Preparing Your Home for Sale

If you google the title of this blog post, you’re going to find a ton of advice and it’s all going to sound pretty similar. Most of it is not incorrect, but some of it is impractical, especially when you’re trying to use all available funds to purchase your next home while also juggling a full time job and shuttling your kids around town (for example). So here are my tips for your top priorities on how to get your home to show its best without (hopefully) breaking the bank or your will.

• Clean like you’ve never cleaned before, maybe more than once: scrub the floors, wipe down the walls and baseboards, make those windows and sills gleam. If that stained caulk in the bathroom just won’t get white or clear again, it’s time to re-do it (this is really simple and inexpensive!). Steam clean the carpets. And the curtains. And the sofa. Are you worried about being judged for your obviously used oven, refrigerator and dishwasher? You’re not wrong, so clean those too. Hiring professional cleaners for a one time deep clean might be worth the expense. You can head to the dog park for a day and come back to a neat and tidy home.

• Declutter, donate, and depersonalize: It’s time to go through all those junk drawers and garage shelves and start clearing out what you don’t need! If there are usable items that you don’t want to just throw away, donate them. If there are 10 pieces of decor on the wall, pare it down to 1 or 2. Box up the rest, or for family photos that you love but are ready to replace with more current pics, digitize them and keep the frames for later use. In fact, it’s time to box up anything you can live without seeing for the next 3 months: seasonal clothing, sports equipment, collectibles and keepsakes, etc. Buyers understand that you’re moving, so they’re not going to be shocked that you have a stack of boxes in your basement or garage.

• Complete your “honey do” list: chances are there are projects that you’ve had on your mind that you never ended up completing. If you never finished repainting the bathroom or replacing the flooring in the half bath, or if you already bought new outlets or register covers to replace the old ones, it’s time to get on that. There are probably local handyman services that can help you if the list is a little longer, and paying a few hundred dollars to complete finishing touches can make a huge difference to prospective buyers.

• If it’s broken, fix it: I’m sure you’re used to that faucet that drips if you don’t position the handle just so, but an inspector is going to make a note about it that is going to get some buyers believing that the plumbing is faulty throughout the home. If you have a non-working outlet, leaky faucet, door or window locks that don’t work, cabinet doors that don’t stay closed, or anything that might lead a buyer to believe you haven’t taken exquisite care of this home, please for the love of all the money you’re hoping to make on this sale…just fix it.

• Ask your agent about the best use of your fix-it dollar: if you are considering doing something more substantial to your home before selling (like replacing the roof, updating windows, or renovating a bathroom) and have a specific budget in mind, it’s time to talk to your agent about what buyers in your market are looking for in their next home. It might make more sense to have some items, like the roof, professionally evaluated rather than replaced. Or if that powder room is the last bastion of the 1970s in your home, updating it might have a huge impact. If you’re worried about a big ticket item that could turn away buyers and you can’t afford to fix it, you should probably get an inspection along with a quote for any repairs so that prospective buyers are prepared rather than scared.

But wait, you’re thinking, I thought this was going to be a short and easy list? If you’re questioning the necessity of any of the above, just look at it from a buyer’s perspective: if there’s something in your home that would be a turn-off in a home you’re touring, chances are other buyers feel the same way…so you need to address it.

What Do Sellers Have to Disclose?

Ohio and Kentucky both have laws regarding what a seller needs to disclose about a residential (1-4 family) property when selling, which types of sellers are exempt from those disclosures, and specific forms with detailed questions about the property. There are also several misconceptions about what a seller has to share, and about the consequences for doing so. Before I get too deep into this, please note that I am not an attorney, so what follows is not intended to be legal advice — just what I would advise any real estate client based on my experience.

The point of a property disclosure from the seller is to share any relevant material facts about the property, especially those which might not be obvious at first glance or even during an inspection. As I tell all of my sellers, it’s also the perfect opportunity to show that you fixed the issues that came up, developing some trust with the buyers that you’re not trying to hide anything. Leaky roof? That’s fine, you replaced it with new 30 year shingles. Heat pump failed? No worries, you replaced it with a more efficient one. Bathroom sink leaked into the room below? You had everything fixed professionally, some drywall replaced, and everything repainted.

Something I see often that concerns me are disclosures from non-occupant owners (usually investors) with the phrase “never occupied the property” and sometimes “seller has no knowledge about the property". What a ridiculous thing to say! Unless you only owned this for a short time and never had anyone lay eyes on it, you definitely know something about the property, such as whether it’s on public water and sewer — pretty sure you know which bills you had to pay, so why not answer that question? Many investment properties have been in the same hands for years, though, so if you’re a landlord who has had any work done to your investment property, speak up. You’re just leaving yourself open to potential lawsuits if you don’t, and making it harder for buyers to evaluate your property. If you made any repairs or upgrades, brag about it! If you get that boiler serviced annually, tell the world! You will automatically sound more responsible and respectable than other sellers.

