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Nick Malouff

Thinking About Selling Your Business?

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There are many ways to sell your business and it is important to have a creative team to help you structure the transaction.

The time has finally come and you’re ready to sell your business. Planning for the sale of a small business may seem daunting. Perhaps you’re not sure where to begin or how to go about selling a business. To make the process as easy and profitable as possible, you’ll want to start planning early. Having time on your side can really pay off when selling a business. Whether you’re ready to retire or just move on to a new venture, here are a few important steps to keep in mind.

Key Steps Before the Sale

Selling a business requires a lot of planning. As you begin the process, it’s important to focus on the step you’re in and the long-term objective. Otherwise, you may end up making short-term decisions that go against your ultimate plan. Here’s an overview of the process and post-sale considerations.

Get Organized, Know Your Numbers

The first step is to get your business financials in order. Clean up your books, prepare financial statements and projections, and compile key metrics for your industry. Understand the numbers. What is the financial position of the business? Are there outstanding liabilities? What is the relative growth in gross sales and net income? What is the number of customers? What is the business’s relative size? How does it align with your forward projections? You must be able to answer and justify the question: Why would a buyer want to buy this business?

Again, this is why it’s best to start as early as possible, so you have time to make adjustments. Perhaps you use cash to refinance, pay down debt or cash out minority shareholders. Even if you don’t need to make any substantive changes, messy or incomplete books can kill the deal before it even gets started.

Gather Your Team of Advisors

When selling a business, having a team of trusted advisors around you is crucial. Here’s why: Chances are you haven’t sold a business before and likely won’t again. We don’t know what we don’t know and you only have one shot to get this right.

In planning for the sale, get your team of business and personal advisors in place ahead of time. Your business advisory team may consist of a business broker/investment banker, valuation expert, accountant, tax advisor and transaction/M&A attorney. On the personal side, your financial advisor, estate planning attorney and CPA/tax advisor should be involved throughout the process.

There’s a lot of complexity to consider: structure of the deal, ways to retain key employees, tax planning, cash flow planning post-close, etc., so it’s very important to work with a team of specialists that can help you navigate your options. Many sellers of a business will carry a portion of the sale via a promissory note to help the buyer finance the purchase. Are you willing and able to do so?

What is Your Business Worth?

Understand the real-world value of your business in the current market by working with a valuation expert, business broker or investment banker. When wondering how to sell your business, ask what buyers would be willing to pay today. There are general rules of thumb and industry standards that can give you a general idea of value, but every business is unique and there are many factors that must be considered when determining real value. A good advisor can help you strengthen the components of your business that will add to its ultimate sale value.

Define Your Goals, Financial Needs

Before going too far down the path of exploring all the ways to sell your business, first consider your goals for the transaction. Do you want to sell 100% of the company at closing and walk away with the cash? Do you want to pass the business to family members or employees? Are you willing to keep working for three to five years after selling all or a portion of the business? How important is it that the brand continue? What are your cash needs?

There are many ways to sell your business and it is important to have a creative team to help you structure the transaction. But there’s no sense in spending time on options that don’t align with your objectives or financial needs. So, before getting enmeshed in a complex deal structure and attempting tax-minimization strategies, take stock of your wants and needs.

As a business owner, your focus has been on running and growing the company. When selling your business, it’s imperative to take steps to plan for your personal financial future and to utilize the right expertise to help you ensure the highest value for your business. QCBN

By Nick Malouff

Nick Malouff, CEO and owner of BHGRE BloomTree Realty, specializes in commercial and business sales. To contact Nick, call 928-925-2023.

To Buy or Not to Buy?

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Many economic experts believe the current inflation cycle will abate within a few years and interest rates will begin to soften.

Many folks who have wanted to buy a home over the last couple of years or so chose to wait until the heated market cooled down and for prices to come down to earth. The good news is, prices have softened somewhat, but the bad news is, interest rates are much higher.

