Selling your home involves careful planning, a well thought-out strategy, and business savvy. Our checklist will guide you to a successful home sale and help explain the process.
Here is the 10-step process:
1) Hire a real estate broker
2) Understand the paperwork involved
3) Set the list price
4) Get the home ready for buyers
5) Establish a marketing plan
6) Hire an attorney
7) Reach a deal with a buyer
8) Understand what is a good offer
9) What are contingencies that could slow a deal?
10) Closing
Step 1
Hire a real estate broker - Finding a good real estate agent or broker is essential to enjoying a painless real estate transaction. Referrals are one of the best ways to find a good agent. Most real estate agents stay in business because satisfied clients refer them to friends, family, neighbors and co-workers. Ask the people around you who they have used and ask them to describe their experiences with this real estate agent. Successful agents make customer satisfaction their number one priority and put their customers' needs before their own.
Step 2
Understand the paperwork involved - From the listing agreement and the disclosure statement, to the sales agreement and the settlement statement, selling a home involves quite a bit of paperwork. Know what to expect and make sure you understand what you receive.
Step 3
Set the list price - Research what comparable properties in your neighborhood have sold for before setting your price. Consult with your real estate agent as to how your home fits into the market from a location and condition stand point. Your price should be based on concrete sales data that you can utilize when you are negotiating an offer. Remember that the quickest way to sell your house is to price it properly.
Step 4
Get the home ready for buyers - Prepare the house by checking your home's "curb appeal". Clean up the inside of your house as well and make sure it stays that way. Trim the lawn and shrubs, keep your gardens neat and healthy, and repair visible damage.
When it is appropriate, you can also attract buyers with low cost cosmetic repairs. Possibly you can paint cracked walls, pick up carpets and remove inside clutter. Why? Because people buy homes that appear clean, solid and well maintained.
Step 5
Establish the marketing plan - Set the listing timeframe from the start to the end date. Once the dates have been set, the MLS listing can be prepared and the date to host a broker caravan can be established. A broker caravan invites local brokers who may have interested clients to the home so they can preview it for their customer.
Also, you should determine or ask your real estate agent where you want to advertise and establish a schedule of open houses. Create home profile sheets and marketing brochures that prospective buyers can take with them. The brochure should contain appealing photos, brief descriptions of all your home's features and floor plans.
Step 6
Hire an attorney - Real estate transactions are governed by federal statutes, as well as state statutory and common law. A qualified real estate attorney can assistance in a variety of matters including the closing. The real estate attorney can protect you from costly mistakes, errors in the documents, errors in the figures and other problems that could lead to litigation or other expensive legal action.
Step 7
Reach a deal with a buyer - The offer to purchase is the contract that buyers present when they wish to submit an offer in writing (all offers should be in writing). Once you receive the offer, your options are:
- Accept the offer by signing it without changes.
- Make a counter-offer by changing any of the terms and suggesting your own.
- Reject the offer, indicating that some or all of the terms are not acceptable.
If the offered price is less than what you wanted, look at the offer as a whole. There may be terms that counterbalance the lower price (i.e. fast closing, no contingencies, buyer paying their own closing costs, etc.). Be prepared to split the difference if you and the buyer are close
Let the buyer know you have considered their position. Explain how you arrived at your asking price (comparable selling prices in the neighborhood).
It is important to establish trust in the transaction and to try to take as much emotion out of the deal as possible. Avoid responses that may offend, even if the buyer makes an insensitive comment or is being stubborn on terms.
The buyer is not the enemy. Engage them in negotiations. If offered less than your asking price, get an explanation. Did the buyer check the prices of comparable homes? You should be ready with your sales comparables in order to engage in a conversation about it.
Is there a perceived defect in the property? Find out what the basis is for the lower offer. Discuss perceived property defects. Also, be objective about the cost of holding out. If you are paying $1,000 per month to keep the property, selling for $2,000 below your asking price might be better than holding on for an extra two months.
Step 8
Understand what is a good offer - A strong offer will have pre-approval letter (if financing is needed). Also the buyer should provide at least $500 - $1,000 in earnest money or a "binder's fee." The earnest money check is made to an escrow agent (your attorney, the real estate agent, or whomever is stipulated). This check may be yours to keep if the buyer defaults on the contract. Finally, the buyer should offer an additional 5% down at P & S signing.
Once you have signed an offer, you may still accept a backup offer, as long as you make sure the backup buyer understands the house is under contract, and their offer is second in line.
Step 9
What are contingencies that could slow a deal? - After you have reached a deal with the buyers there remain obstacles to overcome in order to see the deal through. This is outlined in the chart below:
The inspection contingency -The buyer will likely ask for a 7-10 day inspection period for a home, radon, pest and lead paint inspection. The contract will specify a time limit for these inspections. If the inspection is not completed in time, the buyer forfeits his right to the inspection.
One way to try and avoid inspection problems is to sell the home "as is." The seller can stipulate in the MLS listing and when negotiating the offer that the home is being sold in "as is" condition.
Many times the inspection will reveal big or small problems in the house. No matter how new or in good a shape your home is, inspectors are hired to find issues with it. At this point you may find yourself having to re-negotiate the price on the deal. Even if you have declared that the home will be sold in "as-is" condition, many times a buyer will not be afraid to ask for something after the inspection. They could ask for money back, ask for you to make repairs, or they can walk away from the deal.
As was the case when you were negotiating the original offer, you can decide to work out a deal or allow the buyer to walk. This will likely depend on how reasonable you feel your price is and if you think you can still attain this in the open market. Often times, given that the home has been off the market, you may be willing to give in a little in order to get the deal done.
Approximately, five days after inspection contingency runs out, the purchase and sale (P & S) agreement should be signed. A qualified real estate attorney can provide valuable advice and review all the documents involved.
The mortgage contingency - If the buyer is obtaining any debt to close the deal, they will have approximately 30 days to obtain a mortgage (or in the amount of time that you have allowed, per the offer and P & S) The buyer will be required to have at least one application submitted to a qualifying mortgage company, within 7 days after the signing of in the P & S agreement.
The pre approval letter submitted with the original offer does not mean that the buyer will ultimately receive financing. There are several additional steps before a bank will give a commitment to loan including having the house appraised.
Once the buyer receives the mortgage commitment, many of the major hurdles are behind you. The main issues will be involved with delivering a clean title and deed to the buyer. These are details that your attorney can help you handle.
Step 10
Closing - The buyer will have the right to a walk thru the day of the closing to make sure that they are satisfied that the house is in similar condition as to when the P & S was signed. The final step is sitting at the closing table to make sure that both sides have lived up to the terms of the purchase and sale agreement.
Selling your home is by no means easy. However, if you are well prepared, aware of the process and of the potential pitfalls, you will be on your way to having a smooth transaction while at the same time helping to maximize the value of your home.
Questions or comments about this article? Contact the author - Mathew Roth