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Subject to Sale 101
I have spent a lot of time helping a new buyer find a home. To buy their new home, they must rely on the proceeds from the sale of their current home. This is very common. Most of us cannot purchase a new home without selling our current home. The problem is that due to the state of a very competitive buyer’s market – many buyers are not using this contingency.
To clarify the process of purchasing a new home subject to sale, here is a breakdown:
“Subject to sale” is a term commonly used in real estate that refers to a condition or contingency when buying a home. When a buyer submits an offer on a property and includes a “subject to sale” clause, it means that the purchase is dependent on the successful sale of their current home.
In practical terms, this condition allows the buyer to proceed with purchasing a new home while still needing to sell their existing one. It provides some flexibility and protects the buyer from being burdened with two mortgage payments if their current home doesn’t sell in time.
Here’s how it typically works:
- The buyer finds a home they want to purchase and includes a “subject to sale” clause in their offer. This clause specifies that the offer is contingent upon the buyer successfully selling their current home within a specified timeframe.
- The seller can either accept the offer with the “subject to sale” condition or reject it. They may also negotiate the terms or request additional information about the buyer’s current home sale.
- If the seller accepts the offer, they usually include a “kick-out” clause. This clause allows the seller to continue marketing the property and accept other offers. If another buyer submits a more attractive offer without a “subject to sale” condition, the original buyer will usually have a specific timeframe (often 48-72 hours) to either remove the condition or terminate the contract, allowing the seller to proceed with the new offer.
- Once the buyer’s current home sells within the agreed-upon timeframe, the “subject to sale” condition is removed, and the purchase contract becomes unconditional. The buyer can then proceed with the purchase of their new home.
It’s important to note that “subject to sale” offers can be less attractive to sellers compared to offers without this condition since it introduces uncertainty and potential delays. However, in a slower market or when the seller is not in a rush, they may be more open to considering such offers.
If you’re considering using a “subject to sale” condition, it’s crucial to work closely with a knowledgeable real estate agent who can guide you through the process and help you navigate any potential challenges that may arise.
Home Inspections: from a seller’s perspective
I have written about what buyer’s can expect during the home inspection, but it’s important to clarify what happens for a seller.
(Again, ChatGPT helped me write this blog, I modified it to reflect what happens in the Des Moines real estate market)
A home inspection is a crucial part of the home buying process, as it helps buyers identify any potential problems with the property before they make a final purchase decision. As a seller, it’s important to be prepared for the inspection and it’s my job to help sellers understand what to expect.
First and foremost, it’s important to note that the home inspection is usually conducted by a professional home inspector who is hired by the buyer. The inspector will examine various aspects of your home, including the roof, foundation, electrical and plumbing systems, and HVAC system. They will also look for any visible signs of damage or defects, such as cracks in the walls or leaks in the roof.
As a seller, you can expect the home inspection to take several hours, depending on the size of your home. You should be prepared to give the inspector access to all areas of your home, including the basement, attic, and crawl space. You should also make sure that all utilities are turned on and that all appliances are in working order.
After the inspection is complete, the inspector will provide a detailed report to the buyer, which will outline any issues or defects that were found during the inspection. The buyer may then use this report to negotiate repairs or a reduction in the purchase price. The purchase agreement will outline how many days the buyer has to present you with requests for repairs. From there, I will help you negotiate with the buyer. We will discuss what is reasonable and how you want to respond. In the event that a buyer and seller can not come to terms on inspection requests the house could go back on the market (but as the seller, you would have to disclose to a future buyer any deficiencies that were discovered during the prior inspection).
Property taxes in Iowa
Last week Iowans received their updated tax assessments from their local county assessor’s office. This stirred a lot of conversation because many residents saw BIG increases in their property tax assessments. Can you imagine how many phone calls the local assessor’s office received last week?Many residents were upset, and I wanted to break down what this means for you as a homeowner.
Firstly, it’s important to understand that property taxes are based on the value of your home. This value is determined by an assessor who takes into account a number of factors, including the condition of your home, its location, and most importantly, the current market value of similar homes in the area.
