The Top 5 Mistakes Made When Preparing to Sell a Home by Owner in Boise, Idaho.
If you’ve been thinking about how to sell your own home in Boise, Idaho but have come up empty-handed, we understand. There is a plethora of bad information out there when it comes to how to sell a home by owner, between “professionals” with inaccurate data or who are misinformed when it comes to market valuation to incorrect numbers with regard to the speed at which you need to sell.
We’re going to break down the top five mistakes Boise, Idaho home sellers make when searching terms like “how to sell home by owner,” while introducing solutions that can be tied in and taken advantage of – all in an easy-to-follow, cohesive style so that you can avoid these pitfalls moving forward.
1. Inaccuracy Or Misinformation On Market Valuation
While modern technology has made it much easier to keep up with a home’s value – or at least a computer’s best guess of a home’s value – many Boise, Idaho home sellers are still inundated with inaccurate market valuation data for their property. Once you have decided to sell your property, you will need to get an accurate valuation of your home in order to determine the potential sale price.
A. Understanding Your Property Value
I. Market Trends in Your Area
The snow will soon become a distant memory with spring just around the corner, and the real estate market in the Boise area will build momentum until July – prices will then jump. The Boise housing market typically softens in the fall (but no guarantees) and prices are generally on the rise between six and eight percent or more by then. Homes for sale in Boise are usually slowed due to the nasty winter weather, but strong demand and short supply pushes home prices higher.
II. Schools, Churches, Parks, etc. That Can Sway Price
For the right buyer, an amenity such as a dog park could be a very strong selling point; indeed, property value, and the appeal of a particular home to a potential buyer is determined by a myriad of factors all working together. Parks, like community pools, tennis courts, and schools, are features of an area and will appeal to those who are looking for these amenities within their community/subdivision. Parks won’t make any particular home go up thousands of dollars in value by itself, but in combination with other amenities within a community such as schools, churches, etc., it will help make a particular neighborhood feel more complete – thus giving your home a higher value.
III. Keeping Your Finger on the Pulse of the Local Market
Whether it’s buying or selling, it is crucial to know what is happening in your local real estate market because after all, real estate is always local. When considering how to sell your own home, it can help you to stay abreast of what homes are selling for in your area, and can help you price your home competitively; this way, you will be able to evaluate offers quickly and get the net bottom line you want.
B. Valuation of Additions and Repairs
I. Here, we’ll be taking a look at what is going to “raise the needle” and increase your property value with the most impact related to cost-per-dollars spent.
1. Square Footage – In general, the cost of construction is less than purchase – so, for example, according to Trulia the average price-per-square-foot is about $200. If you could build a bedroom for $100 per-square-foot, you’d be “making” $100 profit-per-square-foot. The first thing to consider is how much value it will add to your property; whether spending $1000 or $50,000, if it only brings back the same exact value, your money has not been well spent. You want to add value at a ratio of at least 1.5:1, meaning for every $1.00 spent you yield $1.50 in property value.
2. Bedrooms – Adding a room to a home can easily cost thousands of dollars; if you build a new master suite, you might see a 66-percent return on your investment. However, bedrooms are another thing entirely when it comes to a home’s value – adding another bedroom to your home makes your house appealing to a whole new group of buyers. Save money on renovations by dividing a large space with a wall in order to form an extra room. Take this a step further by adding a bath to this bedroom, creating a master suite, and you have a much more compelling layout for prospective buyers.
3. Kitchens and Baths – People buying a house look first at kitchens and baths, so while these rooms can be the most costly to redo, they’re more likely to pay for themselves. In the Boise market, on average, you will net a 2:1 ratio on these repairs and additions, based on the condition of the current kitchen or bath.
4. Bonus Amenities – Some value add-ons in this area include dog areas, gardens and basketball courts, storage sheds, man cave shops or ADU (accessory dwelling units – mother in law suites).
C. Different Pricing Methods
Despite many nay-sayers on the subject, the price-per-square-foot does hit home runs when considering how to sell a home by owner. To achieve accurate results with price-per-square-foot analyses, you must follow key guidelines, including:
• Understanding the Truth About Improvements – Data shows that although upgrades generally make a home more sellable, most add little or nothing to the actual value, only increasing it at the same cost of the repairs – a 1:1 ratio.
• Using the “Thirds” – The bottom one-third of homes for sale include properties wherein the condition, improvements and/or location are not comparable to the upper two-thirds; specifically, the top price is limited to the properties in the best condition and best locations.
• Marketing Knowledge – Cost-per-square-foot analysis works best when you have a solid grounding in local values. But beware of the house with huge square footage, but cheap fixtures, electric base boards, or other non-desirable features. Although the cost per square foot may be similar, the reality is a comparable property may be far worse than the one you’re are trying to sell.
II. Market-Based Criteria
Beyond cost-per-square-foot, a home’s value can be determined by:
• Running a comprehensive report that takes into account the final sale price of any recently-closed homes within a 1-2 mile radius and of similar size and bedroom count.
• Looking at nearby “For Sale” (Active Listing) and Pending Listings.
• Determining the “solds” within a certain time frame (usually no more than six months back from current date).
• The current market and information gathered based on what has sold comparable to your home and what’s located in your neighborhood.
2. Accepting Offers With Government Loans From First-Time Home Buyers
As the home seller, you may have to comply with FHA or similar guidelines to make sure the property is able to be accepted by the lender as collateral. First, let us state that, as a seller, you are limiting your buyer pool significantly if you’re not open to make repairs; unless the buyer pays cash, there will probably be issues getting any kind of financing if the property deficiencies are major.
