The beginning and ending of anything are incredibly important. Just think about the excitement and build-up to the birth of a new baby, or the sadness and finality when a loved-one draws their last breath. The start and end of a career, the beginning of high school and then graduation, the end of one year and the celebration of a new year rolled into a single moment–these beginning and endings are all packed with emotion and importance in our lives.
Buying and selling a house are no different! Buying a house, especially your first, is scary and exciting. Very little compares to finally owning your own little piece of the world. On the other end of that is selling your home, when you have to turn loose of something you have lived in with family and enjoyed for many years, perhaps decades.
Selling your home doesn’t have to be haphazard and random. There is a selling process that you can and should follow. Millions of real estate transactions have revealed proven steps you should take when selling your house.
1. Decide to sell.
This first step may seem odd, considering that you have probably already decided to sell. If not, you probably wouldn’t be reading this. But let’s step back a minute and consider what this means.
When you make a decision to do anything, you are by definition weighing two or more options, then picking the one option that you deem best for your situation. Choosing to sell your home versus staying in your home is a big decision that requires well-considered options.
Evaluate why you want to sell. Is the “why” reason enough to subject yourself to the hassles of putting your house on the market and moving? You’ve heard the phrase “be careful what you wish for.” If you wish for a better home, carefully consider if your current home is able to serve your needs. You may realize once you move to a new location that the home you just sold was actually a better option than your new home.
Weigh the pros and cons of selling. Have an honest and open discussion with your family about the possibility and implications of selling. If selling and moving will cause major issues in your life, think twice and consider delaying until your situation is better.
Also, consider the timing of your sale. Spring and into early Summer are generally considered the best time to put a house on the market since homes normally sell for more and will probably sell faster. However, your local real estate market may be different. And your life situation may dictate selling at other times of the year. If you can time your sale to the Springtime market you might get a bit more money, but don’t wait if your situation requires a sale at other times of the year.
Decide to sell, but decide carefully.
2. Consider what your financial position will be after you sell.
Real estate is normally an appreciating asset, which means it increases in value. When you sell your house after living in it for some period of time, you expect it to be worth more than you paid for it. You don’t expect to lose money or to have to bring money to the closing table when you sell. Unfortunately, this sometimes happens if market values drop or if you had an interest-only loan or if real estate commissions eat all of the appreciation.
Look at market prices in your area. Look at your specific situation with your mortgage and the equity you have in your home. Make some educated calculations as to the proceeds you would receive upon selling your property. Deduct the typical real estate commission rate in your area, then deduct other costs such as repairs costs, moving costs, transfer taxes, etc. Are you left with a profit or at least a loss that you can live with? If so, then selling may be right for you. If not, you may want to wait until you have a bit more equity or when home prices rise in your area.
3. Decide how you will sell your home.
There are essentially two options for selling your home:
1. For Sale By Owner (FSBO or “fizzbo”): You sell your house yourself. You are responsible for marketing, showing, negotiating, and everything else necessary to conclude a sale.
Advantages to selling yourself:
- You don’t pay a real estate commission.
- You control all showing times.
- You control every aspect of marketing and selling.
Disadvantages of selling yourself:
- You don’t have access to the many listing services to blast properties out to buyers and their agents.
- A large chunk of potentials buyers won’t ever be exposed to your house.
- If you are not familiar with how to negotiate and respond to offers on your property, you may get into legal issues, and require the services of a real estate attorney.
- You may leave money on the table by selling at a price that is below market value. Pricing a property correctly is critical. Ask too much, you won’t get offers. Ask too little and you lose potential profit.
- You are essentially on your own. When you have questions, who will provide the answers?
