5 Things to Consider As You Get Ready to Sell Your Home 

1. Find a competent real estate professional you feel comfortable with.

A real estate professional will be prepared for their listing presentation and be cognizant of what is happening in your community. A real estate professional will provide comparable sales and other market analyses of your home and show you how they have determined your home’s value. The sales process is arduous and you will be spending some time together so choose wisely! Do some homework and make sure you are picking a real estate professional who is the right fit for you and your needs.  

2. Price it right the first time!

By far, this is the worst mistake most sellers make. By reaching for the moon and stars on the value of a home and overpricing it, a seller can miss opportunities within the marketplace by scaring away potential prospects. In perpetuation of this grave mistake, a compounding side effect is the lack of interest accruing as the days on the market keep ticking by. A listing that has been on the market for a while makes buyers question what is wrong with the home as clearly there must be something or else it would not be available. More times than not, there is no issue with the home just a misconception from buyers that if it was great, it would be sold. The solution here is to listen to you realtor. They have knowledge of the current marketplace and want to see you succeed in your sale. More often than not, you are not going to be the one to set a new sales price record in your neighborhood. 

3. You will have buyers coming into your home regularly. Be ready for them!

Your house should always be show ready once you are on the market for sale. You should be ready, willing and able to accommodate all showings. Daily upkeep is important as buyers will want to see every corner of your home and YES they will open closets too so perhaps you could donate those unwanted items to your local thrift store or just pack them up out of eyesight. If you have pets, clean up after them. If you have children, have them put their toys away. The less personal effects around, the better. Buyers want to picture themselves in your home but cannot when they are surrounded by your “stuff.” Point is, having your home show at its best benefits you because the better it shows, the more willing a buyer will be to present you with a full priced offer. 

4. It’s not personal, it’s business.

Buyers will try to purchase a property that they love for a fair price while also trying to feel like they got a bit of a “deal.” In the meantime, a seller is looking for a full price offer, or an offer for the highest amount possible for their property. As a seller, don’t take it personally if a buyer is offering under your asking price because they feel the home needs updating or because a buyer just decided to offer low. You can consider it as a conversation starter for the negotiation process and be happy because- HOORAY! You got an offer. Ultimately, you are getting ready to convey your property to another party. You are entering into a business relationship, however teetering on the personal as it is and has been your home for quite some time.  Try to not let the emotional attachments to the home get in the way of the sales transaction of the property. 

5. Don’t go it alone.

There is so much liability on the parties during a real estate transaction and not to mention lots of paperwork! By hiring the right real estate professional, you are not only getting your weekends back as you won’t have to hold open houses on your own, you are gaining the services of an experienced professional who is there to make sure you are covering (what is for most) your largest asset. A real estate brokerage has error and omissions insurance, do you in the event that something goes askew within your transaction? A real estate professional is there to oversee every aspect of the real estate transaction. The money you will save selling it on your own will pale in comparison to the potential litigation that may lie ahead.

No Money Down Solar Leases From My Perspective.

Green Energy is not always Green Money.

The latest predator of residential homeowners are those peddling, no money down, solar leases.  I get a few door to door solar sales representatives every month stating that they can reduce my electric bill by at least 75% with a no money down solar lease.  Who does not want to go green, but at what cost?  

We have all heard the term Predatory Lending, but there is no term of art for predatory leasing.

'Predatory Lending' Unscrupulous actions carried out by a lender to entice, induce and/or assist a borrower in taking a loan that carries high fees, a high interest rate, strips the borrower of equity in a security, or places the borrower in a lower credit rated loan to the benefit of the lender.  

Why make points on an unlawful loan to a consumer to buy a product, when the government will pay you comparable incentives to legally lease them the same product?  So what is the harm, green energy is good, right?  Green energy is great, but leasing it may not be.

Let’s look at a real life example:

I recently had an agent representing a buyer who made a very fair offer on a home.  The offer was accepted by the home owner, and the diligent buyer’s agent was doing the usual scramble to assist the buyers with their inspections and investigations.  You would think that was the right thing for the agent to do, but we often forget that the standard California Residential Purchase Agreement (“RPA”) has Section 8(B)5 “Leased or Liened Items or Systems.”  The RPA provides the seller with 7 days after the acceptance of the offer to disclose to the buyer any material facts known to the seller, including the presence of leased fixtures such as a solar system.  

So on the sixth day, the diligent buyer’s agent received the Seller’s disclosures, and for the first time the seller’s agent disclosed that the solar system on the roof is leased, and that the seller expects the buyer to assume the lease in the sale.  

