Deciding To Sell
So you’ve decided to sell your house. Before anything else, it’s a good idea to sit down and clarify your motivations and draw up a basic time frame for the selling process.
Define your needs
Write down all the reasons for selling your home. Why do you want to sell and what do you expect to accomplish with the sale? For example, a growing family may prompt your need for a larger home, or a job opportunity in another city may necessitate a move. For your goals, write down if you’d like to sell your house within a certain time frame or make a particular profit margin. Being clear about your intentions for selling will make it easier for an agent to determine the most appropriate option for your specified financial, lifestyle and real estate goals.
Work with your real estate agent to map out the best path to achieve your objectives and set a realistic time frame for the sale.
Understanding the Market and Pricing
Your next objective should be to determine the best possible selling price for your house. Setting a fair asking price from the outset will generate the most activity from other real estate agents and buyers. You will need to take into account the condition of your home, what comparable homes in your neighborhood are selling for and state of the overall market in your area. It’s often difficult to remain unbiased when putting a price on your home, so your real estate agent’s expertise is invaluable at this step. Your agent will know what comparable homes are selling for in your neighborhood and the average time those homes are sitting on the market. If you want a truly objective opinion about the price of your home, you could have an appraisal done. This typically costs a few hundred dollars.
Remember:You’re always better off setting a fair market value price than setting your price too high. Studies show that homes priced higher than three percent of their market value take longer to sell. If your home sits on the market for too long, potential buyers may think there is something wrong with the property. Often, when this happens, the seller has to drop the price below market value to compete with newer, reasonably priced listings.
Deciding to sell your house demands a serious consideration of your current financial situation and future possibilities. With the help of a qualified agent, you will be able to effectively assess the cumulative impact of these changes, estimate potential proceeds of selling your house, and plan effective tax savings and estate planning strategies.
Selecting A Real Estate Agent
There are countless decisions to be made when selling a home and many of them will significantly affect whether or not you make a profit and how much time it takes to sell your home. A real estate agent can offer specialized knowledge in research, marketing and negotiations to help you meet or exceed your goals. According to the National Association of REALTORS®, 82 percent of home sales are the result of agent connections.
A real estate agent serves as your advocate and representative with dealing with buyers, buyer’s agents and service providers. They help you establish a fair asking price and assist you in making counter offers while screening all written offers and discussing their advantages and disadvantages. They advise you on how to present your home in order to appeal to the most buyers, and they design a customized marketing plan that will promote your home 24 hours a day, seven days a week. They prepare the closing documents, represent you at closing and mediate any last-minute obstacles to ensure a smooth, successful transaction. The agent you select should take time to listen to your goals and clarify your needs, understand your unique situation and be genuinely concerned about the outcome of the process, and your guide and partner in this critical decision. The rapport you have with your agent should be one of respect, honesty and trust.
IMPORTANT TO NOTE:
Real estate professionals can represent the seller, the buyer or both. When agents represent both parties, it is called dual agency. In some states, dual agency affects the real estate professional’s fiduciary responsibilities to the seller. Keep in mind that real estate laws differ from state to state and even from locale to locale. For more in-depth answers, talk with a knowledgeable real estate professional and ask about local practices.
Preparing To Sell
Pricing to Sell and Making a Profit
The asking price you set for your home significantly affects whether you will profit in the sale, how much you will profit and how long your home will sit on the market. Your real estate agent’s knowledge of the overall market and what’s selling — or not selling — will be invaluable in helping you determine the price. The objective is to find a price that the market will bear but won’t leave money on the table.
Time is not on your side when it comes to real estate. Although many factors influence the outcome, perhaps time is the biggest determinant in whether or not you see a profit and how much you profit. Studies show that the longer a house stays on the market, the less likely it is to sell for the original asking price. Therefore, if your goal is to make money, think about a price that will encourage buyer activity (read: fair market value).
Pricing your home to sell in a timely fashion requires some objectivity. It’s important that you not confuse value with cost — in other words, how much you value your home versus what buyers are willing to pay for it. Don’t place too much emphasis on home improvements when calculating your price, because buyers may not share your taste. For instance, not everyone wants hardwood floors or granite countertops.
Because time is of the essence, make it easy for the buyers. Remain flexible on when your agent can schedule showings. Also, avoid putting contingencies on the sale. Though a desirable move-in date makes for a smoother transition between homes, it could cause you to lose the sale altogether.
Preparing Your House for Sale
Most of us don’t keep our homes in “showroom” condition. We tend to overlook piles of boxes in the garage, broken porch lights and doors or windows that stick. It’s time to break out of that owner’s mindset and get your house in tiptop shape. The condition of your home will affect how quickly it sells and the price the buyer is willing to offer.