2. List with a real estate agent: We’re biased on this one and will just admit that up front! For most homeowners, using an agent is the best option. An agent is familiar with your market and will help you price the property correctly. Your agent will prepare a Comparative Market Analysis (CMA) to give you an accurate evaluation of the value of your home as it compares to other homes in your market. Your agent will list the house on a listing service, which makes it available on potentially hundreds of web sites, where hungry buyers and their agents can find your property. Your agent will show the property to interested buyers. All negotiations will be conducted through your agent and with their guidance and hard-earned wisdom. Your agent will protect you from problems that you don’t even know exist. If an agent is doing their job properly, they likely will sell your home for more money and in less time than you would be able to achieve on your own.
4. Get your house ready to sell.
Preparing your house to sell can begin at any time, preferably well before you put it on the market. If you have lived there for an extended period of time, you probably have an accumulation of stuff that you will have to discard, sell or store so that you can show the house in a clean, clutter-free state.
Begin sorting your possessions into these buckets:
- Donate: Find a charity or charities that would benefit from having your stuff, then donate liberally to get rid of the things you no longer need.
- Sell: Have a garage sale or put items on eBay, Craigslist, Facebook Marketplace and other online outlets.
- Toss: Throw away the items that you don’t want and can’t donate or sell.
- Storage: The goal when you show your home is for it to be free of clutter and excess items like big furniture that make a house look smaller. You may need to move some items to a storage unit so that your house will show in the best light when buyers come through.
- Keep: The items you will be keeping and leaving on display during home showings.
Your goal is to create a visually pleasing look that feels like a home but without your personal items such as family photos, kids artwork, etc. making it difficult for buyers to see the house as their own.
You may consider using professional stagers to make your home look its best. A stager will decorate the house to sell, rearrange furniture to make rooms look bigger and even bring in furniture if the house is empty.
Start deep cleaning each room. Dust, vacuum, clean carpets and windows and deodorize if necessary. Be sure to keep your house clean the entire time you are having buyer visits.
Making repairs and remodeling are discussed below.
5. Clear up any title issues that may delay the sale.
The last thing you want to hear just before your house is about to sell is that there is a problem with the title to your house. Upon sale of a piece of real estate, “clear and marketable title” is passed to the next owner of the property. If the buyer is not able to get a clear title, they won’t be willing to complete the purchase. If you are aware of title problems on your home, you should clear them up now, before buyers ever take the first tour. Title clearance problems can take days, weeks or even months to fix, so get ahead of them now.
Title problems can result from numerous sources:
- Mechanics liens
- HOA liens
- Delinquent tax liens
- Child support liens
- Paid mortgages the were never removed from the title
There could be more than one issue on a title, and you’ll need to correct each one prior to a sale.
Title defects will normally be uncovered by a title company during a title search. Title searches are conducted prior to most closings as a part of the title insurance policy preparation. The buyer normally pays for this as a part of their closing costs. Any title defects that are discovered will have to be addressed before a closing can take place. By proactively correcting any defects that you know about ahead of time, you can potentially shorten the closing process.
6. Hire an agent.
Assuming you have decided to use a real estate agent to sell your home, you should seek recommendations from family and friends for a trusted agent with a record of success. Look at their track record and credentials. How long have they been an agent? How many homes have they bought and sold?
Interview several agents to find out their marketing and selling process. How quickly do they expect to sell your house? How much? What is their commission? What services are a part of their offering?
Your agent will ask you to complete some documents including a seller disclosure on which you disclose any problems or defects in your home that you are aware of, as well as any previous material repairs you made. The agent will gather other details about the home so they can prepare to list the property for sale.
You may discuss more details about the marketing plan and set a date for when the property will go on the market.
7. Get a pre-sale home inspection.
Any smart home buyer will get a home inspection before they close on a home. If you as the seller get your own inspection beforehand, you can avoid any surprise findings that might derail a sale and waste time. You can also share the results of your inspection with potential buyers, to give them extra peace of mind about the quality of your home.
If the inspection uncovers major problems, you have the option to make repairs yourself or to disclose those problems and adjust your sale price accordingly. On the other hand, if your inspection comes up clean, you have ammunition to dispute any claims the buyer may make in any inspection report they have prepared.