Let’s assume that you could have purchased your dream home in 2020 for $650,000 with 20% down and that you could have financed the balance with a 30-year, 3% mortgage. Your payment would have been $2,398.53 per month. Let’s also assume that with softening prices, today your home may be worth $630,000. The result is you have equity of $110,000 and you still have a low interest rate. Not a bad position to be in overall but you have lost some equity in your home.

Let’s assume that today, you decide to continue to wait because interest rates have skyrocketed. If you were able to buy that new home today for $630,000 with a 6.5% mortgage and you put down 20% or $126,000, your monthly payment on a 30-year mortgage would be $3,869.49. Unfortunately, for many, this is more than the household budget can handle. However, your savvy mortgage broker tells you, you can qualify for a 3-2-1 buydown so your first-year mortgage payment could be $2,263.19 and increase to $2,553.69 the second year and $2,861.66 the third year.

Now, let’s assume again you hold this home for another three years or so while the market goes through more softening but then interest rates come back down because a potential recession is requiring the feds to drop interest rates again. What will happen to housing prices as the rates come back down? That is right, they will go up again.

Many economic experts believe the current inflation cycle will abate within a few years and interest rates will begin to soften. As they do, your home value will likely increase. Buying a home today utilizing a buy-down option could help you accelerate your equity gains in a few years because you are buying in a down market!

The home you could have bought today could go up in value a conservative 5% or $31,500 and the home is then worth $661,500. You would have equity of at least $157,000. At this point, you may choose to refinance your existing loan balance of around $500,000 at say 4% on a 30-year mortgage. Your new payment would be $2,406.17 and you have gained quite a bit of equity. If you continue to wait, you may miss an opportunity to gain future value and equity.

The above example is in general terms and I have made some broad assumptions. Please talk to your real estate agent and mortgage broker about your own situation, which may or may not fit this example.

Real estate is like many other commodities. Prices and interest rates are affected by supply and demand, but over time the market reaches equilibrium where supply, interest rates and demand adjust to market conditions.

Is it always a good time to buy or sell? Not necessarily, but if you have a game plan and understand that market forces always change and a new equilibrium will set in, you can buy and sell in almost any market and come out a winner over time. Conversely, waiting for the market to improve or change without a game plan could be a very bad strategy without understanding the basics of market forces and the dynamics that change them over time. QCBN

By Nick Malouff

Nick Malouff is the CEO and co-owner of Better Homes and Gardens Real Estate BloomTree Realty with offices in Prescott, Prescott Valley and Cottonwood. To reach Malouff or a highly qualified agent, please call 928-925-2023

Area Real Estate Market is Mixed

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Is it still a good time to sell? I would say yes, because prices have held fairly well and days on market is still fairly low.

According to recently published statistics from the Prescott Area Association of Realtors, the area real estate market remained reasonably strong in August 2022 versus August 2021, but there are signs of weakness.

For the entire market area, the sold median price versus a year ago is up 7.4%, from $437,500 to $470,000. The median days on the market went up from 11 in August 2021 to 33 in August 2022. By most measures, that would still qualify as a seller’s market, but the trend does seem to be heading to a more balanced market. However, for the same period, total sales went down from 436 to 321,  or 26.4%.

Prescott’s total sales went down from 193 in August 2021 to 145 in August 2022, a 24.9% decline, and the median sold price went down 9.3%, from $600,000 in August 2021 to $544,000 in August 2022.

Prescott Valley had similar results, with a reduction in total sales of 31.5%, down from 111 in August 2021 to 76 in 2022. However, the median price increased from $405,000 to $433,250 for the same period.

Chino Valley experienced what is probably the biggest drop across the board year over year. Total sales dropped from 62 in August 2021 to 30 in August 2022, a whopping 51.6% reduction. At the same time, the median price went down from $388,000 to $365,000 for the same period, which is a reduction of 5.9%.

