vacant-home-for-sale

Should I buy a vacant home?

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Advantages and Considerations for Vacant Homes

In a blazing hot real estate market, a vacant home that’s not newly constructed can raise some questions. How long has the property been vacant? Has it been properly maintained so that there are no weather issues? Are there pests? Are there ghosts? At RealtyHive, we feature many types of properties, both vacant and occupied, from all types of sellers. This is what you should know.

Vacant Home Advantages

You can see it on your schedule

Unlike an occupied home where you have to coordinate schedules with current owners or tenants, vacant homes are often able to be shown at any time of the day. While the convenience factor is one benefit, there’s another reason this is so beneficial for a prospective buyer. 

Imagine you’re looking to buy a home in an unfamiliar area. Maybe you don’t know the area or the neighborhood well or only pass by during a certain part of the day. Depending on your location, the character of the neighborhood may change from day to night. Knowing there’s a loud and rowdy bar down the street or a school-induced traffic jam every afternoon may change the price you’re willing to offer. It’s not just properties in the city center that can be affected. What about a property that should have a wonderful view of the night sky, but instead has industrial lights coming from the nearby farm?

Viewing a vacant house multiple times allows you to see these details — the kind you normally find out about after the fact — ahead of time and without inconveniencing the seller.

It’s easier to picture yourself in

When looking for real estate, you should make it a point to look past the current tenant/owners personal items. Sure, you might fall in love with the current furniture and design, but more likely you’ll find yourself thinking “Why would you chose that couch?” or “How do you live in this mess?” 

When you look at a vacant home, you don’t run into this issue. Instead, you get to see a room with it’s permanent features. While some sellers use staging to create a more “homey” feel, the majority of the “stuff” is typcially removed allowing you to see how much space you have to work with and how the rooms flow without much distraction.

The sellers are probably motivated

The biggest advantage of buying a vacant home tends to be the sellers. From mortgages to maintenance, an unoccupied property costs the owner each and every month they hold on to it. Even if the property doesn’t have the mortgage, taxes, maintenance, and in some locations, required utility payments, that all need to be paid.

These holding costs, in addition to the labor and stress of having an additional property, can add up. For this reason, sellers of vacant homes are often highly motivated and more open to discussing all offers. One of the ways you can find motivated sellers is to check out the properties in upcoming RealtyHive Time-Limited Events. These sellers have committed to competitively pricing their properties and are willing to entertain all reasonable offers.

Vacant Home Considerations

How long has the property been vacant?

When a home is occupied issues are noticed quickly. Leaks in the basement or roof are addressed, heating or cooling systems are being used, and the property is often more or less maintained simply by being occupied. None of this applies to vacant homes. In the southern US, homes that sit vacant too long can attract unwanted guests like spiders, snakes, and scorpions, while homes to the north run the risk of freeze damage if homes are not property winterized.

Can the property serve its current use?

This one gets into the weeds of real estate law a bit, but if you’re looking at buying a vacant property, you should know about non-conforming use laws. In regard to a vacant home, this could mean that what appears to be a multifamily home or duplex would be allowed to be used as such.

Is buying a vacant home a good idea?

As with all real estate purchases, it’s important to do your homework. Vacant homes offer buyers the ability to see the property without any distractions, but may come with some unique considerations or challenges. Choose a great agent (find one who offers incentives to buyers here!) to assist you and help you through the process.

What Makes a House “Sellable?”

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We know when a person is fashionable and we know when a topic is debatable. But what makes a property sellable? If you’re worried about why your house isn’t selling, read on to see if it checks all the sellable property boxes.

Is your property listed at the right price?

Here’s the thing: every property is sellable if it’s at the right price. By “right price,” we don’t necessarily mean the exact value of your home but more so the price that buyers are willing to pay for.

