1. Your tax value and your market value are rarely, if ever, the same
This is probably one of the hardest lessons sellers have to learn. The municipalities aren’t appraising your house and their main goal isn’t to give you a market value for your home. Their main goal is to tax the property to generate income for the area. In addition since there are so many houses they have to find a tax value for this means it is a very lengthy process to have the value changed.
In fact, tax values move so slowly that they are usually pretty far off from market value. In a down market tax values are typically higher than market value. In a strong market tax values are typically lower than market value.
You need to look at what houses in your neighborhood are selling for. These comparables give you an idea of what buyers are willing to pay for your home. Don’t think that purchasers don’t know these comparables exist. They’re looking at more than just your house when they search for homes so they know an overpriced home when they see it.
2. The title company represents the contract, not their client
The title company is held to the high standard of neutrality no matter who hires them. This means they don’t necessarily have their client’s best interest in mind. Instead they enforce the contract to how it is exactly written. If they start choosing sides they can face penalties from the government including getting shut down.
But title companies are ran by humans so many states, Virginia included, give purchasers the legal right to hire a separate title company from the seller without penalty. Even in this case both title companies are still representing the contract but more importantly they keep each other in line. In any event, don’t think that because you hire a title company that they’ll fight for you in a dispute. You need to hire your own attorney for that.
3. You aren’t entitled to the EMD
When a purchaser puts an offer on a house they almost always include an earnest money deposit or EMD. This EMD is usually about 1% of the contract sales price. In any event an EMD shows a buyer is serious because this is the money they are willing to lose should they default. EMDs aren’t usually required but sellers rarely accept contracts without an EMD.
However, as a seller you aren’t automatically entitled to the EMD. First off, the EMD is held in an escrow account usually by a broker, although we recommend a title company. This escrow account is neutral. This means even if the purchaser defaults in the contract the seller doesn’t automatically get the EMD. The purchaser and seller have to agree who gets the EMD and how much of it. If they can’t agree, the seller has to take the purchaser to court in order to have the funds released through a judgment.
But don’t feel like an EMD is not worth anything. EMDs are deposited funds so the purchaser doesn’t have access to the money either. This can affect their ability to write on other properties. Just like how the purchaser doesn’t have to release the funds to the seller, the seller doesn’t have to release the funds to the purchaser.
4. HGTV isn’t real life
Television has given the world huge misconceptions about how several industries operate including real estate. While real estate TV shows give you a general idea of how to improve your property’s value they are far from precise. Real estate TV shows film in many different markets and every market is unique. For example: Granite countertops in the Northern Virginia area are so common that purchasers often don’t care about them anymore. In fact, even apartment rentals have granite countertops further reducing their luxury appeal.
Listen to your real estate agent’s advice on the market value of your home. They are experts in the area and have seen hundreds of houses in your area. If they say your stainless steel appliances aren’t special they’re right – because purchasers are going to say the same thing.
5. Everyone’s house is special (in other words, nobody’s house is special)
Even though real estate agents use comparables to help determine the price of your home each house has unique properties that make it special. These unique properties are more of a marketing aspect rather than a valuing aspect. And because each and every comparable house has unique properties that makes a comparable just as desirable as yours – even if the aspect is completely different from yours.
So don’t think that since you have a bump out that adds 300 square feet to your townhouse that it is automatically more valuable. This unique feature makes your property more desirable so purchasers want to write on it. But purchasers are just as happy to write on another house that has a large wood deck without a bump out.
We aren’t accountants or real estate attorneys. Remember to consult an accountant and a real estate attorney before entering into a real estate transaction.