The Dewey- Humbolt area seems to have fared better during this same period, with total sales increasing from 29 in August 2021 to 36 in August 2022, an increase of 24.1% countering the trend in the rest of the market area. The median price also increased from $415,000 to $446,250 for the same period, showing strength in price appreciation of 7.5%, which is market leading performance.

Although days on market for the entire market area has increased about 200% from 11 to 33 days in August 2022 over August 2021, this statistic would still be considered a seller’s market.

Is it still a good time to sell? I would say yes, because prices have held fairly well and days on market is still fairly low. Is it a good time to buy? I would say yes, because prices have abated somewhat and interest rates are still relatively low, but they could go much higher before the economic turmoil we are experiencing now is over. Also, the total inventory of homes is up about double for the market area compared to a year ago, which makes the possibility of finding the right home much higher. QCBN

By Nick Malouff

Nick Malouff is the CEO and co-owner of Better Homes and Gardens Real Estate BloomTree Realty, with offices in Prescott, Prescott Valley, and Cottonwood. To reach Nick or a highly qualified agent, please call 928-925-2023.

Traditional Home Selling: A Time-Tested Approach

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Under a proposed administrative order, Opendoor will have to pay $62 million and stop its deceptive tactics.

I wouldn’t blame consumers if they said the housing market is more confusing today than ever. There are so many new companies out there today claiming that they have a better way and that you will end up with more money if you use their service. The truth about some of those claims is starting to reach the light of day and it doesn’t always look so good for the consumer.

One of the latest examples is the action the Federal Trade Commission took earlier this month against online home buying firm Opendoor Labs, Inc., for cheating potential home sellers by tricking them into thinking that they could make more money selling their home to Opendoor than on the open market using the traditional sales process.

The FTC alleged that Opendoor pitched potential sellers using misleading and deceptive information, and most people who sold to Opendoor made thousands of dollars less than they would have made selling their homes using the traditional process. Under a proposed administrative order, Opendoor will have to pay $62 million and stop its deceptive tactics.

“Opendoor promised to revolutionize the real estate market but built its business using old-fashioned deception about how much consumers could earn from selling their homes on the platform,” said FTC Bureau of Consumer Protection Director Samuel Levine. “There is nothing innovative about cheating consumers.”

Opendoor, headquartered in Tempe, operates an online real estate business that, among other things, buys homes directly from consumers as an alternative to consumers selling their homes on the open market. Advertised as an “iBuyer,” Opendoor claimed to use cutting-edge technology to save consumers money by providing “market-value” offers and reducing transaction costs compared with the traditional home sales process.

Opendoor’s marketing materials included charts comparing their consumers’ net proceeds from selling to Opendoor versus on the market. Those charts almost always showed that consumers would make thousands of dollars more by selling to Opendoor. In fact, the complaint states, the vast majority of consumers who sold to Opendoor actually lost thousands of dollars compared with selling on the traditional market, because the company’s offers have been below market value on average and its costs have been higher than what consumers typically pay when using a traditional realtor.

The FTC expanded its findings by including the following:

  • Opendoor used projected market value prices when making offers to buy homes, when in fact those prices included downward adjustments to the market values;
  • Opendoor made money from disclosed fees, when in reality it made money by buying low and selling high;
  • Consumers likely would have paid the same amount in repair costs whether they sold their home through Opendoor or in traditional sales; and
  • Consumers likely would have paid less in costs by selling to Opendoor than they would pay in traditional sales.

Enforcement Action

Opendoor has agreed to the following in response to the FTC’s findings:

Pay $62 million, which is expected to be used for consumer redress.

Stop deceiving potential home sellers: The order prohibits Opendoor from making the deceptive, false and unsubstantiated claims it made to consumers.

Stop making baseless claims: The order requires Opendoor to have competent and reliable evidence to support any representations made about the costs, savings or financial benefits associated with using its service, and any claims about the costs associated with traditional home sales.

