7-Step Guide to Selling a House

 

1. Prepare to Sell Your House

Millions of existing homes are sold each year and, while each transaction is different, every owner wants the same thing: the best possible deal with the least amount of hassle and aggravation. 

Home selling has become more complex than it used to be. New seller disclosure statements, longer and more mysterious form agreements, and a range of environmental concerns have all emerged in the past decade.

More importantly, the home selling process has changed. Buyer brokerage, the process in which REALTORS® represent home buyers, is now common nationwide and good buyer-brokers want the best for their clients.

The result is that, while hundreds of thousands of existing homes may be sold each week, the process is not as easy for sellers as it was five or 10 years ago. Surviving in today’s real estate world requires experience and training in such fields as real estate marketing, financing, negotiating and closing, the very expertise available from local REALTORS®.

Are You Ready?

The home-selling process typically starts several months before a property is made available for sale. It’s necessary to look at a home through the eyes of a prospective buyer and determine what needs to be cleaned, painted, repaired and tossed out.

Ask yourself: If you were buying this home, what would you want to see? The goal is to show a home that looks good, maximizes space and attracts as many buyers as possible.

While part of the “getting ready” phase relates to repairs, painting and other home improvements, it is also a good time to ask why you really want to sell. Selling a home is an important matter and you should have a good reason to sell, perhaps a job change to a new community or the need for more space. Your reason for selling can impact the negotiating process, so it’s important to discuss your needs and wants in private with the REALTOR® who lists your home.

When Should You Sell?

The marketplace tends to be more active in the summer because parents want to enroll children in classes at the beginning of the school year (usually in August). Summer is also typically when most homes are likely to be available.

Generally speaking, markets tend to have some balance between buyers and sellers year-round. For example, a given community may have fewer buyers in late December, but it’s also likely to have fewer homes available for purchase. As a result, home prices tend to rise or fall due to general patterns of supply and demand, rather than the time of year.

Owners are encouraged to sell when the property is ready for sale, there is a need or desire to sell, and the services of a local REALTOR® have been retained.

How Do You Improve Your Home’s Value?

The general rule in real estate is that buyers seek the least expensive home in the best neighborhood they can afford. This means you want to put on the market a home that fits with the neighborhood but is not over-improved. For example, if most homes in your neighborhood have three bedrooms, two baths and 2,500 square feet of finished space, a property with five bedrooms, more baths and far more space would likely be priced much higher and would be more difficult to sell.

Improvements should be made so that the property shows well, reflects community preferences and does not involve capital investments, the cost of which cannot be recovered from the sale.

Cosmetic improvements, paint, wallpaper, landscaping, etc., help a home show better and often are good investments. Mechanical repairs that ensure all systems and appliances are in good working condition are required to get a top price.

Ideally, you want to be sure your property is competitive with other homes available in the community. REALTORS®, who see numerous homes, can provide suggestions that are consistent with your marketplace.

2. Find a Realtor

What to Consider When Choosing a REALTOR®

When you’re choosing a REALTOR® to represent your interests as a buyer, your choice should be based on strong recommendations from a reliable source about your prospective agent’s attention to detail and communication skills.

You will likely rely a lot on your own instinct, too, to decide whether you are compatible with a particular agent and will feel that he is someone you can trust.

One more step you can take is to understand your REALTOR®’s training. In fact, the first step is to check that your sales agent is indeed a REALTOR®, which means she is a member of the National Association of REALTORS® and therefore adheres to NAR’s code of ethics.

Designations REALTORS® Hold

While all licensed real estate agents must meet the minimum requirements of their state laws, you may also have noticed a string of letters attached to the REALTOR®’s name on a business card. These abbreviations mean that the agent has taken additional courses, has documented experience and has passed a test to earn a particular designation. The following list of designations shows the most common designations and what they mean to you as a buyer.

ABR—Accredited Buyer Representative: As a buyer, you may want to look for someone with this designation since it means the agent has taken a course in buyer representation, passed the test and has extensive experience with buyers.

ABRM—Accredited Buyer Representative Manager: This designation is for brokers, owners and managers who have documented experience and education managing agents who represent buyers.

ALC—Accredited Land Consultant: If you’re looking for land to build a custom home, you may want to consider this type of specialist.

CIPS—Certified International Property Specialist: If you want to buy overseas or you’re from another country and want to buy in the United States, a CIPS designation means the REALTOR® has specialized in the international marketplace.

CRB—Certified Real Estate Brokerage Manager: This designation means that the broker or owner of a real estate company has completed advanced classes and has extensive experience.

CRE—Counselor of Real Estate: Membership in this elite group of REALTORS® is by invitation only to professionals with extensive experience.

CRS—Certified Residential Specialist: If you want a REALTOR® with more experience and access to a network of other highly successful agents, you may want to look for one with a CRS who therefore has advanced training as a listing agent and buyers’ agent.

