Sellers
There are a lot of things to keep in mind when selling your home. Don't fret, you're not on your own. Our home seller's guide will help get you up to speed. From the basics to home selling tips and real-estate investment advice that can help you make the best decisions.
Every home sale shares a common process, from putting the house on the market to settlement day. Long & Foster's Home Seller's Guide is designed to give you inside know-how that will help you make smart decisions every step of the way.
Of course, this short guide cannot answer all your questions. For specific answers to your specific situation, we encourage you to consult a Long & Foster sales associate.
Before you put your house on the market, it is important to understand "who's who" in the home selling process.
Agents and Brokers
A listing agent, or sales associate, markets your home. A selling agent provides the potential buyer. Each agent is associated with a broker, or real estate company. When a house is sold in a cooperative sale, the listing broker is directly paid the listing commission and then splits the commission with the listing agent. Likewise, the selling commission is split between the selling broker and selling agent. .
If the listing broker also provides the buyer, then the broker receives both the listing and selling commissions. .
If the buyer's real estate agent is also a Long & Foster sales associate, Long & Foster becomes a disclosed dual agent with the consent of both buyer and seller. .
Listing Appointment
The first step toward putting your house up for sale is to meet with a listing agent at your home. At this appointment, the agent will provide you with information on recent sales and current listings of comparable homes in your neighborhood. The agent will also want to tour your home. Be ready to tell specific details about schools, nearby public transportation, and other desirable community features, as well as home features not readily apparent. .
Remember, prospective buyers will be comparison shopping and keenly aware of subtle differences in houses for sale in the area. Be sure to tell your listing broker why yours is special - from any home remodeling to afternoon winter sunshine. .
Asking Price
After discussing market conditions and comparable sales and listings with the listing broker, you will set the listing or asking price for your house. Experience in the industry has proven a market analysis approach is more accurate than the "replacement cost" or "potential rental income" methods. .
A rule of thumb says, "A house priced more than 5% over market value discourages offers." Market value is commonly defined as, "What a ready, willing and able buyer will pay, at a price a seller will accept." Buyers are sophisticated. They've already been shopping, and when they see your home, they will be comparing features and financing. Buyers who cannot afford the price simply won't look. This is why we say, "A house priced right is half sold." .
Sample Net Sheet
Based on the sales price, the listing broker will give you a worksheet that estimates the net cash from the sale. In this exercise, your anticipated charges are subtracted from the sales price. A list of typical selling costs is covered in the settlement section of this guide. .
Financing Strategy
No sale can be completed without financing. Therefore, it is to your advantage to appeal to the greatest number of home buyers by accepting the greatest range of financing plans. The listing broker will explain the basic differences between Veterans Administration (VA), Federal Housing Administration (FHA), and conventional financing, as well as explain "discount points.".
Property Profile Folder
The listing broker will prepare an information folder on your property with the following information:
- Pay-Off Notice - This is a signed letter notifying your lender you intend to pay off the mortgage. The broker will then mail the letter to your lender to help you minimize any prepayment penalties. Also provide your lender's address, loan balance, assumability, years remaining on present mortgage, and the interest rate, if possible.
- Well and Septic Inspection - If your property relies on a septic tank or well water, current inspections by local health authorities are required while the home is still occupied. The listing broker will usually arrange for the inspection after a contract is ratified.
- Lender Appraisal - Lenders require a home appraisal to ensure that the property is adequate collateral for a loan. A lender will usually insist on ordering its own appraisal for this purpose.
- Assessments/Easements - The listing broker will ask you if any tax assessments or easements exist on your property that must be paid or included in the purchase contract and passed with the land when sold.
- Property Taxes, Condominium Fees - You must provide a record of property tax or condominium fee payments. The buyer will reimburse a pro-rated share of these payments to you at settlement.
- Inspections - The VA, FHA, and most lenders of new mortgages require a termite inspection certificate that shows the house is free of infestation. If you do not have a current certificate, the listing or selling broker will arrange an inspection at your expense. Sometimes a home inspection and radon testing will also be ordered. You should provide all information regarding the physical condition of the property, such as the presence of fire retardant plywood.