First impressions are the most important. Your real estate agent can help you take a fresh look at your home and suggest ways to stage it and make it more appealing to buyers.A home with too much “personality” is harder to sell. Removing family photos, mementos and personalized décor will help buyers visualize the home as theirs.Make minor repairs and replacements. Small defects, such as a leaky faucet, a torn screen or a worn doormat, can ruin the buyer’s first impression.Clutter is a big no-no when showing your home to potential buyers. Make sure you have removed all knickknacks from your shelves and cleared all your bathroom and kitchen counters to make every area seem as spacious as possible.
Following The Selling Process
Market your home
Now that you’re ready to sell, your real estate agent will set up a marketing strategy specifically for your home. There are many ways to get the word out, including: the internet, yard signs, open houses, print advertising and agent-to-agent referrals. In addition to listing your home on the MLS, your agent will use a combination of these tactics to bring the most qualified buyers to your home. Your agent should structure the marketing plan so that the first three to six weeks are the busiest.
Receive an offer
When you receive a written offer from a potential buyer, your real estate agent will first find out whether or not the individual is prequalified or preapproved to buy your home. If so, then you and your agent will review the proposed contract, taking care to understand what is required of both parties to execute the transaction. The contract, though not limited to this list, should include the following: legal description of the property, offer price, down payment, financial arrangements, list of fees and who will be paying, deposit amount, inspection rights and possible repair allowances, method of conveying the title and closing information, appliances and/or furnishing that will stay with the home, settlement date and contingencies.
At this point, you have three options: accept the contract as is, accept it with changes (a counteroffer) or reject it. Remember: once both parties have signed a written offer, the document becomes legally binding. If you have any questions or concerns, be certain to address them with your real estate agent right away.
Negotiate to sell
Most offers to purchase your home will require some negotiating to come to a win-win agreement. Your real estate agent is well versed on the intricacies of the contracts used in your area and will protect your best interest throughout the bargaining. Your agent also knows what each contract clause means, what you will net from the sale and what areas are easiest to negotiate. Some negotiable items include the price, financing, closing costs, repairs, appliances, fixtures, painting and move-in date. Once both parties have agreed on the terms of the sale, your agent will prepare a contract.
Prepare to close
Once you accept an offer to sell your house, you will need to make a list of all the things you and your buyer must do before closing. The property may need to be formally appraised, surveyed, inspected or repaired. Your real estate agent can spearhead the effort and serve as your advocate when dealing with the buyer’s agent and service providers. Depending on the written contract, you may pay for all, some or none of these items. If each procedure returns acceptable results as defined by the contract, then the sale may continue. If there are problems with the home, the terms set forth in the contract will dictate your next step. You or the buyer may decide to walk away, open a new round of negotiations or proceed to closing.
Important reminder:A few days before the closing, you will want to contact the entity that is closing the transaction and make sure the necessary documents will be ready to sign on the appropriate date. Also, begin to make arrangements for your upcoming move if you have not done so.
Close the deal
“Closing” refers to the meeting where ownership of the property is legally transferred to the buyer. Your agent will be present during the closing to guide you through the process and make sure everything goes as planned. By being present during the closing, he or she can mediate any last-minute issues that may arise. In some states, an attorney is required and you may wish to have one present.
Understanding Escrow To Appraisal
As you near closer to the selling and closing of your home there are a handful of matters you still need to fully understand. Your real estate agent will be there to answer your questions and guide you through the closing process, but the better informed you are, the more confidence you will have with the deal and the final outcome.
The Title Company
The buyer selects a title company, whose job it is to examine and insure title to real estate. After researching the complete recorded history of your property, they'll certify that 1) your title is free and clear of encumbrances (eg. mortgages, leases or restrictions) by the date of closing, and 2) all new encumbrances are duly included in the title. They'll draw up a preliminary report at the end of the process, which your listing agent will go over with you in detail.
A contingency is a condition that must be met before a contract becomes legally binding. For instance, a home buyer will usually include a contingency stating that their contract is binding only when there is a satisfactory home inspection report from a qualified inspector. Before completing his or her purchase of your property, the home buyer goes over every aspect of the property, as provided for by purchase agreements. These include:
Obtaining financing and insurance
Reviewing all pertinent documents, such as preliminary title reports and disclosure documents
Inspecting the property. The buyer has the right to determine the condition of your property by subjecting it to a wide range of inspections, such as roof, termite/pest, chimney/fireplace, property boundary survey, well, septic, pool/spa, arborist or mold.
