Home Sellers Guide - Powered by Colorado Home Finder
Colorado Home Finder Realty’s Handy Guide for Home Sellers is designed to help you understand the selling process before just diving in. Selling a home can be complicated, and this guide will help you make informed and smart decisions every step of the way, and set aside any worries you may have—right from the beginning.
ARE YOU READY TO SELL?
Your home is your biggest asset. You’ve invested a lot in it over the years, whether it’s time, money, or emotion. So, when it comes time to sell, you want to get it right.
Any time the housing market heats up, it’s tempting to put your home on the market just to see what happens. After all, if homes near you are selling like hotcakes, your home could move quickly too!
Of course, the decision to sell your home isn’t solely based on market conditions. Your personal situation matters too.
THREE SIGNS YOU MAY BE READY TO TAKE THE LEAP
Your home doesn’t fit your lifestyle anymore.
You can separate your feelings from your home.
You won’t go broke in the process.
That covers the basics, but let’s dig a little deeper.
Is It Worth It?
Selling your home is a big deal with a lot of dollars on the line. Obviously, you’d like to know it will be worth the effort you put into it before planting a For Sale sign in your yard. So, let’s do a little math to figure out your potential proceeds.
First, determine how much equity you have. To calculate equity, simply subtract your mortgage balance from the current market value of your home. If your home is worth $200,000 and you owe $120,000 on your mortgage, you’d have $80,000 in equity.
Now, factor closing costs into the equation. These typically come from the proceeds of your sale and cover fees like agent commission, prorated interest and taxes, and title insurance.
According to Realtor.com, closing costs can total 6–10% of your home’s sale price. Aim high for this example and deduct approximately $20,000 to cover those potential closing costs. That means, in the example above, you could expect to make $60,000 on the sale.
SHOULD YOU SELL YOUR HOME YOURSELF?
Everybody loves saving money, and selling solo can seem like a great way to do just that. After all, the biggest chunk that comes out of your pocket at closing is the real estate agent commission. This fee traditionally runs around 6%. For the typical For Sale by Owner (FSBO) home, that’s almost $12,500. Ouch!
But is FSBO all it’s cracked up to be? Here are three ways taking your home sale into your own hands could cost you:
1. Limited Exposure
If you want to sell your home, you need buyers—and lots of them. It’s a classic example of power in numbers.
An experienced real estate agent exposes your home to thousands of potential buyers by:
Giving your home a much-needed online presence through the Multiple Listing Service (MLS).
Developing a targeted strategy for marketing your home to their extensive network of buyers and agents.
2. Unintentional Mishaps
I appreciate an independent spirit. But your home is your largest asset. Even small mistakes can cost you big. You’ve worked too hard to risk losing money just to prove a point!
Let’s face it. A top-notch agent sold more homes last week than you’ve probably sold in a lifetime. That kind of expertise is worth its weight in gold.
3. Lost Profits
Can you save money by going FSBO? Sure. But you’re missing the chance to make a whole lot more. Consider this: the latest NAR data shows that the typical home sold by an agent last year fetched $235,000. That’s $27,000 more than the typical FSBO home sold for! Are you okay with leaving five figures on the table?
FIRST THINGS FIRST
Before putting your house on the market it’s important to understand “who’s who” and how real estate agents may cooperate to sell your house.
The Listing Agent: A real estate agent who the seller hires to represent themselves is referred to as the “listing agent”. The listing agent represents the seller and has a fiduciary obligation to represent the seller’s best interests at all times.
The Selling Agent: In a “cooperative” sale, the house is listed by the listing agent and a buyer is represented by a “selling agent”. The listing agent can only be an agent for the seller—he or she may not be an agent for both the seller and the buyer in the same transaction.
HOW TO PRICE YOUR HOME RIGHT THE FIRST TIME
Remember, buyers are sophisticated. They have been shopping and have seen many houses, and when they see your house they’ll be comparing property features, condition, terms, and most importantly—price. Therefore, it is vitally important to establish a realistic selling price for your house right from the beginning.
So, now it’s time to work together to price your home. Your agent will walk you through the pricing strategy they recommend, but ultimately, the final number is up to you.
So how do you ensure you don’t get it wrong? Here are four common pricing mistakes to watch out for—and how to price to win.
Mistake #1: Starting with Sentiment
Nothing tugs at the heartstrings quite like selling a home. How do you put a price on all those years of memories? The answer is easy: you don’t. I hate to burst your bubble, but buyers are no more attached to your place than any other home on the market. Price it too high, and you can count on sending buyers running the other direction.
