Tag: selling a home

Nate Hedrick, aka The Real Estate RPh, joins the show to talk about 5 tips for selling your home – valuable information for buyers and sellers alike!

Episode Summary

Most of our real-estate episodes to date have covered the topic of buying a home, but today we’re putting ourselves in the shoes of the seller. If you think this episode isn’t for you because you’re only interested in buying a home, think again! Being able to see things from a seller’s perspective will add huge value to your home-buying journey. Today’s guest is Nate Hedrick, a pharmacist, and the founder of Real Estate RPH. It’s a seller’s market at the moment and he is here to share five top tips for selling your home for its maximum value. From the benefits of enlisting the help of an agent to getting to grips with price-setting strategies and understanding buyer versus seller costs, this conversation will equip you with the tools you need to navigate current chaotic housing market with confidence!

Key Points From the Episode

•  Introducing today’s guest, Nate Hedrick
•  An overview of Nate’s recent interview with first-time home buyers, Neal and Katie Fox.
•  Why this episode will benefit you if you are a home-buyer or a home-seller.
•  An overview of the current market from Nate’s local perspective. 
•  Two of the main pain points for newly practicing pharmacists.
•  Costs you can expect to incur when selling a home with the help of an estate agent.
•  The benefits of enlisting an agent to help you sell your home. 
•  How most people choose an agent.
•  The difference between an excellent and a mediocre agent. 
•  Examples of how good agents can maximize value for their clients.
•  Benefits of depersonalizing the home. 
•  Different types of pricing strategies that can be used when selling a home.
•  How the appraisal process should work.
•  An overview of buyer costs versus seller costs.
•  Understanding the concept of seller’s credit and the problems that can arise when this strategy is used.

Episode Highlights

“If you’re a first-time home buyer, you have no idea what it’s like to sell a home, right? You don’t have an idea what it’s like to buy a home. Being able to put yourself in somebody else’s shoes as you’re going through that journey, it can give you some perspective and it can be really helpful.” — Nate Hedrick [0:03:23]

“It’s still a seller’s market. We have a lot of people who are sitting on three and a half percent or lower interest rate loans that they refinanced over the last three or four years, and they don’t want to move if they don’t have to.” — Nate Hedrick [0:04:19]

“The list price of a home is completely made up. The market value of the home is the number you want to determine.” — Nate Hedrick [0:25:15]

Links Mentioned in Today’s Episode

• Nate Hedrick on LinkedIn
• Real Estate RPH
• YFP Episode 316
• Tim Ulbrich on LinkedIn
• Subscribe to the YFP Newsletter
• YFP Disclaimer

Episode Transcript

[INTRODUCTION]

[0:00:00] TU: Hey, everybody, Tim Ulbrich here. Thank you for listening to the YFP Podcast for each weekly strive to inspire and encourage you on your path towards achieving financial freedom. 

This week, I welcome back onto the show a familiar voice Nate Hedrick at the Real Estate RPH and co-host of the YFP Real Estate Investing Podcast. We discuss five tips for selling your home, helpful information whether you’re looking to sell now or in the future, and even for those looking to buy a home to gain some insights and understandings to what the seller is going through. 

All right, let’s hear from today’s sponsor, Real Estate RPH, and then we’ll jump into my interview with Nate. 

[MESSAGE]

[0:00:38] TU: Are you planning to buy a home in the next year or two? With the state of current home prices and mortgage rates, the home-buying process can feel overwhelming. But what if you could leverage the knowledge and ongoing support of someone who has worked with dozens of other pharmacists through their home-buying journey all at no cost to you? 

I’m talking about Nate Hedrick at the Real Estate RPH. Nate is a pharmacist who has been a partner of YFP for many years now and offers a home-buying concierge service that can help you find a high-quality agent in your area and support you throughout the entire process. Head on over to realestaterph.com or click on the link in the show notes to schedule your free 30-minute jumpstart planning session with Nate. 

[INTERVIEW]

[0:01:24] TU: Nate, welcome back to the show. 

[0:01:25] NH: Hey, Tim, always great to be here. 

[0:01:27] TU: Well, I’m excited to be back in the host seat. Not too long ago on the podcast episode 316, you interview Neal and Katie Fox about their journey and lessons learned as first-time home buyers. What a neat episode that was. Just to recap for our listeners that maybe haven’t heard that episode already, tell us about that interview and the story with Neal and Katie. 