Paying for your own report will cost a few hundred dollars, but will probably more than pay for itself before and during a sale. The report can give you professional advice on what does and does not need to be repaired, and it can help you conduct better educated negotiations with buyers.
8. Make repairs, but avoid excessive and unnecessary remodeling.
Does your home hit the expected level of finish for homes in your area and price point? If your home is just a few years old, it probably has most of the expected features. But if your home is 10 years old or more, your home may be missing some of the latest trendy features buyers expect.
So the big question is “Do I spend money before I put my house on the market to remodel it and make it trendy and current?”
When buyers tour prospective homes they want to see clean homes, and they don’t want to see broken, damaged, moldy or non-functioning parts in those homes. Beyond that, what you think buyers want in a home does not matter. What matters is what the buyer actually wants. Each buyer brings his or her individual checklist of wants and desires. You can’t possibly make every prospect happy as they walk through your home.
What you can give potential buyers is a fairly neutral canvas on which they can insert themselves as the owner of your home. Can they see themselves and their family in that kitchen or on that deck or using that master bathroom?
Research data shows almost no remodeling projects you undertake will return 100% of your expenditure. So if you put $10,000 into renovating a bathroom, you might get a $6,000 return on investment when you sell. Why put yourself through the hassle of the renovation when it will only cost you money and not make you money? The choices you make for tile color and plumbing fixture style and vanity countertop materials are almost guaranteed NOT to be what the next owner would pick. So why do that? The better option in most cases is to let the next owner decide what they want, and let them undertake the big remodeling projects once they own the house. Aside from the cost, remodeling projects take time and might delay putting your house on the market by many weeks.
What you should do prior to listing your house is fix obvious damage, moldy areas, water leaks, dirty walls and floors, weeds in the yard and peeling paint on the front door, and other simple things that will distract prospects from the beauty of the rest of the house. If you got a pre-sale home inspection as mentioned above, you will know if there are any problems that would be deal-breakers for buyers. Fix those items. If you have rooms that are looking dingy or have an odd color, a fresh coat of paint using neutral colors is probably worth your time and money. A fresh coat of paint on the front door will do wonders for setting the tone of a prospect’s visit. In other words, get rid of the big and obvious zits on your house’s face, but don’t undergo plastic surgery trying to make it look young again!
Beyond minor repairs, cleaning and touch up, it’s best to refrain from making those changes and upgrades. Instead, you may adjust your sale price downward slightly, or be willing to negotiate and allot for less than perfect countertops in the kitchen or slightly outdated light fixtures in the bathrooms, etc.
If you put your home on the market and you are not receiving offers, ask for feedback from the buyers that are looking. Is there a glaring problem that is turning them off? If you keep hearing that the kitchen is dated or that the master bath needs desperate help, perhaps it is time to consider remodeling, or offering a “remodeling incentive” to prospective buyers.
9. Hire a professional photographer.
If you are using a real estate agent, they will probably provide a photographer who will take photos of your home. If you are selling on your own, you’ll need to search for a real estate photographer who knows how to capture the best photos of your home.
Real estate photography requires a special set of techniques to capture rooms with just the right angles, light and story. A portrait photographer may struggle to capture the true essence of your home, so using a specialized real estate or architectural photographer is best. Fees will range from $200 and up, depending on the size, location, quality and quantity of photos.
The importance of good photos cannot be understated. Most prospects will see your home for the first time online. Unless the pics wow the prospect and/or their agent, they probably won’t be interested in a showing.
Some photographers have started offering drone photos and videos as well. For lower-priced properties this may be unnecessary, but for luxury homes, this will eventually become an expected practice to show off the homes. Your photographer will probably have a package deal to add the drone work for a small and reasonable extra fee.
