How You Can Save Money on Your Home Sale [Real Estate Insider]
By spending around $500 up-front, you can save thousands of dollars on your home sale and have the luxury of a quick and comfortable ride to closing day.
Does this seem like an investment that you're interested in? Here are some key factors that can determine how quickly your home gets sold and how much money you can save during negotiations:
- Agents agree to lower commission rates.
- Buyers love that your home is free of major issues.
- You can save money on expensive repairs or "closing credits."
- You have proof that your home is listed at a reasonable price.
Putting in the work before listing your home is an industry secret that saves agents the time and resources it takes to get a house ready to sell. By going through a Pre-Listing program, your home will be free of any significant issues that the buyer may find, which puts you in a great position to attract serious buyers who are searching for a move-in ready house. In return, the seller saves valuable time and some serious cash on the sale as a reward for the hard work they put in before listing their home. Take a look at some of the ways sellers are saving money by utilizing HomeTraq's Pre-Listing services:
Agents Agree to Lower Commission Rates
Realtors who are partnered with HomeTraq have agreed to a 4% commission rate on houses where sellers have participated in the pre-listing program to some extent. A typical commission is around 6-8% for a home sale, and it typically comes out of the seller's pocket. Keep in mind, the seller and buyer's agents both get a cut of the commission. Thus, the seller pays a commission for the buyer's agent as well, which they agree upon in the contract with their selling agent. In other words, you pay for an agent that doesn't even represent you. It's in your best benefit to get a lower commission and keep more money in your pocket.
Suppose you're using an agent outside of the HomeTraq network. In that case, you can still utilize our pre-listing model and request a reduced commission rate. Most agents appreciate the fact that you are making their life more comfortable. By consulting professionals about selling your home before agreeing on the contract, you are putting in the work for them. Your home will be in excellent condition to sell before they step into the picture, and they just have to find the buyer. We can negotiate a reduced commission, so more cash from the sale goes into your pocket.
Buyers Love That Your Home is Free of Issues
Gaining insight into the problems gives you the power to fix them before the buyer is even aware of the issue. If buyers see your home as "complete" and the house is more attractive, they may be willing to offer more money for a well-prepared home.
An issue-free home comes from having an inspection done before you allow buyers to tour the home. Getting an inspection before the sale might seem like a waste of money because the buyer's lender will also have an inspection done by someone in their network to ensure the home doesn't have any major defects. However, getting ahead of these problems could save you a ton of money in the long run.
Move-in ready homes are the most popular listings on the market. Most buyers aren't looking for a home to fix up and turn around for profit. Therefore, having a home with few issues is the best way to ensure you get substantial interest in your home. More interest leads to more tours, and more tours mean a higher chance for an offer.
You Can Save Money on Expensive Repairs and "Closing Credits"
You can preemptively fix the issues however it works best for you. Once the buyer becomes aware of any problems, they can negotiate closing credit with stipulations like requesting a specific contractor or other specifications.
As the owner, you want to be in the driver's seat. Once you offer your home for sale, the buyers are interested in how the problems get fixed. If you do them before listing your home, you have complete control over how much you spend on the repairs. For example, if the buyer finds out about an issue from their inspection, they can request a $3,000 credit to fix it. In reality, it may only cost $50 to hire someone to come fix it. You run the risk of scaring away the buyer if you come back with a low counter-offer. Having a pre-inspection dramatically reduces the likelihood of this happening.
You Have Proof That Your Home is Listed at a Reasonable Price
One great way to get a quick estimate for the value f your home is to use an automated valuation model (AVM). Many mortgage companies use AVMs so they can confirm pre-approvals for buyers. However, sellers can utilize the same software to determine how much they should list their home for.
Not all AVMs are created equal, so they aren't seen as an official "appraisal." They still consider several factors that the appraiser will evaluate, such as square footage and the number of bedrooms and bathrooms. Some will go more in-depth and utilize other properties in your area for comparison and even ask for tax records on the home.
Tax records are another key component of the pre-listing program. Ensuring that your tax records are accurate and up-to-date is a key step to estimating the real value of your home. If anything on the record is inaccurate, you could get an incorrect valuation. While AVMs are fast, they are not as meticulous as a full appraisal. Appraisals can take weeks to complete, but they are as official as it gets. If you want to be sure about your home's value, you should get your property appraised. In this case, you will have the most powerful negotiating tool. If the offer is below the appraised value, you would have an easy case for your counter-offer already on-hand.
Everything You Need to Know About Credit [Real Estate Insider]
Having a high credit score is critical for getting a low-interest rate on your mortgage. Here's what you need to know about improving your credit score.
