Whether it is your first time to sell a house, or it has been a while, it is important to go through all of the things to prepare for (and there are a lot). To help you out, we have put together an in-depth list of things to consider when selling your house in Houston TX.
1. Amount Of Time It Will Take
The first thing to consider is the amount of time it will actually take you to sell your home. This can change somewhat depending on a number of variables, some of which you can control, some that you cannot.
What you can control:
- Is your house priced to sell?
- Is your home updated?
- Is your home clean?
- Do you have good photos?
- Do you have a quality real estate agent?
1. Is your house priced to sell?
You can easily write an entire article on pricing your house correctly. What data shows, is that the most amount of traffic occurs in the first few weeks, then tapers off substantially.
If you are trying to keep a price that is unrealistic for too long, you will lose a huge chunk of your potential buyers. Thus, turning what could be a 2-month listing, into a 6-month or more listing…and as you will see shortly, has a major impact on your holding costs.
To understand if you are priced correctly, you first need to know what your house is worth.
2. Is your home updated?
If you are trying to get a quick sale and top pricing, your house needs to be updated to 2019 standards. If you were to turn on HGTV, the styles you see there should match what is going on in your house.
Now, I understand that everyone is not going to be in a situation to spend tens of thousands of dollars to fix up their house.
If this your situation, it is best to leave the house in it’s current state, rather than to update a portion of the house then try to sell it for a higher price. This is usually a bad idea, and can cause you to lose money in the process.
Why is that? Well think about it like this.
Say you are on the opposite end side of things, and you are looking to buy a new house.
You find a house that is all outdated except for one of the master bathroom that was updated in a style that you don’t like. You are going to renovate the whole house, including the bathroom because it isn’t at all what you want. The seller now wants to get more money for the house than they had previously wanted because they spent $10,000 on a new bathroom.
If you aren’t going to fix up the whole thing, then don’t waste your time and money trying to do something that can cost you. Instead try cleaning up.
3. Is your home clean?
If your house is fully updated, then spend some money and get it deep cleaned, and touch-up the paint in a couple of rooms.
A very nice cleaning of tile in a bathroom, and steam cleaning the carpets can go a long way in making the house more desirable because it isn’t dirty looking.
As I said in Step 2, instead of trying to renovate a small part of your house, spend your money cleaning and doing little touch-ups to get it in a more presentable shape.
You may not necessarily add any value to the property, but you can maximize the value that you have, and potentially get it to sell faster than you would have otherwise.
4. Do you have good photos?
Don’t skimp on the pictures!! If your agent tells you that they are good photographer and can do it for free, make sure to see what the quality looks like.
This is going to determine whether people will even want to stop by to see your house. If the inside of your house is very outdated, but you have a great backyard, try to get some great photo angles that really show it off.
People have different tastes. A key feature that your house has may be more desirable than something it lacks – let people see it.
5. Do you have a good real estate agent?
The fact is that the industry is fully of really bad agents – the majority of agents add little value, and some can actually make the process more difficult for you.
This is not because they are bad people, or are unintelligent. It is because they just don’t have the necessary negotiation skills, and the market knowledge that the top tier agents possess. A real estate license is pretty easy to come by, and the market has become diluted with agents that will not really add any value to you.
Don’t just go with a relative or friend – they could end up costing you thousands. Go with a professional that has outstanding references.
Conclusion – Do your best to maximize the things you can control.
What you cannot control:
- Is it a buyers or sellers market?
- Is your neighborhood hot or cold?
- Is it a good time of year?
1. Is it a buyers or seller market?
You really have no control over this.
The equilibrium point, or balance point for deciding between a buyers and sellers market has historically been around 5.5 to 6 months of inventory of houses. Whenever this gets too low, then there are a lot of people who are trying to buy the same house, thus it will be a seller’s market. Whenever this gets too high, then there are plenty of houses on the market for buyers to choose from, and they can have more control.
In a buyer’s market, house sells are slow and there is typically a lot of inventory to choose from. Above you can see a classic buyers market. There was nearly 8 months of inventory back in August of 2010. At this point there were so many houses on the market, that buyers could demand what they wanted.
In a seller’s market, it is the opposite. Houses will get offers (sometimes multiple) on them right after hitting the market. The data above was from 2014 where you had an inventory that dipped down to close to 2 months during the year! The market was HOT at that time.
We are still in a sellers market at this point, but we have been drifting upward over the past several years. There are a lot of indicators that are pointing to a recession in 2020 and many economists agree that the housing market may be the thing that is keeping things afloat. There is no way to fully predict the future, but all signs point to what is considered a contraction of the market and a slowdown in the economy.
2. Is your neighborhood hot or cold?
This is independent of the market.
If your neighborhood is hot, you will see rising prices and short DOM (days on market) for houses around you.
If it is cold, you will see that the list prices around you will have been slowly declining. This can be due to many reasons. If you are in an area that has flooded three years in a row, there is a good possibility your neighborhood could be cooling.
3. Is it a good time of year?
The seasons play a HUGE part in determining how long it will take to sell your house.
What you can see in the graph above is that there is a clear cyclic pattern for interest in houses throughout the year. With the highest point coming in at the end of July, and the lowest point at the end of December.
In general, spring and summer are the best times to sell a house, and winter is the worst.
It is all about comfort and accessibility here. When the weather starts getting nice, people are more willing to get out of their house.
During the summer, kids are out of school. Many families don’t want to make a move that will disrupt their kids schooling, thus wait until the school year ends.
April – August are the best months to sell, while October – February are the worst.
Conclusion – Again, do your best to maximize the things you can control.