Buyers devour pictures of homes. Photographs become some of the best “sales agents” for your listing because they speak volumes without having to say a word. They will be viewable from potentially hundreds of sites where your prospects are searching, and are often shared from agent to buyer and vice versa.
Make sure you get high quality professional photos!
10. Set the right listing price.
Setting the right price for your home means that you don’t price is so high that you turn off potential buyers and kill your chance to sell, nor do you price it so low that you undercut what you could have sold it for and lose some profit.
Part of the way that a real estate agent will “earn their keep” is to help you determine the best selling price for your home. Their intimate knowledge of real estate market conditions as well as access to helpful data about comparable listings (“comps”) and sold properties nearby allow them to dial in just the right price for your home. The Comparative Market Analysis mentioned above will guide you and your agent to the right selling price.
During times of heavy demand for homes, a seller’s market will help you to get fair market value, even if you set the initial price below the market because multiple buyers will often bid the price up, much like an auction, offering more than your asking price. The problem with depending on this bidding war is that, during lean times when buyers are few and far between, you may not have multiple people to drive up the price. Your best bet is to price your property as close to fair market value as possible.
During a buyer’s market when demand is lower, setting a competitive price is critical. If you price it too high, you’ll have to take a price reduction, which can place a stigma on a property. “What’s wrong with it?” buyers may ask. It may be better to take it off the market and list it anew later, at a lower price, rather than revealing a history of dropping prices.
11. Market your home.
This is where things start to get exciting. You’ve laid the groundwork with all the previous steps. Now, you and/or your agent begin letting the world know that your home is for sale.
If you have an agent, they will almost certainly put the home on a multiple listing service. These services make the details of the property, including pictures and videos, available to other agents and to hungry buyers searching the online listings. This info is syndicated to hundreds of sites, giving your listing incredible reach and visibility.
Your agent will normally put a sign in your yard or somewhere on your property. They may conduct open houses, do additional advertising, make videos, do virtual video tours both live and on replay, plus more.
If you are selling by owner, there are numerous platforms where you can list your house free or at low cost. You should also blast your photos out to your existing social media accounts so your friends and others are aware that your property is available. While your friends may not be interested, they may know someone who is.
12. Show your home.
Within hours of listing your home online, you will likely have interested buyers asking for a showing time. If you are selling the house yourself, you’ll make the necessary arrangements. If you are using an agent, they will field requests from other agents who bring their own pool of buyers to the table.
Customary practice is for the homeowners to leave the property or to remain sequestered in one room while buyers tour the home with their agent. Buyers need the freedom to privately discuss the house as they move from room to room, and to imagine themselves living in the home. If you are in the home, buyers may not feel comfortable enough to do this.
Coordinate with your agent for times when you will be out of the house while he or she and other agents show the property. You may want to have back-to-back showings whenever possible to reduce the number of interruptions to your life. If you agree to put a lockbox on the house, buyers can visit at any time (with their agent), but you will be able to approve the times. Be flexible. Buyers are probably like you, and will need to visit the house on nights and weekends.
13. Review and respond to offers.
After your home showings take place, you can expect to receive offers within 24 to 48 hours, or less, depending on market conditions and demand. During a seller’s market, you may receive multiple offers on the same day.
It’s time to review the offers and respond with any negotiations that you deem necessary. Your agent, if you have one, will help you understand the offers, make recommendations about them and suggest responses. Then they will prepare the written responses and communicate your counteroffers to the other agents following accepted practices for real estate transactions. Agents normally use forms carefully prepared by real estate attorneys, so you can be assured that the negotiations are done legally and properly. These are considered legal documents and agents are allowed to manage these on your behalf even though they are probably not an attorney.
Offers can be tricky. Buyers almost always have contingencies–conditions that must be met for the sale to continue. Typical contingencies will include getting approved for financing, getting a favorable inspection of the home and getting an appraisal that meets a specific minimum value. Buyers may also make the deal contingent upon the sale of their home, which can delay the sale of your home indefinitely. These and other contingencies are common parts of offers that you will have to respond to when selling a house. A real estate agent can help you navigate these and many other clauses that get thrown into buyers’ offers.