[0:01:47] NH: Yeah. Neal and Katie were just an awesome couple that I got a chance to work with as home buying concierge clients. We got them hooked up with an agent, helped them buy their first home together. It was just really cool to be able to sit down and talk to them about what it’s really like to buy a home in this market. We went through everything from A to B or A to Z and just got their perspective on it, right? Somebody that doesn’t have experience, right? 

I sometimes forget how long I’ve been doing this. There’s things that I don’t even think about anymore, as a first-time home buyer. So, to actually talk to first-time home buyers and see where their pitfalls and strategies came from, that was just, it was fun. It was really cool to talk to them. 

[0:02:24] TU: Yeah. Great interview. They had some really interesting tidbits, lessons learned, things on financing, importance of working with an agent, who you’re working with and the value of that relationship. We’ll link to that episode in the show notes if folks haven’t already heard it. Today, Nate, we’re going to be talking about a topic we haven’t really covered in depth before. I’ve lost track. You’ve been on the show at least 10 times now, maybe more, obviously co-host of the Real Estate Investing Podcast. We talk so often about buying a home, but we haven’t really talked about selling a home. 

Now, for those that are in the home buying journey and are listening to this and saying, “All right, I’m turning this off, they’re talking about selling a home, that’s not applicable,” hold on, right? Because I think as you and I talked about before the show, as a buyer, if you can really understand some of these tips and components as it relates to the seller, that is going to be helpful to you and the buying journey as well. 

[0:03:17] NH: Yeah, 100%. Understanding that other side where the other person’s coming from, it’s really difficult, especially if you’re a first-time home buyer, you have no idea what it’s like to sell a home, right? You don’t have an idea what it’s like to buy a home. So, being able to put yourself in somebody else’s shoes as you’re going through that journey, it can give you some perspective and it can be really helpful. 

[0:03:35] TU: Now, before we jump into five tips for those that are selling a home, and again, the relevance of that to buyers as well, important to talk about context, right? We’re recording this episode in summer, 2023, wild times just in terms of where the market’s at, what’s happening with interest rates, where the economy is at. I do think that context is really important to understand things like leverage, right? As a seller or as a buyer. Nate, just give us a quick update knowing that every market is, of course, different, but you have a unique perspective working with pharmacists and agents all across the country. What are you seeing right now? 

[0:04:07] NH: Yeah. Obviously, real estate is local, right? What I tell you that we’re seeing may not be exactly applicable in your area, but broadly what we’re seeing is low inventory, right? It’s still a seller’s market. We have a lot of people who are sitting on three and a half percent or lower interest rate loans that they refinanced over the last three or four years, and they don’t want to move if they don’t have to, right? 

You’ve got people that want to buy, as there always are, but people that aren’t really ready to sell their home yet. So, that’s causing a lot of low inventory. We’re seeing high prices still and just things are moving quickly. It’s not as crazy as it was in 2021 and early 22, but it’s still an interesting and difficult time if you’re a buyer and a pretty good time if you’re a seller in most parts, because you can typically move your houses pretty quickly. 

[0:04:54] TU: Yeah. It’s really interesting. Jess and I often talk about this. We love our home, right? But it’s just a natural point of conversation where it’s like, “Well, what about moving here? What about doing this?” When you look at what interest rates are doing right now, not only what our interest rate is, refinance close to three, but seeing what you’re going to be buying at, but then also just the elevated prices, because of the supply and demand, it’s a double whammy effect, right? 

[0:05:17] NH: Yeah. 

[0:05:18] TU: For existing home buyers to give up that loan, to take on a new higher interest rate loan, as well as a higher mortgage on price of the home. So, that makes sense, what’s happening there on the supply side. Then to be frank, Nate, I’m feeling for the first-time home buyers right now, right? Many of them we know in our community are also facing significant student loan debt. Here we are now ready to have those payments turned back on. 

I think that’s a topic we just aren’t talking enough about. We know from our community, student loans and home buying are for many people, two of the top pain points, right, especially for that new practitioner group. I think when we look at the rising home prices, rising interest rates, student loan, payments turning back on. We’re looking at more challenges that I think are being added to this. Doesn’t mean it’s impossible, right? Doesn’t mean it’s a goal that can’t be attained, but it means we’ve got to be a little bit more diligent in the planning process to make sure we’re looking at the broader financial plan. 

[0:06:13] NH: Yeah. I appreciate you keeping it at the forefront, because I know if it were me 10 years ago, just starting out, dealing with loans, if they were on pause, I don’t know, it’d be in that bucket of, “Well, I’ll figure that out when it becomes a problem,” right? I 100% know that would have been me 10 years ago. Talking about it is super important, because don’t wait to figure it out, start figuring it out now, before it really becomes a problem. 