Certainly, not all companies offering a better deal are using similar tactics to deceive consumers, but it is becoming harder to determine who is offering real value and who is deceptive.

The traditional process of selling a home may not always be perfect, but the consumer has the advantage of allowing the market to determine the best possible price. Also, having an agent representative on your side can potentially tip the scales to the advantage of the seller or buyer. Although it may take a little longer and sometimes is not as convenient, the traditional home selling process is time-tested, proving once again that a deal that sounds too good to be true probably is. QCBN

By Nick Malouff

Nick Malouff is the CEO and co-owner of Better Homes and Gardens Real Estate BloomTree Realty with offices in Prescott, Prescott Valley, Cottonwood and Sedona. To reach Nick or a highly qualified agent, please call 928-925-2023.

The Housing Market: Is it a Buyer’s or Seller’s Market Now?

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How do we make sense of these interesting and unexpected numbers? Is this a buyer’s or seller’s market?

The housing market statistics in our area for the year-over-year period from the end of June 2021 to the end of June 2022 are very interesting and not what many might expect given the changes in interest rates and other economic turmoil.

As one would expect, the number of total listings has increased from 605 at the end of June 2021 to 923 at the end of June 2022, an increase of 52.6%. This is truly an eye-opening statistic given the tight market through the last several years. Another interesting statistic is that sold listings for June of 2022 came in at 363, compared to 472 for June 2021, a decrease of 23.1%.  However, on a year-to-date basis of 2022 over 2021, we find that total closed sales year to date were 2,155 for June of 2022 and 2,245 for YTD June 2021, a decrease of only 4%.

While much of the sales listing volume data might indicate a buyer’s market, we are seeing some not so expected results on the pricing and sales of homes. Despite the overall slight slowdown of sales, we find that the median list price has increased 19.78% year over year through June, from $455,000 to $545,000! The median sales price has also increased by 15.54%, from $390,000 to $451,000.

The average days on market has increased from 22 for June 2021 to 25 for June 2022. Although the number of listings has increased, homes are still selling at a pace that is only slightly slower than in 2021.

How do we make sense of these interesting and unexpected numbers? Is this a buyer’s or seller’s market? I would say the answer is both. For buyers, the increase in inventory is good news providing greater selection and a less competitive environment. Although interest rates have gone up, they are still historically low, so this could be a great time to buy, given that rates are likely to go up even more.

It has been stated many times that this housing market is not like 2008 where prices collapsed dramatically. This time around, we are still struggling to find enough inventory for all buyers but it is improving because of higher interest rates.

Sellers are finding that this is also a good time to sell, and many of those who were waiting for the opportunity to sell at the right time may have decided it is time to act. Therefore, we are seeing an increase in the number of listings year over year. So, it appears from the data that this market is becoming much more balanced, and it may very well be both a buyer’s and a seller’s market!

I am sure there will be more unexpected market statistics in the future as the worry about inflation and a possible recession have an impact on the behavior of both buyers and sellers.

The bottom line for the current market is that waiting for the bottom to fall out on home prices could be a losing strategy for buyers. And, waiting to sell your home to gain even more appreciation could result in a missed opportunity to take advantage of a fairly robust buyer environment while interest rates are still reasonable and prices are holding up. QCBN

By Nick Malouff

Nick Malouff is the CEO and co-owner of Better Homes and Gardens Real Estate BloomTree Realty with offices in Prescott, Prescott Valley, Cottonwood and Sedona. To reach Nick or a highly qualified agent, please call 928-925-2023.

Are We Experiencing a Housing Market Shift?

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In other words, the market is shifting somewhat to favor buyers a little more, but no one is talking about a market collapse right now.

The rising tide of inflation and interest rates are beginning to take their toll on home buyers’ and sellers’ sentiment.

