My husband and I have had the fortune (or maybe misfortune?) of being involved in a number of personal real estate transactions. From inherited, residential, investment, and commercial – we’ve lived it. In no particular order here are some tidbits off the beaten path we’ve learned along the way:
As a buyer:
- Think carefully through the logistics of your day and ensure your new location can accommodate them. Maybe this is simply evaluating your commute and local amenities, but maybe it’s much more. For example, let’s say you’re in the business of dog boarding and training. You’ll need to install a tall fence at your new home and will also be relying on a local park to complete group training. What if the covenants of the deed only allow decorative fencing and training at the local park requires restrictive permitting? You’ve just put your livelihood at risk.
- Make the assumption that appliances and utilities have longevity between 10-15 years. Repairs to keep them operational will likely be needed after just 5 years. As you tour and submit preliminary questions, ensure you ask about this before putting in an offer. If the age is discovered during the inspection but everything is technically still working it’s difficult to negotiate anything. Those involved will simply say the age has already been factored into the list price.
- If you have big plans for renovation or outdoor updates, make a call to the local zoning board to learn about any obvious red flags that may prohibit you from moving forward. For instance, our home abuts conservation land, has a septic tank, and is on a slope. When we put in our pool we had to get insanely specific on where it could go. Thankfully that spot is directly in the sun, otherwise, it may have not been worth doing at all.
As a seller:
- Take a deep breath. Buyers will try to get away with as much as possible. This is a HUGE outlay of money that makes anyone feel desperate to negotiate. Don’t get angry or take offense, this isn’t personal, it’s business. Instead, leave an ace up your sleeve to make your prospective buyer feel more at ease. If you don’t want to come down on price, offer to upgrade the carpet or include some furniture. It may be just enough for the buyer to feel like they’ve won at the negotiating game.
- You may be considering a 1031 exchange, which is a strategy when selling a secondary or investment property with significant taxable gains. A 1031 exchange essentially allows you to make a “like-kind” exchange by rolling over the gain to a newly purchased property with similar characteristics. Since timing is everything (only 45 days to nominate and 180 days to close), the newly purchased property may not be that great of a deal because it was acquired in haste. This means while you may save on taxes, you may have actually lost more by way of value, rental income, transaction fees, holding costs, etc.
- Make expectations known with real estate agents upfront and accounted for in your agreement. For instance, if there is an amount you need to walk away with, how will they accommodate that if the negotiated price doesn’t cover the full commission? What happens if it sells before the first open house? What if the buyer is also a client of theirs? Will they be personally attending tours and what’s their marketing plan? And my favorite – what if their “get ready to pack” valuation doesn’t even get a nibble? These are all common occurrences that should be agreed upon and documented ahead of time.
- If you list a piece of real estate yourself on a site like Zillow, know that they chronicle your attempt in the pricing history. So if you’re just dabbling and nothing comes of it, expect to justify any differences in valuation when you legitimately intend to sell. I will add that I was successfully able to get Zillow to delete our do-it-yourself efforts from the record, but it required a bit of back and forth.