Mistake #2: Using Fuzzy Math
Pricing your home may seem like the perfect chance to put your calculator to good use. After all, you’ve got lots of big numbers to crunch. Unfortunately, basing your sales price solely on how much money you need to buy your next home just doesn’t equate. Leave your bottom line out of it, and you’ll have a better chance of landing on a price that’s in line with the market.
Mistake #3: Testing the Market
When the market’s hot, it’s tempting to shoot for the stars to see just how much money you can get. After all, you can always negotiate it down or drop the price if buyers don’t bite. But that’s a bad approach.
Here’s why: buyers don’t waste time on overpriced homes, much less make offers on them. And the longer your listing lingers, the more money it costs you in the end.
Mistake #4: Trusting the Internet
These days, you can find oodles of home values online. Sounds great . . . until you dig into the data. Three different sites show three different values. How do you know which one is right?
The truth is, you don’t—and neither does a computer programmed to pull numbers from the shelf. This job calls for a real, live expert with personal experience in your market.
Secret to Success: Simply put, your home is worth what someone will pay for it. The best way to get an idea about that number is to compare recent sales of homes like yours in your area. Your real estate agent has access to all this information and can provide a comparative market analysis (CMA) to help you get top dollar for your home in the least amount of time.
What’s a Comparative Market Analysis?
A comparative market analysis (CMA) is a detailed report that compares homes near you that are either on the market or have sold in recent months. The goal is to find homes in your immediate area that are most like yours. This enables your agent to more accurately predict what buyers will pay for your home.
For instance, if you live in a 2,000-square-foot home with three bedrooms, your agent won’t pull a list of 3,000-square-foot homes with four bedrooms. Why? Because that wouldn’t be a fair comparison. Likewise, a home that’s just like yours but located in a highly desirable school district across town also doesn’t get you any closer to your home’s market value.
Your CMA will offer pages and pages of information and will usually feature photos and a location map of all the properties. A true pro will take time to walk you through the results so you understand exactly how your home stacks up to the competition. With this information in hand, you can work with your agent to set a competitive price that’s based on fact, not emotion.
Price your home to sell when its market exposure and buyer interest are highest.
In a purely numbers sense, how you price your home will directly impact how many buyers, showings and offers you attract, as well as how easily it sells.
However, the practical dynamics of attracting those qualified, motivated buyers who will pay top market value for your home is a little more complex. That’s because experience shows that you’re far more likely to get top market value if you sell your home during a certain “golden window of opportunity” during the listing. In short, timing is crucial.
With the exception of hot, sellers’ markets, homes generally attract the most interest and activity among buyer prospects and their agents during the second to fourth or fifth weeks they’re on the market.
Beyond five weeks, your home will increasingly be viewed as a stale listing – i.e. as a commodity with a history of being rejected by other buyers. Consequently, there will be less market buzz, less showings, less offers and less likelihood that you’ll get your asking price.
This is why it is crucial to price your home correctly right from the beginning so that you get and accept a solid offer during the three or four week “golden window”.
The consequences of overpricing at the time you list
The strategy of overpricing your home when you list, knowing that you can reduce the price later, might seem to make sense at first glance. However, it seldom works. In fact, sellers who overprice their homes – even just 10% above market value – and then reduce the price one or more times often end up getting less than they would have if they’d priced it realistically from the start.
Fewer buyers will respond to the online and offline marketing of it – even if they’re otherwise attracted to your home – if they know it’s overpriced.
Fewer agents will show your home to their buyers if they know it’s overpriced.
The right buyers – i.e. looking to buy a home like yours – may never even view it because they’ll confine their search to a lesser price range where yours should be.
You’ll attract the wrong buyers – i.e. those looking in your price range – who won’t be interested in your home, having viewed other homes truly worth what you’re asking for yours.
An excessive price on your property makes others more attractive – i.e. both those priced where yours is, and those priced where yours should be.
You’ll get fewer – if any – serious offers overall because buyers may consider doing so a waste of time.
Even if you do get a serious offer, the excessive price can lead to a mortgage rejection
for the buyer once the lender has a professional appraisal done on your home. This
leads to critical lost time waiting for finance approvals that never go through.
Reducing the price after buyers have begun to perceive your home as a stale listing will not generate as much interest as if you’d priced it properly from the start
The bottom line: realistic pricing is strategic pricing!
