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The Home Seller's Guide to
Success |
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Selling a home is a big
decision and requires a lot of work. From getting the house
ready to reviewing the escrow papers, our helpful guide will
walk you through the process of selling your home |
Plan and Prepare
Set The Price
Market It
Sell It
Closing
Moving |
Plan and Prepare
Some 5 million 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.
Unfortunately, home
selling has become a more complex business 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 - where REALTORS®
represent homebuyers - is now common nationwide, and good
buyer-brokers want the best for their clients.
The result is that
while almost 100,000 existing homes are 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, negotiation 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 which looks good, maximizes space and attracts as many
buyers - and as much demand - as possible.
While part of the
"getting ready" phase relates to repairs, painting and other home
improvements, this is also a good time to ask why you really want to
sell.
Selling a home is an
important matter and there should be 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 August). The 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. In a given community, for example, there may be fewer
buyers in late December, but there are also likely to be fewer homes
available for purchase. So, home prices tend to rise or fall because
of general demand patterns rather than the time of the 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. In terms of
improvements, this means you want a home that fits in the
neighborhood but is not over-improved. For example, if most homes in
your neighborhood have three bedrooms, two baths and 2,500 sq. ft.
of finished space, a property with five bedrooms, more baths and far
more space would likely be priced much higher and likely be more
difficult to sell.
Improvements should be
made so that the property shows well, is consistent with the
neighborhood and does not involve capital investments, the cost of
which cannot be recovered from the sale. Furthermore, improvements
should reflect community preferences.
Cosmetic improvements -
paint, wallpaper and landscaping - help a home "show" better and
often are good investments. Mechanical repairs - to ensure that all
systems and appliances are in good working condition - are required
to get a top price.
Ideally, you want to be
sure that 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.
SET THE PRICE
Some 5 million 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.
Unfortunately, home
selling has become a more complex business 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 - where REALTORS®
represent homebuyers - is now common nationwide, and good
buyer-brokers want the best for their clients.
The result is that
while almost 100,000 existing homes are 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, negotiation 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 which looks good, maximizes space and attracts as many
buyers - and as much demand - as possible.
While part of the
"getting ready" phase relates to repairs, painting and other home
improvements, this is also a good time to ask why you really want to
sell.
Selling a home is an
important matter and there should be 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 August). The 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. In a given community, for example, there may be fewer
buyers in late December, but there are also likely to be fewer homes
available for purchase. So, home prices tend to rise or fall because
of general demand patterns rather than the time of the 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. In terms of
improvements, this means you want a home that fits in the
neighborhood but is not over-improved. For example, if most homes in
your neighborhood have three bedrooms, two baths and 2,500 sq. ft.
of finished space, a property with five bedrooms, more baths and far
more space would likely be priced much higher and likely be more
difficult to sell.
Improvements should be
made so that the property shows well, is consistent with the
neighborhood and does not involve capital investments, the cost of
which cannot be recovered from the sale. Furthermore, improvements
should reflect community preferences.
Cosmetic improvements -
paint, wallpaper and landscaping - help a home "show" better and
often are good investments. Mechanical repairs - to ensure that all
systems and appliances are in good working condition - are required
to get a top price.
Ideally, you want to be
sure that 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.
MARKET YOUR HOME
If you bought a car, you could purchase
a given model with selected features from any dealer. Since the car
comes from one assembly plant, it's going to be the same whether
purchased from dealer Smith or dealer Jones.
Homes are different. Each is unique, the
marketplace is always in flux, interest rates constantly change and
new buyers search for homes each day. With such fluidity, it
requires REALTORS® to craft marketing plans specifically for
individual homes and market conditions.
Selling can entail a variety of
marketing strategies. Once listed, it's likely that the home will be
quickly entered into the local MLS (Multiple Listing Service) and
placed on REALTOR.com®. REALTORS® routinely market by mail with
new-listing announcements and regular newsletters. Open houses,
broker access to the home via the use of a lock box and networking
with both local and out-of-town brokers are also common.
Much of a broker's work will be quiet
and unseen -- yet important. The quiet telephone calls, the work
with contacts, the follow-ups with open-house visitors,
conversations with ad respondents, the web postings and other
outreach efforts are all part of the process required to sell homes.
Experienced REALTORS® base their
marketing efforts on previous transactions and ongoing research. For
instance, according to the National Association of Realtors (NAR),
37 percent of all buyers check the Internet. NAR numbers also show
that most households move within 10 miles of their current location
while 20 percent move at least 50 miles.
How to market your home.
If you look at a typical transaction you can see that there are five
general areas where REALTORS® can assist in the home-selling
process.