Here’s an example: a beautiful mansion located in an area where there’s no demand for that kind of luxury will likely sell below its worth. You can sit and wait for the right buyer but you might end up waiting forever. Otherwise, you can keep lowering the price until someone bites. This isn’t ideal, but we have some other solutions we’ll mention towards the end of the blog.

Is your property in a good location?

This is a tough one, because you obviously can’t just up and move your house to a more desirable location. But we all know how powerful location is — people will pay a premium price for even the most rundown of homes as long as it’s in a good spot.

Do whatever you can to sell up the location you’re in. In a super remote location? Hype up the peace and quiet. Near an industrial site or an airport? Talk about being close to a lot of jobs (or consider if you’re located in a place that might one day be up and coming — it’s a trend we see with many industrial locales). 

If none of that seems to work, find a platform (such as RealtyHive) that targets a larger audience. Expanding the location of the people who see your property creates more potential to find a buyer and, ultimately, a sale.

Do you have good curb appeal?

Around the corner from where I (the writer) live is a house that used to be a Pizza Hut. The once-parking lot is now a lawn but nothing has changed the fact that when you look at it, it’s clearly a Pizza Hut. I’ve heard the interior is really modern, but I’m still not convinced that it doesn’t smell like greasy, cheesy pizza inside.

That tells you pretty much all you need to know about curb appeal. While the Pizza Hut house isn’t a lost cause, it’s undoubtedly lacking in sellability. Countless buyers looking for homes will feel the exact same way that I do, which limits maximum potential.

If the Pizza Hut house had some beautiful trees, shrubs, and other landscaping, you truly couldn’t even tell it was once a restaurant. First impressions are important, which is why it’s essential you examine your home’s exterior when trying to sell.

Does your house make foundational sense?

A house on stilts makes sense in Florida or the Caribbean — not so much in the frozen tundra that is Wisconsin. Houses without basements aren’t uncommon in warmer, drier states. In tornado country, a house lacking a basement is kind of scary.

If your house is structurally sensible for the region, you have an asset(s) that you should absolutely highlight. For all you know, a buyer from Arizona might be shocked at your green lawn or unfinished basement — what’s common for you could very well be a novelty for others.

If your house lacks structure, curb appeal, location, or any other sellable factor, don’t despair. Don’t let it sit for months on end without an offer in sight — sell with RealtyHive instead! We’ve got the exclusive marketing you need to help your home go to the right buyer. Find out today how a time-limited event can help your house for sale.

Why You Need Digital Marketing to Sell Your House

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Need to buy a present for your dad’s birthday? Go on Amazon! Trying to watch a movie? Digitally stream it through Netflix or Hulu. Shopping for a new car? Check out your local car dealer’s website. Ready to sell your house? It’s time to take that online as well.

We’re living in an age where practically everything we do relates back to the internet. This holds true for selling your house. While posting listings in the paper worked wonders for previous generations, you’ve got to get online, and you’ve got to have a strategy.

Marketing online > listing alone.

These days, even posting your listing on MLS or Zillow doesn’t guarantee a successful home sale. Real estate marketing attempts to reach as many interested buyers as possible — not just the buyers who are close to your property. Here are a few reasons why listing without marketing might not cut it:

Exposure for Your Domestic Property

If your property is unique, luxury, or in the middle of nowhere, people in your neighborhood or immediate circle are likely the first to know about it and the last to go for it. Potential buyers often move into the area for a specific reason and need a house to complement their lifestyle. Your neighbors likely aren’t looking to move to your property, they have one of their own.

Exposure for Your International Property

Did you know that Zillow doesn’t list international properties? Your Bahamian beach condo or Spanish apartment need to reach a global audience in order to sell. Without the right marketing team, your international listing will sit on the market for months or longer.

Exposure for Faraway Buyers

Think the only interested buyers are the ones within a 30-mile radius? Think again. Buyers come from all over the country and even the world!

Especially if you’re in a bigger city or near a high-profile company (particularly a tech company), properly marketing your property is crucial. Global or out-of-state buyers won’t drive by your property and know it’s for sale — marketing reaches buyers where they’re at.

