SELLERS GUIDE
Whether you’ve sold your home ten times or you’re going to be selling your first, there are things that you need to know before listing your home for sale. There are many sellers who think the home selling process is very easy and doesn’t take any preparation. This is not true, in most cases.
Any friend, family member, colleague, Realtor, or individual who says selling a home is a fun filled experience is not being honest. The truth is that selling a home can be an inconvenience, create stress and anxiety, and lead to thoughts of uncertainty. These feelings can however be minimized if the proper preparation is taken and well crafted decisions are made along the way.
So before you sell your home, there are several things that you need to know before beginning the journey for the first time or the tenth.
RESEARCH
There are many things you need to know and prepare prior to listing your home. This page will try and give you insight into what you should research prior to listing.
ESTIMATE POTENCIAL
PROFIT OR LOSS
Before you ever get to the point of reviewing a purchase offer, you should already evaluate potential gains or losses within your acceptable price range. The selling price will be reduced by the following items:
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Real estate sales commissions
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Fees paid at closing
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Title charges
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Government recording and transfer charges
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Any additional settlement charges
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Debt obligations related to paying off any existing mortgages
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Home repairs included in the sales contract or repair work completed prior to putting your house on the market.
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Preparation work to get your house ready for the market such as landscaping, painting, etc.
UNDERSTAND CURRENT TAX LAWS
Selling a home is a taxable event. The good news is that the IRS provides tax breaks for homeowners. The main requirement is that you generally must have used the house as your primary residence for 2 out of the previous 5 years. The current capital gains exclusion amount is $250,000 for single taxpayers and $500,000 for married couples that file jointly.
CAPITAL GAINS
Capital gains are based on your home's selling price after subtracting any deductible closing costs, selling costs, and your tax basis in the property. Your cost basis on a primary residence is the original purchase price plus any related purchase expenses. Then you also add in the cost of capital improvements and subtract any depreciation and casualty losses or insurance payments. IRS Publication 551 provides additional information on determining the cost basis of assets.
REASEARCH HOME PRICES
Find out how many houses are currently on the market in your area and the average number of days they have been listed. It’s also helpful to look at comparable homes in your neighborhood to get a general idea of what the competition looks like. A comparable or “comp” home has similar features and is usually located within a close proximity to your home. Examining the number of bedrooms, bathrooms, lot size, and other features are important when seeking out comparable properties. If you really want to go the extra mile in reviewing comparable properties, visit open houses and search real estate websites that publish on the Multiple Listing Service (MLS).
HIRE YOUR TEAM
Do your homework if you decide to utilize the service of a real estate agent. It is suggested to interview 2-3 potential realtors to make sure you are choosing the best professional possible. Don't just make your decision based on their percentage. Keep in mind there is a high cost to agents, 50% goes to the buyers agent, 30% of that balance goest to the agents broker plus photographers, marketing and time eat up a lot of the commission so lean more on their qualifications to get the best price for your house. If you negotiate the percentage and they readily agree to reduce their commission how good will they be when it comes to negotiating on your house.
Other potential members of your professional team include a closing attorney, home inspector, photographer, landscaper, handyman, painter, and home stager. If you decide to go the DIY route, be sure to understand state laws regarding the sale of real estate. Some states require sellers to provide disclosure forms that obligate you to report any known facts about the property’s condition that may impact the value or the desirability to purchase the home.
CAPITAL GAINS
Capital gains are based on your home's selling price after subtracting any deductible closing costs, selling costs, and your tax basis in the property. Your cost basis on a primary residence is the original purchase price plus any related purchase expenses. Then you also add in the cost of capital improvements and subtract any depreciation and casualty losses or insurance payments. IRS Publication 551 provides additional information on determining the cost basis of assets.
PREPARE
Now you know your position, have a plan and a team in place. Its time to take a look at your home and get it ready to sell. When it comes to buying a home, first impressions have a significant impact. While significant landscaping updates aren’t likely to play a major factor in a buyer’s decision making process, it does help to avoid anything that could detract from that positive first impression.
GET IT READY FOR SHOWINGS
People (buyers) want a house that is clean and move-in ready,” she said. “I’ve seen it happen time and time again where $3,500 to $4,000 in new carpet will save $15,000 in negotiations. It’s definitely worth it.”
