Sellers Start Here!

Please note: The seller's guide will be quite a bit longer than the buyer's guide due to the greater amount of issues and complexity involved with selling real estate. In other words, we hope you are nice and comfy, there is a lot to read!

For sale by owner or list with an agent? It can be a tough call. For some the thought of the hassle of selling their home, and becoming a salesperson, consultant, negotiator, financier, paralegal etc. in order to do it, quickly convinces them to hire a pro. Many others are willing to take on the challenge in order to save the costs involved with hiring a licensed real estate agent to do it for them.

So which is it, sell it yourself or use an agent? Ultimately that choice is yours, but lets consider some of the advantages and disadvantages to some of the main issues that will face you.

These are:

1. Pricing the property

2. Preparing your home to be sold

3. Marketing your home

4. Showing your home

5. Negotiating the deal

6. Your Rights and Legal Responsibilities  


1. Pricing your home to be sold
 

FACT: one local title company reported that in 1999, for every 10 escrows that were opened by an owner of a property, 7 of those 10 failed to close escrow. In other words 7 out of 10 failed to sell. On the other hand, less than 2 out of 10 escrows opened by a real estate agent, failed to close. In other words, better than 80% of escrows opened by an agent successfully closed.

It goes without saying that every seller wants to get the most money they can for their home. This is the number one reason why some home owners choose to take a swing at selling on their own. Now in pricing your home for sale there are a number of considerations to take into account. Ask yourself these questions: What are comparable homes in my area selling for? What is the market like? Is it sluggish or booming? What is my home really worth? How much money do I need to end up with when it is all said and done? How will the costs of selling affect that figure?

Here are some recommendations:

Don't price it too high or too low! First off, don't make the mistake of pricing the home to high. If you are thinking of selling on your own, perhaps you may feel that if you start out high, even though there is a small chance, someone may buy it, but if not you can just lower the price gradually until someone does. Depending on your motivation for selling, this can be a very poor approach. A high price will cause many prospective buyers to lose interest in your home even before they see it. Others may be still willing to look at it, but will be expecting a lot more than what you have to offer. Bottom line is, if the price is out of line it may not sell for a very long time.

On the other hand, if you are a motivated seller and you price the home too low, you are potentially losing thousands of dollars. Here to is where an agent who knows your needs can price the property appropriately, so it can sell for the maximum amount, but still in a timely fashion. Those extra thousands you may be underpricing your home, could pay for an agents commission to handle all the headaches for you, and get it done quickly!

Get a CMA! Here is where using a licensed real estate agent to sell your home can be to your advantage. They have access to information so that they can compare similar homes in the area, what they sold for, how long it took, and using that information they can recommend a price that is good for your circumstances. This is called a comparative market analysis, or CMA for short. It is superior to an appraisal because an appraiser can only consider the prices of homes that have already been sold in order to determine the value of your home, whereas an agent can also compare other currently listed homes as well as those that are pending sale.

Refinance appraisals do not necessarily reflect true market value! If you have refinanced your home, you had to have an appraisal as part of that process. It is the tendency of lenders and appraisers to inflate the value of the home when it comes to a refinance situation. This encourages their business. Some agents also have been known to offer a higher CMA too, especially when they know they are competing against other agents for your listing. Regardless of what this type of Realtor may say, they can not magically wave a wand and add thousands of dollars of value to your home above what the current market will bare. Be careful not to fall for a high selling price that is just to good to be true. People will always only be willing to pay what they think something is worth.

Figure out the bottom line! You will want to figure out ahead of time what your closing costs will be, what the market will bare, whether or not you need to offer added incentives, and if after all this, you will be walking away with enough cash in your pocket to satisfy the reasons why you are selling in the first place. If you are looking to sell on your own, this is going to involve quite a bit of homework. You may be able to glean some information from a good title company you know or perhaps some other websites that sell do-it-yourself home sellers kits.

Some of these figures can include:

• Payoff figures for your present loan(s)

• Any sales commissions

• Possible prepayment penalties

• Attorneys fees

• Unpaid property taxes

• Title insurance premiums

• Transfer taxes

• Surveys fees

• Inspections fees

• Recording fees

• Homeowner Association transfer fees or paperwork preparation

• Natural hazard disclosure report

• Home protection plan

• As well as others

A licensed real estate agent will be familiar with all the local laws and customary closing costs and will be able to estimate very accurately what your proceeds will be from the sale of your home.

2. Preparing your home for sale

It is human nature to be drawn to clean and defect free things. If you were to take two cars for example that were completely identical in features, mileage, reliability, and condition except for one being detailed and sparkling clean and the other being driven through a mud pile and allowed to dry, put them both up for sale as is, the sparkling clean one will easily fetch a higher price, even hundreds of dollars more. Why is this true when both cars were maintained exactly the same? The clean car gives the appearance that the owner really cared for it, that it has in fact been maintained with great care, and that it was not abused in any way.

