The Process of Selling a House

Real estate

If a “For Sale” sign remains in front of a house for too long, it may not leave a good impression on buyers.

Selling a home can be a complex process, regardless of the state of the real estate market. Whether you are a first-time seller or not, there may be several questions that you would like answered. Do I need a real estate agent? What is meant by “closing”? How much paperwork would I have to fill out? How can I get the best price for my house? Is it possible to sell my house and buy a new one at the same time?

This article provides answers to all these queries and more, explaining what “curb appeal” is and why an open house may not be the best marketing strategy.

There are primarily two ways to sell your home – with or without an agent. However, before discussing and comparing each option, there are a few essential tips that all sellers must know.

Knowing the value of your house and exercising patience and restraint are critical. Have your home appraised, even if it costs between $250 and $500. In a good market, the sale price may be 10% to 15% higher than the appraisal. In a weaker market, the sale price may be around the appraisal figure. We will discuss how to calculate your sale price in more detail later in the article.

A home inspection is also essential to avoid any complications during your sale. The seller will conduct an inspection, but conducting a pre-sale home inspection allows you to have greater control over how to deal with any problems. If your inspection does reveal any issues with your home, it is essential to familiarize yourself with your state’s disclosure laws to avoid future legal issues. These laws differ from state to state, but they generally require you to disclose any hazardous materials or significant flaws in construction, either verbally or in writing. If you are unsure of what you need to disclose, consult a real estate agent, attorney, or your local housing authority.

Remember, patience is the key. Realtors express concern that homes can become “stale” if they remain on the market for too long, which means they are no longer attracting buyers’ interest. However, a stale sale usually results from a seller overvaluing their home. The opposite can also occur if the seller undervalues their home in a rush to sell it or sell it in time to move into a new house.

Finally, if possible, try to keep your home on the market for as long as possible before buying a new one. Otherwise, you may end up paying two mortgages, which can be difficult to afford. If you do find a house that you cannot wait to buy before selling your own, you can request a bridge loan from your lender. A bridge loan is a specialized loan type that allows you to make the down payment on a new home if you have enough equity in your current home. You may also be eligible for a home equity loan to assist with the dual mortgage payments. For additional information, see our article on How Home Equity Loans Work.

After learning some basic tips for selling a home, the question arises: should you use a real estate agent or not? Although the internet has made it easier to sell a home without an agent, the majority of home sales, about 93 percent, are still done through an agent. Agents can work independently or for a broker, with the broker signing the agreement with the seller. The top agents receive the full commission and pay a fee to the broker, while less experienced agents receive 30 to 40 percent of the commission.

There are many reasons why hiring an agent can be helpful, including their education, experience, and knowledge of the market and trends. Agents can also save you time and energy by conducting tours of your home and gauging offers from serious buyers. They have the negotiation skills to help you get a good price and can provide professional contacts with other realtors, contractors, and inspectors. Additionally, buyers may offer less money to those not using an agent, believing the seller is trying to save money by not paying commission.

Real estate agents use the Multiple Listing Service (MLS), a database that contains listings of 90 percent of properties for sale across the US, which can be accessed by buyers for free on realtor.com. However, using an agent can be expensive, with commissions running up to 6 percent of the sale price. It also requires a certain degree of trust, as you are placing your most valuable possession in a stranger’s hands. But with all of the benefits that come with using an agent, it is an important part of the sale process.

If you’re considering selling your home with the help of a real estate agent, you have a choice between a full service agent and a discount service. A full service agent takes care of everything, from preparing your home to conducting open houses, using the MLS, producing marketing materials and placing a sign in your yard. In some cases, they may even hire a professional photographer to take pictures of your house. On the other hand, a discount service provides less comprehensive services, and you will pay a lower commission. However, discount services may require you to conduct tours and buyers agents may be less willing to show your house due to the lower commission involved. Some examples of discount brokers include ZipRealty and House Rebate.

Although the terms real estate agent, broker, and realtor are often used interchangeably, they may have different meanings. A Realtor® is someone who is licensed by the National Association of Realtors and is bound by a Code of Ethics. A real estate agent and a real estate broker are essentially the same thing, but the term broker may also refer to the corporation or partnership for which an agent works.

