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The Process Of Selling A Home
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Copyright Lawrence Yerkes. May not be reproduced or reprinted without permission in writing. All rights reserved.
If you place it up for sale, will buyers come?
Selling your home can be a positive and rewarding event (not just in terms of getting a good return on your investment equity, but also in the relationships and new experiences you will encounter, and with the possible new skills you may acquire) -- provided you use the right real estate professional and you understand the process of selling a home.
There are 10 major steps or phases that we have identified in the real estate home sales transaction process. All real estate home sales involve these steps, often varying in the details, but you can not have a successful home sale without properly executing these steps.
ARTICLE OBJECTIVE: To give you a basic understanding of the Home Selling Process and to minimize your risks and maximize your results by identifying and using the right real estate professional to guide and assist you in the process.
Because we believe that... "An Educated Home Owner...Becomes a Satisfied Home Seller"
1. Analyze and determine your needs -- both short term and long term.
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Identify and validate reasons for leaving: transferring, upgrading, downsizing, fulfill a life dream, financial...
Determine desired time frame. (Whether you need to sell immediately or can afford to wait -- this will effect pricing, the market you must reach, negotiations.)
Evaluate pricing. (Pricing will directly impact length of time to sell. You will confirm and set pricing in Step #2 below.)
Calculate current cost of ownership (investment equity) and how much you need to break even. (What is your break even point?)
Make decision to continue process of selling home.
Note: The above step requires action by the seller to make a decision to sell the house.
2. Identify an agent with whom you are comfortable and has the proper credentials and experience for your situation.
Manage your risks.
Having someone with the proper depth of training and breadth of experience to assist and guide you through the selling process steps will greatly reduce your risk, your overall costs, and minimize your chance of unpleasant surprises, undue stress and being inconvenienced or disappointed. You want someone that has faced enough situations so that they can more easily and effectively handle and deal with any problems that will occur during the real estate transaction that you can not foresee nor plan for in advance and that are outside of your control.
if you, or someone you know, has a property in
financial distress and may be facing the possibility
foreclosure; We are ready to help
Note: Some say that Step #2 should come before or in conjunction with Step #1 above, so that the agent can facilitate and provide input to your decision making process. We believe that at least some initial thought and determination to sell your home should proceed engaging the help of an agent.
Maximize the potential for your home's presence and exposure on the Internet. Since everything is heavily Internet oriented nowadays, it's important you have Realtor that has a strong web presence and web sites that provide state-of-the-art search and support facilities, reaching as broad an audience as
possible and able to target specific market segments.
Use the agent to confirm and refine your analysis and decisions.
Make available important documents to Realtor so they can inspect, evaluate and determine whether everything is in order to proceed with Sale: Deed, Mortgage information, Surveys, Construction Permits, Changes in zoning, Variances, Easements/Restrictions, etc.
Confirm (with input/guidance from the agent) to proceed with Sale of home and the time frame for putting on the market.
If you are contemplating not using an agent, i.e., For-Sale-By-Owner (FSBO):
Realtors that are licensed in New Jersey have to be formally trained, pass a state test and licensing procedure, be finger-printed, go through a state police and FBI background check, have to be accepted by a state regulated real estate office which makes sure they are properly insured and is responsible for making sure that they are professional, ethical and legal in their actions and effectively represent you.
Are you prepared to...
Incur the advertising costs and support expenses that usually the agent (and agent's office) is spending thousands of dollars monthly to market your property, to identify and qualify your buyers and provide support services?
(You've essentially decided to fire your potential advertising, marketing and sales staff of thousands, as will as your experienced administrative, operations, customer service and support personnel and do it all yourself.) [A Realtor's Costs : Your Costs]
Incur additional time for making the sale, because you are reaching a few possible qualified buyers, instead of thousands of already qualified buyers?
Spend adequate time to manage showings, screening of buyers, working with buyer's agents, inspectors, negotiations? What is your stress threshold?
Properly vet buyers who say they are qualified and have the experience to determine if they are pre-qualified, pre-approved, are working with a mortgage banker or broker, have prior experience to know how the loan company performed in the past?
Have ongoing and potential future interactions with loan and service companies and thus have the leverage to demand quick responses in a crisis situation?
Expose yourself to unnecessary security risks in dealing directly with the public and not having an agent to screen them? (Also, if they are calling your phone number, does that provide a way for them to know when you are/are not home?)