- Utilities - Most buyers will want to know a history of utility costs. You should provide a record of the past 12 months' utility bills, including gas, electric, sewer, water, and trash where applicable.
- Other Helpful Documents - If possible, you should also provide the listing broker with the following documents:
- 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
- Copy of homeowner's insurance policy
Personal Property
You must be ready to supply your listing broker with a specific list of the personal property that is included, or conveyed, in the sale. These items can include light fixtures, drapery rods, appliances, firewood, and even swimming pool chemicals. You should tag or remove items you do not wish to convey.
Listing Agreement
When you are ready to put your house on the market, you will sign a listing agreement which specifies a length of time, or listing period, you will work with a listing agent and broker.
Lockboxes
A lockbox is a universal metal container for your house key that is hung on the front door and can only be opened by licensed sales associates. It provides access to your home for potential buyers when you are away.
Today, the home that stands out among similarly-priced houses is the home that sells. Why? Because it makes a good first impression that lasts right to the settlement table.
You may not be able to improve the market value of your house with major remodeling projects, but you can improve its marketability. This usually 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.
Should I redecorate?
No. It is very difficult to anticipate the tastes of strangers. It is 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 broker 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.
Here are some home selling tips think about when you're getting ready to put your house on the market:
- Exterior
- Front Hall
- Kitchen
- Living Room
- Master Bedroom
- Bathrooms
- Recreation Room
- Garage
- Basement
- Attic
Exterior
Start here with "curb appeal." Basics: Mow the lawn and trim shrubs. Remove garden hoses, lawn tools, dog houses, 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. Clean, or even paint, the front door. Keep walks and steps free of snow and ice. Extras: Install a brass door knocker. Put up seasonal door decorations. Plant flower beds.
Front Hall
The atmosphere here gives a hint of what is inside. Basics: Light the area using a skylight, lamp, overhead fixture, or open window. Turn on every light in the house in the evening for a welcoming glow. Make sure the house smells fresh and clean. Make sure that the woodwork is unmarred and the carpeting is spotless. Remove unsightly or worn throw rugs. Extras: Install a door chime. Install a dead bolt lock and chain.
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. Repair or replace anything that sticks, squeaks, or drips. Keep counter, cooking, storage, and eating spaces uncluttered. Put away countertop appliances. Clean butcher block. Treat the floor and walls so they are resistant to grease and moisture.
Living Room
Strive for a lived-in, cozy feeling. Basics: Discard worn, chipped, or frayed furniture. Open curtains. Set out fresh flowers, and even put a drop of bath oil or vanilla on light bulbs for a subtle scent.
Master Bedroom
The master bedroom is the second-most appealing room to the buyer (after the kitchen, before the garage). Basics: Remove clutter. Arrange furniture to define areas: sleeping, dressing, sitting. 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
Combine practicality with attractiveness. Basics: The sink, toilet, bathtub, tile, even shower curtains should be immaculate. Fix leaky faucets - rust stains indicate faulty plumbing. Repair caulking and grouting. Light should be soft, but bright. Extras: Use some potpourri for a pleasant scent.
Recreation Room
An atmosphere of relaxation, fun and activity should pervade here. Basics: Open the space to accommodate an assortment of activities. Make sure the fireplace or wood stove is clean, with fresh logs. Extras: Install track lighting and ceiling fans.
Garage
Convenience is the key here. Basics: Sell, giveaway, or toss unnecessary items. Tidy the workbench. Clean oily cement floors. Install a strong overhead light.
Basement
Organize, hang tools on peg boards, and put items on shelves. Basics: Cure smells by placing a bag of limestone in any damp areas. Clean the outside of the water heater, change the furnace filter and make inspection access easy. Brighten the basement by painting walls.
Attic
Yes, it's for sale, too. Tidy it up. Light it up. Basics: Again, pack anything you're going to move. Get rid of the rest. Be sure your energy-saving insulation is apparent and the air vent works.
While you are actively getting the house ready to show, your listing broker is actively spreading the word that the property is available. Generally speaking, the listing is promoted to two groups: the real estate community and the buying public.
Many home sellers are surprised to learn that approximately 56% of all buyers come from referrals between brokers and their vast network of contacts. Approximately 17% of buyers come from inquiries stimulated by for sale signs in yards. The remaining 27% of buyers come from a combination of the real estate company's reputation and image, open houses, and advertising or other promotional efforts.