All this is why pricing your home realistically right from the beginning – to coincide with its window of maximum market exposure so that you can best leverage buyer interest and emotions – is important, regardless of market conditions.
If you do so, you’ll not only attract more buyers, you’ll attract the right buyers: qualified, motivated and willing to pay top market value for your home at the very time during the listing when you’re most likely to get it.
OTHER ITEMS THAT WILL BE DISCUSSED AT THE LISTING APPOINTMENT
Net Proceeds from the Sale: Once you are satisfied that you have determined a competitive sales price, the listing agent will go through a worksheet generally referred to as a “net sheet” that estimates the “net cash proceeds” you can expect from the sale. Simply put, this exercise subtracts the outstanding loan balance, and all other anticipated costs paid by the seller, from the sales price. You should be sure to ask for a copy of the “net sheet” that you can refer to when you eventually receive an offer.
Financing Strategy: Most sales cannot be completed without financing. That is why it is generally to your advantage to appeal to the greatest number of homebuyers by accepting the greatest range of financing plans. The listing agent will explain the basic differences between VA (Veterans Administration), FHA (Federal Housing Administration) and conventional financing.
Assessments/Easements: The listing agent will ask you if any tax assessments or easements exist on property that must be paid or included in the purchase contract and passed with the land when sold.
Property Taxes/Condominium Fees: You will be asked to provide a record of property tax or condominium fee payments which the listing agent will disclose to prospective buyers. The buyer will reimburse a pro-rata share to the home seller at settlement.
Home Inspection - Why Sellers Need One: Most homebuyers know it pays to get a home inspection. The same goes for home sellers. A presale inspection might cost a few hundred dollars, but it’s money well spent. Why? Because it can keep buyers from demanding big bucks at the negotiation table or, worse, skipping out on the deal at the last minute.
Electrical, plumbing, heating, and cooling systems
Walls, ceilings, floors, windows, and doors
Roof, attic, and visible insulation
Foundation, basement, and structural components
Here’s How It Works: A qualified home inspector combs a property’s accessible areas to assess the home’s condition and identify any health and safety issues. Once the inspection is complete, you’ll receive a detailed report outlining what works and what doesn’t, with recommendations for maintenance and repair.
Don’t worry about checking every single to-do off your list, but do pay attention to big-ticket issues. These can scare buyers into asking for way more money than it takes to fix them. Your agent can help you sort through the findings, but the roof and electrical, plumbing, and HVAC systems typically take priority. If you have room in your budget, take care of those before planting the “For Sale” sign in your yard.
Utilities: The listing agent will ask you to provide a record of the past 12 months’ utility bills, including gas, electric, sewer, water, and trash where applicable. Most buyers will want to know history of utility costs.
Helpful Documents: If possible, you should provide the listing agent with the deed, house location survey, condominium bylaws or homeowners association documents, subdivision plat map, house floor plan, previous title search abstracts, legal description of property (subdivision, section and lot), home warranties on major systems, if still in effect, and a copy of homeowner’s insurance policy for endorsement in the purchase contract.
Listing Agreement: When you are ready to put the house on the market, the listing agent will complete and present the listing agreement, called the “Exclusive Right to Sell Agreement” in Colorado. Some of the most important items that are addressed in the listing agreement include:
The property address and legal description
The initial asking price
The length of the listing period (typically 6-12 months)
The listing agent’s fee (commission)
The co-op commission that will be paid to a cooperating selling agent
The listing agent’s fiduciary obligations to the seller
Personal property, or fixtures, that are either included or excluded
EFFECTIVELY MARKETING YOUR HOME FOR ALL IT’S WORTH
The successful marketing of a home, like that of any good or service, is a multi-faceted process that includes nearly every activity involved in getting it sold.
In fact, marketing encompasses just about every topic covered in this Guide – home preparation, pricing, presentation and even negotiation, as well as strategic advertising and networking.
All these activities are undertaken with one aim: to maximize your home’s market exposure, and with it the number of showings and offers you get so that you ultimately sell for top marketvalue. An experienced real estate professional has the knowledge, expertise and resources to implement a plan that will effectively coordinate these activities so you do just that.
How Buyers Find Out About Homes for Sale: As We’ve Seen, Strategically Preparing And Pricing your home are master keys to attracting serious, financially-qualified buyers. However, to maximize the impact of these preparation and pricing strategies, your home needs to be effectively exposed to the marketplace through a variety of advertising media.