But what if I’m selling in a highly desirable neighborhood?

Sure, you might be able to simply list on Zillow or MLS and hear from a number of buyers. You might even get a number of offers. But what sounds better: 5 offers and the highest number is $10k above your listing price, or 15 offers and the highest number is $20k above?

Marketing reaches a wider audience, giving you the greatest chance for the greatest ROI. And who couldn’t stand to pocket an extra $10k from a home sale?

RealtyHive does it all!

International properties, vacant land, residential homes, commercial buildings — we list it all. We take on properties that sites like Zillow can’t. But our services don’t end with listing. We have a premier marketing team in place to help get your property the exposure it deserves by offering a variety of plans. In other words, you cannot pay until your house sells.

So before you try to become a marketing expert or resign to a life of little to no offers, let our team help. List with RealtyHive today!

Real Estate Investing Resources

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When it comes to real estate investing, are you:

a. A complete novice who wants to get started but doesn’t know where to begin
b. A rookie who’s getting ready to buy their first investment property
c. An investment property owner who wants to grow their wealth even more
d. A seasoned vet who thinks they know it all

No matter what you answered, we guarantee this blog will help you on your property investing journey. Here’s a list of real estate investment resources to help any investor stay up to date.

YouTube Channels

Did you know that in 2019, YouTube was the most visited site on the Internet? Most people won’t be surprised by that stat, but it just goes to show how YouTube has evolved from a place of viral videos to a truly resourceful tool. Here are some of the best YouTube channels to help your real estate portfolio:

Graham Stephan

“Here’s my story of skipping college, pursuing [sic] real estate sales at 18 years old, and becoming a millionaire by the time I turned 26.” Graham Stephan’s YouTube bio says it all. While Stephan diverts his attention from real estate investing to millennials (and lots of avocado toast mentions, for whatever reason) to other financial topics from time to time, his transparency as a whole is inspiring and insightful.

Mark Ferguson

A true flip king (often balancing 15-20 property flips at a time), Mark Ferguson documents every part of his real estate investment process. Ferguson shows before and after footage, spreadsheets and other financial info, and even whether a property was ultimately worth it. 

BiggerPockets

As one BP fan writes, “BiggerPockets forum is the single greatest resource for real estate investors.” While BP also has a blog, forum, website, and podcast, their YouTube channel is perhaps a perfect compilation of each resource.

HONORABLE MENTIONS

  • Meet Kevin
  • Flipping Mastery TV
  • Max Maxwell
  • The Financial Diet (not real estate, but an excellent financial video channel)

Podcasts

Put these on during your commute, take a walk and plug in your earphones, or even just make cleaning the house a little more interesting with a good real estate investing podcast. Many of the channels listed (and sites below) also have their own podcast, but here are some lesser-known podcasts to check out.

Apartment Building Investing With Michael Blank

On top of writing for BiggerPockets, Michael Blank’s podcast has unique perspectives regarding multifamily complexes. Blank dives deep on this somewhat niche form of property investing through conversations and intriguing interviews.

The Real Estate Guys

One of iTunes’ most popular podcasts, the Real Estate Guys were once a radio show and got their start in 1997. Fast-paced and fun, you won’t start snoozing with this podcast.

Rental Rookie

Teacher-turned-investor Emily Du Plessis explains how she finessed her transition into property investing. But with more than 160 episodes as of January, 2020, this podcast title is a misnomer — Du Plessis certainly knows her stuff. This is a great podcast in general, but the fact that it’s run by a teacher means you know you’ll learn a ton.

Blogs, Sites, & Forums

REtipster

REtipster stands apart from many other blogs because it gives a lot of attention to land sales and how to sell land. Blogs, podcasts, reviews, and interviews make this an extraordinarily comprehensive site.

