Steps For Selling Your Home
Step 1 - Decide to Sell
Step 2 - Choose an Agent
- a. Experience, Knowledge and Education
- b. Commitment and Availability
- c. Understanding
Step 3 - Selling Consultation, Pricing & Marketing Strategy
- pricing considerations
- comparable sales
- market conditions
- offering incentives
- estimated net proceeds
Pricing Considerations – Find a Balance Between Too High and Too Low
When setting a list price for your home, you should be aware of a buyer’s frame of mind. Consider the following pricing factors:
If you set the price too high, your house won’t be picked for viewing, even though it may be much nicer than other homes on the street. You may have told your REALTOR® to “Bring me any offer. Frankly, I’d take less.” But compared to other houses for sale, your home simply looks too expensive to be considered.
If you price too low, you’ll short-change yourself. Your house will sell promptly, yes, but you may make less on the sale than if you had set a higher price and waited for a buyer who was willing to pay it.
TIP: Never say “asking” price, which implies you don’t expect to get it.
Price Against Comparable Sales in Your Neighborhood
No matter how attractive and polished your house, buyers will be comparing its price with everything else on the market.
Your best guide is a record of what the buying public has been willing to pay in the past few months for property in your neighborhood. Your REALTOR® can furnish data on sales figures for those comparable sales and analyze them to help you come up with a suggested listing price. The decision about how much to ask, though, is always yours.
Competitive Market Analysis (CMA): The list of comparable sales a REALTOR® brings to you, along with data about other houses in your neighborhood that are presently on the market, is used for a “Comparative Market Analysis” (CMA). To help in estimating a possible sales price for your house, the analysis will also include data on nearby houses that failed to sell in the past few months, along with their list prices.
A CMA differs from a formal appraisal in several ways. One major difference is that an appraisal will be based only on past sales. Also, an appraisal is done for a fee while the CMA is provided by your REALTOR® and may include properties currently listed for sale and those currently pending sale. For the average home sale, a CMA probably gives enough information to help you set a proper price.
Formal Written Appraisal: A formal written appraisal (which may cost a few hundred dollars) can be useful if you have unique property, if there hasn’t been much activity in your area recently, if co-owners disagree about price or if there is any other circumstance that makes it difficult to put a value on your home.
TIP: If you do order a market value appraisal, make it clear you don’t need an elaborate, or full narrative report, i.e., the kind that’s complete with photos of the house and neighborhood. Floor plans and a site map is sufficient in most cases.
Market Conditions – Is it a Buyer’s Market or a Seller’s Market?
A CMA often includes a Days on the Market (DOM) value for each comparable house sold. When real estate is booming and prices are rising, houses may sell in a few days. Conversely, when the market slows down, average DOM can run into many months.
Your REALTOR® can tell you whether your area is currently in a buyer’s market or a seller’s market. In a seller’s market, you can price a bit beyond what you really expect, just to see what the reaction will be. In a buyer’s market, if you really need to sell promptly, offer an attractive bargain price.
If You Price High, Set a Schedule for Lowering the Price
Some sellers list at the rock-bottom price they’d really take, because they hate bargaining. Others add on thousands to the estimated market value “just to see what happens.” If you want to try that, and if you have the luxury of enough time to feel out the market, sit down with your REALTOR® and work out an advance schedule for lowering the price if need be.
If there haven’t been many prospects viewing your home after three weeks, you may need to lower your list price. If that doesn’t bring any prospective buyers, you may need to lower your list price again. Plan on doing that regularly until you find a level that attracts buyers. Make a written schedule in advance, before emotion takes over and you’re tempted to dig your heels in.
Offering Incentives to Hasten a Sale
Sometimes cash incentives are as effective as lowering the price, especially in the lower price range where buyers may be “cash poor.” You may offer to pay some or all of a buyer’s closing costs and discount points required by the buyer’s lending institution.
If you haven’t had much traffic through your house and you’re in a hurry to sell, you may want to add the offer of a bonus to the selling broker, in addition to their commission. An example of the wording for such an offer may be “to the broker who brings a successful offer before Christmas.”
Estimating Net Proceeds
Once you’ve been given an estimate of market value by your REALTOR®, you can get a rough idea of how much cash you might walk away with when the sale is completed. This can be particularly useful when you start looking for another home to buy.
To estimate your net proceeds, from the estimated sales amount, subtract the applicable costs in the three sections outlined below: seller’s costs, buyer’s/seller’s costs and closing costs.
Seller’s Costs: Subtract the following costs as applicable.
- payoff figure on your present loan(s)
- broker’s commission
- prepayment penalty on your mortgage
- attorney’s fees
- unpaid property taxes
Buyer’s/Seller’s Costs: Additionally, your REALTOR® can tell you whether local customs or rules dictate whether the buyer or seller pays for the items listed below. Subtract the following costs, as applicable.
- title insurance premium
- transfer taxes
- survey fees
- inspections and repairs for termites, etc.
- recording fees
- Homeowner Association transfer fees and document preparation
- home protection plan
- natural hazard disclosure report
Closing Costs: As far as closing costs are concerned, you and your eventual buyer may agree on arrangement that suits you, no matter what local practice dictates. Your REALTOR® will assist you in estimating what your final closing costs will be.
Marketing – Realtypath Extended Market Reach
When you list with me, we’ll have access to the Realtypath Listing Service. This proprietary, exclusive system ensures your property is marketed online 24/7 through more than 350 of the most popular search Websites.