Currently, the internet (including realtor.com, real estate professional websites, social media, blogs, etc.) and direct contact with real estate professionals are far and away the main sources of home information for buyers (at 90% and 87%, respectively). Other sources are yard signs, open houses, real estate magazine ads, home builders and television.
An interesting phenomenon is the yard sign’s role. Buyers who call on a yard sign already have convinced themselves that they like the town, neighborhood, street - even your front yard. This same “qualification” is present when people call on your home after finding it on Colorado Home Finder Realty’s mobile device application.
Buyers Are Flocking to The Web: The internet is revolutionizing real estate advertising. Clearly, your real estate professional needs to have an internet marketing strategy in place to target these desirable and more market-informed internet buyers. Here’s what discriminating internet buyers look for most on real estate websites:
98% – Property photos (plenty of them)
98% – Detailed information about properties for sale
78% – Virtual tours
78% – Real estate agent contact information
78% – Neighborhood information
This means that your real estate professional should have a compelling web presence where buyers are known to go online for real estate information. In addition, the internet marketing plan should include emphasis on information rich sites that offer lots of property details and photos, virtual tours, community and school reports, and mapping.
Also, because today’s demanding internet buyers often expect a fast response to their online requests for property information (many within an hour), experienced and internet-savvy real estate professionals need an efficient system in place for managing web and email inquiries.
Particularly in this market, it’s important that your home be advertised to its fullest over the internet, and that inquiries about it be handled in as close to real time as possible. Effectively reaching and responding to more of these internet buyers can increase the demand for your home and, in turn, its value.
Marketing Your Community as Well As Your Home: Real estate industry surveys have repeatedly found that neighborhood quality is the most important reason why home buyerschoose where to live. In fact, experience shows that buyers usually “buy” an area first, and are often willing to pay a premium for homes there.
That’s why it’s crucial to highlight your community’s amenities – like proximity to quality schools, restaurants and shopping, local parks and attractions, as well as other benefits tha t impact on lifestyle.
Real estate professionals have access to the kinds of detailed community and school information that today’s buyers are looking for, and they are highly capable of portraying the relationship between the value and benefits of your community and home together.
While the internet is now the real estate information source of choice, if you want to maximize the number of serious buyers, showings and offers you get it is necessary to employ a broad spectrum of advertising in a coordinated manner. Real estate professionals have a wide range of options for maximizing a property’s exposure to the marketplace, including:
Such extensive market exposure will not only generate more interest from motivated buyers. It will also ensure that you don’t sell your home to just any buyer, but to the right buyer – the one who fully appreciates what they’re buying and will pay top dollar for it.
A Comprehensive Approach to Showcasing Your Home and Community in the Marketplace:
Multiple Listing Service (MLS)
Company website: ColoradoHomeFinder.com
Social media sites like Facebook® and Twitter®
Notifying potential buyers and referral sources in their database
Direct mail and email campaigns
Home Highlight info to all agents in their company’s local offices
Notifying the area’s top real estate professionals
Real estate professional tours
For Sale sign
Networking within the local community
Such extensive market exposure will not only generate more interest from motivated buyers, it will also ensure that you don’t sell your home to just any buyer, but to the right buyer – the one who fully appreciates what they’re buying and will pay top dollar for it.
GETTING READY TO PUT YOUR HOUSE ON THE MARKET
Clean Up, Fix Up, Or Toss Out: Today, the home that stands out among similarly-priced houses is going to be home that sells first. Why? Because it makes a good first impression that lasts— all the way to the settlement table.
You may not be able to improve the market value of your house (finish basement, remodel kitchen, etc.), but you can improve its marketability. And usually this can be done with more elbow grease than hard cash. The key is to put yourself in the buyer’s shoes. In fact, if you drop by some open houses (you may soon be a buyer yourself), you’ll pick up some pointers. Then practice making your house as appealing and uncluttered as the home you wish to buy.
The Exterior: Start here with “curb appeal”. Basics: A trim lawn, well-proportioned shrubs. Remove garden hoses, lawn tools, dog house and toys from the yard. Check for flat-fitting roof shingles; straight lines on gutters, shutters, windows and siding; solid caulking around frames and seams; paint. Keep walks and steps free of snow and ice. Extras: Brass door knocker. Seasonal door decorations. Small landscaped courtyard. Flower beds.