Appraisers approved for FHA financing know the FHA MPS requirements, and as such when they see something that doesn’t meet FHA guidelines, they note it in the appraisal. Until the issue is resolved, the lender won’t issue a final approval for the loan. But sometimes, the FHA underwriter – the one who verifies compliance with FHA standards for the lender – will notice something in the appraisal pictures and call for it to be fixed. A good example of this is peeling paint or a questionable roof.
3. Speed At Which You Need To Sell
Remember: Time is money. It takes the average home, on average, six weeks to close a sale – and that’s once a contract is signed. This also leaves the possibility of experiencing a “sale pending” status that may fall through, leaving you back to square one. It’s no secret that an overpriced home takes longer to sell for a lot less than market value; in a high-demand market, a well-priced home could sell within 3 to 10 days.
Sometimes, there is no logical reason for the length of time it takes to sell a home; it could be sheer luck (as in “the right place at the right time”), a house could come on the market on the very day a specific buyer is looking to buy such a house…but more likely, the answer to how long it takes to sell depends on four factors:
• Target Buyer
4. PROCRASTINATING ON REPAIRS AND NOT TIMING THE SALE FOR OPTIMAL TOP DOLLAR
Putting in a little work or money on the front end means you stand a better chance of avoiding costly repairs down the road, and it will also pay off when you want to sell your house. If you keep up maintenance on the home, you likely won’t have to make a lot of costly repairs – or drop the purchase price to account for them – before you close the sale.
A. Certain Times of the Year Statistically Get More Money-Per-Square-Foot Than Others
The time of year can affect how you sell a house, too; if you have a choice, it may be best to sell your home at certain times of the year, such as the spring or summer. It also depends on what part of the country you live in – in this case, we’re talking about residents of Boise, so let’s take a more focused look at this geographic area. While most of the snow has melted, January’s historic snowfall had an effect on the local real estate market in Boise. Though purchase activity was down in January compared to last year, it was up from the previous month.
Here are some statistics:
• In January 2017, 1,037 homes went under contract in Ada County, down 6.5-percent from January 2016, but up 5.4-percent over December 2016.
• In Canyon County, 432 homes went pending in January 2017, down 1.6-percent from January 2016, but up 11.3-percent from December 2016.
• Homes that are pending typically close within 30 to 90 days.
Still, even with all this data, inventory of homes in Boise is needed in all price points in all communities, especially among homes priced below $250,000 – so you don’t have to wait until spring.
B. Best Times to Sell
Timing is everything when it comes to a home sale. Getting your asking price and even attracting multiple buyers many times comes down to the time of year, and this applies to Boise, as well.
As we touched on above, spring brings rain and flowers – and possibly extra green in the final sales price of your home. Families like to move during the summer when there’s a break in the school calendar so they don’t have to pull their kids from class; plus, it is often easier to move in the warm months than during winter snow storms. If you are selling your home in the fall, you can stage your open house with the warmth of the turning season to add to the appeal.
Accentuating your landscaping with seasonal decorations such as pumpkins and gourds will appeal to the potential homebuyers.
C. Some Downfalls of the Whole Process
We cannot emphasize enough how much work it is to plan, coordinate and manage the project of selling your home, as well as managing contractors that may be needed for repairs, etc. Additionally, it’s a ton of work to even come up with a plan to remodel a house, to say nothing of executing the plan – it takes a ton of time to actually put the whole thing together and into motion.
Then, there’s the cost of missing opportunities to spend time with your family or on personal hobbies or interests; you must weigh just how important this is going in.
. A Real Estate Agent Takes on the Liability – That’s Why They Have a License
So one of the benefits of going with a real estate agent to sell your Boise home is that he or she has a license to take on the liability involved. If you sell your home yourself without the assistance of a real estate agent, you can save money on commissions – however, you take on the liability for different aspects.
Let’s take a brief look at that now:
B. Liability Issues When Not Hiring an Agent
A lot of legal paperwork is involved in a home sale, and it needs to be completed correctly by an expert. One of the most important items is the seller’s disclosures – the seller can be held liable for fraud, negligence or breach of contract if he/she does not disclose properly. Unless you’re a real estate attorney, an agent probably knows more about Idaho disclosure laws than you do.
Here’s an interesting statistic:
According to the National Association of Realtor’s 2013 Profile of Home Buyers and Sellers, the average for-sale-by-owner (FSBO) sales price was $174,000 while the average price for a home represented by an agent was $215,000 – a difference of $40,100. Now, that said, those looking to sell to an Investor can wipe their hands clean of the property, save loads of time, effort and headache, while getting a fair price for their property when selling in as-is condition. Further, that $40,000 average increase is going to be eaten away by paying the real estate commissions on the sales price, dropping the value of using agents.
Here’s what we can tell you as seasoned experts in the Boise realty market: Spending a ton of time on your property by your own hands and not increasing value is a hardship you don’t want to experience. This is easily avoided by using your new found knowledge of your local real estate market, seeking advice from others and talking to an investor who will give you straight answers and not waste your time.
If you find yourself facing foreclosure and unable to find tenants or maybe just inherited a home, in any case, we can help you sell your home in Boise in 7-10 days. If you’re thinking of selling and are exploring your options, consider selling directly to us.
Call our team at (208) 214-3365
If you don’t want to go through the hassle and headache of selling to the market, then we might be able to help. We’ll give you a quick call once we find out a bit more about your property in Idaho, and make you an offer on your home the same day.