House Selling Process

Home-selling-process-AubreyHess

1. Choose a listing agent

With so much information readily available online, clients sometimes ask, “Why should we hire a real estate agent?” A listing agent will represent you and have a fiduciary responsibility to look out for your best interests. Though the Internet has made it easier to sell your home without an agent, about 93 percent of home sales are still done with a real estate agent. There are many reasons why hiring an agent can be helpful to you.

  • Education and experience – A good realtor understands the complex procedure and paperwork involved in selling a home. She has also gone through a licensing program which requires continuing education every year to keep her license active.
  • Saves time and energy – We’re all looking for more precious time in our lives, and hiring a pro gives us that time. You won’t have to schedule and conduct tours of your home, which cut into your work and weekends.
  • Agents are buffers – Agents take the spam out of your property showings and visits. Your agent will filter all those phone calls that lead to nowhere from looky-loos and try to induce serious buyers to immediately write an offer.
  • Knowledge of the market – Real estate agents can disclose market conditions, which will govern your selling process. Data such as the average per square foot cost of similar homes, median and average sales prices, average days on market, and ratios of list-to-sold prices will have a huge bearing on what your bottom line will be.
  • Negotiation skills and confidentiality – A good agent has studied different personality types to effectively negotiate with different types of people and achieve a good sale price for your house. Top producing agents negotiate well because, unlike most buyers and sellers, they can remove themselves from the emotional aspects of the transaction. Instead of being a messenger delivering buyer’s offers to sellers and vice versa, REALTORS are professionals who are trained to present their client’s case in the best light and agree to hold client information confidential from competing interests.
  • Professional contacts – Your agent’s contacts with other Realtors, contractors, inspectors, lenders, and appraisers can help you find a solution for any problem you may encounter through the listing period. Agents know which vendors have a reputation for efficiency, competency, and competitive pricing, and your agent can give you a list of references with whom they have worked to help you make a wise selection.
  • Agent tours – Agents sometimes conduct open houses where buyer agents arrive in groups and check out the house. This is usually a quick process, is more convenient than a traditional open house and allows buyer agents in the area to tell their clients about your home.
  • Handling volumes of paperwork – Today’s purchase agreements can run up to 20 pages or more. Most real estate files average thicknesses from one to three inches of paper. One tiny mistake or omission could land you in court or cost you thousands.
  • Multiple Listing Service – A key tool for real estate agents is the Multiple Listing Service (MLS), a massive online database that contains listings of 90 percent of properties for sale across the United States. Only subscribing agents can list properties.
  • Answer questions after closing – Even the smoothest transactions that close without complications can come back to haunt. For example, taxing authorities that collect property tax assessments, doc stamps or transfer taxes can fall months behind and mix up invoices, but one call to your agent can straighten out the confusion. Worthy and honest agents don’t leave you in the dust to fend for yourself.

To find the right agent for you, please review my guide on Hiring the Right Real Estate Agent. 

2. Establish the value of your house

Pricing a house is part art and part science. It involves comparing similar properties, making adjustments for the differences among them, tracking market movements, and taking stock of present inventory, all in an attempt to come up with a range of value.

  • Is it too low? Houses sell at a price a buyer is willing to pay and a seller is willing to accept. Don’t over value your house. If you happen to price it too low, you will likely receive multiple offers, which should drive up the price. So, there is little danger in pricing a home too low. The danger lies in pricing it too high and selecting your agent solely on opinion of value. Unfortunately, uninformed sellers often choose the listing agent who suggests the highest list price, which is the worst mistake a seller can make.
  • How much money does an overpriced listing cost the seller? The financial loss often exceeds the extra mortgage payments paid and goes beyond the uncompensated hassle factor of trying to keep a home spotless during showings. It affects the amount that a buyer will pay because it’s not a fresh listing anymore. It’s now a stale, dated, market-worn home that was overpriced for too long. When houses sit on the market for long periods of time, buyers think something is wrong with them and end up writing low offers that reflect that opinion. Don’t let it happen to you.

3. Get the house ready for sale

  • Look at the house with a critical, objective eye. Consider hiring a professional service to clean your house thoroughly, including carpets, appliances and windows. You may also consider hiring a professional stager or ask your real estate agent for help in staging. Get rid of any excess clutter. You want to communicate that this house has been well maintained.
  • Does your house need painting? Do any moldings, shutters or trim need to be replaced? Stand at the curb and consider whether this is a house that you’d want to visit if you happened to be walking by. Review my list of Essential Items Prior to Listing Your House to make sure you are ready for potential buyers.
  • Get your house pre-inspected. Discovering problems during a pre-inspection allows you to have more control over how to handle them, and it also takes some negotiation power away from a buyer. Many house sales are contingent upon a home inspection, and a buyer may ask for repairs. If you know what the issues are prior to putting your house on the market, you can either make the repairs or price the house accordingly to avoid heavy negotiations when you receive an offer.