The Front Hall: Aura and atmosphere upon entering a home give a hint of what’s inside. Basics: Light (from window, skylight, lamp or overhead fixture; perhaps even use a stronger light bulb). For evening inspection, turn on every light in the house for a welcoming glow. Make sure the house smells fresh and clean. Make sure that the woodwork is unmarred and the carpeting spotless. A fresh coat of paint is a good investment, and it’s most appealing in a neutral tone, since strong color is so subjective. Remove unsightly or worn throw rugs. Extras: Door chime. Dead bolt lock and chain.
Staging Tips for Every Budget
Once your home’s in good working order, it’s time to show off its best features. Thankfully, you don’t have to spend a fortune to do it.
In her book, Psychological Staging, Kristie Barnett—an award-winning staging pro and author of The Decorologist blog—says effective staging taps into buyer minds by:
Making rooms appear bigger
Making a home feel more high-end
Accentuating the positives
Downplaying the negatives
So, is it worth it? Consider this: according to the Real Estate Staging Association, sellers who staged before listing sold their homes 87% faster than those who waited until late in the game to do so. And a HomeGain survey found that staging resulted in an average 196% return on the costs to stage the home!
Must-Dos for Every Room
Before you dig into the details, you have a little housekeeping to do.
Apply a fresh coat of paint
Scrub every surface until it shines
Pay a pro to deep clean rugs and carpets
Minimize clutter to maximize space
Where to Focus Your Wow Factor - Most experts agree that three areas bring the most bang for your staging buck:
Kitchen and dining
The Living Room: Strive for a lived-in, cozy feeling. Discard worn, chipped or frayed furniture. Open curtains. Furnishings here and throughout the house should be well placed and in good repair. Set out fresh flowers, and even put a drop of bath oil or vanilla on light bulbs for a subtle scent.
The Kitchen: Many buyers judge the house by the way the oven and stove are kept. Basics: Appliances should be spotless and in perfect working condition. Replace or repair anything that sticks, squeaks or drips. Counter, cooking, cabinet and eating spaces should be kept open and uncluttered, without countertop appliances. Clean butcher block. Floors and walls should be in inviting light colors, and serviceable (resistant to grease and moisture).
The Master Bedroom: The second-most appealing room to the buyer (after the kitchen, before the garage). Basics: Uncluttered furnishings; defined areas (sleeping, dressing, sitting) by furniture arrangement. Show the true size of closets by removing or packing items that can be stored elsewhere (since you’re moving away), like off-season clothes.
Bathrooms: Practicality combines with attractiveness. Basics: Sink, toilet, bathtub, tile, even shower curtains should be immaculate. Fix leaky faucets — rust stains indicate faulty plumbing. Repair caulking and grouting. Minor flaws suggest neglect to the prospect. Light should be soft (no harsh fluorescents), but bright. Extras: Use some potpourri for a pleasant scent.
The Garage: Convenience is the key here (the perfect garage holds only cars). Basics: Uncluttered space. Sell, giveaway or toss unnecessary articles. Clean oily cement floor. Strong overhead light (fluorescent or bulb). Orderly storage area, tidy workbench.
The Basement: Organize, hang tools on peg boards, and put items on shelves. Cure damp smell by placing bag of limestone in damp area. Clean the water heater outside, change the furnace filter and make inspection- access easy. Brighten the basement by painting walls.
Should We Redecorate? The big problem in major redecorating arises because it is very difficult to anticipate the tastes of strangers. Best to stick to fresh paint in very neutral colors and present a sparkling clean house without the redecorating expense.
Is It Possible to Over-Improve? Yes. Your landscaping may be divine. You may have the only cabana and swimming pool in the neighborhood, but it may be difficult to sell a $450,000 home in an area of $420,000 homes. Consult your listing agent to determine if added improvement means added marketability.
Are “Fixing Up Expenses” Tax Deductible? Yes. You can reduce your taxable capital gain by “fixing up”, but only under strict guidelines. Check with your tax consultant for details.
Many states now require that sellers provide buyers with either a residential property disclosure or a disclaimer statement.
PREPARING FOR A PHOTO SHOOT
These days, listing photos matter. A lot. Just ask the National Association of Realtors. According to their latest data, 92% of buyers search for homes online. If your home makes a lackluster on-screen appearance, you’ll lose buyer interest before they ever pull up to the curb. That’s why it pays to put a pro behind the camera. The right agent should have a good photographer on speed dial so you don’t have to round one up.
You’ve got work to do too. Get your home ready for the big shoot with these expert tips.
Do Put Everything in Its Place: You may be comfortable with that blanket lying out or those shoes by the door, but buyers don’t want to see clutter. Put everything away.