[0:06:36] TU: Yeah. This is where the strategy, we’re not going to dig into student loan strategy right now, we’ve done that many times on the show before, but this is where that strategy part becomes really important, because not all student loan repayment plans are created equal in terms of the impact they have on monthly cash flow. For example, someone who’s pursuing loan forgiveness versus someone who’s doing an aggressive debt repayment. Those are going to have very different impacts on the budget, which obviously is going to change also how much money is available, discretionary income available, potentially for a home purchase. 

Another example yet of where these puzzle pieces need to come together. Let’s talk Nate, five tips for those that are selling a home. Number one, not all agents are created equal. I’ve experienced this on my own home-buying journey. Not only that, but also there’s the using an agent versus not using an agent for those that are thinking about potentially a for sale by owner. Talk to us about tips as it relates to the agent and why that piece is so important. 

[0:07:31] NH: Yeah. I think something you mentioned there about the first, the for sale by owner versus an agent. I think a lot of people are, they look at the market, they look at how, “easy” it is to sell a home. The first thought becomes, “Well, can I just do this myself? Couldn’t I just kick the agent out of the whole process, save a ton of money on commission?” Truthfully, it can be quite a lot, right? Typical way the commission structure works to peek behind the curtain, right, is that it’s going to be about five to 6%, depending on the agent that you work with, is what the seller is going to pay toward the commission. That, that seller paid commission is what goes to both the buyers and the seller’s agent. 

It’s usually split 50-50. So, if we say 6%, you’re talking about 3% for the buyer’s agent, 3% for the seller’s agent. That can be $18,000 if you’re talking about a $300,000 home, which is a huge chunk of change. I think it’s natural for people to think, “Man, I can just do this myself. Why bother? I don’t want to pay that $18,000.” But there’s a couple of pieces I think that I think what people should realize before just jumping to that route. Only about 10% of homes in America are sold for sale by owner. 

Again, there’s a reason for that. One of the stats that I like to throw out there, and it’s biased, so I’ll lead with that, but that is that according to the National Association of Realtors, and this is looking at 2021, for sale by owner homes sold for about, on average, $225,000 in that year. The typical agent-assisted home sale was about $330,000. About $100,000 difference. Now again, I think that’s biased. I think a lot of four sell by owners tend to being like friends and family. They bring the prices down intentionally in some of those cases right or wrong. I think that there’s some bias to that number. 

Let’s say that $100,000 number, let’s just cut it in a fourth, right? Let’s quarter it to $25,000. If you have a $300,000 home, that $25,000 difference is more than the 18 grand we talked about in terms of commission sales. I still think there’s a lot of value there. The typical agent is going to bring a lot more value to the actual home and getting it for the right price, just on a dollar-for-dollar basis, even if again, we take that number and cut it in the fourth. I think that’s an important number to look at and to think about is that the agent is going to be able to bring more value or get more value out of the home on average than you might as a for sale by owner. 

Then the natural next question to that becomes, “Well, why? What are they doing that’s different?” I think a lot of it comes down to just their experience and their ability to price the home appropriately and get the maximum value there. One of the things that an agent’s going to do if you are ready to sell a home, and we can dive into more of these details in a moment, but they’re going to come in and they’re going to help figure out, “Here’s where I think your house sits today. Here are some things that you could change to improve that value, whether it’s curb appeal or decluttering or whatever. Then here’s where I think the market value is on that property.”

Once you know market value, then you can start to come up with strategies for how to price that home. That’s where an agent’s really going to come in, right? Let’s say we were going to price it 10,000 under asking or under market value rather to try to generate a lot of business or let’s say we’re going to price it right at market value and try to get the most dollars we can for it right up front. There are a lot of different things that go into that strategy that I think an agent brings to the table that a typical home seller might just not have access to that information or be aware of. 

Then if you go beyond the dollar amount, I think that that’s where the agent comes in with paperwork and helping with all the legal paperwork. There’s a lot of legality that goes into home sales and a lot of this a title agent or a good lawyer can help you with, but the agent takes all the guesswork out of that, right? Everything’s been predetermined, pre-established by a broker. It’s all going to be put in front of you in the way that it needs to be. There’s a lot of value that can be created from that. 