Green Designation: Buyers interested in finding an environmentally friendly home can work with an agent with a green designation who has more knowledge about this type of dwelling.

GRI—Graduate REALTOR® Institute: Graduates of the REALTOR® Institute have received extensive additional education related to residential real estate.

MRP—Military Relocation Professional: This certification emphasizes experience and education with current and former military personnel and their families.

RSPS—Resort & Second-Home Markets Certification: If you’re in the market for a vacation home, look for an agent with this certification.

SRES—Seniors Real Estate Specialist: REALTORS® with this designation have expertise meeting the needs of buyers and sellers over age 50.

Your choice of a REALTOR® should be based on interviews and research, but you can also check on their designations to see whether their experience and education meets your needs as a buyer.

3. Set the List Price of Your Home

Your Home’s First Price Should Be Its Best Price 

If you’re putting your home on the market, especially if you live in an area where prices are going up and buyers are competing for homes, you may be tempted to try listing it at a high price just to see if you can get it.

Don’t do it.

Experienced Realtors will tell you that pricing your home appropriately from the beginning is critical to getting it sold quickly and at the best price. Research shows that overpricing your home and then ping the price several times while it languishes on the market usually leads to selling it at a much lower price than what you originally should have asked for it.
The longer a home stays on the market, the deeper the discount is likely to be off the original price.

For example, according to McEnearney Associates, a McLean, VA, real estate company, homes that sold in August 2013 within their first week on the market sold for an average of 2.08 percent above list price. Homes that lingered on the market for four months sold for an average of 11.53 percent below their original price.

How to price your home correctly

Many homeowners want to set their list price based on what they paid for their home, the balance of their mortgage, or on the profit they want to make so they can move into another home. In reality, your home is worth only what the market will bear. If you price your home too high, some potential buyers won’t want to look at it at all, while others will simply walk away without making an offer.

If you’re interviewing several Realtors to choose a listing agent, you may be tempted to pick the sales professional who suggests the highest price for your property. But sellers, like buyers, need to beware. The Realtor who provides the best comparative market analysis and explanation of how your home should be priced will be more likely to sell your home quicker and for a higher price than someone who tells you only what you want to hear.

A comparative market analysis should include sales prices for similar nearby homes that sold in the last month or two. In addition, many Realtors include prices for homes currently on the market that will be your competition, as well as homes taken off the market because they didn’t sell. Other data Realtors can use to suggest a price range include how many days homes were on the market at various price points and the average difference between the list prices and sale prices on homes that have sold.

Your Realtor can help you estimate who might want to buy your house and what else those buyers are looking at so you can measure your price against the competition.

A knowledgeable Realtor can factor in all of these issues in the context of your local market conditions, including whether home prices are rising or falling and whether it’s a buyer’s or seller’s market.

Choose the right professional to help you with your home sale and then listen to your Realtor’s advice and your transaction is more likely to go through quickly and smoothly from the beginning.

4. Market Your House for Maximum Exposure

Once you’ve made the commitment to sell your home, chosen a REALTOR® to represent you, and established a list price, it’s time to work with your REALTOR® to market your property so it sells as quickly as possible.

Your REALTOR® should share a marketing plan with you, but the more you know about the process of selling your home the easier it is to support your REALTOR®’s efforts.

Pre-Market Tips

The day your home goes on the market it should be in prime condition and priced right to attract the most potential buyers. While your REALTOR® can help you determine an appropriate price and can offer suggestions to make your home more appealing, your job is to put in the work to get your home pristine clean and to remove clutter and personalization.

Buyers want to see a home where they can visualize themselves living. If buyers see an overstuffed closet, they’ll assume the home lacks storage space; and if your kitchen counters are cluttered, they’ll think the space is too small.

Provide your REALTOR® with tips about what you love best about your home and community that can be incorporated into your marketing materials.

Your REALTOR® can advise you on what you need to repair before putting your home on the market. You can also visit other homes that are for sale, or even local model homes for ideas on ways to present your home to potential buyers.

What to Expect From Your REALTOR®

Many REALTOR®s have experience staging homes, or they can bring in a stager to rearrange your place. In addition, your REALTOR® should market your home in multiple ways:

  • Research the market to identify potential buyers to target for direct mail.
  • Reach out to other real estate brokers and agents who work with buyers in your price range.
  • Take excellent photos or hire a professional photographer to showcase your home online with attractive pictures.
  • List your home on the local Multiple Listing Service and make sure it receives maximum exposure on multiple websites.
  • Take a video of your home or produce a virtual tour with numerous photos so your home can be viewed in-depth by buyers looking online.

Once buyers begin visiting your home or contacting your REALTOR®, your agent should respond as quickly as possible to keep the momentum going. Every visitor to your home or their agent should be contacted by your REALTOR® to get feedback on your home and to gauge their interest.