Afford Anything

Afford Anything tells a fascinating story of a woman, Paula, who has done it all in the pursuit of financial freedom. Paula has a podcast, a blog, a consulting service, and even a course to help investors get on their feet. Even if you’re just learning about how she scraped up $25k on a $21k salary, you’re bound to be captivated by her story.

Connected Investors

Connected Investors is almost like the Reddit of property investing. You can find topics to read up on or contribute to, or even start your own. Plus, these forums are a great way for people to network, which can absolutely help you grow your portfolio.

RealtyHive

Countless cruise through Zillow, Trulia, Realtor.com and the like. What many people don’t realize is that RealtyHive is an untapped source of potential. 

We are an exclusive resource for learning about purchasing property through time-limited events, our blog is a resource for real estate buyers and sellers, and we feature listings that other sites might not show. We know that knowledge is power, and we’re more than happy to share our knowledge with you!

New Psychology Tricks to Help Sell Your Home

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Words, colors, sounds, timing, shapes — each of these things affect us on a subconscious level, and each of these things are used constantly by advertisers and businesses alike.

Psychology plays a huge role in attracting more clients and customers. But can you use psychology tricks in a similar manner to help sell your house? Try these tricks (and check out a previous psychology in real estate blog we’ve posted) to see for yourself.

Psychology Trick #1: Create FOMO.

Otherwise known as the fear of missing out, FOMO doesn’t solely exist in terms of weekend plans and brunch dates. Creating FOMO for your property is a great tip for selling your home. 

The way to do it is pretty simple: sell through a RealtyHive time-limited event. Creating FOMO is just in the nature of our auctions. In fact, the FOMO is so real that as we talked about in a previous blog, many properties listed with us actually sell before the event. 

Many times, a buyer who was only mildly interested in a property is suddenly chomping at the bit when they know it could go to auction. They don’t want to lose out on the current deal, knowing that the price could go up, so they act now instead of waiting.

Point being, you don’t have to jump through hoops to make your property highly desirable and FOMO-inducing. Just list with RealtyHive and we’ll handle the rest.

Psychology Trick #2: Play to the senses.

Playing to the senses is especially relevant if you’re in a buyer’s market (aka it’s highly competitive, the houses are similar, and your property needs to stand out). Read the following listing descriptions and see which appeals to you more:

Example 1:

Spacious 3-bedroom, 1-bath house with a yard. Close to grocery store and park. Kitchen was renovated in 2019.

Example 2:

This spacious 3-bedroom, 1-bath house has it all, and we’ll miss it dearly! Take in the sunlight in the newly renovated kitchen and watch the hummingbirds flit around the backyard. 

The mud room will come in handy as you come back from running errands (we’re just a block away from the grocery store) or the park around the corner.

It’s pretty clear which listing description stands out. While you don’t want to overwhelm potential buyers and write a novel, there are simple ways to appeal to the senses, paint a picture, and keep people interested.

Psychology Trick #3: Try your hand at price perceptions.

Nearly everything you buy ends in 99 cents. Why don’t businesses just round up the dollar? It’s because of an important psychology trick that you should absolutely apply to selling your house.

When people see a pack of Oreos in the checkout line at the grocery store is $1.99, the 1 is the first number they see. We have a habit of subconsciously ending our thought process there — most of us think “well, it’s under $2” instead of the fact that it’s basically $2. 

If your current house is listed at $250,000, it could honestly make a difference to list as $249,000 or $249,999. Plus, listing at a slightly lower rate might include your house in a higher number of searches — buyers looking solely for houses below $250,000 might miss out on your property.

Secondly, weird or random prices might get more buyers’ attention. If you list at a random price like $194,722.78, it will likely catch buyers’ eyes and help your property stand out.

Psychology Trick #4: Remember that “perfect” doesn’t exist.

To be clear: staging your house and taking photos are times where your home should look as spotless as possible. But oftentimes, people become paralyzed in the process of selling their house. They’re trying to fix too many things or write the absolute perfect listing description before taking their listing live. 

