The day is here! You need to sell your home. The next steps are to find a real estate agent familiar with the MLS, put your home on the market and negotiate a contract. You might not have seen the latest Arizona purchase contract. Filled with 10 pages of legal jargon and multiple addendums, the management of the Arizona contract is an easy way to give away thousands of dollars through the sale of a home to a buyer. Here a few items to watch for that can affect your bottom line:
- Buyer Loan Costs. With the current distressed market, many buyers like to write offers asking for the seller to pay their loan costs. And if the overall contract sales price is right, paying the buyer loan costs might be well worth while. Generally, the request is made as 3% of sales price, which initially may not seem high. However, when considering a sales price of $150,000, 3% of sales price works out to be $4500 – not a small sum of money. Instead, consider offering a compromise: have the buyer pay only half of the loan costs.
- HOA Transfer Fees. Did you speak with your home owners association (HOA) before listing your home? The amount your HOA will charge to transfer the property to a new buyer is great information to know. In some situations, HOAs have charged $500 – $1500 to transfer the property. With HOA transfer fees being a negotiable item, a seller may be able to pass this cost on to a buyer.
- Home Warranty Costs. As a general rule, buyers of homes in the Phoenix area expect sellers to pick up the cost of a Home Warranty. The Home Warranty will cover the buyer for one year in case some of the working components in the house break. The home warranty also protects the seller from being pursued by a buyer who feels that an A/C unit, hot water heater, or other expensive item died prematurely. A typical, basic Home Warranty plan will cover most items and can be obtained for under $350. But watch out – some buyers will ask for plans that can cost up to twice this amount.
- Appraisal. Did you and your real estate agent have a conversation about what price the property is likely to be valued by an appraiser? Will your home appraise for the sales price on the contract? Over and over again, I see sellers accept contracts for sales prices that have no chance of being supported by appraisal. Many times, after about 15 days into the escrow, the appraiser may submit an appraisal for thousands less than the contracted sales price. With the seller having planned a move, packed up the house and secured a new place to live, the seller is generally between the proverbial rock and a hard place. They’re forced to wonder: “Do I accept the new sales price or cancel the move?” Keeping in mind that most sellers are moving for significant life reasons such as job transfer, bigger home or changes in lifestyle, the seller generally must accept the financial change or give up on the reason for moving.
In most cases a little upfront planning will help net more money for sellers when the contract arrives. Asking the right questions and getting the right information can be crucial. Do you have more questions? Contact us at (480) 776-5214 or www.ThompsonGroupAZ.com.