One of the main reasons for the recent increase in property tax assessments in Iowa is the strong real estate market. With low inventory and high demand, home prices have risen significantly in many areas of the state. This means that your home may be worth more now than it was when it was last assessed, which can result in a higher property tax assessment. Many residents saw their property value increase over 25% in the last two years! In Iowa, the maximum taxes can increase in a year is 3%, so even though there was a larger increase in your home’s value, your taxes can only increase 3% (as long as this is the current law).
Additionally, if you have made improvements to your home, such as adding an addition or remodeling your kitchen, your property tax assessment may increase to reflect the added value of these improvements – this is one reason you are required to obtain a permit when making major updates!
It’s also worth noting that property tax assessments are not set in stone. If you believe that your assessment is too high, you have the right to appeal it. You can do this by contacting your local assessor’s office and providing evidence that shows that your home is not worth as much as the assessment suggests. I am available to help you with finding a list of properties that compare to yours.
I understand that no one wants to pay more in property taxes, but remember that if you are planning to sell your home, an increase in the assessed value of your home is great news! If you’re planning to stay in your home for years to come, then you could consider this increase in value as additional equity. Property taxes are a necessary part of homeownership and I hope this helps you feel more informed.
Buying and selling at the same time
It was very timely that this month I mailed to clients a helpful cheat sheet about tips for buying a home and selling at the same time – this is often the number one stressor I hear from clients. This can be challenging, but with proper planning and guidance from a trusted real estate agent, it can be a smooth and successful transaction. Here are some tips on how to navigate this process:
- Start by researching the market: Before you start the process of buying and selling a home simultaneously, it’s important to research the real estate market in your area. This will help you determine the current value of your home and what you can expect to pay for a new one. Understanding the local market trends will give you a better idea of how long it may take to sell your home and how quickly you’ll need to act to secure a new one.
- Determine your finances: Buying and selling a home at the same time can be costly, so it’s essential to have a clear understanding of your finances. Meet with a financial advisor to determine your budget and the maximum amount you can afford to spend on a new home. You should also consider any potential costs associated with selling your home, such as repairs, staging, and real estate agent fees.
- Work with an experienced real estate agent: An experienced real estate agent will be able to guide you through the process of buying and selling a home at the same time. They will help you determine the right time to list your current home and find a new one. They can also help you negotiate the best deal on both transactions and ensure that all the necessary paperwork is in order.
- Consider a contingency offer: A contingency offer is an offer on a new home that is dependent on the sale of your current home. This can be a good option if you need the proceeds from the sale of your home to finance the purchase of a new one. However, be aware that contingency offers may not be as attractive to sellers, especially in a competitive market.
- Have a backup plan: Even with the best-laid plans, things can sometimes go wrong. It’s important to have a backup plan in case your home doesn’t sell as quickly as you’d hoped or if you can’t find a new home in time. You may need to consider alternative housing arrangements or temporary storage options for your belongings.
In conclusion, buying and selling a home at the same time can be a daunting task, but with the right preparation and guidance, it can be a successful and stress-free process. Work with an experienced real estate agent and be prepared to be flexible and adaptable throughout the process. With the right approach, you can successfully move on to the next chapter of your life in a new home.
Winning for buyers in the current market
If you’re a buyer in the current real estate market, you know the competition is tight! I always prepare buyers that they will most likely need to write a few offers before they land an accepted offer. This is tough. Buying a home is emotional, but buyers need to understand that with such tight inventory, they may not win the first house. With low inventory and high demand, it can be difficult to stand out and win accepted offers. But don’t worry, there are strategies you can use to increase your chances of success.
First, it’s important to have your finances in order. Get pre-approved for a mortgage and have your down payment ready. This will show sellers that you’re serious and financially stable. You will need to share your pre-approval letter when you submit an offer.
I will help you find properties that meet your criteria and offer guidance on making competitive offers. I spend hour searching for properties and many times I am able to show properties to my clients before they are listed. I following the market values for homes in our area so I can guide my clients to make a competitive offer.
When you do find a property you like, be prepared to act quickly. In a hot market, you may only have a few hours to make an offer. Make sure you have seen the property and are ready to make an informed decision.
Consider offering a higher price than the asking price, but be careful not to overextend yourself financially. I will help you determine a competitive price based on comparable sales in the area.
