Some 5 million existing homes are sold each year, and while each
transaction is different every owner wants the same thing - the best
possible deal with the least amount of hassle and aggravation.
Unfortunately, home selling has become a more complex business than it used
to be. New seller disclosure statements, longer and more mysterious form
agreements, and a range of environmental concerns have all emerged in the
past decade.
More importantly, the home-selling process has changed. Buyer brokerage - where REALTORS represent homebuyers - is now common nationwide, and good buyer-brokers want the best for their clients.
The result is that while almost 100,000 existing homes are sold each week, the process is not as easy for sellers as it was five or 10 years ago. Surviving in today's real estate world requires experience and training in such fields as real estate marketing, financing, negotiation and closing - the very expertise available from local REALTORS.
Are
you ready?
The
home-selling process typically starts several months before a property is
made available for sale. It's necessary to look at a home through the eyes
of a prospective buyer and determine what needs to be cleaned, painted,
repaired and tossed out.
Ask yourself: If you were buying this home what would you want to see? The goal is to show a home which looks good, maximizes space and attracts as many buyers - and as much demand - as possible.
While part of the "getting ready" phase relates to repairs, painting and other home improvements, this is also a good time to ask why you really want to sell.
Selling a home is an important matter and there should be a good reason to sell - perhaps a job change to a new community or the need for more space. Your reason for selling can impact the negotiating process so it's important to discuss your needs and wants in private with the REALTOR who lists your home.
When
should you sell?
The
marketplace tends to be more active in the summer because parents want to
enroll children in classes at the beginning of the school year (usually
August). The summer is also typically when most homes are likely to be
available.
Generally speaking, markets tend to have some balance between buyers and sellers year-round. In a given community, for example, there may be fewer buyers in late December, but there are also likely to be fewer homes available for purchase. So, home prices tend to rise or fall because of general demand patterns rather than the time of the year.
Owners are encouraged to sell when the property is ready for sale, there is a need or desire to sell, and the services of a local REALTOR have been retained.
How do
you improve your home's value?
The
general rule in real estate is that buyers seek the least expensive home in
the best neighborhood they can afford. In terms of improvements, this means
you want a home that fits in the neighborhood but is not over-improved. For
example, if most homes in your neighborhood have three bedrooms, two baths
and 2,500 sq. ft. of finished space, a property with five bedrooms, more
baths and far more space would likely be priced much higher and likely be
more difficult to sell.
Improvements should be made so that the property shows well, is consistent with the neighborhood and does not involve capital investments, the cost of which cannot be recovered from the sale. Furthermore, improvements should reflect community preferences.
Cosmetic improvements - paint, wallpaper and landscaping - help a home "show" better and often are good investments. Mechanical repairs - to ensure that all systems and appliances are in good working condition - are required to get a top price.
Ideally, you want to be sure that your property is competitive with
other homes available in the community. REALTORS, who see numerous
homes, can provide suggestions that are consistent with your
marketplace.
Before placing a home on the market you should also identify
REALTORS in your community who can assist with the sale. Because
Realtor.com is the largest real estate site online, it's a perfect place
to look when seeking realty services. Realtor.com lists realty
professionals nationwide, and you can find those active in your
community through extensive directories and property listings.
Why use a REALTOR?
There are more than 2 million people nationwide who have licenses to
sell real estate, of which about 750,000 belong to the National
Association of Realtors (NAR). Only NAR members are entitled to use the
term "REALTOR."
NAR members must adhere to a strict Code of Ethics. By joining NAR,
individuals have access to a wide range of classes, seminars and
certification opportunities. Local REALTOR groups are active in
community matters, and individual members are routinely involved in PTAs
and other neighborhood organizations.
In essence, local REALTORS are community experts. They track real estate trends, share neighborhood concerns and participate in local matters. They're good neighbors who are in the business of helping others buy and sell homes.
How do you choose a REALTOR?
Whether you're a first-time seller or someone who has sold many homes,
there are several ways to find a local REALTOR:
In some cases, sellers elect to meet only with one REALTOR while other owners elect to meet with several. Whatever your preference, there will be a number of questions you will want to ask, including:
What should you expect when working with a REALTOR?
Once your home is listed with a REALTOR, he or she will immediately
begin to market your home according to the most appropriate conventions
for your community.
Your REALTOR should keep you informed as the marketing process unfolds and as expressions of interest are received. In time, the marketing plan may be modified to reflect buyer reactions and changes in the marketplace.
In real estate there are written offers and oral offers. Oral offers
("Would they take $225,000 for the home?") are not acceptable because
they generally cannot be enforced ("Gee, did I say $225,000? I was sure
I said $215,000"). Written offers created by the REALTOR with
assistance from qualified attorneys address numerous issues, are
consistent with local requirements and provide the foundation for an
actionable offer.
Every reasonable owner wants the best possible price and terms for
his or her home. Several factors, including market conditions and
interest rates, will determine how much you can get for your home. The
idea is to get the maximum price and the best terms during the window of
time when your home is being marketed.
