The Home Selling Process

Steps, guides, and resources

The Process

The world is full of people who sell real estate. Some of them are smart, efficient, focused, versatile and willing to go the extra mile. And some of them aren’t.

Finding an agent who will sell your home using a range of marketing tools to get you the best deal possible in a reasonable amount of time, all while charging a fair rate, takes some effort. Interview at least three candidates before you sign a contract.

Here, thanks to Alison Rogers, author of Diary of a Real Estate Rookie, and a practitioner in New York City, are 10 questions you really want to ask so you can identify the best real estate agent to sell your property.

  1. How much? Ask potential agents how much they think they can sell your home for. If two agents say $600,000 and the third says $700,000, think hard. It’s likely the high bid is an exaggeration to attract your business. In the trade it’s known as buying a listing. In the end, you’ll be the one who pays because the high price will scare away potential buyers before you inevitably drop the price.
  2. How will you market it? Running a few classified ads in the local paper, listing it on the Internet and holding an open house shouldn’t be the only answers. The practitioner should be able to talk about what kinds of people are likely buyers and how he will reach out to those specific people.
  3. How has your business changed in the last five years? If she doesn’t talk about website tours and smart phones, chances are this is not a highly wired agent. While Luddites can still sell houses, it is getting harder. And if this is one of those people who doesn’t even use e-mail, you’re letting yourself in for unnecessary aggravation. And you may cut yourself off from opportunities.
  4. Tell me how your last two deals surprised you? Every agent has a success story, but this question will give you a much better feel for what this practitioner is like as a salesperson.
  5. What’s your specialty? If you’re selling a starter home in a community full of young families, hiring an agent who specializes in seniors is probably a bad idea. It doesn’t mean that if he only sells condos that he can’t sell a house, but he may not be geared up to do the best job.
  6. How many people are you selling homes for right now and what are you doing for them? It may not be a bad thing that a high-powered agent is juggling 15 homes, but don’t expert her to give you personal service, although her assistant should be attentive. On the other hand, be wary of an agent with no other customers because she may lack experience and contacts.
  7. What do you expect of me? A good salesperson will have expectations. He may want you to leave and take the dog when the house is shown, paint the garage, move some furniture around and scrub the tile in the bathroom. It shows that he can think like a buyer and that’s a good thing.
  8. What advice would you have for me if I get an offer from a buyer who wants to use an FHA loan? It wasn’t very long ago when the right answer might be run the other way, but these days government-guaranteed financing from the Federal Housing Administration, the Department of Veterans Affairs and state and locally managed loan assistance programs can be key to selling a property. Real estate agents shouldn’t be pushing buyers toward their favorite lenders, but they should be able to help them and you wade through complex financing issues.
  9. What’s your fee? Forty-six percent of sellers Consumer Reports surveyed this year attempted to negotiate a lower commission rate. About 71 percent succeeded and those people were just as satisfied with the performance of their real estate agents as those who paid the standard 6 percent or more. In short, if you don’t ask, you don’t get.
  10. Can I talk to one of your previous clients? You never know.

Before you can establish price points, you must have some idea of what your home is worth. This means that you will have to solicit some objective viewpoints and consult some impartial data. Sentimentality can cloud a seller’s judgment, while a tendency to view one’s own home as “special” compared to others in the area has left too many homeowners in the lurch.

A good starting point for discovering what your home is worth in the real-world current marketplace is to analyze your local market. Attend some open-house showings near you and gauge how much the homes that are comparable to yours are selling for. Pick up a copy of your local Sunday newspaper and read the real estate listings. Invite constructive criticism of your home from anyone willing to give it.

After you’ve done a bit of homework, start talking to professionals. Don’t be sweet-talked into hiring the real estate agent who gives you the highest estimate of your home’s worth. Rather, make prospective agents prove to you that they have done their homework and know what the local market will actually bear. Ask for a comparative analysis of the market with comps – the prices that local homes have recently sold for, as opposed to the asking price.

Don’t talk to only one agent, even if he or she impresses you straight off the bat. The more professionals you talk to, the better idea you will have of what your low and high price points should be.

