Successful Sellers Know How to Think Like Buyers

By Ilyce R. Glink with Samuel J. Tamkin
Saturday, July 26, 2008

I recently spent some time listening to friends who are thinking about moving across the country and buying a house.

They told me that even though there is a seemingly endless list of houses for sale, not all home sellers are making the most of the house they're trying to unload.

When it comes to putting your house up for sale, the big problem for most homeowners is thinking like a seller. Most homeowners think that the house that they lived in, and loved, is the house they're trying to sell.

In fact, if your house is for sale, you'll have better luck selling it if you think first like a buyer and then like a seller.

It's clear to me that the cable channels HGTV, Bravo and Discovery have changed the way home buyers think. They want something that has character, is in good shape and is move-in-ready. Shows such as HGTV's "Designed to Sell" have convinced buyers that all homes for sale should -- at the very least -- have a fresh paint job, matching stuff and personality.

If your house is for sale and you haven't repainted in the past 10 years and don't have matching knickknacks on your coffee table, it could look dated compared with the competition.

But that's just the beginning. If a house is for sale and it doesn't meet the needs of today's buyers, no matter what price range, you're going to have a hard time selling it.

I recently visited a house that's been for sale for more than six months. It has the decorating thing down pat, right down to the two blue boys' rooms and one pink girl's room, but I instantly knew why it hadn't sold: The sellers had made a strategic mistake when they renovated the first floor.

The kitchen, dining room and family room have big windows that face the lovely back yard and pool. But the order of the rooms is the kitchen on the left, huge dining room in the middle and family room on the right. The family room, which is more casual, leads to a much more dressed-up formal living room.

When the owners redecorated, what they should have done was create one massive kitchen/family room, incorporating the kitchen and dining rooms. The family room should have been the dining room, and the owners should have pulled up the ceramic tile and replaced it with hardwood floors to give the rooms a better flow.

No big deal, right? Someone buys the house for a steep discount and makes the change. Well, that's ideally how it should work, but buyers today don't want to take on big improvement projects. There are too many houses for sale in which the flow already works well. They can buy a great house for a great price without having to commit to a lot of work.

If you can't remember how to think like a buyer, here are a few suggestions:

· Visit a few open houses in your neighborhood and price range to get a sense of what other sellers are doing.

· Try to imagine what you'd want in a house. How do you want to live?

· Talk with your agent about what kinds of properties and amenities she is looking for on behalf of her buyers.

· Visit model homes in new-construction developments to get a sense of what developers are trying to showcase.

Once you're thinking like a home buyer, you can use that information to help you retool as a home seller. How can you change your house so that when you list it for sale, there's real interest from buyers? If you owned the house I saw last week, you might spend $10,000 to open up the wall from the kitchen and switch out the dining room and family room.

But don't go out and make major repairs or renovations to your home until you understand what impact those repairs or renovations will have on your ability to sell the home and recover the money you put into it.

Your home could sell faster with a new kitchen, but that doesn't mean you should go ahead and renovate if the cost would be $65,000 and you wouldn't profit from the investment.

Remember, the trick to selling your house is to remove any possible objections a buyer might have to purchasing it. By thinking like a buyer, you're much more likely to change your "for sale" sign into one that says "sold."

Q I own a home with a lady; we are not married. We have children that are all older than 18. I now want to sell the house, but she does not. She has never made a mortgage payment. I worked two jobs to pay the down payment. I just want to sell the house, split the proceeds and go on my way. The house was bought in March 1986 for $84,500. I owe $32,000. There is only the first mortgage on the property.

ALet's address the elephant in the room -- you're ready to break off this long-term relationship that you've had with your lady friend. You don't say whether you have children together or whether each of you brought children to the relationship, and now they are all out of the house. In any case, it's clear that you're ready to move on.

