What should homeowners expect from a traditional real estate sale, and how might this compare to other solutions for selling homes fast, and for the most net proceeds?
Traditional Home Selling Timelines
Typical timelines for selling a home can vary depending on location and who is buying the home. Many seriously underestimate how long traditional sales can take to complete, with dire financial consequences.
In advance of marketing a property for sale either by owner or through a real estate agent many homeowners might choose to spend the time to prepare and remodel a property to help it compete. This might take a couple weeks, or months for major renovations and additions.
As of September 2014 the national average days on market for marketing a home for sale stood at 90 days according to Realtor.com. These statistics get slightly better when zooming in on the most popular and populated cities. In Denver, CO the average days on market was just 37 according to data released in October 2014, but had been rising from the previous month. In Colorado Springs this timeline stretches out to 71 days. There can also be a substantial difference between properties based upon condition. In some areas brand new construction will receive multiple bids and sell out in days, while older properties which could use some updating might sit idle for as long as 10 years.
What most homeowners don’t realize is that the above days on market figure is just the tip of the iceberg when it comes to the time it takes to actually sell a property. Even where there aren’t issues with negotiating short sales or solving title and lien issues, it is a process.
Once a contract is agreed to and signed, the real work begins. In busy markets appraisal, home inspection and mortgage companies can be significantly backed up. If a buyer can’t obtain an appraisal for 4 weeks, their mortgage application is delayed. Traditional mortgage underwriting can then take a couple weeks, or even as much as 60 to 90 days when lenders are really slammed.
Many buyers won’t be motivated to close faster than this anyway as they need to arrange the sale of their old property, give notice to landlords, and schedule movers.
This doesn’t not include multiples of this cycle which occur commonly in traditional sales attempts when buyers fail to obtain mortgage financing or change their minds.
Traditional Closing Costs
Real estate closing costs are most frequently the biggest concern of a home buyer, but sellers can have costs too.
A general rule of thumb for home buyers is to expect home loan closing costs of 3% to 6%. This can include a variety of miscellaneous borrowing costs such as loan application fees, inspections and appraisals, points, credit reports, and more. According to BankRate.com the average buyer closing costs in Colorado are $3,199, though many will find this a very, very low estimate.
Sellers will also normally have various expenses which are subtracted from their home sale proceeds. This can include title company or attorney settlement fees, taxes, prorated association dues and rent credits. A Colorado real estate website operated by one of the largest brokerages chains also points out that it is traditional for the seller to pay for the title insurance at closing. This can range from a few hundred, to several thousand dollars depending on the price of the home.
Those using Realtors will also pay a commission on the sale. This often ranges from 2% to 10%, with 6% being the traditional fee. If traditional home buyers discover additional repair needs during inspections they may request them to be fixed before closing, or monetary credits to be applied at closing.
Superior Choices for Those Needing to Sell Homes Fast, and for More Net Proceeds
An emerging and often superior solution for homeowners that want to sell homes faster, and net more money is to find a qualified cash buyer who will buy the property in as-is condition and close immediately.
These buyers may be able to close in just a few days, without risk of the issues which can derail other types of real estate transactions. Combined with the benefits of speed this might enable some homeowners to net even more on the sale of their home.
For example; while the Colorado housing market has improved significantly since 2012, Zillow predicts that annual house price growth will slow to just 2.7% as we move into 2015. For many the expenses and risks associated with holding onto their homes for another 6 months will far exceed any potential gains, and this is if their home values aren’t negatively impacted by nearby foreclosures.