Don’t Leave Toys and Pet Stuff Out: Babies and puppies may sell breakfast cereal, but homes... not so much. Keep the kid clutter and pet paraphernalia under wraps so buyers can focus on your home.
Do Add Extra Touches: Breathe life into your home with just a few accessories. Think simple but warm. Maybe it’s a pair of colorful pillows on the sofa or a super soft throw draped over the corner of the bed.
Don’t Use Counters as Open Storage: This is not the time to show off your favorite juicer. Counters should be sparse and spacious. That goes for bathrooms too. Throw your personal items in a drawer to keep them out of sight.
Do Let There Be Light: Bright rooms make your home look bigger. So, throw back the curtains, pull up the blinds, and let the sunshine in! Just be sure to wash your windows until they sparkle.
Don’t Scatter Rugs in Every Room: Rugs generally don’t photograph well and can make your space look smaller. Ask your agent which rugs can stay then put the rest away.
Do Put a Lid on It: Your toilet, that is. Nothing turns a buyer’s stomach like an up-close look at your home’s biggest germ-fest. Do us all a favor and shut it before snapping photos. It’s the polite thing to do.
STRESS-FREE HOME SHOWINGS
Home showings are hard to juggle, whether your home is bare bones, or full of kids running around. Whatever your situation, these handy tips can help you stay sane and get your home sold.
If Your Home Is Vacant: Make it easy for buyers to see the possibilities. Breathe life into empty spaces.
Most buyers need help in the imagination department. Give them a hand by lightly staging the most important rooms. Can’t afford to stage your whole home? No problem! Focus your efforts on the living room and master bedroom, then add a few accessories to your master bath and kitchen counters.
Hire a Few Helping Hands: Nothing’s worse than a home that screams “nobody lives here” because the grass is knee-high and there’s dust everywhere. Budget for basics like lawn and cleaning services while you’re away to ensure your home looks like it’s getting the TLC it deserves.
If Your Home Is Occupied: Strike a balance between “at home” and “for sale.”
Make a Daily To-Do List: Surprise showings always seem to happen when your home’s a complete wreck. Reduce last-minute panic by putting things away as soon as you’re done with them and creating a checklist of simple tasks to knock out before you leave every morning. That way you’re always ready for guests.
Get the Pets out of Dodge: Man’s best friend can be your home deal’s worst enemy. Leaving pets home for showings just brings mess to mind, and a yap-happy dog is just plain annoying. Take the pets for a joy ride or send them to Grandma’s house so buyers can focus on your home’s best features.
Let It Go: Separating yourself from the place you’ve called home can be hard. But if you want to make a deal, you’ve got to give buyers time and space to fall in love with your home. Be flexible about scheduling showings, and don’t make buyers step around you—or your feelings—when they visit.
If Your Home Is a Kid Zone: Contain the chaos without missing a beat. Ask your kids to choose a few favorites to keep in their room, then store the rest in plastic bins. Be sure to explain that they’ll see their toys again. If they get bored with their selections, you can always rotate toys out.
Enlist Help from The Kids: Want to ease your load? Give Junior a job to do! It’s a great way to teach the value of hard work. Don’t forget to recognize a job well done. If you can’t spare extra cash for their work, quality time spent with you works too!
Don’t Pass Up a Showing: There will be days you just can’t get everything put away and make it out the door on time. If you get a call for a showing, tell your agent what happened so they can prepare the buyer ahead of time. Just don’t miss an opportunity to get your home seen!
Leave the Selling to Us: While the home seller is actively getting the house ready to show, the listing agent is actively spreading the word that the property is available. The listing is promoted to two groups: the real estate community and the buying public.
Seller and Agent Team: During the listing period, the listing agent will periodically update the home seller on the mortgage market, new competitive listings and sales in the area, and progress in selling the home. The feedback between agent and seller is vital to exchange selling suggestions and maintain maximum marketability. The listing agent will follow-up with the other selling agents and provide feedback to the home seller. This mutual teamwork becomes especially important later when negotiating offers to purchase.
Should I Let Anyone in To See the House? If a prospective buyer calls or comes by unexpectedly without an agent, get their name and phone number. Do not show the home. Explain that it is not a convenient time. Call your listing agent so that the buyer can be qualified and identified prior to showing. This is for your benefit and protection.
If an Offer Is Imminent, Should We Still Show the House? A property is either sold or available — there is no in between. However, if there is an accepted contract that contains a contingency, and backup contracts are invited, then this must be made clear, and the house should be shown. Refer the selling agent to your listing agent for details.