Fannie Mae spoke to us in May when it reported a third consecutive month of record-low homebuyer sentiment, divulging in its latest National Housing Survey that fewer than one in five Americans think now is a good time to buy a home. A disheartening 17% of the 1,000 Americans polled by Fannie Mae last month believed it was a good time to buy. Times, they are a-changing.

Although homebuyer sentiment is down, there may be hope on the horizon, given the effort by the feds to hike interest rates and curb inflation.

Although the prospects of a housing bubble have been widely dismissed, a consensus has begun to form in which a mild recession later this year or in 2023 may bolster housing.

Among 114 experts polled earlier this month at Zillow, three out of four expect the economy to contract for multiple quarters as the Federal Reserve takes bigger steps to curb inflation.

While it’s unclear how a recession would affect the real estate industry, at least a few have suggested that, historically, such a turn would be less damaging to housing than the economy at large.

“Although the Great Recession was triggered by a housing crash, it’s an outlier in the grand history of recessions, which have often strengthened investment in housing due to its relative stability as an asset,” said Zillow economist Nicole Bachaud in Zillow’s report on the survey.

Meanwhile, although home prices are still rising, sellers are losing some of their advantage and, in some cases, are reducing their asking prices. That doesn’t mean prices are dropping, but it does suggest price growth will slow down and a more balanced market may return. What’s more, incentives and concessions are appearing like a sudden cloudburst, giving homebuyers the occasional upper-hand in some markets.

In other words, the market is shifting somewhat to favor buyers a little more, but no one is talking about a market collapse right now. Despite the downward pressure on housing prices because of higher interest rates, the fact remains that we simply have not built enough homes fast enough in the last decade to serve the needs of the nation – and that problem won’t likely vanish anytime soon. QCBN

By Nick Malouff

Nick Malouff is the CEO and co-owner of Better Homes and Gardens Real Estate BloomTree Realty ,with offices in Prescott, Prescott Valley, Cottonwood and Sedona. To reach Nick or a highly qualified agent, please call 928-443-8800.

Higher Interest Rates Having an Impact on Sales and Appreciation of Homes

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All of these projections beg the question: should I sell now or wait until there is more certainty in the market?

Economists at Fannie Mae have dramatically downgraded their home sales forecasts for this year and next, saying they expect a “modest recession” in the second half of next year in the face of Fed tightening and the war in Ukraine.

Home sales are now expected to decline by 7.4% this year and 9.7% in 2023, a dramatic adjustment from March, when Fannie Mae forecast a 4.1% decrease in home sales this year and a 2.7% decrease in 2023

In their latest forecast,  Fannie Mae economists said the projected downturn “is not expected to resemble the severity or duration of the Great Recession,” but that higher mortgage rates are likely to cause home sales to decline by 7.4 percent this year and by 9.7 percent in 2023.

Fannie Mae had previously forecast that home sales would drop by 4.1 percent this year and 2.7 percent next year.

“Since our last forecast, monetary policy guidance has shifted in a hawkish direction, and markets have responded with rapid increases in interest rates, signaling a belief that brisker tightening is likely to occur,” Fannie Mae forecasters said. “While a ‘soft landing’ for the economy is possible, which is where inflation subsides without economic contraction, historically, such an outcome is an exception, not the norm.”

If there is a recession, Fannie Mae economists don’t expect it will be as severe or as long as the Great Recession of 2007-09, due to “multiple factors.”

From a housing market perspective, factors weighing against a severe downturn include “stronger mortgage credit quality, a far less-leveraged residential real estate and mortgage finance system, and a better equipped mortgage servicer and public policy apparatus, as well as ongoing housing supply constraints relative to demographic demand for housing.”

But rising mortgage rates don’t bode well for already tight housing inventories in many markets, forecasters at the mortgage giant said.