Two things to keep in mind, the first being the Pratfall Effect. People tend to like people who aren’t perfect, who make mistakes and who are genuine humans. The same can apply to houses. Remember the old adage, “If it seems too good to be true, it probably is?” Buyers are sometimes wary when a house seems *too* perfect. This is good news for anyone who has a cringe-y wallpapered room they’ve just never had time to fix.

Plus, in the era of fixer uppers, a lot of buyers like looking for potential. They like the idea of tackling on a home project. Suffice to say, don’t wait for your house to be perfect before selling — in some instances, your attempts could actually backfire.

The second thing to keep in mind: If you’re worried about your house never selling on Zillow or Trulia because of its imperfections, sell with RealtyHive instead! We’ll happily take it to a time-limited event and in the event it doesn’t sell, you don’t pay. Our real estate psychologists, erm, team is standing by.

5 Things to Try When Your House Isn’t Selling

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“Did I do something wrong?”

“Have I displeased the real estate gods?”

“Why isn’t my house selling?”

It’s the last question that any seller wants to ask. Sadly, many people end up in this swirl of seller confusion. Instead of just leaving your house on the market as-is for the next several months or longer and hoping for the best, try these proactive tips that can make a difference.

1. Hire a real estate agent.

Are you experience the “fizz” in FSBO? Now might be the time to work with an agent. Before you go with just anyone, however, look into finding an agent with RealtyHive! We have a vast network of highly qualified agents — and you can even get a cash back credit at closing through Cashifyd.

Have an agent but you’re not impressed or feeling worried? Keep reading for some other tips, and check out our blog on parting ways with an agent if things don’t seem to be going as they should.

2. Fix the minor things for a major difference.

When it comes to selling a house, the details are everything. Here are just a few questions to ask when your house is anxiously sitting on the market:

  • Are your photos truly showcasing your home for its best value?
  • Are things tidy or chaotic when people come to look at the house?
  • Is your landscaping appealing or appalling?
  • Are there smaller repairs you could complete? Holes in the drywall, leaking faucets, broken or wobbly fixtures, burned out light bulbs — all of these things are relatively easy to fix and reassure the next homeowner that they won’t have to.
  • Is your listing description well-written? If not, read this blog for some tips.

3. Consider lowering your price.

Some buyers might think “I’m not looking at a house over $200k” and your price might be just over at $204k. When those buyers are looking for a house online, they’re setting their parameters below the $200k benchmark, missing out on your property.

If your house is truly listed at an accurate value and near a benchmark ending in a 0 or 5, try lowering your price just beneath it. For example, a $172,000 house would list at $169,999. 

You don’t want to do this frequently or lower by too wide of a margin, but this strategy could find more interested buyers. For all you know, you might suddenly receive multiple offers and some are for your original price or more.

4. Hire the right marketing team.

Marketing is its own job industry for a reason. If you don’t have the time or the skill set to properly market your house, it only makes sense to find someone who does. It’s just like how you wouldn’t perform your own surgery or build your own house. 

RealtyHive has an expert real estate marketing crew to help. In fact, we’re so confident in our marketing that if your property doesn’t sell, your marketing is free!

5. Try a time-limited event.

Many of the properties that list with RealtyHive actually sell before the event. That’s because people don’t want to miss out on a buying opportunity and lose their dream home in an auction. Not only do time-limited events stir up a sense of urgency for buyers, they also open up bidding for people all over the world who are distinctly interested in what you have to offer.

You may feel cursed, unlucky, or the receiver of bad karma, but RealtyHive is here to turn your luck around. Find out how you can get your property sold through a time-limited event and list with us today

What to Look for in a Realtor

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Just as no one wants to end up marrying a malicious Malfoy or a crazy Carrie Bradshaw (sorry Carrie, we still love you), choosing the right Realtor is as crucial as choosing the right significant other. In order to avoid mishaps and desperately wanting to back out once things are “steady” and underway, you want to make sure your agent is up for the task. But what should you look for in a Realtor?