4. Market your house

Depend on your REALTOR to create an effective marketing plan for your house. Ask questions about the plan to make sure you understand and are comfortable with all aspects of it. If your house isn’t getting much showing activity early in the listing period, talk with your agent about adjusting your marketing plan to increase traffic.

Beware of the open house myth. It’s still a popular tool used in home sales, but its usefulness is actually far overrated. According to the National Association of Realtors, only 3 percent of houses are sold this way. In fact, open houses are much more useful for agents than for home sellers. The few hours an agent spends conducting an open house can yield many new clients. If your agent is doing a good job advertising your home, the extra time and expense of conducting an open house shouldn’t be necessary. The exception may be the agent tour described earlier, which helps to spread the word about your house among buyer agents.

5. Make all seller disclosures available

Buyers need to be made aware of any known defects in a house. It is to your benefit to accurately and completely fill out any required disclosures and make them available to potential buyers.

  • If your house was built before 1978, a lead-based paint disclosure will be required.
  • If you are aware of material facts, disclose them in the seller property condition disclosure statement. Your REALTOR will have you fill out this form at the time of your listing appointment.
  • Your title company should provide any neighborhood covenants, but if you belong to a homeowner association, additional documentation will be required.

6. Show your house

To make your house look the best it can for showings, follow these guidelines.

  • Lighting – Open all drapes and blinds. If there is an unpleasant view, close the sheers. Turn on all overhead lights and lamps for a bright and cheerful look. If some wall switches operate wall outlets, plug in a lamp. When a buyer flips a switch and nothing happens, he thinks “problem”. Clean or replace all switch plates.
  • Aromas – Set out some fresh flowers, both for appearance and fragrance. Bake canned cinnamon rolls just before a showing.
  • Utility bills – Have copies of the past 12 months’ bills or show the monthly MUD and OPPD average.
  • Pets – SEE NO PETS, HEAR NO PETS, SMELL NO PETS! Kennel all pets during a showing. Buyers can be diverted or annoyed with man’s best friends. Better yet, make arrangements to remove your pets during all showings.
  • Music – Create a relaxed mood with soft music to make a buyer want to stick around.
  • Pick up – Make your bed! Put away clothes, straighten up newspapers, and wash dishes. Clear anything you can off of the kitchen counter top.
  • Leave the house- Most buyers will not relax and inspect a home if the owners are present.

7. Receive an offer and negotiate

Anytime you receive an offer on your house, it’s a good thing. Even if you receive a lowball offer, negotiate by issuing a counter offer. Don’t ignore it or refuse to respond. Sometimes buyers may offer what you may consider an insulting offer to see what your bottom dollar is. Don’t be afraid to make a full-price counter offer, if you are priced competitively. If you are priced right, prepare yourself for multiple offers.

8. Prepare for closing

Congratulations! You’ve found a buyer, agreed to a sale price and are ready to sell your house. Now it’s time to close the deal, so how is that done?

While you are getting prepared for your move, packing boxes, and calling the utility companies to switch your service to a new address, the title company is examining the title deed, the document that gives someone ownership of the property. They look for any issues such as disputed ownership claims or incomplete documentation and issue title insurance to the homebuyer to guarantee against losses that come from a problem with the title. The title company may request documentation from you to ensure a clean title is handed over to the buyer at closing. In the meantime, you have several responsibilities.

  • Cooperate with the home inspection process. Ask your agent to provide you with a home inspection checklist so you will know which items an inspector will want to see and prepare those areas for review.
  • Negotiate the request for repairs. You are entitled to a copy of the home inspection report if the buyers request repairs, but you aren’t required to make them; however, buyers can then cancel the purchase agreement. Be open to another round of negotiations when deciding what repairs to make. If you do not choose to make repairs, a buyer might instead accept a closing cost credit.
  • Schedule the appraisal. Your agent can coordinate this for you, but make sure to clean the house the day before the appraiser arrives so it shows well. If you receive an appraisal that reflects a value less than the purchase price, ask your agent about alternatives. You are not entitled to receive a copy of the appraisal because it is the property of the buyers, since they paid for the service.
  • Obtain seller-required inspections. Some types of loans may require a pest inspection or wood-destroying insect inspection. The title company and buyer are typically responsible for setting up these inspections, but it is up to you to make your house available for these appointments.
  • Sign the title and escrow documents. The title company will call you to sign these items prior to closing, so remember to bring a valid picture ID.

9. Hug your Realtor! You’re on your way to closing!

On the day of closing, your agent will attend to represent you. The buyer will sign the required loan and title documents, and your property deed, reconveyance, and deed of trust will record in the public records. Once the closing is complete, the buyers will take the keys to their new home, so make sure that the house is thoroughly cleaned with no personal items remaining. Your agent should deliver copies of all paperwork and any proceeds to you after the closing is complete.

Done! You just sold your house!