Depending on the outcome of these inspections, one of two things may happen:
Either each milestone is successfully closed and the contingencies will be removed, bringing you one step closer to the close, or
The buyer, after reviewing the property and the papers, requests a renegotiation of the terms of contract (usually the price).
How do you respond objectively and fairly to the buyer when a renegotiation is demanded, while acting in your best interests? This is when a professional listing agent can make a real difference in the outcome of the transaction. Having dealt with various property sales in the past, we guarantee our expertise and total commitment to every client, no matter what their situation.
Loan Approval and Appraisal
We suggest that you accept buyers who have a lender's pre-approval letter, which is a better guarantee of loan approval than a pre-qualification. Expect an appraiser from the lender's company to review your property and verify that the sales price is appropriate.
Ready To Go?
Don't pack your bags just yet. Something unexpected might happen - a buyer's offer fails to push through, or new buyers come by to visit right when your house is in chaos. There's a proper time to start preparations for moving, and given a real estate agent’s previous experience with these transactions, he or she will help you determine when that time will be. Having dealt with various property sales in the past, a real estate agent can guarantee his or her expertise and total commitment.
Practicing Seller Etiquette
When your house goes on the market, you’re not only opening the door to prospective buyers, but also sometimes to unknown vendors and naïve or unqualified buyers. As with any business transaction, there is an expected protocol to how sellers, buyers and their respective agents interact.
The Aggressive Agent
When your agent puts your house on the market, typically all promotional materials state clearly that your agent is the primary contact for buyers and buyers’ agents. However, sometimes a buyer’s agent will contact a seller directly to try to either win over their business or cut the seller’s agent out of the deal. This is not reputable behavior and you should report it to your agent immediately if it happens to you.
Understanding the Buyer
As the seller, you can control three factors that will affect the sale of your home; the home’s condition, the asking price and the marketing strategy. However, it’s important to note that there are numerous other factors that influence a buyer, and you need to understand these consumer trends when you enter the sellers’ market. The more your home matches these qualifications, the more competitive it will be in the marketplace. Your real estate agent can advise you on how to best position and market your home to overcome any perceived downsides.
The Naive Buyer
Yard signs, Internet listings and other advertisements can generate a lot of buzz for your home. Some prospective buyers — particularly first-timers — will be so excited to see your home that they’ll simply drop by. If this happens, no matter how nice these unexpected visitors are, it’s best not to humor their enthusiasm by discussing your home or giving an impromptu tour. Instead, politely let them know that your real estate agent is in charge of scheduling tours and provide them with the agent’s contact information. If you attempt to handle these surprise visits on your own, you might inadvertently disclose information that could hurt you during negotiations down the road.
Unfortunately the most influential factor in determining your home’s appeal to buyers is something you can’t control: location. According to the National Association of REALTORS®, neighborhood quality is the No. 1 reason buyers choose certain homes. The second most influential factor is commute times to work and school.
While some buyers want to simplify their lives and downsize to a smaller home, home sizes in general have continued to increase over the decades, nearly doubling in size since the 1950s. Smaller homes typically appeal to first-time home buyers and “empty nesters,” or couples whose children have grown up and moved out.
Preferences in floor plans and amenities go in and out of fashion, and your real estate agent can inform you of the “hot ticket” items that are selling homes in your market. If your home lacks certain features, you can renovate to increase its appeal, but be forewarned: that’s not always the right move. Using market conditions and activity in your neighborhood as a gauge, your agent can help you determine whether the investment is likely to help or hinder your profit margin and time on the market.
Closing Of Escrow
If you've come this far, then this means only one thing: congratulations, you've successfully sold your home! Don't forget to tie up these loose ends:
Final Walk-Through Inspection
More of a formality than anything else, the final inspection takes place a few days before the transaction is closed. The buyer visits your property to verify that all is in working order. You'll be signing the papers certifying that the property was sold in satisfactory condition.
Cancel Home Services and Utilities
We can provide a list of useful numbers for the termination of home services and utilities as of the date of the closing.
Your agent is ready to assist you should an unforeseen glitch pop up, even at this last stage. Sometimes, the buyer's loan doesn't pull through on time - no need to worry. Real estate agents have encountered these problems before and know how to handle these problems efficiently.
The title company furnishes the principals with a closing statement, which summarizes all the financial transactions enacted in the process. At closing, you and the buyer will sign the final documents for the title company. They'll record the transaction for you and the buyer at the County Recorder's Office. At closing you'll then receive your proceeds, and the buyer will become the new owner.