I mentioned earlier that some sellers are exempt from completing the property disclosure form, which is true. The Ohio Association of REALTORS lists the following conditions as possibilities:

1. A transfer pursuant to a court order, such as probate or bankruptcy court;

2. A transfer by a lender who has acquired the property by deed in lieu of foreclosure;

3. A transfer by an executor, a guardian, a conservator, or a trustee;

4. A transfer of new construction that has never been lived in;

5. A transfer to a buyer who has lived in the property for at least one year immediately prior to the sale;

6. A transfer from an owner who both has inherited the property and has not lived in the property within one year immediately prior to the sale;

7. A transfer where either the owner or buyer is a government entity.

Kentucky doesn’t allow for quite as many exemptions. According to their Seller’s Disclosure of Property Condition, the only situations in which the form is not required is if the property is new construction and being sold with a warranty, or it is being sold at auction, or it is a court supervised foreclosure. It’s also worth noting that the Kentucky form is much more thorough than Ohio’s, and many of the questions are very specific with follow-up questions where applicable. While you always have the option to not complete these disclosure forms (we can’t force you), failure to disclose a material defect in a property leaves you open to legal consequences. Also, if you tell your licensed real estate agent about a material defect that you don’t include on the disclosure form, they are legally and ethically bound to share that with any potential buyer, so you might as well err on the side of honesty.

Last week a buyer asked me whether a seller in Ohio needed to disclose any deaths in the home. It’s not the first time I’ve been asked this! The short answer is no, there is no question on the property disclosure form that covers this and for most deaths that occur in the home (the peaceful passing of an elderly person, for example), there would be no material issue with the property as a result. However, a seller should probably disclose if there was a more unusual situation — suicide, murder, accident, etc. I had a listing a few years ago that was next door to another active listing where a well-publicized kidnapping and murder had taken place. I don’t know whether it affected my client’s sale, but I am sure that many prospective buyers of that neighboring home would have been very upset to not be informed about the history of that home before they moved in.

I’ve heard many questions that no seller has to answer, although it can’t hurt to ask the question if it’s important enough to my client. Examples include the sellers’ reason for moving, where they sent their kids to school, whether there is good wireless service in the house, how often (if ever) the ductwork gets cleaned, whether the sellers have noticed any ghosts, what the neighbors are like, and so much more. As a seller, be ready to answer as many questions as you can, especially if it gives you positive information to share — buyers feel more confident about making an offer and more understanding about their home inspection results when they have as much information as possible from you. This means quicker offers and a smoother transaction!

P.S. Every state has different laws, so it’s important to consult a licensed real estate agent and/or an attorney who specializes in real estate law if you have any questions or concerns about what you should share about any property you are selling.

Do I need a home warranty?

There is a lot of information in your average residential purchase contract, but one item that trips people up pretty frequently is the home warranty. You're already getting homeowner's insurance, so why on earth would you need a warranty, and why would the seller be willing to pay for it?

Your homeowner's insurance policy covers damage to your home and some things on your property, such as the tree falling on the car in the driveway scenario (which hopefully only happens in commercials). However, it probably doesn't cover your furnace, hot water heater, or appliances. That's where the home warranty comes in! Home warranties are becoming more common, with many sellers offering to pay one year of coverage for a prospective buyer, especially since many warranty companies will cover the home during the listing period for free if the home warranty is purchased at closing. The price for a year is usually between $400 and $500 in the Cincinnati area, with additional premiums for multiple HVAC systems, septic tanks, and other less common features. An added bonus: You can apply for a home warranty at any time, not just when you're buying or selling your home. 

Not all home warranties are created equal. Comey & Shepherd works with HMS Home Warranty because they have a solid reputation for good service, but there are a lot of options out there so be sure to talk to your agent for advice. And if you have a little extra income, the best alternative to a home warranty is setting aside money each month for a home emergency fund. There a several ways to calculate this, but several sources suggest saving 1% of your home's value a year, or 1/12% each month.

Improved Market Activity In February

View fullsize

One of several infographics from the February 2015 survey report

The latest REALTORS(c) Confidence Index survey has been released to those who responded to the survey -- like me -- and it has some good news for those looking to buy or sell this year. For those of you unfamiliar with the survey, it is sent by the National Association of REALTORS each month to 50,000 randomly chosen members, as well as to respondents in the previous three surveys who provided an email address.

So, what's the news? February showed increased market activity across the nation, supported by easier mortgage access and the recent decrease in FHA mortgage insurance premiums. Also, REALTORS in every state were very positive about the outlook for single family homes in the next six months. Buyer traffic did continue to outpace seller traffic in February, so it's not just me wondering where all the homes are for my buyers (great time to list, everyone!). Showings were down overall in February, but since this has been the trend for the past two years and it was a snowy winter month for many of us I'm not terribly surprised. REALTORS expect that prices will increase modestly over the next year -- not another bubble, just a gradual increase partly due to high buyer demand and lower inventory. Homes are taking about a week less to sell than reported in January but about the same amount of time as February 2014; over a third of homes sold within 30 days.

There's plenty more information in this report, but those are the highlights. You'll be able to see it for yourself at the NAR website later this week.