“Households with a 3%, 30-year, fixed-rate mortgage are unlikely to give that up in favor of a mortgage closer to 5%, and we expect this so-called ‘lock-in’ effect to weigh on home sales,” Fannie Mae Chief Economist Doug Duncan said in a statement. “Moreover, if mortgage rates remain relatively elevated, we expect the added affordability constraint to price out some would-be first-time homebuyers and contribute to the slowing of demand.”

Shortages of existing homes have builders working overtime to complete new houses, and Fannie Mae still sees new home sales growing by 2.3% this year, to 788,000 homes, even with sales of existing homes projected to drop by 8.6%, to 5.6 million.

But the “lock-in” effect of rising mortgage rates and worsening affordability “will eventually weigh on new sales as well,” Fannie Mae economists said of their prediction that sales of new homes will drop by 8% in 2023, to 725,000.

For would-be homebuyers being priced out of the market, the good news is that Fannie Mae economists expect home price appreciation to make a rapid plunge back to the single digits, moderating from a record 19.8 percent during the first quarter of this year to 6.5 percent by the first quarter of 2023 and 3.2 percent by the final three months of next year.

“It should be noted that interest rates have moved up further than we had expected since the completion of our interest rate forecast at the start of the month, representing downside risks to our housing forecast,” Fannie Mae economists said.

All of these projections beg the question: should I sell now or wait until there is more certainty in the market? Many times, the answer depends on your personal circumstances and talking to someone who knows your market and your situation well is a good next move. QCBN

By Nick Malouff

Nick Malouff is the CEO and co-owner of Better Homes and Gardens Real Estate BloomTree Realty with offices in Prescott, Prescott Valley, Cottonwood and Sedona. To reach Nick or a highly qualified agent, please call 928-443-8800.

Were the Remodel Projects Taken on During the Pandemic Worth the Money?

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Americans spent $420 billion in 2020 on remodeling their homes.

According to a recently published report by the National Association of Realtors and the National Association of the Remodeling Industry, homeowners remodel for a variety of reasons and some projects produce a better cost recovery than others.

The report focused on the following items:

  • The typical cost of 19 remodeling and replacement projects, as estimated by members of the National Association of the Remodeling Industry (NARI).
  • How much appeal each project is likely to have for buyers, according to realtors.
  • How much realtors estimate that homeowners can recover on the cost of the projects if they sell the home.

Americans spent $420 billion in 2020 on remodeling their homes. Among NARI members, 90% found a greater demand in contracting in remodeling work during the COVID-19 pandemic. Sixty percent of NARI members cited the scale of the projects increased either in a larger project or remodeling more than one room because of the pandemic.

While most consumers (83%) cite they would have remodeled regardless of the pandemic, 86% of consumers report that remodeling one area of their home made them want to then remodel other areas of their home. When consumers remodel, it is to upgrade worn-out surfaces, finishes and materials (30 percent); to add features and improve livability (20%); and because it is time for a change (16%). Most consumers are pleased with the overall result and 57% would tackle the project the same way, while 35% would make a few different choices such as finishes or materials.

After remodeling, 84% of owners have a greater desire to be in their home. Sixty-nine percent have increased enjoyment in their home. Fifty-seven percent feel happy, and 39 percent feel satisfied when they see their completed project, with a typical Joy Score of 9.6.

Sixty-nine percent feel a major sense of accomplishment when they think of their completed project. Thirty-five percent of owners report the single-most important result from remodeling is better functionality and livability, 22% report durable and long-lasting results, materials and appliances, and 14% report beauty and aesthetics. Thirty-five percent of the owners hired a professional for the whole job, 28% hired the labor but purchased the materials, and 22% did the entire project themselves.

Thirteen percent contributed some do-it-yourself (DIY) labor. In some areas of the report, costs are not collected, as these projects are more likely to be done DIY or part of a larger project. The report covers both interior and exterior home improvement projects. This report provides a cost recovery estimate for representative remodeling projects. The actual cost of each remodeling project and cost recovery are influenced by many factors, including project design, quality of materials, location, age and condition of the home, and homeowner preferences. For the purpose of costs collected, NARI members were asked to expect the home was a 2,495-square-foot house — the average size according to U.S. Census data — and that the house is a post-1981-built home with no hidden issues. To ensure the most applicability, projects and materials represent standard or typical quality; a few projects feature “better-quality” materials. But there are no top-of-the-line projects.