[0:11:15] TU: Yeah. The other thing too here Nate, great points, that stands out to me would just be peace of mind knowing that there’s coordination, assuming, and we’ll talk here in a moment about why all agents are not created equal here. We’re talking about agent versus for sale by owner. Peace of mind assuming you’ve got the right person on your team, right? That’s coordinating all of these, but also time. I’ve gone down this pathway and I don’t think I would do it again, to be frank. 

I think even though it was someone within the neighborhood and it was a pretty easy process, there were a lot of those questions about pricing it appropriately and is this fair, right? Now, you’re not dealing with, what does the market say the home’s worth. But it gets more emotional when it’s just one party with another party, right? Is this fair between two parties? But then just the time and the coordination, the title, and there’s this lingering feeling of like, is everything being done correctly and coordinated? 

I remember, maybe part of that is just my type A personality a little bit, as well, but this is a podcast of busy healthcare professionals, like I think they can appreciate, especially if the ROI is there as you mentioned, how important it could be to really make sure that you’ve got someone in your corner. Now, that’s an obvious one, I think for many would be the agent versus the for sale by owner, especially considering folks are busy. 

Again, not all agents are created equal. I think this is interesting, right? We talk about this a lot on the show about financial planners. I think we’ve done a really good job highlighting how the term financial planner in and of itself, doesn’t mean a whole lot and how there’s so much variance between planners in terms of credentials, and experience, and how they charge, and transparency. I don’t think we give the same diligence to real estate agents. I don’t know why, but the more I started to think about this, I’m like, “Well, this is really interesting. Experience matters a lot.” 

Somebody understanding my local market matters. Connections, right? Someone who can, you shared before we hit record about an example of a deal you’re working on where some pretty simple work needed to be done and you’re able to line up a contractor and move that forward. That matters, those relationships. Talk to us about why the right agent matters and how do people vet this? How do they find that? 

[0:13:28] NH: Yeah. It’s certainly tricky. I think what most people do, I’ll tell you what most people do and I’ll tell you what I’d recommend, right? What most people focus on is the commission, right? They want to find out how they can get this on for as cheap as possible as – 

[0:13:39] TU: Like an interest rate on a mortgage, right? 

[0:13:41] NH: Right. Exactly. Yeah. “I want the guy that’s five and a half percent.” Now they got it 6%, right? People focus heavily on that. Again, in the grand scheme of things, that 1% difference that you might find across the market, that’s not where your focus should be, but that’s what a lot of people like to focus on. The other thing to focus on is when you do a listing presentation, when I present to a seller and say, “Look, this is what I’m going to do for you.” They’re really focused on the number. “Well, what do you think you can sell my house for?” 

I’ll tell you, there’s only so much an agent truly can do with the home that’s in front of them, right? The same home, the same parameters, different agents are not going to be able to sell that house for more, just being upfront. What a good agent’s going to do is come in and tell you, “Here’s how to maximize the value of your home. Here’s how I can sell it for more.” Not, “Here’s the same house as the next agent’s going to be selling, we’re not changing anything.” They’re not going to ink more value out of that house just by being a “better agent,” right? 

What a great agent it’s going to do is come in and say, “Look, if you declutter this a little bit, if I let you borrow this storage unit that I have specifically for my sellers, we get a couple of these pieces of extra furniture out of here. We take down some of the pictures.” We hear the things that we’re going to do, that’s how you’re going to maximize value. 

[0:14:52] TU: Yeah.

[0:14:53] NH: When I’m talking to a client and what I recommend everybody do out there, if you’re interviewing a seller’s agent, talk about, “What are the things that you’re going to do to maximize the value of my home?” Not, “How can you sell this for as much money as possible?” Those are closely related to the same question, but they’re not the same question. 

[0:15:10] TU: Yeah. Future episodes, I just took a note, we should do a future episode on questions that you should ask right when hiring an agent. I think that’s a really good, really good one to consider. In your experience, working with other agents, but also in your own experiences as a realtor selling homes, what are some ways that you’ve either stood out? I mean, experience, let’s say that’s a given or that you see another agent stand out. 

[0:15:32] NH: Yeah. So, I think there are a lot of big-ticket things that people stand out with that are attention grabbers. The one I mentioned was the storage unit. I’ve seen agents that will offer those pods. They’ll say, “Look, if you sell with me, I will give you a pod to put all your extra furniture in. Just put that in storage for a while, while we sell the home.” There’s definitely some value to that. I’ve seen agents offer staging, especially if the home is vacant, or if you’re in the process of moving out and things are hodgepodge, you can have the home staged and that can be really advantageous, and some agents will offer that as a big incentive.