Approximately two years prior, the seller signed a no money down lease to install solar panels that would produce approximately 75% of the homes electrical needs.  The lease was for 20 years at a monthly payment of approximately $100, for a total lease amount of $28,000.00 with a final buyout provision of an additional $5,000.00.  So the total cost of the solar system would be $33,000.00.  Significantly, the lease has no discounts for early payment.  To protect its interest in the solar system, the solar company filed what is called a UCC-1 lien with the county perfecting their ownership interest in the solar system.  

What are the costs verses the benefits to this solar lease?

The lease itself states that the solar company is free to transfer its interest to anyone at any time, but not so for the homeowner.  To sell the home, the homeowner would need to pay off the balance of the lease or find prospective buyer that is willing and able to transfer the lease into their name before taking ownership of the home.  

So what is the problem?

The solar company requires a 700 plus credit score from the prospective buyer to transfer the lease.  The credit requirement in itself eliminates a large number of potential buyers.  Fortunately these buyers did have a credit score of greater than 700, but why would someone with a great credit rating take over an underwater lease on top of paying full value for the home?  

So we investigated!  

The cost of solar is going down every year.  The cost of a brand new solar system that would exceed the electric usage of the home and therefore generate income for the homeowner by selling the excess electricity back to the grid would cost the new homeowner no more than $20,000.00.  If a buyer did not have extra cash, but had great credit, they could just borrow some extra money and purchase a system outright.

Why own the solar system?

A leased solar system provides the buyer with minimal or no government credits or incentives.

A leased solar system cannot be included in the valuation of the home.  Appraisers do not include a leased solar system in the home’s appraised value.  However, the monthly cost of the lease is considered in the prospective buyer’s mortgage qualifications as it is a monthly expense which increases the buyer’s debt ratio and hence decreases his/her buying power.  

So let’s look at the numbers in the lease.

The leased system currently saves the home owner about $120.00 per month in their electric bill, but the lease payment is approximately $100.00 per month.  To recover the buyout cost of the $32,000.00 lease would therefore take the homeowner 22 years.  So in 22 years the homeowner would actual start to save money on electricity, and at this point they would be the proud owner of a 22 year old solar system.  How much is a 22 year old solar system worth?  How much will it cost to remove a 22 year old solar system from your roof?

So why are companies pushing these, no money down, solar leases?  

The same predatory business model has been around for a long time.  This is the same basic business model that wreaked havoc in the mortgage backed securities market back in 2008.  The solar company gets up front money for every solar system that they sign up, so a no money down lease option means more systems get sold.  In the solar model the upfront monies come from government incentives. The solar companies insure the solar systems against loss and/or damages, so the solar company’s investment is protected, and after they have captured the upfront incentives they can sell the lease and you off to whomever they choose for the long term servicing.  Until the lease is paid in full or an unwary buyer decides to assume the lease, the home is on lock down and can’t be sold.  

The credit requirements to transfer the lease are often far greater than the initial requirements to provide the system, why?

The solar companies know the following facts;

• No one will want to assume an underwater lease.
• The home can’t be sold without satisfying or transferring the lease.
• The vast majority of homeowners do not keep a home for 20 years.

If they make it difficult to transfer the lease, such as by making it cost prohibitive combined with requiring a credit score above 700, the vast majority of consumers won’t qualify to transfer the lease and that means a large number of solar lease will be paid in order to sell certain homes with solar leases. 

Even better, if solar prices keep dropping, no consumer will want take over an underwater solar lease and that means the majority of solar lease will be paid in full to sell the majority of homes with solar leases.  

Armed with these facts, the solar companies know that the vast majority of their solar leases will be paid in full long before the maturity date of the leasing contract.  So, no money down solar leases, means big money for solar companies at the expense of the unwary homeowner.  Do your homework before you find yourself caught in a green energy dilemma!

I offer this article to those unwary sellers and buyers.  The San Diego real estate market is one of the most competitive in our Nation and it is about as cut-throat as it gets. The market is flooded with agents, brokers, lenders and others all competing for your business, and many have no problems lying to you in order to get it.

One of the most common obstacles agents face when trying to get a client to commit to a contract is to overcome the false promises and misinformation provided to the homeowner by other real estate professionals, and misinformation is often populated by online tools such as ZILLOW. Sellers are often blinded by greed, and this makes them vulnerable.  Many agents will sell the homeowner his/her own dream, and this makes a seller skeptical of an agent who is merely offering them reality.  

 However, many agents see value in not being the bad guy.  They find it is easier to beat out the competition by simply telling the seller what they want to hear.

Most common lies from agents to get listings

#1: The agent that agrees your house is worth whatever you think it is worth

A seller who believes, or wants to believe, their home is worth $10, is more likely to sign with an agent who agrees verses one who insists the home is only worth $6.  

So what is the problem?

