Buying and Selling Tips

Selling Tips

• Dress Your House for Success
• Home Improvement for Profit
• Setting Your Listing Price
• Why Use a Real Estate Agent?

Buying Tips

• The Benefits of Home Ownership
• The Buying Process

Dress Your House for Success

First impressions are probably more important in selling your house than any other factor except price. So, when you put your house on the market, it will pay to get it in tip top shape.

Look at your property as if you were a prospective buyer. Be critical and try to see its highlights and drawbacks. This can be difficult and you should ask your real estate agent for assistance. Below is a list to help you decide what you need to invest money in doing. Again, your realtor can be a valuable asset here.

Outside:

• Trim shrubs and hedges
• Mow the lawn
• Weed flower beds
• Repair walk ways and driveways and steps
• Paint walls
• Paint woodwork
• Paint/ or refinish front door
• Repair and clean screens
• Reorganize garage to eliminate clutter

Inside - general:

• Paint walls
• Clean windows and repair
• Clean and polish wood and tile floors
• Replace worn and dirty carpet (or have cleaned)
• Replace burned out light bulbs (brighter is better)
• Make sure doors and windows operate freely
• Fix light switches
• Fix sagging floors
• Repair and repaint cracks in walls and ceilings
• Fix leaky faucets
• Clear clogged drains
• Clean fireplace
• Un-clutter closets and storage areas
• Un-clutter hallways and rooms
• Clean kitchen and bathrooms
• Keep kitchen counters clear
• Open all draperies and or blinds to allow as much day light as possible
• Eliminate the odors of any animals or smoke.

Remember for every dollar spent wisely, you can return two or three more dollars!

When your agent is showing your home, it is usually best if you are not there. The potential purchaser will be more relaxed and ask more questions. Put any pets away during the showing. If you must be home, don't tag along. Let your real estate agent, who is the expert, show and tell.

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Home Improvements for Profits

Some home improvements projects do not add more value than the money it cost to have them done. An example is a pool. Therefore, if you are thinking of selling your home, choose the improvements wisely. A real estate agent can advise you on what will give you the best return.

While most general projects, especially large and costly ones, are out of the question, tightly focused improvements, particularly those that address specific problems, are a good idea for the seller. By targeting these deficiencies, a seller can not only recoup his or her costs, but perhaps see a significant return and make a shorter marketing period.

Aside from minor repairs outlined in the "Dress Your House for Success" article, here are a few points to consider:

• Does your home have three or four bedrooms but only one bath? In today's market place, this would be considered a negative since someone buying your home may have a large family. The better the location of the home the more important and more value an addition of a second bathroom is.
• Is your kitchen outdated? Colors and styles that were popular 20 or 30 years ago are unattractive today. The kitchen is one of the primary selling points of your home and it may be worth doing some updating. Depending on your location, these improvements can be as little as cabinet painting and hardware changing to countertop replacing or a full kitchen remodel.
• Spruce up you landscaping. You can hire a landscape architect for ideas if your property is large or simply do it yourself. Adding flowerbeds and shrubs can substantially increase your home's curb appeal and is relatively inexpensive.

Worst House in the Neighborhood

Homebuyers looking for a good deal buy the worst house in the area. This doesn't necessarily mean the house is run down, but is an "under performer" by area standards. An improvement to a house like this gives greater gains in market value. As a seller, there is no reason to leave these advantages to the next purchaser. Discuss with your real estate agent what improvements are necessary to bring your home to the general neighborhood standards.

Cost is a major factor here. The cost of renovation and construction is very high in Bermuda and care must be given to ensure that you recoup your investment and then some. Some sellers may not be in a position financially for these types of major renovations. At the very least, implementing some of the suggestion in the "Dress Your House for Success" article will add value.

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Setting Your Listing Price

Every owner wants the best price for his or her home. Several factors, including market conditions, availability of mortgage funds and interest rates, will determine how much you can get for your property. Setting the right price is important and is something you should do with a real estate agent.

The right price should:

• Attract buyers
• Allow you to earn the most money possible
• Help you sell as quickly as possible

Remember, price is the number one factor that most home buyers use to determine which homes they view. Also, although the price is set by you, the value of the property is determined by the buyer.

Proper pricing will give you:

• A faster sale and less inconvenience
• Exposure to more buyers
• Increased realtor response
• More advertising
• Higher offers, which means more money to you
• Avoids being "shop worn"

Remember, buyers will be comparing your property with others.