What you haven't made clear is whether you and your lady friend have actually had a conversation about your desire to end the relationship. If you haven't had that conversation, you need to have it. Perhaps her interest in staying in the house will change if you tell her you're ready to move on. It will certainly change how you and she react to each other as you divide your assets.

Speaking of which, when you buy property with someone else and that person's name goes on the deed, he or she may own half the property -- whether or not they have contributed to the mortgage. You didn't mention whether your lady friend also has her name on the mortgage. If she does, then at least she is legally responsible for the payments. If not, then you've made a foolish decision -- to give her half of the house without having her be legally liable for the mortgage.

From her point of view, she may have poured years of sweat equity into the property while you and she have lived there. If your arrangement was that she would pay for other things or raise the children while you had a job that brought in money, and she lived up to that agreement, you don't have much to complain about. Or if she also works and her income paid for other joint expenses, such as utility payments, food and other household expenses, it's hard to make the argument that she never contributed financially.

Once you and she are on the same page about splitting up, you can have a discussion about what to do about the property. Find out how much the property is worth. You can get a general idea from local real estate agents and from looking online at other properties that are for sale in your neighborhood.

If you two can agree on a price for the property, she could get financing for the house, pay off your existing loan and give you whatever equity is outstanding.

If she can't afford to live in the property but refuses to sell, you may have to file a lawsuit against her to get her to move or find another carrot you can offer that will produce the same result.

A real estate lawyer could help you outline the various ways you and your friend can divide the equity in the property and move on from this relationship. Be prepared for your friend to hire a lawyer, which can make things messy and expensive.

I recently read your reply to a reader who asked about breaking a contract with a real estate agent. You suggested that she ask the brokering agency for a new agent. I have a similar concern, but in my case, my real estate agent owns the agency. So how would I break my contract with her? Is there a form I could get online? Does there have to be a reason for terminating the contract, such as poor service?

You're in a tougher situation, but it's not impossible to cancel the deal even if the broker representing you owns the company. Simply sit down and say this relationship isn't working out for you. Outline your reasons in a calm voice, and ask to break the agreement.

If the broker doesn't agree, you can take your listing agreement to a real estate lawyer and discuss what options you have based on the language in the contract. If your listing agreement is for only 90 days, that is the longest you'd have to wait it out. If you signed a longer listing agreement -- which I never advise -- the lawyer may convince the broker that the company is wasting its time by hanging onto you as a client.

One added note: In this market, some people think their brokers aren't doing what they should because houses are taking a long time to sell. People may feel that if their home hasn't sold, it must be the broker's fault.

Make sure your grievance against your broker is legitimate -- something other than that your broker simply hasn't been able to sell your home. Your broker should, at a minimum, market the home, list the home in a multiple-listing service and place a sign in front of your home.

In addition, some brokers will hold open houses to show off the home to the public or to other brokers, and even place ads in newspapers and on Web sites to try to sell your home.

Make sure you understand how the broker agreed to market your home and what she has done to live up to those promises before you terminate the agreement. If you still think the service you've received is sub-par and the broker has not done the marketing you were promised, move ahead with termination.

What is the average time in months that a family is involved with loss mitigation? And what suggestions can you give to help me maintain my home over the next 12 months? I am a single parent with two special-needs children. Thanks for your help.

If you want to save your home, then you should be on the phone with the lender every week, leaving the loan officer a message about what's going on and staying in touch. The process can take months, but you have to be the driver of it.

A few Sundays ago, I received a call on my weekly radio show from a listener who was in the same position you're in. He confirmed that each week for three or four months, he would call the lender and either speak directly to his contact in the loss-mitigation department or leave a message.

He was ultimately able to refinance and work it out. The lender told him that the only reason he got the attention is that he was really on the case -- almost to the point of annoyance.

Although I'm sure your children are the most important part of your life, the lender isn't going to care if they have special needs. The lender cares only about whether you can afford to pay the mortgage each month and what has to happen to get you there (and off the lender's desk).