Sell for less than market value? You may save on not paying a commission - but the average FSBO home sold for 16% less than a comparable Realtor-sold home, nationwide.
Pay a buyer's agent commission, as frequently it is a licensed real estate agent that brings the qualified, ready, willing and able buyer to your door?
Compete in the current market. You may have a better chance in a strong seller's market, but in the current more balanced market, where there is more inventory available (more home on the market), what will allow you to stand out from the other properties in the area (your competition) that are being heavily advertised and promoted?
Negotiate with buyers, the buyer's representations, family and friends, even though it may become heated and be able to avoid it becoming personal?
Avoid the post-contract pitfalls that surround every transaction [Click here for list]?
If you have honestly answered "yes" to all the above items and are still determined to sell it yourself, then click here
Notes: Step #2 requires action by the seller to select a Realtor that is a best fit for seller's situation and needs.
We have earned NAR's GREEN designation, confirming that we have a comprehensive understanding of what it means to go green and the concerns of those seeking green knowledge about real estate - and what a growing number of green-focused buyers are looking for in properties and how best to reach and present properties to that market segment.
(Click here for our GREEN Resources page.)
Consumer Notice: One of the first items of business every Realtor is required to do by state regulation is presenting an information notice prepared by the state Real Estate Board for you to review and sign (this is not a contract, just a proof for agent that it was shown to you) so that you understand the different forms of real estate agency.
The following steps (3 through 10) are carried out by the seller with the aid / guidance / support of the Realtor or by the Realtor on behalf of the seller. The timings for each step will vary, many times overlapping, but no step can be skipped.
3. Establish Pricing
Conduct a Comparative Market Analysis (CMA or Market Analysis), using homes sold during last 6 months. What are the trends?
Determine the current market. What is your competition?
Decide on what is an acceptable price range -- what is your minimum price, what is a good and fair starting price, based on analysis and input from prior steps.
Set the sale price.
Experience confirms it's always better to set a fair price than to set the price high, hoping that someone will pay more than it is worth... In the end, most overpriced sellers (based on our actual experience) usually end up having to sell for less than fair market price.
As a rule of thumb (experience has shown that on average):
Homes 8% over price required an extra 30 days to sell.
When it's all said and done, the bottom line is almost always PRICE. Any home can be sold, regardless of condition or location, it's just a matter of properly pricing for the market and determining whether the sale of your home at that price will meet you financial objects and time frames.
Remember: Sellers determine the price; Buyers determine the value.
4. Prepare Home to Increase Appeal, Value, Potential Price and minimize Length of Time To Sell.
Determine what cleaning, repairs, replacements, upgrades and areas to be painted are necessary (although this may delay the time for placing on the market, it is to your benefit to do whatever you can before you open home for sale).
Have agent do a walk-thru of home, pointing out areas that need attention.
Stage home for showings and "curb appeal".
5. Put Home Up For Sale and Aggressively Market.
It officially starts with signing a Listing Agreement, fill out a Seller's Disclosure, make available appropriate documents (surveys, seasonal photos, etc.)
Place on your local real estate Multiple Listing Service (MLS) for all real estate agents to see and the Internet for all buyers to see.
Maximize availability of your home for showing and ease of access -- it is important that you make it as easy and as flexible as possible to show your home. (Otherwise, it will increase selling time and possibly lower price.)
Advertising and Market targeting - for maximum exposure.
Make effective use of the Internet - over
84% (according to
survey) of people now use the Internet to find homes, so it is important that your home can be easily found and is properly presented.
Example of site that provides maximum exposure, combined with ease of use and a powerful search facility for supporting home buyers, allowing them to quickly access your home for sale:
Find the right buyer.
6. Receive Offers and Negotiate Acceptable Price and Terms.
Consider Buyer's Qualifications.
Consider terms (price, deposit, schedule, appraisal value vs. mortgage amount, etc.).
Negotiate until satisfactory price and terms are met.
Note: This is an area where a good agent can greatly reduce your risks and maximize the price and terms on your behalf, plus shield you from the extra stress and confrontational situations often encountered during negotiations.
Once you've come to a "meeting of the minds" and you have a "ready, willing and able buyer", we can now generate a Contract For Sale reflecting those terms.
7. Sign Contract and Follow Through (Implement the terms).
Keep in mind that there is a "North Jersey Close" which is different from a "South Jersey Close" assumed in this article.
Click here for more details on our NJ Fast Facts page..
Review terms and validate information in the Contract For Sale.
Sign (buyers -> sellers -> buyers initial to make official and begin the 3-day attorney review period required in NJ).
Receive and properly deposit Ernest Money (Held by Seller's Real Estate Agency or Title Company)
Attorney Review and acceptance
Home Inspections (Termite, Radon, Septic, Well, Mold - plus specialized engineers, inspectors, etc)
Possible Second Deposit
Mortgage approval and commitment (Important!)
Work with Selling Service Providers
1. Identify qualified and experienced Contractors, Inspectors, Engineers, Lawyers as need to complete the sale and meets terms of the contract of sale. (maintenance, repairs, etc.)
2. Work with Service Providers of Seller and those of Provider (Inspectors, Lawyers, etc.)
Note: Having an experienced professional agent can reduce the chance for unpleasant surprises, minimize stress and inconveniences, and can save time, effort and costs when problems arise that have to be quickly resolved and that may involve bringing in the right service providers to remedy situations on short notice (Realtors have extra leverage because of past and future dealings and relationships established with these providers).
8. Prepare for Closing.
Confirm all forms and documents are properly completed and ready for closing.
Confirm that all involved parties have completed their actions which may be required.
Assemble documents to be handed over to buyer: warranties, user manuals, home specific and historical
Move out seller's personal home
Remove all debris and leave all buildings in broom-swept clean condition or as otherwise stipulated by contract.
Conduct buyer Pre-Close Inspection or Pre-Close Walk-Thru of Buyer - usually on the day of closing (settlement).
9. Close the Sale (Closing / Settlement).
Your Realtor is present and still representing you at closing in case anything unexpected should occur, frequently on the buyer's side.
The process from accepting an offer to Settlement should normally take about 4 or 5 weeks, this may be adjusted by contractual requirements or other circumstances upon mutual agreement.
10. Complete Post Close Activities / Moving / Follow-up.
Listing - A piece of property placed by a listing agent on the market, including placing in the Multiple Listing Service (MLS) for all real estate agents to see and access.
Listing Agreement - A written employment agreement between a property owner and the real estate broker (a listing agent, a licensed real estate agent who is a representative of the broker, usually writes and signs the agreement) authorizing the broker to place on the market and find a buyer (or tenant) for the specified property.
|Real Estate Glossary||:||Common Real Estate terms.|
|Real Estate Glossary - General||:||Regularly used Real Estate terms. (Provided by the e-PRO organization.)|
|Real Estate Glossary - General #2||:||Definitions for common real estate and legal terms.|
|Real Estate Abbreviations||:||Abbreviations appearing in real estate listings and what they mean.|
See additional reference resources available at the: Real Estate Library Resource Center
Seller Resource Articles from Realty Reality:
Are Pets Reducing Your Chances of Selling Your Home?
Consumer Protection Information For Home Buyers and Sellers
Consumer's Inspection Kit From Freddie Mac
Factors You Must Consider to Successfully Sell a Home (Survey)
Getting Your Home Organized - Part 1 of 3 - Where To Begin
Home Buyers and Sellers Resource Page
How To Add Value To Your Home
How to Sell Your Home In The Shortest Possible Time
Finance Center - Seller's Guide from Realtor.com
Lead-Based Paint In The Home - Safety Issues from HUD
Maximize Your Home's Emotional Appeal
Minor Property Repairs Can Yield Top Dollar
NJ Fire Extinguisher Legislation Signed Into Law
Preparing and Staging a House for Sale
Private Well Testing Act (PWTA) of NJ [2006/02]
Septic Systems - Owner Maintenance
Setting The Stage For A Successful Sale
Severe Weather Tips to Protect Property from Further Damage
Top Mistakes of Home Buyers and Sellers in 2005
Understanding Home Warranties
Virtual Home Inspection - AHSI
What's In, What's Out With Homebuyers In 2006 [2006/02]
What’s it Worth? - NAHB House Price Estimator
Winter Storm Home Damage Can Be Minimized With Well-Planned Preparations
|Know How to Sell / TV||Click here to view the short NAR TV consumer awareness segment, Know How to Sell.|
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