There are many ways for homeowners to approach remodeling projects and even more ways to analyze the projects’ successful outcome. NAR calculated a Joy Score for each project based on the happiness homeowners reported with their renovations. There were numerous interior projects that received a perfect Joy Score of 10: paint entire interior of home, paint one room of home, add a new home office, hardwood flooring refinish, new wood flooring, closet renovation, insulation upgrade, and attic conversion to living area.

In comparing that dollar value to the estimated cost of each project provided by NARI members, a Recovered Project Cost percentage was calculated. For interior and exterior projects, these graphs show the results of the major cost recovery categories.

Surprisingly, it wasn’t always the most expensive projects that produced the best cost recovery results. Remodeled kitchens and bathrooms are also popular upgrade projects but they are expensive to undertake and don’t always provide for great cost recovery at sale time.

It you are looking to make some upgrades to your own home and you are considering selling any time soon, you may want to pay close attention to the results of this study. QCBN

By Nick Malouff

Nick Malouff is the CEO and co-owner of Better Homes and Gardens Real Estate BloomTree Realty with offices in Prescott, Prescott Valley, Cottonwood and Sedona. To reach Nick or a highly qualified agent, please call 928-443-8800.

Knowing Your Options When Selling A House

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Make sure you understand the options available to you before you commit to a path.

These days, sellers have many options.

In just a few short years, it seems the options available to a homeowner who wants to sell his or her house has gone from either hire an agent or sell it yourself to so many options that most of us can’t keep up.

In addition to the traditional methods, home sellers can now choose from a range of iBuyer options, discount brokerages and home-swap programs. How do you decide which option will serve you best?

The good news is many of the options have merged, so you can have the best of all worlds. How so? Companies like Easy Knock will pay you up to 90% of the appraised value of your home up front (less fees) and they will pay the agent who is advising you in the process. If you need to be out quickly or you have another home you want to purchase, you can accomplish both by taking advantage of this option and have the advisor you need to help with both the sale and a new purchase. You may even lease back the home for up to a year in this program.

Knock is another company that basically allows you to swap your current home for another. In this program, Knock will give you up to 75% of your appraised value up front and purchase the home you want. According to Knock’s publications, you can buy a new home before listing your old house for sale, skip the hassle of living through house showings, pay only one mortgage at a time and build equity while you sell. You may also receive up to $25,000 of home prep work prepaid so your old house sells for the best price, and you avoid renting costs and moving twice.

Of course, if you have sufficient knowledge of the industry and don’t need an advisor, you can go the old-fashioned route of selling your home yourself. There are advantages and disadvantages to this approach. If you aren’t familiar with the selling contract process, critical mistakes could cost thousands of dollars. You may also miss out on giving your home the maximum selling exposure without the benefit of a brokerage or listing service.

Some companies are a hybrid of the sell-it-yourself versus sell-with-an-agent approach. They help you place your house on the market and provide limited services for a lower fee. However, you still need to have sufficient knowledge of the process to deal with the complexities of selling your home in this scenario. You also must be prepared to deal with many potential buyers and do most of the negotiating. The time commitment could be substantial, and the potential pitfalls are many.

Making A Good Choice

Overwhelmed by the options? You don’t have to make a hard-and-fast decision right away. Instead, talk to a few good agents, get quotes from several iBuyers, and scope out your local market. The programs listed above are only a snapshot of the available options in the selling process. Make sure you understand the options available to you before you commit to a path. QCBN

By Nick Malouff

Nick Malouff is the CEO and co-owner of Better Homes and Gardens Real Estate BloomTree Realty with offices in Prescott, Prescott Valley, Cottonwood and Sedona. To reach Nick or a highly qualified agent, please call 928-443-8800.