You'll be in the strongest position if you call your lender before you've been late on a payment. If you're already late, call as quickly as possible to start the ball rolling.

You may need some extra help. A real estate lawyer who works in foreclosures may be able to guide you better. You might also try a local housing counselor. You can find one on the Department of Housing and Urban Development's Web site ( http://www.hud.gov) or by calling 888-995-HOPE. Or consult the Consumer Credit Counseling Service ( http://www.cccsatl.org), an organization that works nationally and is certified in housing and bankruptcy counseling.

If we quitclaim our home to my sister, can someone place a lien against the property if the creditors are chasing us?

Second, we have a private lender who has a second mortgage on the property. Would this affect us if we quitclaim the house?

We are being forced into this position because my husband was in a serious accident in 2000 and the insurance company will not settle the case. We are set for trial in June 2009.

The insurance company has paid for none of the hospital bills, doctor's bills or anything since the accident. My husband is permanently disabled and in the hospital all the time. We have depleted our IRA and his retirement money to live these past eight years, as he has needed 24-hour care.

The only thing that we have left is the equity in our home, and we are selling it to survive. But if all the people who have not been paid over the years place liens against the property, we will have nothing left of our equity.

So would we be safe by quitclaiming the house to my sister?

If someone has already placed a lien on your property, quitclaiming the property to someone else will not help you. In addition, due to your circumstances, if you quitclaim the property to your sister, that transfer may be considered a fraudulent conveyance. In many states, creditors are given the right to look back at the assets a debtor had and may have transferred and not received any money for the transfer. They could try to undo the transfer, and your sister would become part of the litigation.

You should see whether there are any unexpected liens that affect your home. In many counties, you can search online to determine whether a lien has been placed on your home. Check with your local county or local recorder of deeds Web sites so you can review any clouds to your property's title.

If there are no liens on your home and you can sell before any liens are placed on it, you would have the proceeds from the sale in your hands.

Let's assume there are no liens on your home. If you quitclaim your home to your sister and she doesn't pay you cash for the property, that transfer of wealth from you to her could be challenged by your creditors.

If you're in the process of selling, your best option is to stay the course and get your home sold. Once the home is sold, you can pay off the creditors who have liens on your home, including a first or second mortgage lender.

If, in the course of the litigation, someone places a lien on the home, you may also have to pay off that lien or deposit the funds to pay off the lien with the court handling the litigation. More important, once you have the money from the sale of the home, you can use those funds to pay for any of the bills that have come due for your husband's care.

Unfortunately, other than selling the property and getting the cash from the sale, there isn't much a person can do in terms of asset protection once litigation has started or creditors have filed liens against a home.

On a second issue, if you feel that your insurance company or the other party's insurance company has failed to meet its obligations under your policy or under the policy that covered the other driver, you might want to seek assistance from the department that regulates insurance companies in your state. Some states are better at handling those complaints than others.

Also, some states have consumer-protection statutes that give you the right to challenge the insurance company's denial of your claim.

You might find it worthwhile to engage the services of a lawyer who might sue the insurance company to force them to pay up.

If you started that process, and that is what is coming to trial next year and you are the plaintiff in the litigation, you might have to wait until the trial date to see where things end up. Your lawyer should be able to advise you whether the insurance company might be liable for its failure to settle. In some states, that failure to settle -- if done in bad faith -- can lead to an increased recovery to you, if you are the plaintiffs in the case.

Ilyce R. Glink is an author and nationally syndicated columnist. Her latest book is "100 Questions Every First-Time Home Buyer Should Ask." Samuel J. Tamkin is a real estate lawyer in Chicago. If you have questions for them, write Real Estate Matters Syndicate, P.O. Box 366, Glencoe, Ill. 60022, or contact them through Glink's Web sites,http://www.thinkglink.comand http://www.expertrealestatetips.net.

© 2008 Ilyce R. Glink and Samuel J. Tamkin

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