The agent agreed with the buyer, knowing the seller was wrong, only to get the seller under contract.  Your fiduciary, your confidant, your advocate, that’s right your real estate agent just took advantage of you and that is unethical.  Real estate listing contracts are difficult to break and usually require a mutual release from both parties to terminate.  So the agent that agree to take an overpriced listing often does so betting that the owner will simply reduce the price when it does not sell. 

So the agent got the listing by lying to his seller, then the agent continues to damage his/her client by allowing the seller to chase his/her dream price thereby wasting the sellers time and money.  The agent does all of this for self-serving reasons; they have avoiding competition with other agents by lying to the seller about value with the ultimate goal of making a profit. 

#2 The agent that agrees to take a reduced listing commission.

So you think you are a savvy seller. You demand that your agent sells your home for a reduced commission and they agree.  In theory, that all may sound attractive, but are you missing the bigger picture due to your lack of experience and knowledge?  

So what is the problem?

Your fiduciary, your confidant, your advocate, that’s right your real estate agent likely just took advantage of you.  Historically real estate commissions were 6%, but now 5% seems fairly common.  2.5% is traditionally offered to the buyer’s brokerage for a successful sale and the seller’s brokerage keeps the rest.  Agents that agree to take listings for less than the norm, almost always try to pass on the loss to the buyer’s brokerage, meaning they just offer the buyer’s side less than the traditional 2.5%.  The sellers often have no idea why there listing is not drawing the same traffic as others.  The unethical seller’s agent simply waits it out, with the listing on lock down, and the seller loses time and money waiting for the underexposed home to hopefully sell itself.  If the home does not sell, the realtor may then gradually increase the amount offered to the buyer’s agent, and the seller remains ignorant to the truth.

5 Reasons to Use a Professional Real Estate Agent

The proliferation of services that help homebuyers and sellers complete their own real estate transactions is relatively recent, and it may have you wondering whether using a real estate agent is becoming a relic of a bygone era. Doing the work by yourself can save a commission, but doing a bad job can end up being more costly. Buying or selling a home is a major financial (and emotional) undertaking. Do not discard the importance of hiring an agent.  A good agent brings value.

1. Convenience

A real estate agent’s full-time job is to act as a liaison between buyers and sellers. You want a full time agent, and not a part time hobbyist with a license.  A full time agent will know the market and they will have easy access to all properties listed by other agents. They know what needs to be done to get a deal together, and they will have the resources to make it happen. 

2. Negotiating 

Many people don’t like the idea of using a real estate agent. They believe that direct negotiation between buyers and sellers is more transparent and allows the parties to better look after their own best interests. This is probably true, but it assumes that both the buyer and seller in a given transaction are reasonable people. Unfortunately, this is often not the relationship.

The personal interests of the buyer and seller are usually at odds and this often creates unnecessary drama.  Unnecessary drama can kill a deal.  

3. Real Estate Contracts 

If you decide to buy or sell a home on your own, you will quickly learn that the paperwork is not only critical but it is also overwhelming.  The purchase contract is designed to protect the parties and ensure that each are able to back out of the deal if certain conditions are not met.  A simple mistake such as not making financing one of the conditions of the sale–and if you as a buyer are not approved for the mortgage–you can lose your deposit on the home and could even be sued by the seller for failing to fulfill your end of the contract.

An experienced real estate agent deals with the same contracts on a regular basis, and should be intimately familiar with their application.  Your agent will know which conditions should be used, when they can safely be removed and how to use the contract to protect you, whether you’re buying or selling your home.  Your agent should also have errors and omissions insurance, which will further protect you in the event that an error occurs.

4. Real Estate “Liars”

Your agent has a fiduciary duty to you-they have experience and they know the industry.  A good agent knows what is possible and what is not, and they can often avoid the costly pitfalls associated with placing too much faith on statements or promises made by opposing agents, lenders, owners, sellers, buyers and so on. 

5. It Does Not Save That Much Money

The number one reason people choose to not use a real estate agent is that they believe they will save money.  However it is unlikely that both the buyer and seller will reap the benefits of not having to pay commissions. 

If you are selling your home on your own, you will price it based on the sale prices of other comparable properties in your area. Many of these properties will be sold with the help of an agent. This means that the seller gets to keep the percentage of the home’s sale price that might otherwise be paid to the real estate agent.  In theory, that all may sound attractive, but are you missing the bigger picture due to your lack of experience and knowledge?  Did you price it correctly?  Did you sell it in a timely manner? Did you negotiate well? Did you give the property the proper exposure?  Did you provide the proper disclosures?  Did you do all of the paper work correctly?  Are you insured in the event that you did something wrong?

Buyers who are looking to purchase a home sold by owners may also believe they can save some money on the home by not having an agent involved. They might even expect it and make an offer accordingly. However, unless buyer and seller agree to split the savings, they can’t both save the commission.