FACT: A house that sparkles in this same way, will also easily fetch a higher price and sell faster than the beat up house down the road that is for sale.

An experienced agent will know what to look for when it comes to making your house sparkle too. They will know what things you can do inexpensively and quickly that will add thousands of dollars worth of curb appeal to your home. They will know what things not to do because you will spend too much money, and see very little return for the investment. The key is to maximize the visual appeal while spending the minimum amount to do it.

Here are some recommendations for improving the exterior appearance of your home:
 

• Keep the lawn, yard and foliage around the house routinely trimmed, tidy, and fertilized

• Check all walks, foundations, walls etc for any cracking or crumbling and patch as necessary

• Look for peeling paint on doors and windows

• Repair or replace damaged and missing roof tiles and shingles

• Depending on the season, plant some colorful flowers by the front entrance

• Sealing an asphalt driveway

• Keep the garage door closed

• Keep old beat up cars parked away from your home

• Paint the front door

• Repair and repaint any loose siding and caulking

Inside you also have some work to do. Here are some recommendations:

• De-clutter rooms, and thoroughly clean and organize them. It makes the house look bigger.

• If you are too busy, consider getting a maid service for a while

• Declutter your counters in kitchens and bathrooms

• Consider painting neutral colors if you have any "loud" colors

• Repair all holes, cracks, or the like to any plaster, wallboard, wallpaper, paint, tiles and the like

• Check for leaking plumbing

• Inspect all plumbing, heating and cooling units, and any alarm systems

• Give attention to improving the look of bathrooms with new towels or floor mats

• Improve the feel of old kitchen by putting on new knobs and handles and painting

3. Marketing your home

It should be noted that marketing your home is a complex issue in itself but hopefully a few guiding principles will help here, especially if you are thinking of selling on your own. Traditionally homes are advertised as being for sale either by a yard sign, a newspaper or home magazine ad, a multiple listing service (only available through a licensed Realtor), or a combination of all the above. Roughly 15% of leads are generated from a yard sign, 10% from ads, 13% from other sources like word of mouth or flyers, but the overwhelming number 60% comes from the multiple listing service. As you can see, using a Realtor provides nearly 200% more effectiveness when it comes to marketing your home.

In some markets and conditions all of the above are necessary to sell your home, in others just one or two of the above can accomplish your goal of selling your home within your time constraints. Yard signs can be fairly inexpensive and newspaper ads can run anywhere from $30 for an ultra small ad with 1 or 2 days of run time to $100 or more to run it for a week. As you can see, newspaper ads can add up very quickly if you have to run them week after week without any good leads generated. Keep in mind your goals as far as the timeliness of the sale of your home. If you need to get it sold quickly you will need to take a more aggressive approach to the marketing of your home.

However if after 2 or 3 weeks of your marketing you find that you are getting little or no response there are 3 possible reasons. These are location, condition, and price. Obviously you can do nothing about the location of your home. We discussed what you can do about the condition of your home above. The price however is something that you control. We discussed above some principles involved with pricing your home above. Unfortunately, in order to sell a property in a timely fashion, most for sale by owner homes end up selling for less, (sometimes substantially less) than if you were to have it professionally listed by a Realtor who uses the MLS system. This is because the more time that goes by without getting a legitimate offer can cause the owner to stress that the home will not sell quickly enough to meet possible deadlines, and the result is a reduction in price in order to stimulate a quick sale. On the other hand, using a Realtor usually generates so many leads that you will have a legitimate offer, either for the listing price or very close to it, in less than a month depending on market conditions. The extra money that you can realize this way will pay for most, if not all of the commission it would cost you to use a professional Realtor.

The other thing to keep in mind is your schedule. When you hire an agent, they are available during business hours, and even after hours in most cases, to receive all phone calls, host open houses, and negotiating deals. When you sell on your own you must make sure you or someone you trust is available to handle these aspects of marketing your home. Realistically you are busy with your employment already to have to worry about handling an additional work load, so count that in as part of your costs.

Finally, aside from lowering the price of your home you may be able to offer certain incentives instead to make the home a more attractive buy. An experienced agent will know what is best for your circumstances, but if you are selling on your own there are a couple of things you can do. Many potential buyers can often get approved for financing but may be cash poor so to speak. This is critical because you need a certain amount of cash to cover a down payment as well as closing costs. So you may offer to pay for some or all of a buyer's closing costs or maybe pay to buy down the buyer's interest rate on their mortgage for a year or two. Also investing in a home warranty can mean a lot to a potential buyer.

