really like, their emotions will take over. Look at comparable sales in the neighborhood to see if the price seems right. Look at the facts so you can write a reasonable offer. A good Realtor can lead you through that process. A buyer should also get a home inspection so that they know everything they can about the house they want to buy. It is hard not to be emotional, but it is essential to do all your due diligence.”
Gaining an understanding of associated costs such as title insurance, appraisal, survey, recording fees and taxes, escrow contributions for homeowner’s insurance and property taxes, and other expenses is critical for a home buyer. Many aspects of a sales contract are negotiable, and the buyer who consults a real estate professional, seeks preapproval, invests the time and energy necessary to educate themselves on the dynamics of the market, and makes informed decisions will find the entire process to conclude as smoothly as possible.
“The role of the Realtor as a buyer’s agent is to assist the buyer in finding a home, getting it inspected and negotiating a sale price in which the closing is a win-win situation for everyone involved,” says Trapp. “Realtors are there to help the buyer and the seller get the best deal possible.”
The Keys to Financing
Of course, the financing arrangement is essential in closing a home purchase, and mortgage lenders perform a key function in the process. Many loan programs are available and choosing the right terms for an individual’s financial situation pays off in the long run.
“Someone considering buying a home should talk to a mortgage professional before they even begin looking for a house,” says Molly Haynes, vice president and mortgage services manager at CapitalMark Bank & Trust. “A mortgage originator will help a buyer with the entire process of buying a home, from preapproval all the way through closing and beyond. An originator will help determine the price range that best suits the buyer’s financial situation. Having a preapproval letter is also a great tool when making an offer to a seller.”
The recent economic downturn has affected the mortgage market and the financing process, making the role of the originator more critical than ever. “Someone buying a home today needs to be prepared to understand that the mortgage world has changed drastically,” explains Greg DeMars, a mortgage loan officer and relationship manager with First Tennessee. “Money is still out there, and we still have plenty of money to lend, but the process is much more detailed. I tell all of my customers, ‘Don’t get your feelings hurt. Just work with me. My ultimate goal is to get your loan closed.’ We are fortunate at First Tennessee to offer many products to help a wide range of customers, from first-time home buyers to the seasoned investor, including jumbo financing.”
According to Haynes, sellers should consider the net dollars they need to realize in the sale of a home, as well as their available timeline from listing to closing.
“In our current market, sellers are going to see all kinds of different offers,” says Haynes. “Some offers may be really low and could discourage a seller. If a seller knows up front exactly what they need to profit from the sale and what timeline they have to sell the property, it will help the seller stay confident in the market and wait until the right offer comes along.”
Despite the recent news concerning the housing market, real estate professionals assert that the time is right to buy or sell a home in Chattanooga. Much has been written and discussed about “bargain basement” prices or getting a “steal” in a foreclosure situation. However, the local market has remained remarkably stable in the midst of the nationwide turmoil, although there have been some peaks and valleys.
“I think the media has done a great job of alerting everyone as to the times we are in when it comes to the real estate industry,” says DeMars. “Fortunately, we have not experienced near the crisis other areas in the country have. It is definitely a great time to buy or sell. We have a perfect storm going on in the housing world right now – great prices and great rates. We have had one or the other previously, but in my 20-plus years in the business, I can’t remember a much more opportune time.”
“We are fortunate to live in such a great area that has not seen drastic decreases in property values,” notes Haynes. “We, as a community, need to help keep our area great by being involved in the market – buy and sell.”
Those considering buying or selling a home may take advantage of an extraordinary opportunity today, particularly in the Chattanooga area. An active local real estate market is a cornerstone of a healthy economy, and buyers and sellers are positioned to reap the benefits of current conditions. In either case, knowledge is key. Understanding the process and enlisting the assistance of a qualified real estate agent and a dedicated mortgage originator will enhance the experience.