MLS Profile
Your listing broker enters a profile of your house in the Multiple Listing Service (MLS) computer. MLS is a membership service available exclusively to brokers belonging to the Association of REALTORS®. The profile includes everything from location and price, to house style and showing instructions, and is instantly available to the entire MLS membership.
In addition, your listing broker announces the listing at regular office sales meetings. At Long & Foster, the listing office, as well as other Long & Foster offices, may tour the property. Other real estate companies may also ask to tour your home.
Advertising
Yard signs provide additional exposure for your home. These signs often create high-quality inquiries because buyers looking in the neighborhood are already interested in the area. To reach a wider audience, your home will also be advertised via direct mail cards, ads in major metropolitan and community newspapers, and ads on the Internet.
Long & Foster's World Search® staff also advertises nationally and internationally for potential relocation buyers in military and foreign service publications. Our entire relocation division receives over 9,000 leads annually, largely from broker referrals and corporate transferees.
Showings
With all this activity, your listing broker and other selling brokers will bring prospective buyers to see your house. Brokers will make an appointment with you to show the home with as much advance notice as possible. This will give you time to tidy up, light dark areas, perhaps pop something in the oven, like a spicy cake, bread, or even a pan of cinnamon. Make every effort to accept all appointments - you never know when your buyer will walk through the front door. Also, have the property profile folder available with information including utility bills, MLS profile, and house location survey.
We have found over the years that a number of tips make showings a little easier for your broker and the buyers:
- If you are home, greet the prospects at the door and politely excuse yourself. Leave the selling to us. Too many people present during a showing may make potential buyers feel like intruders. It is better that you and your family busy yourselves in one part of the house or outside, rather than tagging along. The broker knows the buyer's desires and can better emphasize your home's features.
- Quiet is the ideal environment. Noise is distracting, so don't have the radio or TV on - the broker and the buyer need to hear each other.
- It is better to keep pets enclosed in the basement, garage, or back yard. Buyers may be timid around unfamiliar animals.
- Chatting with a potential buyer may dilute the broker's ability to present your home's best features in the best light. If asked a question, respond honestly, but diplomatically refer questions to the broker.
- Do not discuss price, terms, possession, or other factors with the potential buyer. Your broker is most qualified to bring negotiations to a favorable conclusion.
- If you are not home, selling brokers may leave their business cards. Be sure to give the cards to your listing broker as soon as possible for follow-up.
- When an open house is scheduled, plan to be away for the afternoon. Make sure to leave word with your broker on how to contact you.
Should I let anyone in to see the house?
If a prospective buyer calls or comes by unexpectedly without a broker, get their name and phone number. Do not show the home. Explain that it is not a convenient time. For your benefit and protection, call your listing broker so that the buyer can be qualified and identified prior to showing.
If an offer is imminent, should I still show the home?
A property is either sold or available - there is no in between. However, if there is an accepted contract that contains a contingency, and back up 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.
Seller and Broker Team
During the listing period, the listing broker will periodically update you on the mortgage market, new competitive listings and homes for sale in the area, and progress in selling your home. The listing broker will follow-up with the other real estate brokers and provide feedback to you. This mutual teamwork becomes especially important later when negotiating offers to purchase.
A buyer makes an offer by submitting a written and signed offer to purchase, which will become the sales contract when endorsed, or ratified, by everyone's signature.
Contract Presentation
The selling broker registers the offer with their office and notifies the listing broker of the offer. The listing broker then arranges a contract presentation appointment with you and, in some areas, the selling broker. The buyer does not attend the presentation. Part of the presentation is determining that the buyer is qualified financially to make the purchase.
Should either the seller or buyer be located out of town, the contract is presented via telephone and confirmed later by fax.
A number of specific concerns are included in the presentation. After all, once the contract is signed, it becomes the binding guideline for the transaction. The offer will include, but is not limited to:
- Date, name, and address of the buyer and seller, and the legal description of the property.
- Amount of the earnest money deposit, which will be held in an escrow account by the broker, unless otherwise noted.
- Sales price.