YOU’VE RECEIVED AN OFFER! NOW WHAT?
With Rare Exception, Negotiating the Transaction Is the Most Complex Part of Selling a Home. At the Same Time, It’s the One That Can Involve the Most Creativity.
That’s why it’s important to have an experienced and savvy real estate professional who has successfully worked through many different transaction scenarios.
What follows is a brief description of the negotiation process and a few strategies for negotiating the best possible deal you can. This includes: keeping in mind your situation, priorities and needs, not giving your situation away to the buyer and buyer’s agent, trying to understand and respect the priorities of the buyer, being creative and, where necessary, willing to compromise to get the deal done.
The Basic Process: When a buyer, typically with the help of a real estate professional, makes an offer on your home they’ll do so using a contract that has been approved by the Colorado RealEstate Commission, in conjunction with legal counsel. These contracts enable the buyer to set a sale price, and include many clauses for specifying various terms of purchase, such as the closing and possession dates, the earnest money deposit amount, and a variety of other conditions.
The buyer’s real estate agent will then deliver the offer to your real estate agent, who’ll present it to you. You should closely review every detail of the offer with your real estate professional, who’ll be happy to address all your questions.
Having sold thousands of homes, we know what it takes to go from contract to closing and keep your sanity intact. If there’s one thing we learned, it’s the importance of an experienced pro to guide you to the finish.
Let’s take a closer look at five key steps you can expect once you have an offer in hand.
Step 1: Initial Offer
The purchase agreement kicks off the offer stage and sets the tone for the rest of the process. Your agent should explain the offer to you in simple terms to ensure you understand what you’re agreeing to before you sign on the dotted line.
Items to Pay Close Attention to Include:
Closing or escrow date
Special allowances for personal property, home improvements, and closing costs
Contingency deadlines for the home inspection, appraisal, and buyer financing
Additional contingencies (i.e. sale of the buyer’s current home) With any offer, it’s
important to look beyond the purchase price and take the whole package into account. For example, a buyer might offer full asking price but want you to pay all their closing costs plus throw in your washer and dryer. Alternately, a second buyer might offer $5,000 under asking with no other seller concessions requested.
Think of it this way: even a low offer is an opportunity to get your home sold, so don’t take it personally. With some skillful negotiating, you can turn a disappointing offer into a deal where both sides win.
Step 2: Home Inspection
Even if you had an inspection done before you listed your home, your buyer will likely want to get an inspection of their own. Hopefully, there won’t be any big surprises. But don’t be shocked if the buyer’s home inspector uncovers a few issues yours didn’t.
How do you know what needs to be fixed to close the deal? Your agent can help you make the call. In some cases, you can offer cash at closing, or a discount on the sales price, to cover thecost of repairs. In other cases, the buyer’s appraiser may require certain repairs for the sale to go through based on the buyer’s loan and the value of your home.
If a major fix does rear its ugly head, your agent can help you gather a few professional quotes for the repair. That way you have an accurate dollar amount to work with as you negotiate an agreeable solution.
Step 3: Appraisal
This stage of the process can be stressful. After all, the buyer’s ability obtain financing to fund the purchase depends on it.
Obviously, success starts with a price that aligns with the market. But it’s also important to do everything in your power to ensure appraisal day goes off without a hitch.
Some Tips for Improving Your Appraisal Odds:
Leave your home clean so the appraiser knows your home has been well-maintained.
Make a detailed list of any improvements you’ve made to the home and include invoices
or receipts if available.
Ask your agent to provide well-researched comparables to support your sales price.
Step 4: Loan Commitment
The ball may be in the buyer’s court at this stage, but this is no time to sit on the sidelines. You’ve got skin in the game too, and no one wins if the deal implodes in the final seconds.
That’s why you need an agent who’s willing to carry the ball to get you to the goal. A true professional will rise to the occasion in this situation by:
Maintaining a clear stream of communication with the selling agent
Contacting the buyer’s lender to push the approval process through on time
Actively investigating red flags that could put your deal in danger
Connecting the buyer with an alternate lender if the original one falls through
So how do you keep a lack of financing from killing your deal? Look for a buyer who’s already been pre-approved for a mortgage. That means they’ve submitted the required paperwork and the lender has verified exactly how much they’re willing to lend.
Just know it’s not bulletproof. Buyers lose jobs, open credit cards, and take out new car loans— all of which can throw a wrench into the final approval. If that happens, the right agent will help you make the best of a bad situation.