You’ll find that the characteristics of a good Realtor aren’t all that different from that of a good partner. Let the love doctors at RealtyHive give you the proper coaching to find a match made in real estate heaven.

Someone With Experience

Of course, most of us are first-timers at relationships at some point or another, and that’s OK. Just because your Realtor is fresher on the market doesn’t mean they won’t do a fabulous job. That being said, your Realtor should definitely have experience in the following areas:

  • Location: Agents should be well-versed and in-the-know when it comes to selling in your area. An agent who doesn’t know the area raises some red flags — look for someone who has lived in or near your city/neighborhood and can speak to the buyer’s market and demographic.
  • Property Type: Selling a house is very different than selling a commercial property. Make sure your agent has experience that aligns with the type of property you’re selling.
  • Licensed: This should go without saying, but do not go with a Realtor who isn’t licensed. Going with your neighbor’s friend who “knows a guy” who sold a house for someone “on the cheap” sounds about as successful as a blind date with someone 40 years your senior.

Someone Who Isn’t Afraid to Show You Off

No one puts Baby in the corner! It’s a massive red flag to date someone who won’t take you around to their family or friends, or who barely acknowledges you exist in public. You deserve more, honey!

The right Realtor has the marketing skills to make sure your house gets the traction it needs. They probably won’t just put a sign out in front of your house — they’ll likely post listings online and garner web traffic for your home. Ask your Realtor about their marketing strategy before crossing any Ts or dotting any Is.

Someone Who’s a Good Communicator

Ahh, communication. The backbone of every healthy, thriving relationship! Everyone has different needs, so it’s important you establish what you expect from a Realtor before signing a contract with one.

For example, if you prefer minimal contact, you should look for a Realtor who is compatible (or someone who is flexible and can adapt to your needs). If you need to hear daily updates, that’s also something to communicate to your Realtor. Being frank from the get-go is essential to making sure your Realtor is a good fit.

Someone Who’s the Complete Package

A kind person who makes you laugh, happens to be a great cook, is an exceptional listener, and they also serenade you with a heart-wrenching rendition of “Wonderwall?” Yes please! A Realtor who has more to offer than the bare minimum? Sign us up!

While this might not exist everywhere, it’s definitely a plus when your Realtor includes things like free staging or professional photos. However, it’s a good reminder that the extra bells and whistles aren’t as important as the foundational skills. In other words, what’s more important: a partner who plays acoustic guitar or a partner who is extremely loyal?

PS: Don’t Shy Away From Matchmaking Sites

It can be a tough world out there when you’re trying to find the One. But RealtyHive is the answer you’re looking for. We have the means to help you connect with the perfect Realtor! Find out more about Cashifyd and how you can find the perfect agent to sell your house — and even get cash back at closing. Tell us a dating site that offers that!

Can You Fire a Realtor?

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When you hire a realtor to help sell your property, you expect and hope things will go smoothly. But what if that’s not the case? If something’s not working out with your Realtor, are you allowed to let them go?

When to Fire a Realtor

Before we dive into contracts and the like, it’s good to know the instances where firing a Realtor makes sense. Firing a Realtor is sometimes tricky — you want to have really good reasons to let yours go.

Poor Marketing & Photography

A Realtor needs impeccable marketing skills. If the photos of your home aren’t enough to make you want to live there, your house isn’t getting the traction it needs. 

Unethical

Did you find out your Realtor has put money in trust into their personal account? Has your Realtor shown open discrimination towards you or others? Either of these are fireable offenses. Read up on the code of ethics to see if your Realtor is upholding their responsibilities as they should.

Lack of Knowledge

If your Realtor says they’re an expert in your neighborhood but evidence points to the contrary, this is good to take note of. An example is if a Realtor says your house will sell in ___ days/weeks and things go on for much longer, or if they seem to lack the knowledge they claim.