What Your REALTOR® Should Expect From You

While your REALTOR® does the heavy lifting when it comes to marketing, as a seller you need to support your REALTOR® in several ways:

  • Keep your home as clean, neat and odor-free as possible while your home is on the market. This may mean that you have to give up cooking your favorite liver-and-onions dish and that you have to bribe your kids to make their beds and take out the trash every day.
  • Make your home as available as possible to buyers, no matter how inconvenient it is for you and your family. Your home won’t sell if no one can see it.
  • Leave the house when buyers are there, since studies have shown that buyers linger and look more carefully when the homeowners aren’t present.
  • Lock up your pets or take them away when buyers are visiting, especially during an open house when multiple visitors are expected.
  • Provide information to buyers about community amenities or neighborhood sports leagues so they can appreciate your home’s location.

If you and your REALTOR® develop a team approach to selling, you’ll benefit from a quicker and more pleasant real estate transaction.

5. Negotiate a Real Estate Offer

Negotiate the Best Real Estate Deal

Whether you’re a buyer or a seller you want to succeed in the realty marketplace. That’s natural and reasonable, but what are the steps you need to triumph?

Negotiation is a complex matter and all transactions are unique. Both sides – buyer and seller – want to feel that the outcome favors them, or at least represents a fair balance of interests. In the usual case there is a bit of bluff, some give-and-take, and neither party gets everything they want.

So how do you develop a strong bargaining position, one which will help you get the most from a transaction? Experience shows there are five basic keys which will determine who wins at the negotiating table.

1. What does the market say?
At various times we’re in a “buyers” market, a “sellers” market, or a market where housing supply and demand are roughly equal. If possible, you want to be in the market at a time when it favors your position as a buyer or seller.

Because all properties are unique – it is possible to buck general trends and have more leverage than the marketplace would seem to allow. For instance, if you have a property in a desirable neighborhood with few sales, you may be able to get a better deal than elsewhere. Or, if you’re a buyer who can quickly close, that might be an important negotiating chip when dealing with an owner who just got a new job 500 miles away.

2. Who has leverage?
If you’re on the front page of the local paper because your business went bust – and the buyer knows it – you have little clout in the bargaining process. Alternatively, if you’re among six buyers clamoring for that one special property, forget about dictating an agreement the owner can sit back and pick the offer which represents the highest price and best terms.

3. What are the details?
A lot of attention in real estate is paid to transaction prices. This surely makes sense, but the key to a good deal may be more complex.

Consider two identical properties that each sell on the same day for $275,000. The houses are the same, the sale prices are the same, but are the deals the same? Maybe not. For instance, one owner may have agreed to paint the property, replace the roof, purchase a new kitchen refrigerator, and pay the first $3,000 of the buyer’s closing costs. The second owner made no concessions.

In this example, the first house was actually sold at discount the $275,000 purchase price less the value of the roof repairs, closing credit, and other items. If you’re a buyer, this is the deal you want. If you’re a seller, you would prefer to be the second owner and give up nothing.

4. What about financing?
Real estate transactions involve a trade – houses for money. We know the house is there, but what about financing? There are several factors that impact the money issue:

  • Has the buyer been pre-qualified or pre-approved by a lender? Meeting with a lender before looking at homes does not usually guarantee that financing is absolutely, unquestionably available – a loan application can be declined because of appraisal problems, title issues, survey findings, and other reasons. But, buyers who are “pre-qualified” or “pre-approved” (these terms do not have a standard meaning around the country) at least have some idea of their ability to finance a home and know that they are likely to qualify for certain loan programs. The result is that pre-qualified buyers represent less risk to owners than a purchaser who has never met with a lender. If the seller accepts an offer from a buyer with unknown financial strength, it’s possible that the transaction could fail because the buyer can’t get a loan. Meanwhile, the owner may have lost the opportunity to sell to a qualified buyer.
  • The lower the interest rate, the larger the pool of potential buyers. More buyers equal more potential demand, good news for sellers. Alternatively, high rates or even rising rates may drive buyers from the marketplace – and that’s not good for anyone.
  • It used to be that down payments were a major financing hurdle – but not anymore. For those with good credit, loans with 5 percent down or less are now widely available. In fact, 100 percent financing, mortgages with nothing down, are now being made by conventional lenders. Reduced down payment requirements are good for both buyers and sellers.

5. Who has expertise?
Imagine you’re in a fight. The other guy has black belts in 12 martial arts – and you don’t. Who’s going to win?

Brokers have long represented sellers, and now buyer brokerage is entirely common. In a transaction where one side has representation and the other does not, who has the advantage at the bargaining table?

6. The art of Settling

Settlement Tips for Sellers

In other words, before you can completely relax you need to get to the settlement table.

Contingencies and Sellers

While the burden is on the buyer to finalize financing for the home purchase and to obtain homeowners insurance, some contract contingencies will impact you, too, especially if you’re living in the home. Most transactions include a home inspection, so you’ll need to make your home available to the inspector and then negotiate with the buyers about anything the inspection turns up according to the terms of your contract.

Besides the home inspection, some contracts and some lenders call for a termite inspection and a radon gas inspection. In each case, you or your listing agent or the buyer’s agent will need to make the home available for inspection.

Another important step prior to closing is the appraisal. If the appraisal comes in higher than the sales price, then the buyers can relax and be happy that they have purchased a home for less than its market value. Once the contract has been signed, you as the seller cannot renegotiate the price higher. However, if the appraisal comes in lower than the sales price, then the buyer’s lender will limit the loan amount to that lower value. The buyer may have to come up with additional cash to cover the financing gap or may ask you to renegotiate the contract. Your REALTOR® can advise you about the best way to handle this situation, but in any case you and the buyer are also bound by the contract terms.

Before you go to settlement, you and your listing agent should go over the contract and make sure you’re fulfilling all the promises you made in terms of what items will be conveyed to the buyer and any repairs or improvements you promised to make.

Settlement Date

Buyers and sellers typically negotiate a settlement date that is mutually agreeable. If you have sold your home and are not yet ready to move into your next residence, you can sometimes negotiate a “rent-back” with the buyer that allows you to stay in the home after the settlement by paying rent to the buyer.

Alternatively, some sellers allow the buyers to move in before settlement. In either case, it’s crucial to have a written agreement about who is responsible if something happens to the house or its contents during the transition period. Generally, you’re restricted to a maximum rent-back of 60 days because lenders would require the buyers to finance the home as an investment property if the rental period is any longer.

Settlement Services

The decision about who provides settlement (also known as closing or escrow) services varies from one market to another. In many places, the buyer chooses the settlement company, but in others the seller chooses. At the closing, the buyer will provide funds to buy your home and the settlement agent will review the sales agreement to determine what payments you’ll receive. The title to the property is transferred to the buyers and arrangements are made to record that title transfer with the appropriate local records office.

At a typical closing, adjustments are made to the final amounts owed by the buyer and you as the seller. For example, if you’ve been paying your property taxes through an escrow account, you may be credited extra for prepaid taxes or you may receive less money at settlement if the property taxes haven’t been paid properly.

Once the settlement papers are signed and the house keys are transferred, you’re free tomove onto your next home.

 

7. Plan Your Move

Plan Your Move When You List Your Home

Our Moving Center provides calculators as well as information on moving options, storage, truck rentals and related topics. This information, plus assistance and advice from your REALTOR®, can ease the moving process.

How Do You Plan a Move?

The time to plan your move begins once you’ve decided to sell your home. Some of the activities required to sell the home can actually help with the moving process. For example, by cleaning out closets, the basement and the attic there will be less to do once the home is under contract.

Your planning will be guided by a number of things:

  • Are you moving long distance? If yes, you’ll likely require an interstate mover and the use of a large van.
  • Moving internationally? Contact the embassy in Washington, DC, for information. Be aware that items which may be entirely common in the United States can be prohibited in foreign countries. Ask about customs protocols, duties and taxes.
  • Moving locally? If yes, will you move yourself? You’ll need to consider packing boxes, peanuts, blankets or padding and a van rental.
  • Planning is key: Stock up on boxes, packing materials, tape and markers. Always mark boxes so that movers will know where goods should be placed.

Which Mover Should You Use?

The decision of which mover to use can begin with a visit to REALTOR.com’s® Moving Center and discussions with the REALTOR® who is marketing your home.

There are a number of factors to consider:

  • Cost: You’ll want to spend as little as possible, but choosing only on the basis of cost can be a mistake. Movers must have the right equipment, training and experience to do a good job. A mover, no matter how large or small, should be able to provide recent references for homesellers with a similar volume of goods to transport.
  • Get mover estimates in writing: Be aware that it’s possible to get discounts through membership organizations and, sometimes, on the basis of your profession: Clergy, for example, sometimes qualify for a discount.
  • Always confirm mover credentials: Movers should be licensed and bonded as required in your state, and employees should have workman’s comp insurance.

Get a Checklist

Moving is a big job and checklists can make it more organized and easier. Here are some of the major items to consider:

  • Money: If you’re moving more than a few miles, then you should have enough cash or credit to cover travel, food, transportation and lodging.
  • Medicine: Keep medications in a place where they will be available during the move.
  • Number boxes: Make a list of boxes by number and indicate their contents. It makes it easier to count all boxes on arrival.
  • Keep kids occupied: If moving with children, make sure that each has a favorite toy or toys, blankets, games, music and other items.
  • Moving historic, breakable or valued items? Such goods routinely require special handling and packaging.
  • Have address books readily available: In case you need help.

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