Think Realistically in Setting Your Price Points

By now, you have established your priorities for selling your home. You have an idea of how quickly you want to sell it and whether you wish to hire a real estate agent or go down a different route. Perhaps you’ve cleaned it up and feel confident that it’s ready to put on the market. In establishing your price points, you want to think in terms of how you can best meet the personal goals you have laid out for yourself, but you also want to think in terms of the realities you have discovered in figuring out the value of your home.

With all of this in mind, remember that, even if you are patient and want to wait for at least an uptick in your local housing market, there is no guarantee that “the right time” will ever come. If you want to sell your house in a reasonably timely manner, you want to generate as much interest as possible. Yes, you want to establish a price range with which you feel comfortable, but you risk wasting significant time and money if you establish a price range with which most potential buyers aren’t comfortable.

Setting the High and Low Ends of Your Value Range

The best way to get the attention of buyers is to distinguish your home from other comparable homes on the market. If the average home in your neighborhood is listing for $137,000 and home prices are dropping, on average, 1 percent each year, think about setting the high end of your price range at 3 percent below the average, or approximately $133,000. You won’t be taking a bath if you sell it for that price, and there’s always the chance that by capturing the attention of more buyers, the counterbidding process might even push the final sale price closer to the market average.

In setting the low end of your price range, think in terms of $25,000 chunks. Buyers tend to set their ranges in such chunks (e.g., $225,000-$250,000), so it makes good sense to use that as a range as a seller, as well. Using the scenario in the above paragraph, the price range for your home would be $108,000 to $133,000.

Keep in mind, of course, that setting a range does not obligate you to accept offers that come in toward the low end. But with that particular range, you have a chance to attract the attention of buyers who are searching in the $100,000 to $125,000 range, while also commanding the attention of those searching in the $125,000 to $150,000 range. By not setting an exact price, you encourage more offers, and more offers means more counteroffers. You stand a far better chance of initiating negotiations that will end favorably for you than if you had simply priced the house at $137,000 – or higher – to begin with.

Don’t Dismiss Low Offers Out of Hand

The buyers who are interested in your house are looking for a good deal, and in establishing your value range strategically, you have created the impression of a good deal. With this in mind, don’t immediately dismiss offers that you aren’t thrilled with. You may find buyers who make offers at or even below the low end of your range. This isn’t necessarily their best offer, however, and it doesn’t necessarily reflect the actual interest they have in your home. Because you have provided a range, buyers know that you are flexible, which is why some may try to low-ball you. There’s a good chance that many of these buyers are equally flexible and, if they are genuinely interested in your home, may eventually increase their offers substantially.

The key here is not to take negotiations personally. Low offers are not insults, nor are they commentaries on your home. Take them for what they most likely are – starting points for negotiation – and you’ll stand a much better chance of selling your home for a price that you find acceptable.

If at First You Don’t Succeed, Rethink Your Value Range

Ultimately, the market will tell you how successful you were at establishing a value range for your house. If, during the first month it is on the market, a few potential buyers look at your home but fail to make offers, you know that your range probably needs to come down a little. If no one bothers even to look at your home, your range probably needs to come down significantly. Don’t hesitate to respond to what the market is telling you. Stubbornness may be a virtue in some situations, but it rarely sells houses.