Unprofessional

Does your Realtor consistently show up late? Are they unpleasant and/or apathetic? Are they massively uncommunicative? First off, we’re sorry that’s the case, but secondly, document any instances of unprofessionalism that show a pattern. This is good to bring up when you try to terminate the contract.

Realtor Contracts: What You Need to Know

Letting go of a Realtor is not as simple as switching to a different landscaping company or hairstylist. Sellers sign contracts with Realtors which legally bind them to work together.

However, there are some instances where you won’t have to work with them, unsatisfied, for months on end:

Protection Periods 

Most Realtor contracts have a protection period. These clauses give the Realtor a set amount of time to sell your home. If your home doesn’t sell by the end of the protection period, you should be able to back out of your contract without issue.

Contract Expiration

Whether your contract is for three, six, twelve, or another number of months, it might be in your best interest to just let the contract expire before trying to hire someone else.

Termination Fees 

Sometimes you can get out of a contract by agreeing to pay termination fees. Remember, however, that you will likely have to pay another Realtor and spend even more time trying to sell your house. Termination fees are a financial loss, but might be worth it if you’re severely displeased with your Realtor.

Contract Release 

If your contract expiration is a ways out and you’ve felt unhappy for awhile (and expressed this to your agent, talk to your agent about an amicable release. They might not go for it, but it’s worth a shot — particularly if this isn’t the first time they’re hearing about your dissatisfaction.

Something else to keep in mind: Are you severely frustrated by your Realtor? If so, consider contacting your Realtor’s broker — they could push for an amicable contract release. At the very least, they’ll probably allow you to pick a different agent in their company.

You’re No Longer With Your Realtor, What Next?

You have a couple options at this point. You can sell FSBO, but this will easily add work onto your plate. You can take on a new Realtor, but your wounds might feel too fresh — and keep in mind that a listing under your old Realtor’s name/a contract that’s not properly terminated means that Realtor will take commission when your house sells. You’ll owe the commission even if you sell the house to yourself or a family member.

The other option is working with RealtyHive. We can find you an agent (and even get cash back through Cashifyd) or help you list on your own. Whatever you need, we’ve got you covered — our time-limited events are a proven selling method to help you out.

Can You Back Out of a Real Estate Closing?

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You’ve made it through all the steps of becoming a homeowner. You’ve waited anxiously until closing day. You’re about to sign all the papers annnnnnd now you want to back out.

When it’s down to the wire, can you back out of a real estate closing? We’re breaking it down based on some crucial steps in the process of becoming a homeowner.

When you’re preapproved for a loan…

You can shop around and look at as many houses as you like. You don’t have to submit an offer on anything just yet! If you find a house you’re interested in but then decide not to go for it, you don’t have to move forward. Keep on shoppin’!

When you’re ready to submit an offer…

This is the part where things get interesting. You have to write contingencies into your offer that provide you an opportunity to back out.

However, you can’t write “I want to back out on closing day if something feels off” as a contingency and expect the sellers to accept your offer. Contingencies are especially helpful for:

  • Home inspections. A home inspection might reveal issues you’re not comfortable with dealing with, such as a problem with the foundation. You can write a contingency to get out of a real estate closing if the inspection doesn’t meet your needs.
  • Financing. This type of contingency protects you if the bank decides not to help finance the house you chose. It can also protect you if the bank’s appraiser deems the house value as less than what you’re trying to borrow.
  • Home sale. Many homeowners want to sell their current house before buying a new one. Include this as a contingency if you’re in this situation.

If you include these contingencies in your offer and one of them comes up, you can still safely back out of closing.

When it’s closing day and something comes up…

Backing out depends on what that “something” is.

If you do a final walk-through of the place and come across something major (think flooding in the basement or severe wind damage to the roof), you might be able to get out of the transaction.