Light — Most people don’t live in their house with every light turned on, but that is how a house should be when a buyer first sees it, said Matt Schwind, an agent with Ruhl & Ruhl in Iowa. “Turn on every light, including those in closets, bathrooms and basements. Don’t be frugal with low wattage, either.
Natural light always leave blinds and curtains open wide, taking advantage of every bit of natural light. It’s a psychological fact that the brighter a house when a buyer first sees it, the better impression they will have when they leave.”
Paint — Bright, rich colors are popular, but when it comes to selling, neutral is best. That doesn’t mean white. White is seen as cold and sterile. But colors in the sand family or a soft gray — a new neutral tone — are best. If you think color will help set off a room, confine it to one wall or add pillows or a piece of artwork.
Wallpaper. This may come as a surprise to people who love wallpaper, but it is not universally cherished. “Even if you have spent thousands of dollars on a designer print, the odds are 10 to 1 against the next person wanting your particular style and if you think it’s too much hassle to pull it down, so will the buyer
De-cluttering means tidying up (putting away magazines, toys and clothing) as well as packing up excess accessories and knick-knacks. These items prevent prospective buyers from “seeing” your house because there’s too much stuff in the way. Or, there is so much stuff that they can’t picture their stuff in the home.
Odors — Cooking smells, pet odors, diapers, mold, mildew and smoke can literally kill a sale, Schwind said, adding that you should ask your agent for an honest assessment of how your house smells.
“Smokers especially may have no 'nose' for cigarette smoke, but it is always apparent to nonsmokers,” he said. “Also, buyers will walk right out of a house with a cat or dog urine smell.
“Covering up odors is not the answer either,” he continued. “Heavy perfume, plug-in air fresheners and candles will raise a red flag with buyers.”
Clean — Yes, this means windows, floors and furniture. If your faucets are chrome, make sure they shine. “No one wants to move into a dirty house,” Nelson said
Exterior — Potential buyers have time during drive-bys, or even while the agent is getting out the key, to make an assessment. Clean the gutters, knock down cobwebs, power-wash your siding, do a little touch-up painting if there are spots that need it and perhaps paint the front door. “If your front door is white, painting it can make it pop,” Nelson said.
Fix it up — Sometimes prospective sellers look at their real estate agent and say, “I don’t want to remake my house, I want to sell it.”
While that’s true, some work — such as the new carpeting described above — can pay big dividends.
Sometimes the work is big. If you have a really old furnace, it could pay to replace it. Your real estate agent could use that as a selling point to prospective buyers, and you might get a quicker, better sale.
Sometimes the work is small, but there can be a lot of it. That is, your home has blemishes or inconveniences that you have learned to live with, but when they are “piled one on top of another, (they) seem overwhelming in total,” Schwind said. The more minor things you can fix, the better.
MARKETING
Now you know your position, have a plan and a team in place. Its time to take a look at your home and get it ready to sell. When it comes to buying a home, first impressions have a significant impact. While significant landscaping updates aren’t likely to play a major factor in a buyer’s decision making process, it does help to avoid anything that could detract from that positive first impression.
PRICING & POSITIONING
No matter how well I market your property, if it is priced too high, it won’t sell. If it’s priced too low, you leave money on the table and miss out on the equity you’ve worked to build. Strategic pricing is crucial to sell your home for top dollar in the shortest amount of time. Price it right & sell it quick!
Pricing is an important part of how you position your property for sale to the public, but it’s not the only way. This is how you play Jedi mind tricks with your potential buyer so they make an offer.
AMAZING PHOTOS AND VIDEOS
Your home’s first showing is taking place online. Our marketing team includes a professional photographer and videographer to make that first impression the best impression possible. They say that “the camera adds 10 pounds.” Why not use them to add 10% to your selling price? Same logic… I guess.
In today’s marketing YOU NEED video in addition to good photographs for your home marketing plan.
ONLINE
MARKETING
The top four real estate websites (Zillow, Trulia, Realtor.com, Homes.com) have close to 100 million visits per month. Our marketing targets those websites as well as YouTube, which is the world’s second largest search engine behind Google. Being familiar with SEO, videos can be ranked to the first page of the search engines. We also make extensive use of, Facebook, Twitter, and LinkedIn and other Social media sharing our listings with our networks, as well as other targeted user groups.