Common reasons for overpricing are:

• Over improvement- spent too much money for the location
• Need- I need to get this much in order to buy a better house
• Originally purchased too high
• Want to be able to negotiate down
• I don't need to sell
• Emotional attachment
• Opinion of family and friends

Dangers of Overpricing

Most of the activity on your home will occur in the first few days or weeks. Pricing your home properly will create an immediate urgency in the minds of agents, and buyers. There will be buyers waiting for the right house to come on the market and if the house is priced right, it will sell quickly. If the price is too high, you will have less interest and by the time you decide to lower the price, it may be too late. Even if a buyer agrees to pay an inflated price, quite often, loans get rejected based on the appraisal and time gets lost.

Buyers and agents become aware of the long exposure periods and often don't make offers thinking there might be something wrong with the property. It could also be used to help sell similar home that are priced lower.

Role of a Real Estate Agent

A real estate agent should be able to give you a comparison of the prices of recently sold homes that are similar to yours. He/she should also be able to tell you the replacement cost of your home at today's price. These help enormously in establishing a list price. There is no "exact price" for real estate. The market determines value and together you and your agent will determine price.

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Why Use a Real Estate Agent When Selling?

The selling process generally begins with a determination of a listing price. Your Real Estate Agent can give you up-to-date information on what is happening in the market place and pricing and condition of competing properties. These are key factors in getting your property sold for the best price and as quickly as possible.

The next step is marketing. Your Agent can help recommend repairs or cosmetic work that will increase the value of your property and its salability. Marketing includes exposure of your property through advertising and to other agents. Using other agencies to help sell your property is done through a co-broke agreement between the companies. The commission earned is normally split equally if one of the co-broking agencies introduces a buyer. This is an effective took in selling your property and ensures that all prospective buyers have had an opportunity to see your house. Make sure your agent is using this method to help secure the highest possible price for your property. Advertising can occur in newspaper, magazines, company websites, and voice media. Your agent will know where to advertise and how often. Over exposure in the media may give the buyer the impression that the property is distressed or the seller is desperate.

Your real estate agent also pre-screens potential buyers to ensure that they are serious and pre-qualified. They also accompany prospects through your property and ensure security.

After obtaining one or more interested buyers, the agent can help you objectively evaluate every offer and help negotiate the best possible price for you. Your agent will also help guide you through the contract stage once a deal is successfully negotiated and monitor the progress of the agreement until closing. The negotiating process, preparation of the sales agreement and follow up to ensure all conditions are met, can be a frustrating and confusing process. Your agent is there to take care of the details and make sure you have the best deal possible.

Real estate transactions involve one of the largest financial investments most people experience. In Bermuda today, transactions total hundreds of thousands of dollars and often millions. If you had that money to invest in stocks, would you do it without the help of a financial expert? So why would you sell your home without a real estate agent? The cost can be very small considering what could go wrong, and the peace of mind knowing that you received the best price in the current market.

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The Benefits of Home Ownership

With every rent check that you write, you build equity in your landlord's property. This money could be going towards building equity in your own home. There are many advantages to owning a home including:

Security

Security is a feeling that comes with owning a home. You are no longer at the mercy of a landlord who can increase the rent or even evict you at any time. There is also security against inflation. As prices increase, so does the value of your home. As rents increase, you have the security in knowing that your mortgage payments will remain the same.

Investment

As you make mortgage payments, you increase your equity in your home. As your principle reduces, your equity increases. As you make improvements to your home, you will also add value.

As equity markets have shifted wildly in value, Bermuda real estate has increased significantly making it one of the best investments you can make.

Cash Equity

Over time, home ownership is better than a savings account. As time goes on, in addition to reducing your mortgage, the value of your property goes up increasing your equity. This helps establish financial credibility and gives you and asset from which you can borrow additional funds to do things such as improve your home, buy a boat, or even acquire another home.

Satisfaction & Stability

These are the feelings you have living in a neighborhood where your children grow up and may have friends. You can make changes to your home as you see fit. Home ownership also offers the advantages that make life more enjoyable such as back yard barbeques, large family gatherings during holidays of a home workshop.

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The Buying Process

So you have made the decision to buy a home. The following are the steps in the home buying process:

1. Figure out what you want. Sit down with all the decision makers and decide what is important to you so you have a clear idea of what you are looking for. Remember the market in Bermuda is limited, so keep and open mind and don't restrict yourself with too many criteria.
   
   
2. Get pre-approved. You have some idea of what you are looking for, now you need to know how much you can spend. In the highly competitive Bermuda market, this is a must. Today most vendors won't even consider an offer from someone who has not received pre-approval. This is also a good exercise to see if your expectations for your new home fit within your price range. It is also a good idea to discuss your financing with several lending institutions. You may find one willing to lend you more than the others.
   
