Having Difficulty Selling A Property When Moving? Try…..

Going Once; Going Twice; Sold!

The AUCTION.

During the down side of a market, auctioning a property could be the answer.

There are several variations of the auction form including time limits, minimum and maximum limits on bid prices and special rules determining the winning bidder and the sales price.

Maximum bid (I have heard it called and absolute bid but check on this) means that the property will be sold to the highest bidder (or sold at any price).

The minimum bid auction will allow the seller to pick the lowest price that it will be sold at.  

Auctions are generally funded by sales commissions, paid for by the seller, but each auction house has some specific rules that should be understood beforehand.

Staging.

Staging can at times move a property.  The key to staging is simply to make a seller’s property look better than competing properties.

It is important that staging be done right.  And staging should take place before listing the property to get maximum impact.  

However, this does not mean that a home that has been on the market for a period cannot be staged.  The problem with this property is that it will have a history. It is seldom that a potential buyer will view a home again with after-the-fact staging.

Staging rules are simple.  Get rid of clutter, which covers a wide variety of items including the removal of furniture, knickknacks, personal grooming items in the bathrooms or bedrooms, kitchen cabinets neat, have the neighbors take care of any pets and the sellers gone while the home is being shown.

When one cuts to the chase anything that can be removed should be stored off-site or neatly in the garage or even you can arrange an appointment with movers to store your belongings in the special store.

Be clean and neat.  If you plan to remove something from the home after the sale, remove it now.

You want staging to show space.

Within this blog under Things You Should Know (see Buyers and Sellers Knowledge Center) there are two articles to support staging efforts.  The articles are entitled: Fix The Little Things To Sell Your Home And Add Value and Buyers Love Neatness. 

Seller financing.

If you are lucky you may find that your seller doesn’t owe anything on the property.

This can be very advantageous to both buyer and seller.  With banks and lender exercising very strict rules in home purchasing this is an option to consider. 

However the seller still must exercise due diligence and investigate the buyers credit worthiness and capacity to buy the property.

The advantage can be that the seller can have a secured note (against the property), the seller can be accommodating on the interest rate and can have a note for a limited period (usually 3 to 5 years) or for the long term (15 years or longer).

The seller, acting as the lender, will receive interest income and can offset a potential high tax burden.   

The seller entertaining this method of sale should talk to an attorney to protect themselves and make sure that all of the i’s dotted and all the t’s are crossed.  It can be a win-win for both buyer and seller.

Often the property will have a lien on it and most liens have a “due on sale” clause where the lender can force payment of the loan when the transfer of ownership is recorded.  But ask your lender and they may surprise you by agreeing assuming you make timely payments on the lein. If you don’t ask you will never know. 

Again the seller has to make certain that the buyer is credit worthy and is capable of meeting the note obligation made between the two.

Again talk to a real estate attorney to make sure everything is done correctly.

A 1031 exchange.

Common with commercial, industrial and land transactions it can be applied to residential properties.

The key to this type of transaction is to find a buyer that is also interested in selling their property.  If you are willing to take a property in exchange of yours to help promote a greater buying audience you will need to determine if the property satisfy both buyer and seller needs.

Generally this type of option works if:

• Move up to a more expensive property.
• Move down to a less expensive property.
• This type of transaction can be very tricky so both parties should meet not only with a real estate attorney but also with their CPA or tax consultant.  There can be tax consequences if there is an exchange of cash in the transaction (called boot).

The majority of 1031 exchanges are now structured on a delayed basis where the taxpayer completing the 1031 exchange will sell his or her property to a buyer through a 1031 exchange Qualified Intermediary and the Qualified Intermediary ends up holding the net proceeds from the sale. The taxpayer will then acquire replacement property from another party through the Qualified Intermediary in order to complete the 1031 exchange transaction. We refer to this as a three party 1031 exchange.

You can also complete a reverse 1031 exchange where the taxpayer acquires his or her replacement property first.”

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