LIST ON
MLS
One of the most important additions to the real estate industry was the creation of the MLS, or Multiple Listing Service. Think of it as the Amazon.com of real estate. This shows the real estate world that your property is on the market. 69% of home buyers found their homes through the use of a Realtor – almost all of whom use the MLS to search. This makes the MLS an essential part of my marketing arsenal. As an added bonus, most real estate search sites pull their data directly from there so you get on the MLS, you’re everywhere.
MARKETING
Now you know your position, have a plan and a team in place. Its time to take a look at your home and get it ready to sell. When it comes to buying a home, first impressions have a significant impact. While significant landscaping updates aren’t likely to play a major factor in a buyer’s decision making process, it does help to avoid anything that could detract from that positive first impression.
PRICING & POSITIONING
No matter how well I market your property, if it is priced too high, it won’t sell. If it’s priced too low, you leave money on the table and miss out on the equity you’ve worked to build. Strategic pricing is crucial to sell your home for top dollar in the shortest amount of time. Price it right & sell it quick!
Pricing is an important part of how you position your property for sale to the public, but it’s not the only way. This is how you play Jedi mind tricks with your potential buyer so they make an offer.
AMAZING PHOTOS AND VIDEOS
Your home’s first showing is taking place online. Our marketing team includes a professional photographer and videographer to make that first impression the best impression possible. They say that “the camera adds 10 pounds.” Why not use them to add 10% to your selling price? Same logic… I guess.
In today’s marketing YOU NEED video in addition to good photographs for your home marketing plan.
ONLINE
MARKETING
The top four real estate websites (Zillow, Trulia, Realtor.com, Homes.com) have close to 100 million visits per month. Our marketing targets those websites as well as YouTube, which is the world’s second largest search engine behind Google. Being familiar with SEO, videos can be ranked to the first page of the search engines. We also make extensive use of, Facebook, Twitter, and LinkedIn and other Social media sharing our listings with our networks, as well as other targeted user groups.
LIST ON
MLS
One of the most important additions to the real estate industry was the creation of the MLS, or Multiple Listing Service. Think of it as the Amazon.com of real estate. This shows the real estate world that your property is on the market. 69% of home buyers found their homes through the use of a Realtor – almost all of whom use the MLS to search. This makes the MLS an essential part of my marketing arsenal. As an added bonus, most real estate search sites pull their data directly from there so you get on the MLS, you’re everywhere.
OFF LINE
MARKETING
As important as the internet is for homebuyers, when marketing your home there is still a need for offline efforts as well. A “For Sale” sign will catch the eyes of prospective buyers and spark interest from anyone who sees it. The only form of print advertising we use is direct mail, because it works. Nosy neighbors are the best marketers for a property, because they know the area and often times they know someone looking to move. In addition to postcards, we send email “cards” to our database as well.
SCHEDULE A
BROKERS OPEN HOUSE
The biggest difference between a broker's open house and a standard open house is who ends up on the invite list. While standard open houses are quite flexible about who can stop by—and might include anyone from potential buyers to curious neighbors—the guest list for a broker's open house is strictly limited to other real estate agents and industry professionals.
SHOWINGS, LOCKBOX
AND SIGNS
Soon, a for-sale sign will appear in the yard and a lockbox will be attached to your house, most likely on the front door. The lockbox allows local agents access to the house when you aren't there.
That may seem unsettling, but it's important to allow agents to show your home when you are away, especially in a slower market. If you don't have a lockbox, many agents will put you at the bottom of their client's list of homes to see, because it's a headache to track down your agent, who must contact you to find out when you'll be available, which may not fit into the buyers' schedule. Plus, unless you're in a hot sellers' market, there will be plenty of other houses to see. Try and be flexible with your agent. Someone may be on a tight schedule or only intern for a day, be ready for unannounced showing request.
UAG
UNDER ARGREEMENT
CONGRATULATIONS! You have a contract on your home. You have a willing and able buyer and you have come to terms on the sale of the home. What happens between now and closing?
DUE DILIGENCE
PERIOD
Unless the buyer is purchasing “as is” (usually not the case) the buyer has a “DUE DILIGENCE PERIOD” – typically somewhere between 7 and 14 days. During that time the buyer can terminate the contract for any reason or no reason at all. The buyer can simply send a notice of termination and the deal is over – you are left with an unsold house and a search for the next buyer.