What is a credit score?
It helps to start with the basics. Your credit score is a number that represents your credit history based on a mathematical calculation of your ability to repay your credit. Lenders use your credit score as part of the process to determine your qualification for a loan/mortgage. Landlords usually check your credit score when you apply for a lease. A popular credit company is Fair, Isaac & Company (FICO).
It would help if you had a good credit score to qualify for a mortgage with a reasonable interest rate. If you have a low credit score, you can probably still get a loan, but the interest rate will likely be unfavorable. Low-interest rates are critical for keeping your payments and overall price of the home at a minimum. So, an excellent way to get the best value for your home purchase is to have a great credit score!
What goes into calculating my credit score?
Your credit score is an algorithm that includes many different variables. To put it simply, here is a list of the percentage breakdown for how creditors determine your credit score:
- Payment History: 35%
- Amount Owed: 30%
- Length of Credit History: 15%
- New Credit: 10%
- Type of Credit Used: 10%
Payment History
Payment history is the highest weighted category in the calculation. So, if you fail to make payments on time, chances are your credit score is unfavorable. Credit scores are fluid, which means you can improve them over time. Consistently making payments on time is the best way to improve your credit score.
Amount Owed
Another significant component is the amount of credit you owe at the time a lender runs your credit. This is similar to your debt to income ratio (DTI). If you owe too much already, this can hurt your credit score. Mortgage lenders want to know that you can afford to pay off their loans. If you already have several loans for cars, another house, or massive credit card debt, this can negatively impact your credit score.
The final three categories have less influence, but can still nudge your score in the right direction. The sooner you can start contributing to your credit score, the better. Credit companies take into consideration how long you have had a credit line, and what types of credit you use (i.e., credit cards, car loan, mortgage, etc.)
What can help my credit score?
Whether you have a low credit score or a conservative spender who wants to have the best score possible, there are several ways you can improve your credit score. The quickest way to up your credit score is to pay off any outstanding debt.
Pay off your outstanding debt
It's easier said than done, but the best way to boost your credit score to get approved for a loan is to reduce the current amount owed. The two most influential aspects of your credit score are payment history and amount owed. This tells us that the less debt you have, the more likely a lender will approve your loan. If you're looking to spike your credit score quickly, throw as much money at your debts as possible.
Watch your score
It's also essential to keep a close eye on your credit score over time. Of course, if you're reading this blog, you probably have already checked. We suggest checking your credit score yearly to make sure nothing looks out of line. Creditors are human, and they make mistakes. It would be unfortunate if you got turned down for a loan because of an error that's out of your control. If something looks odd, talk to a lender about your options or how you can get the false information removed from your record. Don't check your credit score too often, as it may hurt your score. However, once a year is a good rule of thumb.
Visit any of these links to check your credit score. You'll need to provide a report from one of these three major credit unions to apply for a mortgage. The scores may vary slightly.
- Equifax 800-685-1111 or equifax.com
- Experian 888-397-3742 or experian.com
- TransUnion 800-888-4213 or transunion.com
What can hurt my credit score?
There are only a few things you can DO to improve your credit score. It's also important to know what to avoid, so you don't hurt the hard work you've done to get a solid credit score. Unfortunately, keeping a good credit score takes time. Unless you can pay off a lot of debt at one time, you should pay attention to what things you should avoid, so you don't make it worse.
Don't activate more credit cards
If you don't have a good credit score, you probably shouldn't tempt yourself to borrow more money. Also, your credit score considers how many credit lines you have open. So, even activating a credit card, whether you use it or not, can hurt your credit.
Try not to "max out" your existing credit cards. As mentioned above, lenders consider your debt. Using your entire credit line can accumulate a lot of interest if you can't pay it back quickly. Do your best to keep up with your current credit cards and focus on paying off the credit you've already used.
Some people think that closing a credit line will help their score. Closing a credit line negatively impacts your credit. Any activity, even if it's meant to eliminate the temptation to use a card, will hurt your score. If you've paid off a card and don't intend to use it, store it in a safe place so no one can steal your personal information. You must have a credit history to get a loan, but you can't close a credit line either. Weird, right?
Try to avoid co-signing
If you co-sign for someone's loan, you are held equally responsible for the payments. If they miss a payment, it impacts your credit score as well. Chances are if they need a co-signer, it's probably because they either don't have adequate income to get the loan by themselves, or they have a poor payment history. Try not to get involved in any unnecessary risks, especially if you plan to apply for a mortgage soon.
Need help?
Talk to a mortgage professional HERE if you need help improving your credit score.