I’ve also seen a lot of – this is pretty common on billboards with big-ticket, high-volume agents, where they’ll offer a guarantee, right? We’ll list your home and if it doesn’t sell in a month, then we guarantee, we’ll buy it from you. There are a lot of stipulations to that, but I’ve seen that as a big-ticket thing.

I’ll tell you where I try to offer value. Again, these are things that I might pepper in where it makes sense. Most sellers actually don’t need a lot of those services quite frankly. I try to just make things as easy as possible. You mentioned earlier, if you’re a busy working professional, if you want to hire an agent, you’re doing so because you want to take all the guesswork out of it and all the legwork out of it, right? It should be as painless as it possibly can be. That’s what I try to come in and show them how I’m going to be able to do that. That’s what I encourage other sellers to look for when you’re talking to a good agent.

[0:16:53] TU: Yeah. I think, Nate, the huge advantage that you have, the relationship piece, asking good questions, you’re a pharmacist that has gone down the path of a first-time home buyer, you’ve obviously worked with many individuals, you understand what it means to buy a home when you have student loans and the considerations. Certainly, it’s not financial planning, but it’s being able to ask good questions that really help people self-reflect and understand and not just like, “Yup, I’m ready to sell your home,” right? Whether or not that’s maybe in their best interest.

[0:17:25] NH: Even if it’s something as simple as, “Hey, you want to sell your home. What’s more important? Getting every single dollar we can out of it, or closing in the next 30 or 40 days so that we can move into the next place?” Or whatever.

[0:17:37] TU: It’s a goal.

[0:17:38] NH: Just a simple question about, what’s the goal of getting this home sold, right? Is it just to move it as quickly as possible, or is it to maximize value and starting from there?

[0:17:47] TU: Great stuff. That’s number one on our five tips for selling a home. Not all agents are created equal. Number two, you alluded to this a little bit already, but I want to dig deeper. That’s really, in terms of determining what is or not worth it, right? Upgrades, repairs, boosting curb appeal, staging the home, right? Maximizing the value of what someone may be able to get out of the home is what you mentioned just a few moments ago. What tips do you have here for sellers?

[0:18:11] NH: Yeah. This is something where a good agent can really make themselves worth it, right? Because there is a ton of stuff. I look around my house today and think like, “Man, if I was going to sell it, I have to fix that and I gotta paint that.” There quickly becomes this list of stuff that you could do before selling a house. What’s the ROI on that? A great agent is going to know the local market, is going to know the comparable properties that have sold recently and is going to be able to see what those high-value items are that you should focus on and what those low-value negative ROI things are that you could just ignore, right? 

There’s always going to be stuff to fix on a house. The trick is finding the things that you can do now that are going to be not very labor intensive and we’re going to maximize the overall value and the speed with which we can sell that property. It’s a myriad of items. It varies based on the home itself. Generally speaking, you’re looking for things where, “If I don’t fix this, is it going to prevent somebody from making an offer?” That’s a really common one. Let’s say, the roof is actively leaking. A lot of people are not going to be interested in jumping into a $10,000 or $20,000 fix right off the bat. Those are things that are obvious that, “Hey, if I fix this, yeah, my ROI might not be huge, but it’s going to make people want to offer whereas, they may have not previously.” Thinking about things like that.

Then also, thinking about things like, hey, if other homes in the area that have a deck, for example, a back patio, or a deck, all of the deck houses are selling twice as fast as all the houses that don’t have a deck, right? You’re in a very similar community. That might be something that’s worthwhile putting in, right? Especially if you’ve got a sliding door already out there and it’s ready to go, it’s just begging for a deck. That might be an easy ROI item that you could tack on. It’s going to be high cost, but it might make that home sell for that much more. It’s those things that a really good agent’s going to be able to jump in and give you advice on to make sure that you can maximize that value.

[0:20:05] TU: Yeah, and that’s a great example with the deck, right? Because I think about, again, if we put ourselves in the buyer’s shoes, all of a sudden, I see the home as having a new outdoor living space. Maybe it’s not all the way there, but you’re providing vision, right? For somebody to come in and say, “Whoa. Wow. I’ve got maybe a smaller square footage home, or maybe it doesn’t have all the bells and whistles that I wanted, but I can really see how I could use this space differently.” Great insights there. I think that’s just so important.

Again, putting yourself in the buyer’s shoes, the roof example, the deck example, especially first-time home buyers are not coming with a bunch of cash sitting in the bank to do some of these things, right? Minor upgrades, minor improvements. But things that you can do. Obviously, the question, “Is there an ROI there or not?” is really going to be helpful to those buyers. I also think, Nate, be curious to hear your perspective here. Where you’re at in terms of price point of the neighborhood, I think could be really important here on potential ROI, right?