Last-Minute Deal Wreckers: Nothing’s more frustrating than working hard to sell a home only to have the deal crash and burn. Here are common pitfalls that can put your deal at risk as well as tips to help you bring it back from the brink.
A Title Search Uncovers an Open Lien on Your Property: Open liens—and any other title problems—must be cleared before you can close the deal.
Recovery Tactic: If the lien in question is covered under your title insurance policy, that should make it go away. If not, you’ll have to resolve or pay the lien before you can close.
The Home Inspection Identifies a Big-Ticket Repair: This means another round of negotiation with the buyer—and the potential for more money out of your pocket.
Recovery Tactic: With an expert negotiator in your corner, your deal should have no trouble moving forward. You just may need to be willing to meet the buyer in the middle to address the issue.
Your Buyer’s Financing Falls Through: Without financing, your buyer likely won’t have the cash to close on the home.
Recovery Tactic: Unless your buyer wins the lottery—or secures another lender before closing day—you can pretty much count on going back to square one to find a buyer who can afford to buy your home.
Your Home Appraises for Less Than the Sale Price: For the deal to go through, someone’s going to have to shell out more money to bridge the gap.
Recovery Tactic: Odds of recovery depend on how big the gap is between the appraisal value and the sales price. You and the buyer may have to split the difference.
An Issue Comes Up in The Final Walk-Through: Last-minute surprises in your home’s condition must be addressed before closing.
Recovery Tactic: Follow the Golden Rule by leaving the home the way you’d want someone to leave it for you. It’s as simple as that!
Appraisal Too Low? Here Are Some Options.
Your agent can dispute a questionable appraisal.
You can drop your contract price.
The buyer can bring the difference in cash.
You and the buyer can meet somewhere in between.
Both parties can call the deal quits.
Step 5: Closing the Deal
A pending sales agreement nearly always includes contingencies and special conditions that must be fulfilled by the buyer and seller by the closing date, which usually falls 30 to 60 days after both parties signed the agreement.
Typical contingencies and conditions may include:
The buyer’s securing of financing
A Title Search – an historical review of all legal documents relating to ownership of the
property to ensure that there are no claims against the title of the property
The purchasing of Title Insurance in case the records contain errors or there are
mistakes in the review process
A professional appraisal of the home, requested by the lender to ensure that the home’s
actual value justifies the loan amount
Any additional contractual promises you have made associated with buyer incentives,
home improvements, etc.
An independent inspection of the home’s structural, electrical, and mechanical
condition (foundation, roof, electrical, heating, plumbing, etc.)
An independent radon inspection
A final walk-through – the buyer is given the chance to look at the home to make sure that it’s in the same condition as when the sale agreement was signed
It’s important to review the sales agreement with your real estate professional so you understand your obligations. Any shortfalls or mistakes at this point can be very costly.
Your real estate professional can discuss and remind you of these obligations, as well as help arrange for their fulfillment and prepare you for the closing.
Do Expect the Best . . . But Prepare for the Worst: The week leading up to closing can send your stress level soaring. Between juggling your own move and making sure you leave your home in tip-top shape, the struggle is real. The good news is you will get through it.
Want to know the secret to saving your sanity? Get used to the fact that delays will happen. The trick is keeping your head on straight when the unexpected smacks you in the face. Rolling with the punches is a lot easier when your agent’s a pro at turning lemons into lemonade. A real expert will handle last-minute surprises so you can close with confidence.
COMPLETING THE TRANSACTION
While different areas handle the final settlement in slightly different ways, generally the closing agent with the title company, who conducts the proceedings, reviews the sales agreement and does the following:
Determines the total amount due from buyer and collects the check
Determines all the adjustments (e.g. seller prepayment of taxes, utilities, etc.) and ensures that they’re factored into the transaction
Assures that the transaction costs (closing, legal fees, etc.) are paid
Determines the seller’s payments, credits and adjusted net proceeds
Witnesses the seller’s signing of the property title and all other documentation associated with the transaction
Collects the keys and any other necessary items from the seller
Provides the seller with the net proceeds as well as copies of the documentation pertaining to the sale
Ensures that buyer’s title is properly recorded in the local records office along with any mortgage liens
In most cases, the buyer’s Possession Date will fall within a couple days of the Closing Date, at which point your former beloved home will have a new occupant.
If everything has gone according to plan during closing, you’ve successfully sold your house!