    1. Clean, clean, clean. Dust on top of the fireplace mantle and fan blades, polish your appliances and faucets, and give the windows a thorough washing. If you’ve already moved out or if you’re too busy to stay on top of things, consider hiring a cleaning service to stop by every couple of weeks.
    2. Pay attention to smells. “Don’t cook bacon in your home the day of a showing,” advises Rachel Weinberg, a broker at Wright Kingdom Real Estate in Boulder, Colorado. “Although it might taste great, the smell is strong and lingers for a long time. You don’t want your home to smell like a fast food restaurant!”
    3. Clear out the clutter. You want buyers to focus on how awesome your space is, not how messy it looks. Banish that piles of shoes from the entry, that stack of mail from the kitchen table and anything else that detracts from your home’s gorgeous features.
    4. Repaint the walls neutral colors. As much as you love your dramatic red dining room, it could turn off a good portion of your buyers. So repaint your rooms in neutral tones like tans and whites that allow buyers to focus on the spaces themselves, not the color of the walls.
    5. Keep the décor simple. To help buyers imagine themselves in your space, get rid of any art or other décor that might turn off people with different tastes. A classic landscape painting? Totally fine. Your zebra print leather couch? Might want to slipcover that for showings.
    6. Get rid of personal items. Buyers want to be able to envision themselves in your home, so remove anything overly personal, like family photos in the hallway or your kids’ artwork on the fridge.
    7. Let there be light! Open up all the windows to let in natural light and add floor or table lamps to areas that are dim. A bright, cheery room looks bigger and more inviting.
    8. Bring nature inside. Potted plants or a few pretty buds in a vase can help bring energy into a space, fill in empty corners and even draw attention to features you want buyers to notice. Just make sure the plants are in good health (and bug-free!).
    9. Get rid of bulky furniture. Your furniture should fit the scale of the room, so get rid of any extra or oversized items that could make your space look smaller than it really is.
    10. Organize your closets. Storage space is a huge selling point, and if your closets are stuffed to the brim, buyers will think you don’t have enough of it. Invest in some boxes, dividers and other solutions that will help you make your stuff look more organized, and remove extra items you don’t need immediately (you can stow them away until you move).
    11. Tackle that honey-do list. All those little things you’ve been meaning to do but never got around to? Buyers will notice them, and they’ll detract from the value of your home. So set aside a weekend to tighten those loose doorknobs, fix that leaky faucet and paint over the scuffs from when you first moved in your sofa.
    12. Do a faux “renovation.” Little tweaks can make a big difference in the overall feel of a room. Kitchen a little outdated? Replace the fixtures, faucets and hinges. Family room furniture beaten up? Throw some slipcovers over it.
    13. Give each room a purpose. That spare room you’ve been using as an office / guest room /dumping ground won’t help sell your home unless you show buyers how they can use it themselves. So pick a use (office, guest room, crafts room) and clearly stage the space to showcase that purpose.
    14. Turn the bathroom into a spa. Create the feel of a relaxing, luxurious bath — for less than $30. Stack a few pretty washcloths tied with ribbon, add some scented candles and faux plants, and buy bathmats and towels in coordinating tones such as light green, blue and white.
    15. Close the toilet! When it comes to both showing and photographing your home, this little trick can make a surprising difference.
    16. Turn the living room into conversation central. Help buyers picture themselves relaxing with family and guests by grouping your furniture into arrangements that inspire conversation.
    17. Keep the flow going. The last thing you want is people bumping into furniture as they tour your home; it disrupts their focus and makes your space look cramped. Do a dry run as though you’re seeing your home for the first time and tweak anything that interrupts the “flow.”
    18. Make something yummy. Realtors don’t put out fresh cookies at open houses just to treat buyers; a “homey” smell like baking cookies or bread can help people connect with a kitchen. Not a baker? Fake it with a scented candle.
    19. Make it look “lived in” with vignettes. Help your buyers see themselves in your home by adding deliberate vignettes that showcase how your home can be lived in. An inviting armchair and a tray with a coffee cup and book can turn that empty corner into a reading nook. Pretty soaps in a decorative tray can make your tiny half-bath more appealing.
    20. Highlight focal points. Draw buyers’ eyes towards any special features with bright colors or accents like plants. A pop of red throw pillows can draw a buyer’s attention to that lovely window seat. A striking fern on the mantle can show off your fireplace.
    21. Boost the curb appeal. Don’t spend all your time indoors. More than one buyer has decided not to even enter a home based on its curb appeal, so make sure your home’s exterior looks excellent. Trim your shrubs, weed your flower beds, fix any peeling paint and keep the walkway clear. Just adding a row of potted plants along the walkway or a cheerful wreath to your front door can make a big difference.

Before you can make a counteroffer, you need an offer. A buyer makes this by filling out a standard document called a residential purchase agreement. Don’t let the name confuse you. The pre-printed “contract” is not legally binding until both parties agree to its terms and sign the contract in evidence of this fact. Until you sign, the document is simply an offer.

A buyer’s offer is their opening gambit. Using the standard document, the buyer inserts all the terms they would like to include in the deal, such as:

– the price

.- the down payment

– who pays closing costs

– any contingencies, such as a finance contingency if the buyer needs mortgage finance to proceed with the deal, or a condition that the buyer sells their current home before they buy this one.

If you like the offer, you can accept it by signing the offer document. At this point, the offer turns into a binding purchase agreement. Neither you nor the buyer can back out of the deal unless the contract allows you to do this, for example, if the buyer’s home inspection throws up material repairs that the buyer is not willing to take on.