If I am the biggest house, the most expensive house in the neighborhood already, and I add a $10,000 deck, hoping I can raise the price $20,000, maybe not as much if on the low end. Is that fair?

[0:21:16] NH: Yeah. It’s spot on, right? Again, that’s where a good agent is going to be able to come in and say, “Look, here are the comparable properties that have sold. This is what people are going to be looking at.” Or better yet, one of my favorite things to do is to look at is what else is on the market today. If I’ve got a $300,000 home and there are three other $300,000 homes for sale in the same community, how am I differentiating? I don’t need to undercut them by $5,000 and just be the cheapest game in town, but I also can’t be $30,000 more and expect to be the first one that everybody buys, right? Unless, there’s some real big value item that I’m bringing and it’s different than those other homes. That’s where an agent can come in and really try to help that out.

[0:21:52] TU: Great stuff. Number three on our list, why it matters to depersonalize, or neutralize the home. This gets a little bit to what we’re talking about, wanting the buyer to really have a vision of their own. I know this is something that you hear all the time, you read about, but as a buyer, myself going through the process twice, I was amazed at how often this wasn’t done. Tell us about why this is important and what this may look like.

[0:22:16] NH: Yeah. I think everybody gets – you get really comfortable in your own home, right? You know what you like. You’re used to it. You think it’s perfect, because you live there. Why wouldn’t you, right? It’s a natural thing to do. I think it’s easy to miss some of the stuff that might come across to a buyer as making it feel not welcoming. That might be something that to you, again, is very welcoming. Families, family photos, all the furniture that you love, the beat-up chair that you love to sit in every night before going to bed, right? That’s your spot. I get it.

But somebody else walking in might look at that and go, “Oh, my God. That’s been scratched by the cat for 20 years. This looks horrible.” You have to be able to put perspective on that, as if you were a total neutral party walking into that home and trying to envision it as the place they want to live. You have to be able to reset that. One of the ways that I encourage sellers to do that is to really try to neutralize things. Like you mentioned, neutralize the home to where they can see that it’s someone living there, it’s comfortable, it’s a place they want to be, but it doesn’t feel like it’s not their space yet. They can start to envision themselves in that space because it’s not so personalized, or so specific to one individual.

[0:23:27] TU: Yeah. I think of things like paint and photos and odors in the home, right? Good, bad, indifferent. You gave some great examples, like the chair that we like to sit on at night. Some of these, what’s great about this is it’s not wildly expensive, typically, right? Neutralizing paint colors. I have vivid memories of going into houses where it was red carpet, lime green walls, and it’s like, man, that is such an easy – or dark paint that made the room look smaller. Miniscule changes in light fixtures and other things that can really open up a room and make it look bigger.

[0:24:02] NH: You mentioned smells too, like you hit the nail on the head with things that are unique can be the problem, right? Maybe it’s an air freshener you have that you love, and it’s like tropical oasis or whatever. 

[0:24:11] TU: In your face.

[0:24:12] NH: It’s like pineapple when you walk in or whatever, right? That stuff can be just as bad, even though it smells good, it can be just as off-putting to somebody. I’ll give you a great example. I had a client that was real sensitive to the candles. We’d go into any house, even if it smelled phenomenal to me, she would immediately say like, “Oh, I feel like I’m getting a migraine, like is driving me crazy.” Yes, it’s a good smell, but it’s not helping your case. It’s all about neutral. That’s the way you’re going to maximize that potential value and the people walking in and out of your home are going to have a good experience. 

[0:24:41] TU: I like that. That was number three. Why it matters to depersonalize. Why it matters to neutralize the home. Number four is setting the price. I’m really curious, Nate, I have not yet gone through the buying or selling process in this chaotic market that we live in. Just curious about what you’re seeing in terms of pricing lower to try to generate more interest. Maybe you have somewhat of a bidding war, pricing it a little bit higher because of the market and where things are at. Again, all markets being local. What are your thoughts here? 

[0:25:10] NH: Yeah. I think the biggest thing here, and I tell this to every single client I work with. The list price of a home is completely made up. The market value of the home is the number you want to determine, right? All pharmacists here, we’re all interested in facts and numbers, right? I don’t want to just make things up. That’s why you want to determine market value first and adjust from there, right? A good agent’s going to come in and tell you, “Look, this is the market value of the home. It’s between 340 and $350,000.” They should be able to give you a pretty tight range. 