To find a real estate agent, it’s a good idea to look for someone who belongs to the National Association of Realtors and has experience in your neighborhood. Ask for referrals from people you know who have worked with realtors, pay attention to how quickly homes in your area sell, and attend open houses to meet agents in person and pre-screen them. When you find an agent, take the time to interview them to make sure they are a good fit for you and ask questions about their experience and approach.

1. What is the ratio of your list price to sales price? (This is the ratio of the original price of the agent’s properties compared to the final selling price. It should be close to 100 percent.)
2. How many homes have you sold in the last year?
3. What marketing strategies will you use for my home? Direct mail? Flyers? Online?
4. Are you familiar with my neighborhood?
5. What sets you apart from other agents?
6. Can you provide references?
7. Can you assist me in finding the necessary professionals and services?
8. What guarantees and policies are offered for cancelled agreements?
9. How much time will you dedicate to selling my home?

Request copies of the agency disclosure, listing agreement, and seller disclosures. Even if your agent initially claims that they don’t negotiate commissions, most agents do, particularly if you’re also buying a house through the same broker.

Prepare for your interviews with potential agents by creating a list of questions. Take your time and ensure that all your questions are answered.

Prior to signing any agreements, have a lawyer review the contract. You will need a lawyer during the closing process, so it’s best to involve someone early who can provide guidance along the way.

For Sale by Owner

Making upgrades, such as installing hardwood flooring, before putting your house on the market can often lead to a higher selling price. However, selling a house without an agent is the exception rather than the rule. With some effort and thorough research, you may be able to save a lot of money – up to 7 percent in some cases [ref]. Keep in mind that these savings can be difficult to achieve and are highly dependent on the market, especially if brokers are reducing their rates.

Aside from potential savings, there are other compelling reasons to attempt to sell your house on your own. You know your home better and may be able to better communicate its benefits and history than a broker who has only recently become involved. Selling your home on your own also gives you complete control. You won’t have to wonder if a broker is being truthful with you or deal with someone telling you how to handle your home.

You will, however, have to contend with a lack of exposure – you probably won’t have access to MLS or a broker’s contacts. Buyers are also typically more at ease dealing with a broker. Be prepared to accept a lower sale price than you might with an agent.

Selling your house on your own is time-consuming and potentially stressful. You’ll have to place ads on your own, schedule tours, personally negotiate, and find and book any necessary professionals (e.g. inspector, lawyer, title company).

However, if you feel up to the task, don’t let these reasons discourage you! You can save money, and serving as your own agent can be a rewarding experience. So continue reading for some pointers on selling your home on your own.

Advice for Selling Your Home Independently

Firstly, ensure that you abide by fair housing laws. Secondly, advertising is crucial. Place an advertisement in local newspapers’ classified ads, and investigate real estate papers or weekly newspaper inserts. Look for online sites that allow you to advertise, such as For Sale by Owner or the National For Sale by Owner Network. Your advertisement should include basic details such as the number of bedrooms, bathrooms, and unique amenities. It may be beneficial to use phrases that mention a below-market price or furnishings included in the sale.

If you’re selling your home independently, you’re likely looking to save money, but investing in an attractive wooden sign for your yard can make a significant impact. Depending on the company, you should be able to purchase a professional sign for $100 to $200. (Plastic signs and stands can cost less than $50.) It’s worth it. Place it in your front yard where it’s visible from the street, and make sure it has your phone number on it. Including an information box with handouts about your home can also be beneficial; in addition to providing general information such as a floor plan and features, listing the asking price can help to weed out buyers who aren’t ready to commit.

Planting flowers and tidying up planters can improve your home’s curb appeal.
Photo courtesy stock.xchng

Talk to your friends, acquaintances, co-workers, bartenders, doctors, lawyers, and anyone else! Ask them if they know someone who’s looking for a house. Not only can this help you find a buyer, but someone who comes through a friend can make the process easier.

Be wary of brokers calling–they may promise a buyer, but letting them bring just one buyer over may make you responsible for the agent’s commission. You can have an attorney draft a document stating that you do not have an exclusive agreement with an agent but are willing to pay him or her a fee if the house is sold to a referred buyer. This fee is generally 1% to 3% of the purchase price, or half of a typical commission.

Throughout this process, appropriate pricing is critical. A house that is priced too high is at risk of becoming stale, as previously noted. And a price that continues to fall as the house remains on the market undermines your negotiating leverage and communicates to potential buyers that you’re uncertain about how much your home is worth.

If you manage to find a buyer and come to an agreement, congratulations! The closing process is essentially the same whether you are working with an agent or not, so we’ll cover that later in the article, but it’s recommended that you employ a lawyer to draft a contract of sale in either case. Local regulations vary drastically, and although some handbooks have copies of standard contracts, that contract may not be valid in your area.

It’s Time to Sell Your House

A thorough and professional cleaning will communicate to buyers that your house has been well maintained.
Photo courtesy stock.xpert

Whether or not you’re working with an agent, there are some standard practices you should follow when selling your home.

It is crucial to avoid overvaluing your home when selling it, as the market ultimately determines the price. Consider the location, schools, weather, housing market, special amenities, and home prices in the neighborhood, and share this information with your broker to better sell your home. Pricing your house too high poses a greater risk than pricing it too low, which could attract multiple offers and drive up the price. Before putting your house on sale, prepare it by cleaning it thoroughly, getting rid of excess clutter, and fixing any necessary repairs like painting, moldings, shutters, or trim. Your agent should be able to weed out buyers who can’t afford your home and disclose all offers to you. Consider your own finances and factor in the fees incurred by the sale process to determine your ideal price and settle on a specific amount.

The Myth of Open Houses

When people think of selling their home, they often imagine open houses with hors d’oeuvres, soft music and strangers wandering through their house. However, the National Association of Realtors reveals that only 3% of homes are sold through the open house method. In reality, open houses benefit agents more than sellers, as they can gain new clients from conducting them. Therefore, it’s important to consider if an open house is necessary. If your agent is advertising your home effectively, an open house may not be needed. The only exception is the “caravan” method, which informs buyer agents about your property.

Closing a Home Sale

Before the sale is complete, you need to “close” it. Many important details are discussed during this process.
Photo courtesy stock.xpert

Congratulations on finding a buyer and agreeing on a sale price for your home! You’re almost done with the tiring process. Now, it’s time to close the deal. But how do you do that?

Firstly, you need a title company to examine the title deed for any issues and provide title insurance to the buyer. Secondly, it’s recommended to hire a real estate lawyer who will help in drawing up the contract of sale. They can assist in working out the details of the sale, such as what items are included, the down payment, the closing and possession dates, and the sale price. Your lawyer will also ensure that the contract is fair and free of hidden or deceptive clauses. They can also advise on the tax implications of your home sale. If you’ve lived in your home for two out of the last five years, you can exclude up to $250,000 in capital gains ($500,000 for a married couple) from your taxes.

Once the contract is signed, all that’s left is to find movers, hand over the keys, and vacate the property by the possession date.

For more information on selling your home and other related topics, check out the links on the following page.

Original Publication Date: Dec 6, 2006

A House FAQ

What is the profit you can get from selling a house?

After paying off the remaining mortgage, the commissions for seller’s and buyer’s agents, and other fees or taxes from the transaction, the money left over becomes your profit. This money can be used for anything, but many people use it as a down payment for a new home.

What repairs should you do before selling your house?

The amount of repairs you should make depends on the market. If it’s a seller’s market, you may not need to do any significant repairs. But if it’s a buyer’s market, you may need to invest some time and money in enhancing the “curb appeal” of your home, which can increase the selling price. Adding simple landscaping during warmer months can boost the overall home value by up to 28 percent. Painting the walls in neutral colors like whites and greys and replacing old carpet can also help. Finally, make any significant repairs, such as foundation issues, broken windows, shutters, or roof problems, as these are crucial things potential buyers will look at.

What are the steps in selling your house?

Get your home appraised and find a reliable real estate agent who knows the area well. They will help you determine a proper listing price that will invite multiple offers. Keep your home tidy and store personal items away in closets, clean thoroughly, and hire a professional real estate photographer to take pictures for the listing. Your agent will prepare the listing using your information and will handle everything once your house goes on the market. Once you have chosen an offer, all parties will sign an agreement. On closing day, you will receive full payment and hand over the keys to your former home.

What are the fees the seller has to pay when selling a house?

The real estate agent’s commission, which is split between the seller’s and buyer’s agents, is typically the most significant fee a seller pays, ranging from 5 to 6 percent of the sale price.

Is it better to sell your house with a Realtor?

Selling a house without an agent is possible, but it is better to list with a Realtor. They can help you avoid costly mistakes, market your home effectively, handle showings, negotiate offers, and understand the market well. Homes sold by Realtors tend to sell quickly and for more money than those sold privately.

Lots More Information

Related Articles

• How Buying a House Works
• How Mortgages Work
• How House Construction Works
• How Home Equity Loans Work
• How Rent To Own Homes Work
• How Real Estate Investment Clubs Work

More Great Links

• The Worst Home Selling Mistake a Seller Could Make
• Real Estate Ad Acronyms
• Taxes When You Sell Your Home

Sources

• “2006 Code of Ethics and Standards of Practice.” 12/2005. National Association of Realtors®. http://www.realtor.org/mempolweb.nsf/pages/code
• “A Checklist for Selling a House.” Home Seller’s Information Center. http://www.ourfamilyplace.com/homeseller/checklist.html
• “Consumer MLS Access for the United States.” MLSaccess.org. http://www.mlsaccess.org/multiple-listings/us/
• “Selling a House.” Investopedia. https://www.investopedia.com/selling-a-house-4767290

The following list includes various resources for selling a home, including websites such as MetLife, SmartMoney.com, and Home Seller’s Information Center. These resources cover topics such as selling without a broker, selling with an agent, bridge loans, disclosure requirements for sellers, and tips for selling a house for the most money. The list is a valuable tool for anyone looking to sell their home and can help provide guidance throughout the process.

FAQ

1. What is the process of selling a house?

The process of selling a house starts with preparing the property for sale. This includes cleaning and decluttering the house, making any necessary repairs, and staging the property. Once the house is ready, the seller will list it for sale with a real estate agent or sell it on their own. Offers will be made, negotiations will take place, and a contract will be signed. The seller will then work with their real estate agent and/or attorney to complete any necessary paperwork and prepare for the closing.

2. What is the role of a real estate agent in selling a house?

A real estate agent can help a seller prepare their house for sale, determine a competitive price, market the property to potential buyers, and negotiate offers. They also handle the paperwork and legalities involved in the sale. A good agent can make the selling process smoother and help the seller achieve a higher sale price.

3. How do I determine the value of my house?

The value of a house can be determined by hiring a professional appraiser, using online valuation tools, or by looking at recent sales of comparable properties in the area. A real estate agent can also provide a comparative market analysis (CMA) which compares the seller’s house to similar properties that have recently sold.

4. What are some tips for preparing my house for sale?

Some tips for preparing a house for sale include decluttering and depersonalizing the space, making any necessary repairs, and staging the property to make it more attractive to potential buyers. It’s also important to keep the house clean and well-maintained throughout the selling process.

5. How long does it typically take to sell a house?

The length of time it takes to sell a house can vary depending on a number of factors, including the local housing market, the condition and location of the property, and the asking price. On average, it takes about 30-60 days to sell a house.

6. How do I handle showings of my house?

To handle showings of a house, the seller should make sure the property is clean and well-maintained, and make arrangements for any pets or children to be out of the house during showings. The seller may also want to be present during showings to answer any questions potential buyers may have.

7. What is a home inspection and do I need one?

A home inspection is an examination of the property’s condition and systems by a trained professional. It is recommended that sellers have a home inspection before listing their property for sale so any necessary repairs can be made before potential buyers see the house.

8. What are closing costs and who pays them?

Closing costs are fees associated with the purchase of a property, including title insurance, attorney fees, and transfer taxes. In most cases, the buyer pays the closing costs, but sellers may also be responsible for some fees depending on local laws and the terms of the contract.

9. What happens at the closing?

At the closing, the final paperwork is signed, the buyer pays the remaining balance on the purchase price, and the seller transfers ownership of the property. The seller may also receive the proceeds from the sale at this time.

10. What happens if my house doesn’t sell?

If a house doesn’t sell, the seller may need to reevaluate their asking price or make additional repairs or upgrades to the property. They may also want to consider hiring a new real estate agent or re-listing the property at a different time of year.

11. Can I sell my house on my own?

Yes, it is possible to sell a house on your own without the help of a real estate agent. However, it can be more challenging and time-consuming, and sellers may miss out on some of the benefits of working with an agent, such as access to a wider pool of potential buyers.

12. What are some common mistakes to avoid when selling a house?

Some common mistakes to avoid when selling a house include overpricing the property, neglecting to make necessary repairs, and not properly preparing the property for showings. It’s important for sellers to work with a knowledgeable real estate agent and be flexible throughout the selling process.