Why the Right Real Estate Agent is Critical for Home Selling or Buying Success

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The value of a good agent in these situations is hard to overstate. The wrong decisions could be very costly for both seller and buyer!

When the real estate market reaches the frothy levels we have experienced over the last few years, it is safe to say most homes will sell quickly. However, does that mean you don’t need a highly qualified agent to help navigate the complexities? The high demand for real estate in this market has actually made selling or buying a house more complicated than ever. It wouldn’t be possible to cover all of complexities here, but the following is a snapshot of what sellers and buyers are up against in today’s real estate market.

Counteroffers in Real Estate Sales

In our market, it is not uncommon for a seller to receive multiple offers to purchase a home soon after listing the property. A seller cannot respond to multiple offers by sending a simple counteroffer to each offer (buyer) without creating a potential legal issue. If more than one buyer accepts the counteroffer, each would have a legally binding contract, but the seller would not be able to sell the property to more than one buyer.

One common way of dealing with a multiple buyer offer situation is when the seller chooses to respond to several buyer offers simultaneously. In this case, the seller would make a “multiple counter offer” to some or all of the potential buyers.

Responding to a Multiple Counter Offer

If the seller receives one or more responses to a multiple counter offer (either accepting it or countering it), the seller must accept and sign one buyer response in order to make the contract ratified. What if all the buyers sign the multiple counter offer? If a buyer simply accepts the multiple counter offer, that does not mean the buyer has a valid contract. The seller has to accept the buyer’s acceptance of the multiple counter offer.

Once the purchase contract has been signed by both seller and buyer, neither can arbitrarily decide to cancel it. However, until the multiple counter offer is ratified by both buyer and seller, the seller can accept an offer which is not from anyone the multiple counter offer was sent to!

Responding to Multiple Offers

The seller and his or her agent must weigh the advantages and risks of each approach. Sending a multiple counter offer cancels the offers that were originally sent by the buyers. However, the multiple counter offer clearly announces that several offers are being considered. The buyers could respond in a multitude of ways; they may be motivated to improve their offer, they may decide to resubmit their original offer, or they may decide they don’t want to get in a bidding war and not respond at all.

A seller’s agent may decide to discuss each situation with the buyer’s agent to gain a better understanding of the situation for each buyer, which, in turn, could help the seller make a more informed decision.

The value of a good agent in these situations is hard to overstate. The wrong decisions could be very costly for both seller and buyer!

Multiple Options for Multiple Counter Offers

Just as each of the buyer offers submitted probably have different terms and prices, the multiple counter offer may have different terms and prices for each of the buyer offers. The seller may like the contingencies (or lack of contingencies) in one of the offers, but not the price. Conversely, the seller may like the price but not the contingencies. Even though it is a simultaneous offer made to several potential buyers, responding with different terms makes each buyer more likely to accept the multiple counter offer.

One seller strategy is to respond with different multiple counter offer terms, trying to get the best terms while also trying to play it relatively safe. The seller could respond to one of the offers with changes, which would probably be accepted, and reply to other offers trying to get the best result.

Conversely, after the seller’s agent discusses each buyer situation with the buyer’s agent, the seller may simply decide to accept the first response to the multiple counter offers if they are confident the fastest response is the most motivated buyer.

The experience and skill of the agents involved can dramatically affect the outcome. Clearly, both the buyer and seller need to employ the most qualified agent they can find to navigate the complexities of a hot real estate market to increase their odds of success and to gain the best possible deal. QCBN

By Nick Malouff

Nick Malouff is the CEO and co-owner of Better Homes and Gardens Real Estate BloomTree Realty with offices in Prescott, Prescott Valley, Cottonwood and Sedona. To reach Nick or a highly qualified agent, please call 928-443-8800.