Finally, be flexible with your terms. Consider offering a shorter closing period or waiving certain contingencies, such as the inspection or appraisal, to make your offer more attractive. It is important to learn what aspect (aside from price) is most important to the seller. I will always call the list agent to talk through what is most important to the seller. It’s not always just the purchase price!
Winning accepted offers in the current real estate market requires preparation, speed, and a willingness to be flexible!
Spring Home Maintenance
This photo makes me so happy! I’m looking forward to the tulips coming up in my yard. It’s spring break in Iowa and we are home this week. Along with some relaxing with Nate and the kids, we will fit in a few home projects. Here’s a list of spring home maintenance items for you (generated by ChatGPT and me).
Spring is a great time to give your home a little extra attention and care. After the long winter months, your home may need some upkeep to ensure that it stays in great shape. Here are some tips to help you get started on your spring home maintenance:
- Clean Gutters and Downspouts
Your gutters and downspouts can become clogged with leaves, dirt, and other debris. This can cause water damage to your home’s foundation, roof, and walls. Clean your gutters and downspouts thoroughly to prevent this from happening.
- Inspect Your Roof
Your roof may have suffered some damage during the winter months. Check for any cracks or missing shingles and make necessary repairs. It’s also important to remove any debris, such as leaves and branches, from your roof.
- Check Your Home’s Exterior
Take a walk around the exterior of your home and check for any signs of damage or wear and tear. Look for cracks in the foundation, peeling paint, or loose siding. Make repairs as needed to prevent further damage.
- Service Your Air Conditioning
Before the hot summer months arrive, have your air conditioning system serviced. This will ensure that it is running efficiently and will save you money on your energy bills.
- Clean and Inspect Your Windows
Clean your windows inside and out to let in the spring sunshine. Inspect the seals around your windows and make any necessary repairs to prevent air leaks.
- Prepare Your Lawn and Garden
Spring is the perfect time to get your lawn and garden in order. Fertilize your lawn, trim any overgrown trees or shrubs, and plant new flowers or vegetables.
By following these simple tips, you can ensure that your home is ready for the spring and summer months ahead. Regular maintenance can also help prevent costly repairs down the road. Happy spring cleaning!
Home Inspections and AI
Each week I write a short blog post that goes more in-depth to a topic I recently experienced in real estate. This week I wanted to share my thoughts on home inspections. Full disclosure: I was curious if ChatGPT could write a quick summary of what happens at a home inspection. It’s fantastic and took 3 seconds!
In the Des Moines metro market there are many reputable home inspectors, I provide my clients with a few companies to choose from. The inspections range from $300-500 and take a few hours. For an additional fee buyers can choose to add radon and sewer line inspections.
AI can’t do it all. The biggest value I add to the process is helping my clients understand their inspection report and what requests, if any, they will make to the seller. Many deals fall apart over inspection requests. It’s my job to keep a level head, manage my clients expectations ,and negotiate with the sellers.
****Blog post on home inspections, written by ChatGPT:
Buying a home is a major investment, and it’s important to make sure you’re getting your money’s worth. One crucial step in the home buying process is a home inspection. This is when a professional inspector examines the property to identify any issues or potential problems.
As a home buyer, it’s important to know what to look for during a home inspection to ensure you’re making an informed decision. Here are some key areas to pay attention to:
- Structural issues: The inspector should check for any cracks in the walls or foundation, signs of water damage, and sagging or uneven floors. These can be costly issues to repair, so it’s important to identify them before you buy.
- Roof and attic: The inspector should examine the roof for any signs of damage or leaks, as well as the condition of the attic insulation and ventilation.
- Electrical system: The inspector should test all outlets and switches, as well as the electrical panel and wiring, to ensure they’re in good working order and up to code.
- Plumbing: The inspector should check for leaks or damage to pipes, as well as the water pressure and drainage systems.
- HVAC system: The inspector should examine the heating and cooling systems, including the furnace, air conditioner, and ductwork, to ensure they’re in good working order.
- Appliances: If the home comes with appliances, the inspector should test them to ensure they’re in good working order.
- Pest and mold infestations: The inspector should check for any signs of pests or mold, which can be harmful to your health and expensive to eradicate.