In other words, home selling is part science, part marketing, part
negotiation and part art. Unlike math where 2 + 2 always equals 4, in
real estate there is no certain conclusion. All transactions are
different, and because of this, you should do as much as possible to
prepare your home for sale and engage the REALTOR you feel is best able
to sell your home.
What is your home worth?
All homes have a price, and sometimes more than one. There's the price
owners would like to get, the value buyers would like to offer and a
point of agreement which can result in a sale.
In considering home values, several factors are important:
How much is too much?
Because all transactions are unique there is flexibility in the
marketplace. The amount of flexibility depends on local conditions.
For example, suppose you're selling a townhouse. Suppose also that there have been five recent sales of the model you own and that sale values have ranged between $200,000 and $210,000. You now have an idea of how your home might be priced. In a strong market perhaps you can ask for $210,000 or a little more. If the market has slowed, $210,000 may be a reasonable asking price, but perhaps more than the final sale price.
Here's another scenario. Imagine that you live in a community of Victorian-style homes, most of which were built in the 1920s. All the homes are different in terms of size, condition, modernization, style and features. In such a neighborhood, an average sale price is just a statistic without much practical meaning. On a single block one home may sell for $400,000 while another is priced at more than $1 million. The average price may be outrageously high for one home and staggeringly low for another.
Who can help?
Experienced REALTORS are active in the local marketplace and can
provide assistance with pricing, marketing, negotiation and closing.
Because experienced REALTORS have handled many transactions, they're familiar with the terms and conditions that went into individual sales, not just published sale prices which may not reflect various premiums, discounts and adjustments.
If you bought a car, you could purchase a given model with selected features from any dealer. Since the car comes from one assembly plant, it's going to be the same whether purchased from dealer Smith or dealer Jones.
Homes are different. Each is unique, the marketplace is always in
flux, interest rates constantly change and new buyers search for homes
each day. With such fluidity, it requires REALTORS to craft marketing
plans specifically for individual homes and market conditions.
Selling can entail a variety of marketing strategies. Once listed, it's
likely that the home will be quickly entered into the local MLS
(Multiple Listing Service) and placed on REALOTR.com. REALTORS
routinely market by mail with new-listing announcements and regular
newsletters. Open houses, broker access to the home via the use of a
lock box and networking with both local and out-of-town brokers are also
common.
Much of a broker's work will be quiet and unseen -- yet important. The quiet telephone calls, the work with contacts, the follow-ups with open-house visitors, conversations with ad respondents, the web postings and other outreach efforts are all part of the process required to sell homes.
Experienced REALTORS base their marketing efforts on previous
transactions and ongoing research. For instance, according to the
National Association of Realtors (NAR), 37 percent of all buyers check
the Internet. NAR numbers also show that most households move within 10
miles of their current location while 20 percent move at least 50 miles.
How to market your home.
If you look at a typical transaction you can see that there are five
general areas where REALTORS can assist in the home-selling process.
How to hold an open house.
There are no universal marketing standards for real estate because
marketplaces are localized. For instance, open houses may be common in
some communities but rarely used in others.
In the case of an open house, a REALTOR typically advertises that the home will be open for a given period (2-5 p.m. on Sunday). During the open period, the REALTOR hosts the home while the owners leave for a few hours.
At the open house, the REALTOR will provide literature, maintain a visitor log and answer questions. By interacting with visitors, the REALTOR will seek feedback regarding the home and opportunities to follow up with prospective purchasers.
How do you show your home online?
The Internet is an important factor in real estate marketing and will
likely become more important in the future.
The Internet has two important roles in the real estate selling process. First, it is a "place" to view real estate. Realtor.com, for example, lists about 1.4 million homes, the largest group of homes online or off. Individual REALTORS also maintain thousands of localized sites while professional groups and, likewise, industry organizations, have an online presence.
Online real estate information includes not only home listings, but numerous additional features and benefits. For instance, Move.com offers neighborhood information, school data, recent home sale prices, video tours, model forms, real estate news and consumer information.
Equally important, the Internet offers new communication media.
E-mail and instant messaging give REALTORS and consumers more
opportunities to keep in touch. As the Internet evolves, more
technologies and techniques will be introduced to make transactions
easier and more efficient.
There is no question that selling a home is an important event. A
home sale represents transition, movement and change. Big money is
involved. Households move from the known and comfortable to the unknown
and a period of adjustment. There may be job changes, new schools,
distance from old friends and the possibility of new ones.
No
less important, a home sale by itself can be complex. There will be
people looking at your house, documents to sign and issues to be
negotiated.
Because a home sale involves an array of both personal and business
concerns, it's important to get it done right. You need to carefully
prepare your home, understand the market and see what alternatives are
realistically available. The old motto "be prepared" is a good guide in
such circumstances.
What's an acceptable offer?