   
3. Get a Real Estate Agent. You know what you want and have been pre-approved. Now you need to sit down with a real estate agent to help make your dream a reality. A real estate agent has in depth knowledge of the current market conditions and what is available for sale. The agent can also give advice on whether your level of financing can support your expectations. The buying process can get complicated and very frustrating and your agent can help you through all of this.
   
   How do you choose an agent? The best source is referral from friends or colleagues. Ask around and find out what experiences others have had with agents. You are likely to find one or two that come highly recommended. Other sources are the local paper, or the yellow pages of the telephone directory. In a difficult market where supply is limited, you may want to consider using several agents to help in your search. Also, if you see a property advertised by a competing agency, don't be afraid to contact your agent. He can follow up and get all the details and show you the property under a co-brokerage agreement.
   
   
4. Look for your new home. This can be the most frustrating process. It can take several weeks, months or even more than a year. The key is to remain patient and keep an open mind. Tell your agent that you would consider something a little smaller if it has potential to add on, or a little larger if it has an income apartment. This gives you more options and can shorten the time it takes to find your home. With the limited land resource in Bermuda , you may not find exactly what you are looking for, but with the help of your agent, you should be able to find something that satisfies your short and long-term goals. When looking at homes, be sure to tell your agent what your like or don't like. This will help your agent in his/her search.
   
   
5. Choose a home. You find a house that meets your needs and you are interested in buying. Every home has an asking price established by the seller. At this point, you have three options:
   • Accept the price and go to contract
   • Reject it
   • Make a counter offer which the seller will either accept , reject or make a counter offer

   This is where the pre-approval is so important. At this point, you know how much you can afford to spend. The negotiating process can take a bit of time and can be frustrating. Your agent should guide you through. Some important points to remember when negotiating are whether you want to make an offer subject to such things as:

   • Financing (pre-approval does not guarantee the bank will finance the purchase- it will be subject to an appraisal)
   • Structural Survey
   • Boundary Survey/ Staking
   • Specific Closing Date
   • License ( if you are non-Bermudian)
   • Or any other condition you may deem necessary

   Remember, the more conditions, the less desirable an offer becomes, however, you always want to make sure that you are protected. This would be a good time to engage the services of a lawyer.

6. Go to contract. As the purchaser, you have the choice of which lawyer will convey the title of the property from the current owner to you. This lawyer will also help negotiate the contract and give your any necessary advice. The contract, which is normally a standard Bermuda Bar Association Agreement, will list details of the seller and purchaser as well as general conditions and special conditions i.e. subject to financing, structural survey, boundary staking, etc. Any advice a lawyer gives to you in structuring this agreement is at your expense. However, the cost associated with the transfer of title (legal fees and stamp duty) are normally split between the seller and purchaser. This can also be a point for negotiation. Discuss this with your agent. Once there is an agreement on all the terms of the contract, then it is executed by all parties involved. The purchaser signs first and places a deposit (normally 10%) to secure the property. Then the seller signs and finally, the agent. It is at this point that the purchaser and seller must, in good faith and in a timely manner; attempt to satisfy all conditions that relate to him/her. If a condition can not be met by either party and is not renegotiated, then the agreement will be considered null and void and the purchaser will receive his/her deposit back.
   
   
7. Completing the sale. If all conditions have been met on the sales agreement, then it becomes fully enforceable on either party. The deposit placed by the purchaser is non-refundable and is paid to the seller in the event of purchaser default. This occurs very rarely and the normal closing period is 30 days from the satisfaction of all conditions as set out in the Sales Agreement. Why 30 days? Well, once all conditions have been met, your lawyer will notify the Department of Planning of the sale. They, in turn, require up to 28 days to inspect the property for any illegal development. After this time, the property is deemed to be free from any development that contravenes the Planning Act. This is an important step and should not be missed. If you take possession before the Department of Planning has inspected the property, then you become liable for any illegal development which may have occurred prior to your ownership.

   The closing period can take longer for various reasons, but it is normally negotiated into the contract. It is important to notify your lending institution of the closing date. At this point, you may also consider insuring your property which your agent can also assist.

   Typically, the day of closing or the previous day, the purchaser will sign the conveyance documents then the seller will follow. All funds are placed with the purchaser's lawyer including the deposit, less any commissions. The purchaser's lawyer will then disburse the funds, including paying any mortgages or liens on the property. The lawyer then gives the balance to the seller, keys are exchanged and the deal is closed.