In review the marketing of your home can be a little tricky. It can be done successfully by someone selling on their own, especially if time is not a critical factor. Ultimately though using a Realtor to market and list your property will invariably yield a higher selling price, be sold quickly and in a timely fashion, and will save you a whole lot of marketing headaches.

4. Showing your home

Someone is coming to see your home, what now? Part of what you have to consider is the qualifications of the prospective buyer. What's nice about having an agent sell your home, is that they pre-qualify the buyers before they even waste any of your time showing the home. On the other hand, a for-sale-by-owner tends to attract buyers who are not attached to an agent. Why is that noteworthy?

Typically buyers who are not using an agent to represent them will not be ready to buy for another 6-9 months. Basically they are window shopping at this point. Don't be discouraged though. When you do have a good prospect to show your home to here are a couple things to keep in mind. First, do not try to hard sell your home. Many homeowners have a tendency to do that when they are present at a showing, but you have to remember the potential buyers feelings. Buying a house is a very big decision, one wrought with emotions and uncertainties. If you are pushy or engage in haggling, you will inevitably scare your prospect away. Do your utmost to create a relaxed and no-pressure setting for your prospects to view your home in. A good idea would be to point out some of the more subtle features of your home as the opportunity lends itself to that, and be ready and willing to answer all their questions.

The other thing you want to keep in mind is, as we discussed earlier, make the home as attractive and appealing as possible. Make sure things are tidy and organized, uncluttered and clean. Make those necessary repairs. In this way you will be able to showcase your winning home in a way that will fetch the highest price.

When sizing up a potential buyer, it may be difficult to try to gather such information as, if they need to sell another home first, if they are sure of relocating, how is their buying power going to affect financing and so on, due to privacy issues. But this information is important to know because it will help you to avoid wasting valuable time marketing to unqualified buyers. If you are selling on your own one good way to qualify a buyer and know how serious they are to buy, is ask them to provide a preapproval letter stating that they are approved for financing.

As hard as you do try to prequalify a prospect though, you will undoubtedly still face some disappointment when hoped for deals fall through. Selling a home on your own can require a good deal more time and patience then when using a Realtor, so be prepared for that when you decide to use a Realtor or not.

5. Negotiating the Deal

What are some tips on negotiation?

Answer: There are several cardinal rules to negotiating effectively. One is do your homework, and learn as much about the buyer as you can. Another is to play your cards close to your vest and not reveal too much information to the buyer or their agent for that matter, if they have one. Don't let yourself get rushed into any decision, no matter how tempting it may be. Finally, if you have doubts about your negotiating skill, you may really want to consider using an agent, who's job is to represent you.

Food for thought: The extra money that an agent may be able to negotiate due to their experience, may very well pay for most, if not all of the cost of their commission.

6. Your Rights and Legal Responsibilities

Contracts, who pays what closing fees, the closing, who gets involved? A real estate transaction is a complicated legal transaction. You should read and understand references outlining your rights and responsibilities. It is beyond the scope of this website to provide legal advice but if you do have questions, you should ask your real estate agent or a knowledgeable attorney for an explanation. There are no stupid questions when it comes to selling real property.

Also you will need to keep in mind the people who potentially may need to be involved with your transaction. Such as advertisers, appraisers, legal assistants, contractors(if repairs are needed), the buyer's mortgage company, lending underwriter, loan processor, title company, title processor, lawyers, your mortgage company if it applies, moving company, pest inspector, health inspector, utility companies, structural engineer.

Bear in mind that not all of the above will necessarily need to be involved depending on the type of property that is being sold, but make sure you are aware of all of your legal responsibilities especially when it come to laws dealing with disclosure issues and properly filled out legal documents.

Here again is where a large part of using an agent becomes worth it. A licensed real estate agent will be familiar with all these issues. They have gone through schooling and have been tested by a state board. Realtors are also required to meet continuing education requirements in order to maintain their Realtor status. All of this is for your protection and reassurance that you will be working with a professional. Of course as with all professions their is no guarantee, so go with an agent that you feel comfortable with, and that can answer your questions to your satisfaction. We can provide references as to our experience and past client satisfaction.

 

In conclusion, selling a home can be a very big chore. However it is possible, and a number of homeowners have done it before and would do it again. On the other hand, many homeowners either do not have the time it takes to research all they need to know about legal responsibilities, marketing the home, having proper paperwork, and making home improvements, let alone being available to negotiate deals or show the property. Conversely, you may have time to do these things, but may not be comfortable in performing all these necessary tasks in order to successfully sell your home. In either case, if you fall into one of those categories or both, it would be money well spent to hire a Realtor to handle this work for you.

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