Step 4 - Preparing your Home for Sell
It’s a fact: acquiring the highest market value and elevating your home above others in the same price range often comes down to first impressions.
Here are some inexpensive ways to maximize your home’s appeal:
- Keep the grass freshly cut.
- Remove all yard clutter.
- Apply fresh paint to wooden fences.
- Paint the front door.
- Weed and apply fresh mulch to garden beds.
- Clean windows inside and out.
- Wash or paint home’s exterior.
- Tighten and clean all door handles.
- Ensure gutters and downspouts are firmly attached.
- Remove excessive wall hangings, furniture and knickknacks (consider a temporary self-storage unit).
- Clean or paint walls and ceilings.
- Shampoo carpets.
- Clean and organize cabinets and closets.
- Repair all plumbing leaks, including faucets and drain traps.
- Clean all light fixtures.
Step 5 - Showing your Home
- Turn on all the lights.
- Open drapes in the daytime.
- Keep pets secured outdoors.
- Play quiet background music.
- Light the fireplace (if seasonally appropriate).
- Infuse home with a comforting scent like apple spice or vanilla.
- Vacate the property while it is being shown.
Step 6 - Negotiating the Offer
Before we begin to analyze any offer to purchase your home, the most important step is to determine whether the buyer can fulfill the terms of the contract with financing. The Lurch Group will check on the pre-approval letter that we request to be included with every offer. We will also check with both the Buyer’s Agent and the Buyers Lender to confirm that buyer has gone through the full loan approval process.
Once you know the buyer can legitimately qualify for a loan, you should begin to evaluate the offer by looking at these factors:
- How close is the offer to your asking price?
- Will your home appraise for the contract price?
- How large is the earnest money deposit that accompanied the offer?
- Has the buyer asked for assistance with closing costs?
- Has the buyer asked you to make repairs or to give a credit for home improvements?
- Is the requested settlement date appropriate for your needs?
If you’re not immediately satisfied with the offer or are uncertain about whether to accept it, consider your options:
- Are there other offers?
- Can you wait for more offers to come in?
- How will you handle it if no other offers come in after a particular deadline?
As a seller, you have the options of accepting the offer as is, declining the offer, or making a counteroffer. Lurch Group can give you specific advice about your negotiating stance based on your home and your market, but generally you will need to be prepared to compromise on some aspect of your home sale.
Your negotiations can go more smoothly if you have a clear sense of your own priorities, such as a particular settlement date, the ability to rent-back your home from your buyers, or a minimum price that you need to achieve to meet your financial goals. Lurch Group will prepare a document showing you net proceeds at different sales prices that can make it easier to understand the value of different offers.
Negotiations proceed best when both you and your buyer respect each other’s needs and interests and come to an appropriate compromise with the help of your REALTOR®s.
Step 7 - Contract to Close
The first step will be for the Buyer’s Agent to collect the buyers Earnest Money and either deposit it with their Brokerage or Title/Escrow Company. Typically the earnest money will be sent to the Title/Escrow Company. Both buyer and seller may choose to use their own title/escrow company, this is called a split closing and is common in the state of Utah.
The next step will be for the buyer to order a Home Inspection. The home inspection is typically ordered within the first 7 days that the home is under contract. This is a service that is customarily paid for by the buyer. During the inspection process the Home Inspector will go through the home with a fine toothed comb. Some of the major items they usually with look at is the Roof, Foundation, Electrical System, HVAC System, Plumbing System and Installed Systems (“installed” mean anything that is attached to the home where it removal would require tools).
Once the inspection is complete, the buyer will be given a full report from their inspector and will determine if they want to continue with the purchase of the home, request any repairs or possibly even just ask for a price reduction to make those repairs themselves after close. Once the inspection is completed, the lender will then order the appraisal. The appraisal is not assigned to a specific appraiser, it is put in a pool of available apprisers and is given to the next available appraiser. This is to ensure that the lender, the buyers agent or the buyer can not influence the final appraised value of the home. Once the appraisal is completed, the lender will be notified of the appraised value and if any required appraisal repairs are noted (required appraisal repairs must be completed in order for the home to qualify for financing). Usually when a buyer presents and offer, they ask for set amount up front for seller to pay for any required appraisal repairs (ex: Seller to contribute up to $500 toward any required appraisal repairs). This requirement will vary based on the type of loan the buyer is obtaining and can be negotiated upon receiving an offer.
After the appraisal is complete, this is when the lender will submit the buyer loan package to their under writer for final review and to approve closing.
Once final under writing is complete, the lender will issue a “clear to close” and will send the final loan documents to the Title/Escrow office. Once the title company receives the necessary documentation from the lender, they will set appointments with the seller and buyer to sign documents. These generally happen on the same day, but not always at the same time. The seller’s appointment often takes 30 minutes or less. The buyer’s appointment takes about one hour. After everything is signed, the lender must still approve funding before the buyer gets the keys. This usually occurs the same day. The title company will send all the documents to the lender for final approval. Once the lender has issued final approval the transaction is considered “funded.” Keys are then released to the buyer and proceeds are disbursed to the seller.
A few reminders before the final closing:
- Start planning your move. Some good ideas are to hire a Portable Storage Unit (ex:PODS, Pack Rats, etc).
- Cancel all Home Services & Utilities
- Be prepared for any unforeseen issues or delays. There is no such thing as a perfect transaction, so don’t be surprised if any complications arise. There is no need to worry, the Real Estate professionals will work these out in a stress-free manner.
Your final step is to celebrate!!!! Your home is now SOLD