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Preparation: Before being
placed on the market, homes must be in "show" condition.
REALTORS® can explain what repairs and upgrades are required for
individual homes which are most likely to produce the best
results.
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Pricing: Brokers do more than
price homes for sale, they also construct sale terms designed to
speed the selling process. It may be, for example, that a home
priced at $150,000 with a 2 percent seller credit to the buyer
at closing will be far more attractive to purchasers than a home
priced at $147,000. Why? That 2 percent credit is worth $3,000
to the purchaser at closing -- the time when buyers are most
likely strapped for cash.
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Marketing: REALTORS® will
execute strategies and programs to get the home sold. Typically
this includes placement on the local MLS and Realtor.com as well
as related marketing, advertising and networking.
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Negotiation: REALTORS® assist
owners in the bargaining process, offering advice and counsel as
offers are received and by working closely with legal counsel,
tax specialists and inspectors as required.
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Closing: Once a contract for
the purchase of a home has been accepted, a series of
inspections and checks are typically required to satisfy buyers
and lenders. REALTORS® can help owners complete the transaction
process by assisting with the many requirements found in a
typical sale agreement.
How to hold an open house.
There are no universal marketing standards for real estate because
marketplaces are localized. For instance, open houses may be common
in some communities but rarely used in others.
In the case of an open house, a REALTOR®
typically advertises that the home will be open for a given period
(2-5 p.m. on Sunday). During the open period, the REALTOR® hosts the
home while the owners leave for a few hours.
At the open house, the REALTOR® will
provide literature, maintain a visitor log and answer questions. By
interacting with visitors, the REALTOR® will seek feedback regarding
the home and opportunities to follow up with prospective purchasers.
How do you show your home online?
The Internet is an important factor in real estate marketing and
will likely become more important in the future.
The Internet has two important roles in
the real estate selling process. First, it is a "place" to view real
estate. Realtor.com, for example, lists about 1.4 million homes, the
largest group of homes online or off. Individual REALTORS® also
maintain thousands of localized sites while professional groups and,
likewise, industry organizations, have an online presence.
Online real estate information includes
not only home listings, but numerous additional features and
benefits. For instance, Homestore®
offers neighborhood information, school data, recent home sale
prices, video tours, model forms, real estate news and consumer
information.
Equally important, the Internet offers
new communication media. E-mail and instant messaging give REALTORS®
and consumers more opportunities to keep in touch. As the Internet
evolves, more technologies and techniques will be introduced to make
transactions easier and more efficient.
SELL YOUR HOME
There is no question that selling a home
is an important event. A home sale represents transition, movement
and change. Big money is involved. Households move from the known
and comfortable to the unknown and a period of adjustment. There may
be job changes, new schools, distance from old friends and the
possibility of new ones.
No less important, a home sale by itself
can be complex. There will be people looking at your house,
documents to sign and issues to be negotiated.
Because a home sale involves an array of
both personal and business concerns, it's important to get it done
right. You need to carefully prepare your home, understand the
market and see what alternatives are realistically available. The
old motto "be prepared" is a good guide in such circumstances.
What's an acceptable offer?
The goal of every seller is to have a line of buyers outside the
front door, each clutching higher and higher offers. And while this
has been known to happen, in most markets there is some balance
between the number of buyers and sellers. A number of factors
determine whether a buyer's offer is acceptable. They include:
-
Is the offer at or near the asking
price? Is the offer above the asking price?
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Has the buyer accepted the asking
price or something close? Has the buyer then buried thousands of
dollars in discounts and seller costs within tiny clauses and
contract additions?
-
What is the alternative to the
buyer's offer? If a home has not attracted an offer in months,
then sellers need to determine if a better deal is possible --
recognizing that each month costs are being incurred for
mortgage payments, taxes and insurance.
-
Does the owner have enough time to
wait for other offers?
-
What if no other offers are
received?
-
What if several offers are received?
Do you choose the high offer from the purchaser with
questionable finances who may not be able to close, or a
somewhat lesser offer from a buyer with preapproved financing?
In each case, owners -- with assistance
from REALTORS® -- will need to carefully review offers, consider
marketplace options and then determine whether an offer is
acceptable.
What is a counter-offer?
When a home is made available for sale the owner is essentially
making an offer to buyers: For a given number of dollars and other
terms you can acquire this home. Buyers, in turn, can respond with
several options:
A counter-offer is nothing more than a
new offer. And just as the buyer had three options in response to
the owner's original price and terms, the seller can now choose one
of three reactions: accept the offer, decline the offer or make a
fresh counter-offer.