It’s important to remember that a home inspection is not a guarantee that there are no issues with the property. However, it can give you valuable information to make an informed decision about whether to proceed with the purchase, negotiate repairs with the seller, or walk away from the deal. By paying close attention to the areas listed above, you can ensure that you’re making a smart investment in your future home.
Highest and Best
Every industry has their own lingo. In real estate there are many phrases and acronyms to remember. The phrase “highest and best” is one that is out there a lot as more buyers are trying to get an accepted offer when we are facing a low inventory of homes for sale. “Highest and best” refers to the purchase price. It means just what you think it does – calling all offers, bring me the best that you’ve got!
Just last night I was helping clients write an offer on a townhome. The unit just hit the market and we saw it as fast as we could, then wrote an offer within the hour! Now, this was only possible because the buyers were ready. They had lost out on a different unit and were facing a time crunch. In a situation where it’s the first property a client has seen, at the beginning of their search, it would be rare to submit a “highest and best offer” on the spot. In the case of the townhome last night, the sellers received two offers: ours and another buyer. The list agent called me to ask my clients to submit their highest and best offer – the most they are willing to pay for the townhome without feeling gross about it. The buyers thought about it submitted a new, higher offer – and we won!
Some things to be aware of when writing a highest and best offer is that the offer must still be within a buyer’s pre-approval limit. Most buyers will also write the higher offer to include a contingency that the property must appraise for the purchase price (if not, that’s another blog topic where we talk about if the seller is willing to lower the purchase price to meet the appraisal value. Yuck, that conversation never goes well). If it’s a cash offer then the buyer does not need to be concerned about appraisal.
Highest and Best Offers are a clear way invite final offers in a multiple offer situation. It’s my job to prepare my clients ahead of time that this is happening more and more. I never want my clients to feel unprepared or surprised, especially as emotions can run high during the offer and negotiation process.
Spring seller’s checklist
Spring is in the air, that is a phrase everyone loves to hear! I think we are a few months away from warmer weather, but the spring real estate market is heating up! All of the homebuyers I work with are getting tired of waiting for new homes to hit the market, they are ready to buy! That said, seller’s must still be prepared: this involves careful planning and working with a professional to ensure a smooth transaction.
When I meet with sellers I want them to know that their home will not hit the market without careful planning and consultation. Here are some of the things we will discuss:
- What work needs to be done to the home before it hits the market? These can be simple repairs such as a fresh coat of paint or decluttering. We will talk about the need to have the home staged by a professional (renting furniture and accessories to help buyers see themselves living in the house). We will discuss if there are larger repairs that would affect the list price. This is common if there is a lot of deferred maintenance (think original mechanicals, old roof, leaky windows).
- Complete Seller’s Disclosure. Seller’s must disclosure the condition of their home. If you are aware of a defect you must disclosure it (and how it was repaired, if applicable). Sometimes sellers will provide receipts for work done on the home, buyer’s love this.
- Look at comparable properties are on the market. This is huge! It’s essential to dig into the pricing, condition, and days on market of any homes nearby.
- Find the abstract. This is essential in Iowa. The abstract is a physical document (about the size of a phone book) that contains all of the history of the land since it was first purchased. A lost abstract can delay a real estate and it’s costly to replace.
- Make a plan for pets. Nothing is more deterring to potential buyers than a home with pet odor or pet damage. Nothing. A good realtor will be honest and address this from the start. If the pet odor is severe, sellers may need to consider a professional odor remediation service (same for smoke damaged homes!)
- Let your neighbors know you’re selling! Your neighbors want your home to sell as quickly as possible and for the most money, just like you do!
- Price it right. All sellers have a natural tendency to want to price their homes too high. A professional realtor will guide you to a price range, but it’s ultimately the seller who determines the list price. Always remember that the long a home is on the market, the lower the sales price to list price ratio. And last but very important – buyers do not care WHY are you are selling and WHAT you paid for the home, they care about the list price (and how that compares to what’s for sale nearby).
- Hire a professional who is with you every step of the way. It is my goal to be there every step of the way to answer questions, negotiate, alleviate stress and communicate to my clients.