2. Holding Costs
One of the most often overlooked portions of selling a house is the holding cost. It makes sense. You are used to paying your bills every month, so continuing to do so while selling your house likely won’t make you pause to add it as a consideration.
Think of it this way – if all of your expenses on the house could be gone tomorrow vs. 6 months from now what would that look like?
- Mortgage Principal and Interest – More so the interest is the important part because you will be getting the principal back from the sale
- Insurance – you can’t stop paying insurance. You may not think about this if it is in an escrow account
- Property Taxes – you are still paying your taxes for the duration you have the house. If you have this in escrow, it will be pro-rated
- Utilities – water, gas, electricity
- Others – HOA dues, PMI, lawn care, etc.
If you are paying $2,000 a month on expenses that could add up to $12,000 over the course of 6 months if it takes that long to sell.
3. Repairs & Renovations
Most people don’t like to have to fix things, there is a lot of inconvenience. Here is my advice – Don’t do anything until you make a plan. Sit down and put a pen to paper and look at the amount of work you are going to do and figure out what the return on investment is.
You have a house with really old carpet. You could:
A) Spend $2,000 and put new carpet throughout. It can really make the house look fresh with just some nice, new mid-grade carpet. However, if all of the houses in the neighborhood have wood floors, then that $2,000 may have not actually added any value.
B) Spend $10,000 on new wood floors. This can add desirability to your house, and make it appear to be better quality than what it actually is. However, if the rest of your house needed to be fully remodeled, you may not even increase the value of your home by the $10,000 you spent.
C) Sell your house As-Is. Let the next person decide what to do with it. You won’t get the potential added equity from renovating the house, but you also don’t risk wasting time and money.
Choosing to do updates without doing the proper market research will certainly cause you to lose money. You might fix the wrong things, or choose wrong designs/colors and basically just throw the money away. Ask a good real estate agent what you should spend money on to maximize value for your particular house. Work with a designer that has experience in your neighborhood and knows what styles will work.
There are some people that recommend getting a pre-inspection of your house so that you know what the problems are, and you can fix them ahead of time. To be honest with you, I am still on the fence with this, so I will just give you the pros and cons of it.
- You are going to have to pay for the additional inspection. This will range from $400 for a general inspection, all the way up over a $1,000 if you have a structural engineering inspector, or one with a thermal camera.
- An inspector will need to find SOMETHING to justify their usage. If they can’t find any low hanging fruit, they will have to dig deep and get nit-picky
- You will have piece of mind that any major issues are caught and can be fixed before putting the house on the market.
- There is less chance buyers will back out due to a needed repair. If you go under contract and buyer finds there is a large repair that is needed, they may decide to just cut their losses and move on.
4. Closing Date
The closing date is the day that you will actually sell your house. In most cases, you will set a closing date that is something like 30 – 45 days out. As you approach the closing date both you and the buyer have the ability to ask for an extension on the closing date. However, if for any reason you cannot close on the date that you agreed to, and you do not extend the contract, you will be in breach of contract. Here the buyer has the right to take legal action against you.
I should add that legal action is not common, and most buyers and sellers will typically try to work together to make things work, but it is always a possibility.
5. Fees and Commissions
“When selling a home who pays closing costs?”
To put it simply – the seller. The buyer usually will only pay costs that are associated with their lender (mortgage origination fees and such).
“When selling a home who pays the realtor?”
Again, it is the seller.
Expect to pay 6% of the selling price of your home in commissions for the real estate agents.
For example: a 6% commission on a $300,000 house is $18,000. So if you list your house, the fee alone starts your take home at $282,00.
Then you have closing costs, home warranty, survey, as well as any concessions you had to give to get the house sold. If you list your house on the market for $300,000 – don’t expect to walk away with anywhere near that. See the infographic below for a further breakdown of these costs.
There Are Other Things To Consider When Selling Your House in Houston
6. Selling Can Be Stressful
There is a lot that can happen that can really wear you down.
- The amount of paperwork
- The showings
- The inspection
There is a lot of paperwork and signatures when you sell. If you are using the TREC (Texas Real Estate Commission) contracts expect it to be at least 10 pages at a minimum.
There is always going to be an addendum added. For instance, a popular addendum is for lead-based paint. In addition to the contract, you will have things like the survey, and title information you will need to make sure gets taken care of.
The showings are annoying.
Having to get up at the drop of a hat when someone wants to come see your house. Having to always keep your house clean.
This was especially difficult on us when we last sold our house, as we had a 2 year old that kept the house messy.
People say “Oh, just have them make an appointment for when it is convenient for you.” What you will find out is that half the time the people will either arrive late after their scheduled time, or will not show up at all!
The Option Period
In the vast majority of cases, you will have an option period in the contract that gives the buyer the ability to back out for any reason. The option period time will be written into the contract, and is typically 10-14 days.
I have been hit pretty hard in an inspection so I am familiar with the stresses. You may get some relief from this by doing the pre-inspection, although you just never know what an inspector might turn up.
You worry about all of the things above as well as many others:
“How much will my house sell for?”
“When will my house sell?”
“How much work am I going to have to do?”
There is a lot to consider when selling your house. The most money can be made by fixing up a house and keeping it as a rental or selling it for top dollar. However, if you are inexperienced in doing this you can end up losing a lot of money. Your mental health should also be considered.
Whatever way you decide to go, we hope that the information provided is at least somewhat helpful on your journey, and that you know have a better knowledge of some of the most important things when selling your house in Houston.
If you have any questions, or would like to get more information, please call us or fill out the form on our website. We would love to hear from you.
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