The
goal of every seller is to have a line of buyers outside the front door,
each clutching higher and higher offers. And while this has been known
to happen, in most markets there is some balance between the number of
buyers and sellers. A number of factors determine whether a buyer's
offer is acceptable. They include:
What is a counter-offer?
When
a home is made available for sale the owner is essentially making an
offer to buyers: For a given number of dollars and other terms you can
acquire this home. Buyers, in turn, can respond with several options:
A counter-offer is nothing more than a new offer. And just as the buyer had three options in response to the owner's original price and terms, the seller can now choose one of three reactions: accept the offer, decline the offer or make a fresh counter-offer.
Offers and counter-offers reflect the back-and-forth activity of the marketplace. It's an efficient and practical process -- but also one that may contain tricky clauses and hidden costs. The REALTOR who lists your home can explain the local bargaining process in detail and assist in the actual negotiations.
How do you negotiate?
It's
sometimes argued that negotiation must produce one "winner" and one
"loser." Others suggest that a "win/win" situation is possible where
each side gets something of value.
Real estate bargaining typically involves compromises by both sides. It's not war; it's not winner-take-all; and it's not the time to take personally any comments made by purchasers.
Instead, negotiating should be seen as a natural business process;
buyers should be treated with respect; and owners should never lose
sight of either their best interests or their baseline transaction
requirements. These are the standards unique to each owner, which must
be met before the home can be sold.
It might seem as though once a sale agreement has been signed that
the selling process is complete. Not only is it not over yet, but some
of the most complex aspects of a real estate transaction now begin.
A
sale agreement sets not only a purchase price for the home, but also a
series of terms and conditions. For instance:
The REALTOR typically arranges required inspections and helps the
owner prepare for closing.
When should you close?
With
automation now available, closings can occur within a week in some areas
-- at least in theory. In practice, it takes time to arrange financing,
conduct inspections, obtain appraisals, locate replacement housing,
contact movers, pack and actually move.
While instant closings are not practical, neither are closings too far in the future. The problem with closings much past 60 days is that loan rates are difficult to lock in. If mortgage rates go up, it's possible that the buyer will no longer be able to afford the home and thus the deal may fall through.
The result of these considerations is that most homes close 30 to 45 days after a sale agreement has been signed.
What happens?
Closing -- or "settlement" or "escrow" as it is known in some areas --
is essentially a meeting where the closing agent (the party who conducts
settlement) takes in money from the buyers, pays out money to the owner
and makes sure that the purchaser's title is properly recorded in local
records along with any mortgage liens.
The closing agent reviews the sale agreement to determine what payments and credits the owner should receive and what amounts are due from the buyer. The closing agent also assures that certain transaction costs are paid (taxes and title searches).
Closing is also the time when "adjustments" will be made. For instance, suppose you've pre-paid taxes four months in advance. In this case, the closing agent will compensate you for the prepayment at closing by having the buyer pay you additional money.
It could also work in reverse. If you are behind on property taxes, the closing agent will reduce the money due to you at settlement by the amount of the unpaid taxes.
How do you prepare to sell?
It's
important to look at the sale agreement and review your obligations. For
instance, if you have agreed to paint a room or replace the dishwasher,
such work must be completed before closing. Your REALTOR can discuss
your agreement and the steps which must be taken to complete the
transaction.
The closing agent will handle both the settlement papers and related
documents.
Even the smallest home contains a lot of furniture, clothes, kitchen
equipment, pictures and other items. For a short move, it may be
worthwhile to transport small goods by yourself, but larger items will
likely require a professional mover.
It's ideally best to get rid of excess furniture and other goods by having a sale before you move. This will reduce the volume of goods to be moved and thus lower moving costs. Unwanted furniture which cannot be sold can often be donated to charitable groups, many of which will come to your home to pick up donations. All other unwanted items should be taken to a landfill. You should provide the U.S. Postal Service with a forwarding address, and utility companies should be advised when to end service. Check with utility companies to see if there is deposit money which should be returned.
How do you plan a move?
The time to plan your move begins once you've decided to sell your home.
Some of the activities required to sell the home can actually help with
the moving process. For example, cleaning out closets, basements and
attics means there will be less to do once the home is under contract.
Your planning will be guided by a number of things:
Who should you use?
The decision of who to use can begin with a visit to REALTOR.com's
moving center and discussions with the REALTOR who is marketing
your home.
There are a number of factors to consider. Money is one issue: You'll want to spend as little as possible, but choosing only on the basis of cost can be a mistake. Movers must have the right equipment, training and experience to do a good job. A mover, no matter how large or small, should be able to provide recent references for homesellers with a similar volume of goods to transport.
Get mover estimates in writing. Be aware that it's possible to get discounts through membership organizations and, sometimes, on the basis of your profession: Clergy, for example, sometimes qualify for a discount.
Always confirm mover credentials. Movers should be licensed and bonded as required in your state, and employees should have workman's comp insurance.
Get a checklist.
Moving is a big job and checklists can make it more organized and
easier. Here are some of the major items to consider:
