Selling Your Home: Overviewby Ilona Bray
Learn about the home selling process, step-by-step.
Selling a home brings on a whole host of questions, and sometimes, anxieties: How much is your house really worth -- what if you set the price too high or too low? Are you willing to pay a 5-6% commission for an agent 's help? Should you repaint or remodel before putting the house on the market?
This article will look at the home-selling process step-by-step, and provide links to other sources of information.
Step One: Decide How the Local Market Will Affect Your Sale
Hot or cold? A "hot" market is one in which there are more buyers than sellers, so the buyers are competing with each other and driving up prices. A "cold" market is one with more sellers than buyers, so the buyers can be choosy and bid low. The hotter the market, the more aggressively you can price your house.
Do some research. Simply chatting with your neighbors can teach you a fair amount about the heat of the local market. Also, read your local newspaper's real estate section and talk to real estate agents you meet at open houses.
Step Two: Use Comparable Houses to Set Your List Price
What is a "comp"? The best source of pricing information comes from houses directly comparable to your own. In the real estate industry, a "comparable," or "comp," is a house with similar features, preferably located near yours. When identifying comps, look for houses with the same number of bedrooms, bathrooms, and other amenities.
Check current listings. To get comps, visit open houses, read classified ads (in print and online), and check out websites containing real estate listings. Websites that publish the
Review actual selling prices. Of course, list prices don’t tell you how much houses ultimately sell for -- that's the comparable data you really need. In a hot market, houses might go for well over list price, and vice versa. Do some research at websites that collect this data, such as http://realestate.yahoo.com/re/homevalues or www.domania.com. This information will also help you decide which of the incoming purchase offers are realistic.
Do your own homework. Don't wait for your real estate agent, if you work with one, to put a dollar figure on how much your house is worth. For one thing, less scrupulous agents may inflate their estimates to capture your business. More important, you want to be educated about your house’s real value so you can work intelligently with your agent and make rational decisions when negotiating with buyers.
Step 3: Assemble Your Team of Professionals
Most sellers prefer to work with a real estate agent or a lawyer at some point in the process. (In fact, in a handful of U.S. states, a lawyer must help finalize the sale.) Real estate agents usually charge a commission -- usually about 5-6% -- to be split between your agent and the buyer's agent, if any. Lawyers normally charge by the hour, around $200 per.
Despite the costs, experienced, responsible professionals can ultimately save you time, money, and aggravation. Unfortunately, there are plenty of incompetent or unethical ones out there, too. Take the time to get referrals from friends, and meet with a few prospects before you hire anyone.
Or, if you're organized, good with finance and legal issues, and have some time to spare, you can sell the house on your own, and save the commission.
Step 4: Make Your House Look Its Best
Before putting your house on the market, make it look as attractive as possible -- buyers will pay thousands of dollars more for a house they like the look of. Usually you don't need to do a major remodel, although a fresh coat of paint can brighten your home's prospects considerably.
Step 5: Fill out Any State-Required Forms
The buyer will probably shoulder the main paperwork burden in this transaction -- preparing the purchase contract. However, in many states, the seller is responsible for filling out a
Step 6: Advertise and Hold an Open House
Advertise on the MLS. If you're working with a real estate agent, the agent should help place put the property into the online Multiple Listing Service, and maybe in the classifieds too. If you don't have an agent, you can take the same steps yourself (one website, www.iggyshouse.com, allows you to put your house on the MLS for free). Then interested buyers can make an appointment to see the house in person.
Hold an open house. Many home sellers find open houses a useful tool. They're certainly good for bringing in the crowds. Some of the visitors will merely be curious neighbors. Welcome them, too -- they may mention your house to their househunting friends. Others will be genuinely interested buyers, including some who were reticent about making an individual appointment.
Step 7: Receive and Review Purchase Offers
With any luck, one or more prospective buyers will present a written offer to buy your house. (If you're in a hot market, you may want to set a deadline for receiving such offers.)
Evaluate the offers. Here's where your real estate agent can play an important role, meeting with the agents who present offers and helping you decide which offer is the strongest. It won't necessarily be the one for the most money! A high bid with shaky financing, or one made contingent on the buyer selling his or her house first, may actually drop to the bottom of your pile.
Consider a counteroffer. If none of the offers you receive are acceptable, you can
"In contract." After counteroffers have gone back and forth between you and the buyer, and you've both signed off to indicate your acceptance, you're technically "in contract" to sell your house. At that point, you're legally bound to sell your house, and can't change your mind without potentially facing a lawsuit. (The exception is if you included conditions or "contingencies" in the contract, such as the buyer furnishing you with proof of his or her financing, and these conditions aren't met.)
Step 8: Closing the Deal
The signed purchase contract will include a closing date, usually several weeks in the future. During this time, the buyer will line up financing, inspections, insurance, and more. As the seller, your duties will include:
You probably won't meet with the buyer on the closing date. Usually the two of you sign various documents separately, in the office of your escrow agent or attorney.
Once the closing occurs, the buyer has the right to full possession of the house. If you can't be out by that date, you may be able to negotiate a short-term rental agreement with the buyer.
After the Sale: Tax Considerations
Assuming you make a profit on your sale, you might have to pay
If you plan to sell your home in California, For Sale by Owner in California, by California real estate broker George Devine (Nolo), takes you step-by-step through the entire selling process.
Copyright 2009 Nolo