- Size of the down payment, and how the remainder of the purchase price is to be financed. The offer should indicate the maximum interest rate the buyer is willing to pay, and the right to cancel without penalty if such financing proves unavailable.
- Proposed settlement and occupancy date, and daily rent provision for "post-settlement occupancy" if the seller cannot vacate and becomes the temporary tenant of the buyer.
- Contingencies, if any, such as satisfactory review by attorney, structural inspection, home appraisal, or sale of the buyer's present house.
- Other important provisions, including a list of items that convey with the sale, stipulation that title must be insured, and who is to pay various settlement costs.
Net Sheet
Taken all together, this offer is reduced to dollars and cents on a sample net sheet, similar to the exercise during the listing appointment. The estimated outcome is determined, which allows you to consider the bottom line.
Contract Decisions
A decision on an offer should be made at presentation, if possible. You as the home seller have three possible options:
- Accept the offer as written.
- Make a counter offer on unacceptable aspects. Counters are written and initialed in the margin of the contract or in addendums. A purchase offer with counters is not a ratified contract until the buyer accepts and initials the counters. Buyers can withdraw, accept or counter the counter offer.
- Reject the offer, if it is totally unacceptable. Outright rejection, without a counter, should be the last resort.
A contract exists when all terms including changes are ratified by initials of all principals. When the contingencies are satisfied, the contract becomes enforceable.
Multiple Offers
All offers registered will be presented to you in the order registered. You should hear each offer completely and ask questions. No action is necessary until all offers are heard. If more than one offer is accepted or countered, an order of precedence must be established, such as primary, first backup, second backup. Be careful not to sell the home twice.
Questions and Answers
Is it best to turn down the first offers?
In any transaction, it is normal for you to wonder, "Could I have gotten more?" When your reasonably-priced house is put up for sale, the very first lookers may make an offer to buy. That doesn't mean that you have priced your home too low. It means qualified buyers and their brokers have been looking?and waiting?for the right house to come on the market at just the right price. Your listing broker will advise you on all offers.
Does the sale of a condominium or a property within a Homeowner's Association (HOA) require any special action?
The purchase offer for a condo or homeowner's association property will contain, in compliance with the law, a requirement that you furnish the buyer with certain disclosure information. Ask your listing broker about condo and homeowner's association resale procedures in your area.
Do buyers ever offer more than the listing price?
Rarely, but they do offer "above list" sometimes if they believe it makes their offer more acceptable than other competing offers. For the protection of all parties, it is best to include a separate statement signed by the buyers, indicating the buyer's knowledge of the list price and their reasons for the higher offer.
What do I do if the property doesn't sell?
The first step is to carefully go over with the listing broker why the property has not sold. Usually price and property condition are the key. Study and analyze what has sold in your area and at what price. Then re-list the house after adjusting for shortcomings. Another option is to withdraw from the market and rent until the market improves, or simultaneously offer for sale or rent.
When will the yard sign be removed?
Placing a sign in the yard is always done by mutual agreement between you and the listing broker. The law in Maryland, Virginia, and the District of Columbia allows the sign to remain in the yard after contract ratification, even though "for sale" is changed to "sold" after contract acceptance. Ask your listing broker about local sign ordinances.
If a buyer forfeits the deposit, who gets the money?
If the buyer fails to make full settlement, the deposited earnest money may be forfeited only after a release is signed by all parties. In the event of forfeiture, the deposit will be divided equally between you and the real estate brokers, but not exceed the amount of their commission, or according to the sales contract.
Depending on local custom, the listing or selling broker oversees the contract through to settlement, or closing. A number of professionals come into the home selling process during this period, including various inspectors, appraisers, and attorneys. At this stage, all contract contingencies will be satisfied and removed. The buyer will select a settlement or a title company, and the brokers will provide vital information to those firms.
Termite Inspection
A termite inspection is required by most lenders and is specified in the contract. If existing coverage is in effect that might avoid an unnecessary inspection, let your listing broker know. You are responsible for paying for the inspection, removing any infestation, and repairing any resulting damage.
Loan Process
Your listing broker will keep you informed about the buyer's loan approval progress. Most contracts require the buyer to make a loan application immediately after the contract is ratified. The lender will order a home appraisal to confirm the property is adequate security for the mortgage. The lender will also verify the buyer's employment, income, deposits, credit rating, and debts.