Offers and counter-offers reflect the
back-and-forth activity of the marketplace. It's an efficient and
practical process -- but also one that may contain tricky clauses
and hidden costs. The REALTOR® who lists your home can explain the
local bargaining process in detail and assist in the actual
negotiations.
How do you negotiate?
It's sometimes argued that negotiation must produce one "winner" and
one "loser." Others suggest that a "win/win" situation is possible
where each side gets something of value.
Real estate bargaining typically
involves compromises by both sides. It's not war; it's not
winner-take-all; and it's not the time to take personally any
comments made by purchasers.
Instead, negotiating should be seen as a
natural business process; buyers should be treated with respect; and
owners should never lose sight of either their best interests or
their baseline transaction requirements. These are the standards
unique to each owner, which must be met before the home can be sold.
CLOSE ON YOUR HOME
It might seem as though once a sale
agreement has been signed that the selling process is complete. Not
only is it not over yet, but some of the most complex aspects of a
real estate transaction now begin.
A sale agreement sets not only a
purchase price for the home, but also a series of terms and
conditions. For instance:
-
Contracts routinely depend on the
ability of a buyer to obtain financing, which is why most
sellers prefer buyers with preapproval letters from lenders.
-
A growing percentage of transactions
involve a home inspection, or a physical review of the home by a
trained and independent observer.
-
Lenders will establish numerous
conditions before granting a loan. They will want a title exam,
title insurance to protect against title errors, termite
inspections, surveys and an appraisal to assure that the home
has sufficient value to secure the loan.
The REALTOR® typically arranges required
inspections and helps the owner prepare for closing.
When should you close?
With automation now available, closings can occur within a week in
some areas -- at least in theory. In practice, it takes time to
arrange financing, conduct inspections, obtain appraisals, locate
replacement housing, contact movers, pack and actually move.
While instant closings are not
practical, neither are closings too far in the future. The problem
with closings much past 60 days is that loan rates are difficult to
lock in. If mortgage rates go up, it's possible that the buyer will
no longer be able to afford the home and thus the deal may fall
through.
The result of these considerations is
that most homes close 30 to 45 days after a sale agreement has been
signed.
What happens?
Closing -- or "settlement" or "escrow" as it is known in some areas
-- is essentially a meeting where the closing agent (the party who
conducts settlement) takes in money from the buyers, pays out money
to the owner and makes sure that the purchaser's title is properly
recorded in local records along with any mortgage liens.
The closing agent reviews the sale
agreement to determine what payments and credits the owner should
receive and what amounts are due from the buyer. The closing agent
also assures that certain transaction costs are paid (taxes and
title searches).
Closing is also the time when
"adjustments" will be made. For instance, suppose you've pre-paid
taxes four months in advance. In this case, the closing agent will
compensate you for the prepayment at closing by having the buyer pay
you additional money.
It could also work in reverse. If you
are behind on property taxes, the closing agent will reduce the
money due to you at settlement by the amount of the unpaid taxes.
Your obligations?
It's important to look at the sale agreement and review your
obligations. For instance, if you have agreed to paint a room or
replace the dishwasher, such work must be completed before closing.
Your REALTOR® can discuss your agreement and the steps which must be
taken to complete the transaction.
The closing agent will handle both the
settlement papers and related documents.
MOVING
Even the smallest home contains a lot of
furniture, clothes, kitchen equipment, pictures and other items. For
a short move, it may be worthwhile to transport small goods by
yourself, but larger items will likely require a professional mover.
Homestore.com's 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.
It's ideally best to get rid of excess
furniture and other goods by having a sale before you move. This
will reduce the volume of goods to be moved and thus lower moving
costs. Unwanted furniture which cannot be sold can often be donated
to charitable groups, many of which will come to your home to pick
up donations. All other unwanted items should be taken to a
landfill. You should provide the U.S. Postal Service with a
forwarding address, and utility companies should be advised when to
end service. Check with utility companies to see if there is deposit
money which should be returned.
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, cleaning out closets,
basements and attics means there will be less to do once the home is
under contract.
Your planning will be guided by a number
of things:
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Are you moving a 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, D.C., 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.
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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.
Who should you use?
The decision of who 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. Money is one issue: 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:
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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.
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Medicine. Keep medicines and related
prescriptions in a place where they will be available during the
move.
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Number boxes so that all items can
be counted on arrival. Make a list of boxes by number and
indicate their contents.
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If moving with children, make sure
that each has a favorite toy or toys, blankets, games, music and
other goods.
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Moving historic, breakable or valued
items? Such goods routinely require special handling and
packaging.
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Have address books readily available
in case you need help.
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If you have a laptop computer with a
modem, make it accessible during your trip to pick up business
and personal e-mail.