“And here are the factors that I’m basing that on. If I were to list your home today, here’s the pricing strategy I would use.” Like you said, it can be anything from listing it at that 340 or 335 mark to try to generate a lot of activity. Typically, we’re going to do that if there are many other homes on the market, right? That’s more typical in a neutral market or a buyer’s market, where I want to be the first one of the five that are available that people go see. The reason they’re doing that is because it’s priced lower than everything else, right? I’m still going to get close to market value for it, but I’m going to be the first one that everybody looks at, especially – 

[0:26:10] TU: Yeah. I think of the filters, right, on realtor, right? 

[0:26:13] NH: Exactly. 

[0:26:13] TU: Or filtering by price. Yeah. 

[0:26:14] NH: Exactly. The other strategy is, hey, if there’s nothing available, if you’re in a market like the community that I live in, where a home goes on the market and it sells in two days, because everybody wants to buy and there’s not enough inventory, you can push that market value quite a bit, right? If we determined that it’s 340 to 350, I might list it 375 and see what happens, right? You might get a bite at that price and as long as it appraises, awesome. You’ve gotten more than market value out of your home, but you have to start with what is the market value before you can determine a strategy. 

So many agents, I hear this all the time from prospective sellers, they will just throw these giant numbers at people. They won’t tell them market value, they’ll say, “Well, if I were to list your home today, I’d list for $400,000.” Why? Just because it’s the biggest number and you want me to work with you, or do you have a real reason behind that, right? That’s the kind of questions you want to be asking. 

[0:27:03] TU: Since you brought up appraisals, I want to talk about that for a moment, because in my experience, it feels like appraisals are a little bit like the Wild Wild West, and just a ton of subjectivity. I know that’s supposed to have been tightening up. I don’t know, it just feels like it hasn’t when you think about the process and how it’s completed. What are you seeing, again, small sample size in your area, but what are you seeing in terms of, for people that are pushing price point, that maybe is x% above market value? Like how tight is the appraisal of the market value right now? 

[0:27:34] NH: Yeah. Appraisals, unfortunately, are just still so subjective. Typically, what I’m seeing is that if you get a home that is over market value, but there are multiple offers on that home, the appraiser is at the point where, and again, this is not actually how they work, but what it feels like is that they’re looking at it and saying, “Look, this is an arm’s length transaction.” That’s a real estate word for basically, it’s on the market and anybody can buy it. This is an arm’s length transaction. There are multiple people interested at 380, and it’s probably worth 380, right? If lots of people want it, I don’t have – 

[0:28:05] TU: Yeah. That becomes the market value. 

[0:28:06] NH: Yeah. I don’t have the empiric evidence to say it’s worth more than 350, but I do have six people who all threw an offer at this house at 380 and near it. Maybe that is the value, right? I don’t think that’s actually how appraisers are doing it, but that’s how it feels. They’re supposed to base it on comps. They’re supposed to base it on recent home sales. Ideally, it’s based on homes within a mile or less radius, really even less than a half a mile within the last six months. There are certainly times where it doesn’t feel like that’s being followed, good or bad, right? Negative or positive, they’re picking other homes or whatever, but that’s the ideal state. 

[0:28:39] TU: Yeah.

[0:28:40] NH: It’s also a tough job. Not every home is built the exact same way, right? You don’t have just the same cookie cutter house across every block. It’s not an easy way to determine. That can make it difficult. 

[0:28:51] TU: Yeah. That’s a good point, right? We all know that a four bedroom, two to four bedroom, two thousand square foot homes can be very different. 

[0:28:57] NH: Absolutely. 

[0:28:57] TU: So, if you’re just looking at those bones for comps, that may not be a fair comparison. I’ve been in those situations where you’re in areas that aren’t as populated, and they’re trying to draw in comps within a reasonable geographic range. You just know like, “Ah, that’s so different.” Right? Now, if you’re in an area where you’ve got multiple subdivisions and the same type of home and thousands of them, maybe that’s not as significant of a difference. All right. Number five on our list of tips for sellers is understanding buyer versus seller costs. Who is typically paying for what? Tell us more, Nate. 

[0:29:35] NH: Yeah. This is a big point of when you get a house when someone’s actually buying your home and get it under contract, there’s going to be a lot of negotiations about who’s paying for what. This can be state-specific. Some states lay out exactly how it’s supposed to be. Then you can deviate from that. Others are just up in the air, right? You determine what’s normal for your market. 