When the lender receives the appraisal and any other requested information, the mortgage application will be approved. The lender may specify requirements, such as repairs, which must be met before approving the loan. A commitment is then issued to the buyer. Many contracts require a loan commitment from the lender within a specific period of time.
After Loan Approval
After the buyer's loan is approved, the selling and listing brokers will coordinate a settlement date. Your listing broker will notify you to confirm the date, place, and time and give you a checklist of everything you need to bring to settlement. Your listing broker will also let you know when you should notify utility companies to transfer accounts.
You can now make definite moving plans. If you are moving outside of Long & Foster's seven-state region, Long & Foster can arrange for you to receive information about your new area from one of our affiliated brokers. This out-going referral ensures you will work with a broker of the same quality as Long & Foster and makes the move easier by providing information prior to house-hunting trips.
Document for Your Move
Now you will have to organize a number of documents in anticipation of your move:
- Check with your insurance agency if you want to purchase full coverage on household items. Make sure your family car and household goods are adequately protected while en route and initially after arrival.
- If you plan to vacate the house more than 30 days before settlement, be sure hazard insurance covers risk during that period and until the deed is recorded.
- Obtain transcripts of children's school records.
- Obtain birth and baptismal records for all family members.
- Secure all medical and dental records for the family.
The time for the buyer to inspect and note defects for correction by the seller is during the contract negotiation and prior to signing the sales agreement. The purpose of the walk-through inspection prior to settlement is to determine if conditions in the contract are satisfied.
It is up to the buyer to perform the final walk-through inspection, and you may or may not be present. The buyer should be accompanied by the selling broker, and possibly the listing broker. You should make sure utilities are on so that equipment can be operated.
During the inspection, expect the buyer to
- Try all lights and switches.
- Turn all faucets on and off.
- Run showers and flush toilets.
- Turn on the furnace and central air conditioning. In the off-season, the buyer may hire a professional to certify proper functionality.
- Test all stove burners.
- Turn on the oven at bake and broil.
- Run some ice cubes through disposal to test the blades.
- Run the dishwasher, washer, and dryer through complete cycles.
- Open and close all windows and doors.
In short, the buyer should try everything, including the keys and the fireplace flue.
All deficiencies will be noted. If money is escrowed for needed repairs, the settlement attorney will release the balance of funds to you once all repairs are complete. If you do not correct problems prior to settlement, funds may be withheld by the attorney for repairs.
You should make plans to clean, remove trash, and vacate the house the day before settlement, or in any case, not later than settlement day.
The big day is here! Joining you at settlement will be an attorney or title company representative, the listing and selling brokers, and the buyer. The attorney will have searched the title, provided title insurance, and obtained old and new lender instructions.
After all unsettled walk-through issues are resolved, the attorney will explain the following:
- Deed of trust or mortgage
- Deed of trust note or mortgage note
- VA, FHA, or lender forms
- Settlement sheets
You and the buyer will then sign all necessary forms. The buyer pays the balance of their down payment and closing costs, and you pay your appropriate closing costs.
Open Look at Closing Costs
Typical closing costs include:
- Attorney fees
- Lender's inspection fee
- Appraisal fee
- Broker's commission
- State deed transfer tax
- Recording fee
- Condominium or homeowner's association packet fees
- Water escrow
- Termite inspection
- Loan discount fee (points based on loan amount)
- Mortgage pay-off penalty (see your deed of trust note)
- Interest up to the date trusts are paid off
Disbursement
If your taxes or insurance have been escrowed, you will receive any money accumulated in the account for bills not yet due. Additionally, you will be reimbursed for any money paid in advance and not used, such as property taxes. Taxes and homeowner's association dues or condominium fees will be prorated on a daily basis. You will receive these refunds at or after settlement, depending on the locality. Check with your listing broker for details.
The house has now been sold, settled, and funds disbursed.
Transferring Keys
Unless otherwise provided in the contract, the buyer gets possession at settlement. In addition to transferring all house and garage keys to the new owners, you should provide all warranties and user manuals on major appliances in the home.
Congratulations
Once the house keys are transferred, you have successfully sold your home. Congratulations!
