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Steps to Expect When Selling Your Home
Selling your home is not on
anyone’s top 10 list of fun things to do. But it’s time to sell, so here is a
simple game plan of what you can expect during the process. First time sellers,
listen up, because now it’s your time to find the buyer!
First and foremost, figure out if you want to sell your home on your own or with
a Realtor. The vast majority of people choose to sell their home with a Realtor,
which is statistically wiser. Fewer financial results and smaller sales are
produced from homeowners selling their own homes. How can this be? The simple
fact is that the sale of your home depends upon what a buyer is willing to pay.
If you cannot attract the right buyer, or negotiate the proper deal, then you’re
stuck behind the eight ball. And remember - marketing your own home can be very
costly.
With an experienced Realtor, covering the marketing cost and applying proven
plans to sell your home becomes less stressful. They are experienced with the
process, which means fewer mistakes, if any at all. Is the 2.5-3% savings worth
it? We suggest searching and weighing the pros and cons before making this
decision, thinking you will save.
During the decision process, you want to make sure the reasons for selling your
home are beneficial. Many people move to save money, finding out that close to
15% of their home sale goes to moving costs, closing costs and the Realtor (or
marketing for FSBO). Speaking to an accountant is also beneficial to protect
yourself against any tax consequences.
Once you’ve made the decision, you will then Prepare to Sell, Set a Price,
Accept an Offer, Close the Sale, then Prepare to Move.
Prepare to Sell
It is now time to look through the eyes of the buyer, transferring your home of
memories into a dream house for someone else. Decide whether you want to hire a
Realtor to handle the sale, then do whatever necessary to get your home in it’s
best possible condition.
Take the initiative and get a pre-sale inspection, to prevent costly surprises
from the buyer's inspector. Inspections usually cost between $300 to $400. If
major damages are discovered, your decision to sell or at least the price at
which you sell may be altered.
Most states now require sellers and their Realtors to disclose issues that may
affect a buyer's decision to purchase your home. This is a touchy topic, so
speak with your Realtor to make sure you understand what you need to disclose,
what repairs need to be made, or what problems can be back-ended by adjusting
your asking price.
This is not the time to undertake major improvements. It is generally wiser to
make only necessary repairs and cosmetic improvements that will enhance your
home's salability.
Your taste may appeal to you, but may turn off the buyer. Decorate the home with
neutral tones that will add charm. Consider replacing out-of-date carpeting,
painting odd-colored rooms, and polishing your home's appearance. You may also
want to kennel your pet during this time, and hire extra cleaning help while
your house is on the market, especially if an odor exits throughout the home.
Set the Price
Your home's value is ultimately what a buyer is willing to pay at any given
time. It’s dramatically affected by the strength of the market: supply verses
demand. If you want to sell quickly, or you are in a buyer's market, you may
decide to set your price lower than market value. On the other hand, if you're
in a seller's market where multiple offers are common, you may want to set your
price higher than market value.
Use a Realtor to Set the Price
If you plan to work with a listing Realtor, chose one familiar with your area
that has a track record. A good Realtor will provide an honest assessment of
your home's value. When deciding a Realtor and sales plan, consider the current
market and your home's salable assets as well.
Comparative Market Analysis
A comparative market analysis should take into account repairs, improvements,
and annual costs (such as property taxes) of your home, in addition to its size,
features, and amenities. Expect to get an analysis of recently comparable homes
sold in the neighborhood, as well as a list of equivalent homes currently for
sale. When you receive the analysis, break down the home comparisons to square
footage. It will allow you to analyze how accurate the CMA estimate is.
One Step Further
If you want confirmation of the list price you have in mind, get a pre-sale
appraisal. Appraisers use comparable sales in addition to other information to
make their determinations. The appraisal will cost between $250 to $500 dollars.
Accept an Offer
In most cases, you will wait anywhere from 30 to 60 days for an offer, depending
on the market and location of your home. This can be an emotional process,
especially if offers come in far below your list price, or your home has been on
the market for several months. This is why obtaining an experienced Realtor is
essential, so you know what to anticipate and can attack the market accordingly.