It can be everything from the taxes, right? How are you splitting the taxes? It can be the title fees. The actual process of transferring that title, who’s paying for that. Typically, it would be split 50-50, but maybe in this market, you want the buyer to cover everything or whatever, right? That’s all part of the negotiation. There are some things that I think typically fall on one side of the other, so things like inspections typically fall on the buyer. I can’t think of a single transaction I’ve ever done with the seller, helped to cover inspection fees, but I suppose it’s out there. 

Then closing costs. Closing costs are usually split, except for the buyer-specific stuff, like down payment and rate lock fees, and all that other stuff. There are a lot of different ways you can slice that up, but typically things are cut 50-50 and then anything that’s very buyer-centric is going to be covered by the buyer and vice versa. That’s what I typically see, but you can certainly build it any way you like. 

[0:30:48] TU: We were talking before the show, that’s all when things go as planned, right? But there’s situations where once someone’s under contract and then a problem’s identified, right? Typically, under inspection or something else comes up, major, right? Septic tank, roof types of things. Tell us about your experiences here and how that may impact this item. 

[0:31:09] NH: Yeah. So, one of the items that typically comes up is a seller’s credit, is what it’s called. Typically, if you are selling a home, you might be providing some credit back to the buyer. The most common version of that is what’s called a closing cost credit, where you’re basically saying “Here, I’m going to give you $3,000 toward your closing costs to help you with some of the cash that you’re going to need to buy the house.” What I often will see is somebody that says, “Hey, look, if the house is listed at 340 and we’re close and we’re negotiating down to 335, maybe we can agree on 340, but you give me 5,000 back in the form of closing cost credit that will reduce the cash that I need as a buyer.” 

The seller still makes the same amount, right? The net value is still 335, but it’s helping the buyer out quite a bit. That’s very common, but what you mentioned where we’ve got a problem that might come up down the road or someone’s trying to push that seller’s credit beyond the typical amount, that’s where you can start to get into some issues. I had a deal a couple of years ago. I was actually representing the buyer. During inspection, we determined that the house needed a new septic tank and it was way out in the woods. It was a five-bedroom home. It was pretty large. It needed a huge new, I mean old type of tank dugout, new one put in $10,000 fixed. Easy. Yeah.

It became a question of like, “Well, how do we do that? When do we do that? Right? Is it before closing? Is it during after? Like what does that look like?” There are a lot of different ways that you can build that in. For this particular deal, what we ultimately determined was, we had two companies come out, give quotes. We basically all agreed that this was the company we were going to go with. Buyer and seller agreed to that. The seller provided a $10,000 credit toward that septic system to be installed after closing. 

There are certainly risks to the buyer to doing that. There are risks to the seller to doing that, but it was what we landed on. It’s something where if and when those problems come up, you want to talk to your agent about, “Hey, what does this look like if I do X, what are the ramifications? If we do Y, what are the outcomes?” Then you can make the best possible determination. There are lots of different ways that you can build that.

[0:33:14] TU: Great stuff. Another example, right? We’re a good agent with experience. Where it really comes in, right? I have been through this scenario. I’ve seen how this is done, multiple ways this has been done. Seeing how all of this ties together. Well, there you have it. Five tips for those that are selling a home and also for things to be aware of that those that are buying a home and to have the helpful insights. Nate, as always, really appreciate your time, your insights, your expertise, and for coming on the show. 

[0:33:39] NH: Yeah. Thanks for having me, Tim. 

[0:33:41] TU: Nate and I have covered a ton of information in this podcast. Imagine working with Nate one-on-one through your home-buying journey and having his support to give you much-needed peace of mind. We know many pharmacists want to feel confident about big financial decisions, including a home purchase. 

If you have fears of being house poor, concerns about the impact a home purchase might have on your other financial goals, Nate and his home-buying concierge service can help all at no cost to you. You can visit realestaterph.com or click on the link in the show notes to schedule your free 30-minute jumpstart planning session with Nate.

[DISCLAIMER]

[0:34:20] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and is not intended to provide and should not be relied on for investment or any other advice. Information in the podcast and corresponding material should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Furthermore, the information contained in our archived newsletters, blog posts and podcasts is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analyses expressed herein are solely those of Your Financial Pharmacists, unless otherwise noted, and constitute judgments as of the dates published. Such information may contain forward-looking statements, which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward-looking statements.

 

For more information, please visit yourfinancialpharmacist.com/disclaimer. Thank you again for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

[END]

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