In most cases, the original offer from the buyer is not acceptable. You now have two choices: reject the offer outright or make adjustments to it. This is known as a making a counter offer.

MAKING A COUNTEROFFER

Like an offer, the seller’s counter offer is made on a pre-printed documented called, plainly, a counter offer. This is your opportunity to change any of the terms suggested by the buyer and to write in your own terms. For example, you might:

– raise the offer price

– request a higher earnest money deposit

– delete some of the personal property the buyer is asking you to sell with the home

– bring forward the date by which the buyer has to satisfy acceptable contingencies, for example, by insisting the buyer approves a home inspection within 10 days of the offer being accepted.

To be binding, you must sign the counter offer and deliver it to the buyer or the buyer’s agent. Once you do this:

  • Legally, you have REJECTED the buyer’s original offer. Think carefully before filing a counter offer as it cancels the buyer’s original offer. You cannot later go back and accept the original offer if you change your mind.
  • . Your counter offer is a NEW OFFER. This puts the ball back in the buyer’s court.
  • Counter offers always contain an expiration date, for example, 5pm on the third day after the counter offer is signed. You can set the counter offer to expire within one hour if you wish though it’s recommended that you give the buyer a reasonable amount of time to consider the terms you are proposing.

If the buyer does not respond by the expiration date, the counter offer expires. You have now fallen out of negotiations with that particular buyer. Those negotiations can only be reactivated by the buyer submitting a fresh offer.

WHAT THE BUYER DOES NEXT

When he receives a counter offer, the buyer has three choices:

  1. Accept the offer. The buyer does this by signing the counter offer before the expiration date and delivering the signed offer to you or your real estate agent.
  2. Reject the offer. The buyer can discard your counter offer and take no further action. At this point, the deal is off the table and can only be reactivated by the buyer making a fresh offer.
  3. Counter the counter offer. The buyer can make a second counter-offer, or even a third or a fourth, until you reach a deal. Thankfully, multiple counter offers are rare. Most well-advised buyers and sellers reach agreement after one or two rounds of negotiation.

WHEN YOU SHOULD COUNTER OFFER, AND WHEN YOU SHOULD NOT

Counter offers are where the rubber meets the road of the value you get from your real estate agent. They handle offers and counter offers day in, day out and will have a good handle on whether a buyer’s offer is good enough as it stands.

Multiple factors come into play here. Obviously you have a price expectation, and your real estate agent will do his best to meet that expectation. If the offer is clearly unreasonable, your real estate agent invariably will advise you to submit a counter offer.

However, if you are selling your home in a buyer’s market, the buyer may have his pick of suitable homes in your area. Making a counter offer — even one that seems reasonable — may drive the buyer towards the second home on his list, and you may end up with no deal.

Conversely, in a seller’s market with a shortage of suitable homes for sale, the buyer may be prepared to hang in through two or three rounds of counter offers to secure their dream home. In this scenario, you can probably afford to push for your perfect deal.

A second factor your real estate agent will investigate is the buyer’s motivation. If the offer is unacceptable and you need to counter, what type of counter offer will best hit the buyer’s buttons? A counter offer that raises the price, or one that keep the price lower but reduces the closing costs paid by the seller? The net dollar price of the two counter offers may be the same, but the buyer may find one deal more palatable than the other.

The best advice is, listen to your Realtor® and tread lightly. If you can live with most of the items in the offer, it’s probably better to take it. After all, having a willing and able buyer under contract is worth far more than having a home sitting on the market waiting for the perfect offer to come along.

 

 

 

 

Preparing for Closing

Your tasks as seller during the closing period are to:

  • Maintain the house in good condition
  • Negotiate and perhaps repair something the buyer’s inspector finds
  • Notify your utility companies of a final service date
  • Prepare to move

Seller’s Tip: Don’t cancel your homeowner’s insurance policy until the transfer of ownership has been recorded.

Typical seller expenses

  • The outstanding mortgage
  • Real estate commissions
  • Property taxes, utility bills, homeowner’s insurance, and condominium dues, if any are due (most of this is prorated at closing)
  • Escrow, Title and/or Attorney fees

Congrats!

You've successfully sold your home!