INSPECTION
The buyer will have an INSPECTION – by a certified home inspector. The inspector’s job is to find anything and everything that is wrong with the place, so don’t be surprised or offended. Also, the standard inspection report is about 30 pages long – so don’t panic about that either. It contains a lot of OTHER information in addition to any “problems” the inspector has found with your home.After the inspection, the buyer will provide the inspection report to you and ask you to fix items that the inspector says need to be fixed. They might ask for EVERYTHING, so be prepared for that – but more often the buyer will pick what is most important to THEM. You can either agree to fix these items, or you can negotiate a dollar amount to compensate for the things you don’t want to fix. You don’t have to agree to do ANYTHING, but it’s best to be as reasonable as you can – because again, during this period, the buyer is able to TERMINATE the contract for any reason or no reason at all.
APPRAISAL
CONTINGENCY
The appraisal contingency is sometimes a longer contingency. Sellers attempt to negotiate as short a period as possible, of course, but the problem is that many lenders are ordering multiple appraisals – sometimes even the day prior to closing. So imagine the buyer’s dilemma. They think that the property has appraised and there’s no problem – and then the lender orders ANOTHER appraisal and it comes in low. As a seller, all we can do is keep in contact with the buyer’s agent and make sure that at least the first appraisal is ordered in a timely manner. There’s no way to know in advance if the lender is going to order multiple appraisals. It is not the norm, but it can and does happen.
Say the property does NOT appraise for the contract price – it appraises for less. In that instance, if we are still within the appraisal contingency period, the buyer can (and will) ask the seller to sell the property for the lower price. If the seller refuses, the buyer can walk from the contract. But if the seller AGREES to sell for the lower price, the buyer is bound (unless another contingency applies). One sticky issue here can be when the seller has agreed to pay for some of the buyer’s closing costs. Say the contract is for $100,000, seller paying $5,000 of the buyer’s closing costs, and the appraisal comes in at $95,000. Well, that’s what the buyer is REALLY paying, right? Because they are effectively getting $5,000 back. STILL, the buyer has the right to insist that the seller lower the purchase price AND keep the closing costs in.
FINANCE
CONTINGENCY
There may also be the aforementioned FINANCING and/or APPRAISAL contingency associated with the contract. The financing contingency gives the buyer an OUT from the contract if they are unable to obtain financing. The period can be anywhere from 7 days to 50 days. As a seller, you have likely insisted on a prequalification letter from a lender – so you know the buyer at least HAS talked to a lender – and have negotiated as short a period as possible.
NOTIFY
ADRRESS CHANGE
What happens NOW?!?! All contingency periods are up. We are waiting for closing. Time to have all your utilities disconnected as of the day of closing, except for water. It is common to leave water on for three days after closing. The reason for this is that the buyer must present a closing statement to get water service – and, of course, they won’t have the statement until the day of closing. In addition to scheduling the disconnection of utilities, do not forget to put in a change of address with the postal service – www.usps.gov – and notify your credit card companies, magazine subscriptions, and the like of your new address.
WHAT CAN I
LEAVE BEHIND
Best to leave nothing except what was agreed to in the contract (with the exception of any manuals for left appliances or the neighborhood directory). If you want to leave anything else, or think the buyer might want you to, get your agent to get the okay from the buyer. A typical issue here is that you cannot leave old paint cans unless the buyer says it is okay, for instance. (Paint is not always easy to dispose of). Then, hire someone to do one last, final, deep cleaning. All that is required under the contract (unless there is a special stipulation) is that the home be left “broom clean” – floors and carpets swept, horizontal surfaces wiped down, ovens and fireplaces cleaned, etc. But you don’t want to have an issue the day of closing over dirt; simpler to pay someone to do one last sweep
CLOSING
Then, to closing it is! Your job at that point is to bring all keys and remotes to the closing table. Most of the documents will be signed by the buyer – you will have only a few. You can give the buyer a forwarding address and/or email if you so choose – but that is by no means required. You can always ask them to contact your agent if mail arrives for you after closing. If you have gain from the transaction, you will be given a check at the closing table or you can have it wired directly to an account (this can be arranged ahead of time).