Never rush. Take the time needed to make an appropriate decision and never jump
at initial offers. Consider all offers carefully, and make sure that the terms
are as favorable to you as they are to the buyer. Never accept an offer on the
phone. Contact your Realtor and meet in person. This rule will prevent you from
emotionally reacting.
Before you list your home, decide on the lowest acceptable offer. Keep this
number to yourself; do not share with your Realtor, as the number may change
during the time your home is on the market.
Make sure that everything is in writing. This is for your protection and the
buyer's. Documenting the process helps avoid confusion and potential legal
problems down the road. In most states, land transitions and their details need
to be in writing to be valid.
The majority of the time, you’ll want to counter offer. Someone purchasing a
home will almost always start out on the low side, so take this into
consideration. Using a Realtor during this process will be an advantage, as they
are use to this process.
Close the Sale
You have identified the buyer. Now the buyer is busy with financing; until the
sale closes, you are responsible for keeping your property in the same condition
as when the buyer saw it last. The closing date should be clearly specified in
your sales contract, which should include deadlines for the buyer to sign off on
contingencies. Make sure the buyer meets any deadlines you've set.
Be ready to deal with any problems that may crop up. For example:
Unsatisfactory home inspection - If the fix is major, you may want to split the
cost of the repair with the buyer, or give the buyer a cash credit at closing to
cover the repair. If the fix is minor, or you are selling in an active market,
your sale might go through without any concessions on your part.
Preventive measure: Make sure that your sales contract is specific in its
inspection contingency and doesn't allow for the entire transaction to be
renegotiated on the basis of the inspection.
Low appraisal - Your deal could fall through if the buyer's appraisal comes in
lower than the agreed-upon sales price and the lender refuses to issue a
mortgage. Ask for another appraisal if you think the buyer's appraisal was
wrong, or renegotiate your price. Another option is to offer seller financing
for the dollar difference.
Preventive measure: Give the appraiser the most recent comparable sales from
your neighborhood, and make sure your home is in top condition.
Cloud on the title - Title problems can take several forms, including
unsatisfied liens against your property, delinquent taxes, and encroachments on
the property line. In order to clear the title, you will have to pay any liens
or delinquent taxes. Title companies are used to dealing with encroachment
issues, which may be resolved with some kind of insurance policy.
Preventive measure: Check your title before you sell and make sure it is clear.
Buyer's remorse - Occasionally, an uncertain buyer will decide to pull out of
the deal regardless of the consequences. Try to work with the buyer's Realtor to
determine the problem. You may be able to suggest a solution that reassures the
buyer and rescues the deal. (If not, you may be able to keep the buyer's
deposit.)
Preventive measure: Learn all you can about the buyer's motivation before you
accept an offer. Also, be sure the sales contract allows you to keep the
security deposit.
Prepare to Move
Once you've sold your home, you can proceed with your move and tie up loose
ends.
Create a file in which to keep all closing and settlement papers: include
receipts for any home improvements you made while you owned the house. Even
though it's unlikely you will have to pay capital gains tax, you will need these
figures for your next tax return.
If you are planning to buy another home, decide how much you need for a down
payment and moving costs. If you made a profit on your home sale, it may be wise
to make a minimal down payment on your next home, and invest the rest. This will
depend on your tax situation and how the numbers evolve. Consult your financial
advisor. If you aren't buying another home right away, you may want to opt for a
combination of long-term and short-term savings and investment plans.
Make sure that your sales proceeds are in the right place when you issue checks
at closing. Do a walk-through of the property right before closing to avoid
last-minute surprises.
Avoid getting caught by late payment fees: Before you move, send
change-of-address notices to creditors, professional associations, and
publications to which you subscribe.
If you are closing your sale and purchasing a second home simultaneously, it's
important to make sure your utilities are switched off at your previous address
and switched on at your new address around the closing date.
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