You can negotiate any portion of an offer that you want, and buyers will certainly try to do that as well.
Here are just a few of the points you may end up negotiating:
- Sales price
- Financing vs cash
- Buyer financing, if any
- Down payments
- Earnest money
- Closing costs
- Temporary rental
- Personal property like furniture, vehicles and even pets
- Fixtures (blinds, ceiling fans, shelving, etc.)
All of these and more may enter into the negotiation. Buyers can be creative, but you can be creative as well.
If you are looking for a quick sale you can negotiate with the goal of getting an all-cash offer with few or no contingencies. However, you may have to cut your price or give up something else to get what you want.
14. Accept an offer.
You can reject, counter or accept any offer that you want. As the seller receiving offers, you are in the driver’s seat. Once you find an offer that you are happy with, you sign the Purchase Agreement in the appropriate places and accept the offer. Send the executed contract to the buyer and you are one step closer to closing!
15. Hurry up and wait.
After you accept a buyer’s offer, the bulk of your work is done. You will be waiting for the buyer and their agent, property inspector, mortgage lender and other parties to conduct their necessary tasks and complete due diligence.
A sales contract will include a closing date, so you have a pretty good idea when the closing will occur, but there are still numerous problems that still can stop the sale:
- Home inspection uncovers damage or defects that can’t be negotiated away
- Property appraisal comes in too low
- Buyer is unable to get financing
- Buyer is unable to sell their home
- Other contingencies are not met
- Title search reveals title defects that can’t be cleared
- Buyer is unable to secure an insurance policy on the home
- Delays by various parties cause a time-limit to pass, cancelling the contract
- Natural disaster damages or destroys the home prior to closing
These and other issues may prevent closing.
You will have a few tasks to do during this time including:
- Continue making mortgage payments!
- Make your home available for an inspection and any repairs that may be required prior to closing
- Provide necessary records and paperwork about your home, financing, title and more
- Clear any liens or other title defects uncovered during the title search
- Keep your house in good condition
- Pack and prepare to move out
- Take care of items or actions you promised (if any) in the sales contract
- Make the home available for the buyer’s final walkthrough prior to closing
- Turn over keys and other agreed-upon personal property
16. Move out.
At some point in the process of wrapping up your sale, you will be vacating the premises. Your contract will dictate when you must be out of the property, assuming the deal closes. You may need to arrange for temporary housing if you have to be out before your next home is available to move in.
Take some final photos of the home after you have cleared out to document the state you left it in just in case of any disputes with the new owner.
Take time to say goodbye to neighbors and friends. Then it’s time to go!
You probably will not need to attend a closing since many closings are now conducted online or electronically. Sellers typically have fewer documents to sign so it won’t take a huge amount of effort to approve the closing documents.
Of course, verify the purchase price and other important details before you sign anything.
You may need to have your documents notarized, so don’t sign until you are in front of a notary.
18. Receive the proceeds from the sale.
Funds are typically wired directly to your bank, so you won’t even need to deposit a check.
The closing attorney will take care of the financial calculations and transactions, assuring that they receive the proper amount from the buyer and their lender, and that disbursements are paid to the agents, government tax entities, your lender to satisfy your outstanding mortgage balance, and any other parties to the transaction. Any seller closing costs such as transfer taxes will be deducted from your final proceeds.
Congratulations! The long, often complicated process of selling your house is over! Take time to celebrate, if you can. Of course, you may be in the midst of buying your next home and moving in so it may be a short celebration!
If you are thinking about selling your home, let’s have a discussion to see if we are the right fit to help you get the best possible price for your home. Kurzner Group has sold thousands of properties in Metro Atlanta for our clients, so we are ready to make the process easy and profitable for you as well.