In the event of an emergency (like suddenly needing a surgery), you might be able to postpone the closing, or safely back out if there are other offers and it’d be months before you could close.

If some nagging feeling has lingered, telling you not to go through with this, you can back out but you will lose your earnest money. That being said, losing several thousand dollars in earnest money is still better than being shackled to a massive investment that you want no part of.

Why do you want to get out of closing?

This is perhaps the most important question for you to ask. Suddenly needing to care for your parents, getting a job offer in another state, simply feeling like this is the wrong move — these things happen. However, it’s in your best interest to only go ahead with buying a house when you’ve considered all these options.

No one can anticipate getting cold feet and many emergencies simply can’t be avoided. But since buying a house is such a huge deal, you should fully accept and welcome the prospect of closing from the moment you write an offer.

Closing on a house is stressful, but RealtyHive has the experience and listings you’re looking for. Find your dream home through one of our time-limited events!

What Is Earnest Money in Real Estate?

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Buying a house is like driving a car. There are tons of elements that go into having a smooth ride. For first timers, learning all the ins and outs can feel overwhelming. 

One of these details is knowing about earnest money. Once you go through the process of buying a house it makes sense, but not necessarily for someone just starting out. Let RealtyHive help you get behind the wheel — find out how earnest money and real estate go hand in hand.

What is earnest money?

Let’s say you found the perfect house to buy. However, there are many other interested buyers who also think it’s the perfect house. 

When putting in an offer, you can offer earnest money to the seller. It’s kind of like saying, “Look, I’m so interested in this house that I’m ready to start paying for it.”

Do buyers just write a check for the sellers?

Not exactly, but as a buyer, you would write a check. It goes to your real estate agent, who gives it to the seller’s real estate company’s trust account.

The check can come out of your personal or business account, but as stated, it’s written out to the seller’s real estate company’s trust account. This money then gets held in escrow, which is owned by the real estate company who has the listing for sale.

With a FSBO property, the money is typically held in an account owned by the title company or lawyer. Only in FSBO deals would you actually show the check to the seller — otherwise, the agents handle it.

Do buyers get the money back?

That depends. Assuming everything goes well and you make it to closing, you as the buyer will have the money from your earnest check applied as a credit on the deal. Essentially, the money will go towards the house you just bought.

However, if you don’t include contingencies in your offer and end up backing out of the deal, you’ll probably lose your money.

Here’s an example: You found a glaring issue during the house inspection and no longer want to buy the house.

  • If you include a contingency about the home inspection in your offer, you’ll get your earnest money back.
  • If you don’t include a contingency, you’ll lose your earnest money.

Is earnest money the same as a down payment?

No! For that reason, it’s crucial that you save enough money for both a down payment and earnest money — don’t put all your eggs into one basket. Even though you can get your earnest money back as a credit, you don’t get to spend it towards the down payment.

How much earnest money should buyers offer?

This completely varies, usually by property price. Some agents recommend putting 1-2% down. Others say $1,000 or another specific monetary value. You don’t want to put yourself into a lurch by offering too much money, but you also want your offer to stand out. If you’re really committed, it’s OK to write a bigger earnest check.

When do you put earnest money down?

You’ll put the money down once your offer is accepted, usually a few days after you find out the sellers took your offer.

Why do buyers offer earnest money?

Buyers offer earnest money as a way to make their offer stand out. The buying market is pretty competitive. As a buyer, you will need your offer to stand apart from the others — some properties get 10, 20, or even more offers on their home.

But even when prices are low and the number of houses on the market is high, buyers will still put down earnest money (usually a smaller amount). Buyers want to show how serious they are. Even if you’re looking to buy in a less competitive market, earnest money is standard practice.

Hopefully this clears up some questions on earnest money, but contact RealtyHive if you have more questions! We work with buyers, sellers, and real estate agents, and have the knowledge you seek. Look through our listings to get started.