The 6 Step Process of Selling Your Home Part I
September 13th, 2007 categories: San Diego Real Estate, Selling San Diego Real Estate
The Home Selling Process is actually not that complicated once you understand the major components of it. Understanding what is involved will help you make the right decision when choosing a REALTOR® to help you sell your home. There are six basic steps in the Home Selling Process. In Part 2 that will follow this posting, I will walk you through the Closing Process that will begin once you have an accepted offer through to the Close of Escrow.
Step 1 The first thing we will do is to be sure you establish a good price for your home. Improper pricing is the most common mistake that costs home sellers thousands of dollars.
If the price you agree to is too high it will sit unsold and become stigmatized or shop-worn. Finding the appropriate price sets the right stage for the entire selling process. A great benefit to you is to get in the right frame of mind for the sale. Be objective and remember that selling your home is a business transaction, and you need to put your personal feelings and attachments to your home completely out of the equation. This is critical! Keep in mind that potential buyers are not looking to buy your home, they are looking to find a house that they can make into their home.
Step 2 This step is to arm yourself with the facts. By not establishing a realistic price from the beginning, many home sellers end up costing themselves thousands of dollars.
The value of a home is determined by supply and demand. If there are a lot of sellers and few buyers which is the case in todays market, prices tend to be on the down side and homes take longer to sell. This is referred to as a “Buyer’s Market”. But when the opposite is true as one day it surely will be and there are many buyers but few homes for sale, prices will rise and homes will sell faster. This is known as a “Seller’s Market”.
It is best to access my knowledge as your professional in determining the price, you don’t have to spend money on a formal appraisal. As your REALTOR®, I will provide a full market analysis for you. I will also determine which type of market you are closer to; then study your neighborhood to compare your home to others based on style, size, number of bedrooms, baths, garage, basement, view, improvements and lot size.
A CMA, complete in-depth study of the market conditions and sales data in your neighborhood will be covered when we sit down together on our first meeting.
Once we have established a market value, we can calculate your bottom line or net figure. This is the check you will receive after all the expenses related to selling your home are paid. Closing costs vary depending on how the contract was structured. I will guide you through a list of items that need to be deducted from your gross sales price in order to establish your net. When we meet, you will get a fairly accurate estimate ( A Sellers Net Sheet ) of which costs will be incurred and what these costs will mean to your net figure or bottom line.
Step 3 is Preparing your Home for Sale.There are really two phases when it comes to preparing your home for sale. The first phase is getting it ready for the market and the second phase is getting it ready for showing. I’ll start with the first phase – getting it ready for the market. The best way to do this is to walk around your entire home with a notepad- paying careful attention to everything; check the walls for chips, holes or uneven paint. Fix all leaky faucets and make sure they shine- and consider replacing them if they don’t. Ill include some helpful tips for you on the home’s interior and exterior with checklists to make sure you cover everything from top to bottom. Remember, the objective is to maximize your home’s appeal. This is not the time to be taking shortcuts.
Once we have your home officially “For Sale”, you need to make sure your home sparkles. This is an area where you can’t over do it. Be sure to give special concentration in your kitchen and bathrooms. Your buyer will be expecting a used home – but the brighter your home shines, the easier your buyer can “see” themselves purchasing and moving into your property. It’s a good idea to box up any items that haven’t been used for a while. By boxing up your possessions you will add visual square footage to your home – thus increasing its perceived value. Ask a friend or relative to help you out with this – or even consider renting a storage space to keep your belongings until you sell.
Un-cluttering the home is the toughest thing for sellers because they have built so much intrinsic value in the house. After years of living in a home, clutter collects without the owner even realizing it. But unfortunately the buyer does notice it and is affected drastically by it. Clutter collects on shelves, counter tops, drawers, closets, garages, attics, and basements.
Pretend you are walking into your home for the very first time. Or better yet – get an outsider’s opinion. Ask a friend to point out clutter. Notice all areas of clutter and begin eliminating it by boxing it and putting it into a storage unit until you move.
Now might be a good time for a garage sale. If you were going to get rid of anything before your move anyway, do it now before the house is even shown.
Step 4 Marketing. It is now time to bring on the buyers. While I will be doing most of the marketing, it’s a good idea to know all the avenues to be used. Today’s technology offers many new ways of marketing to give your home exposure to more potential buyers than ever.
To better maximize your potential for success, it’s important to market to three tiers – brokers, neighbors and buyers. To effectively target all three tiers aggressively, the following resources may be utilized: open houses, flyers, newspaper and magazine, e-mail, and the Internet. But since all REALTORS® have access to buyers, they will be especially incorporated into a plan through the local multiple listing service. When we sit down together, I’ll cover other ways of targeting agents that specialize in your price range and area.
Step 5 Is qualifying The Buyer. Once an interested buyer is located, they need to be qualified in the following terms: financial ability, buyer wants and buyer needs. This is not something you will be responsible for – it will be up to the mortgage lender and the buyer’s REALTOR®. I will, in the meantime, need to be on top of every detail. Anytime there is a call or contact, many details need to be discovered. Has their loan commitment come through? What conditions are on it?
Has the appraisal been done? Are there any repairs needed, etc. Remember this may be only one of 30 deals the lender has this month – but the only buyer you have. It is my duty to make sure there is an open line of communication at all times to ensure that everything is done. You must also watch out for contingencies that could cost you time off the market.A good example that comes up in our current market is if a buyer wants to buy your home contingent on selling his or her current house. We will discuss the possible acceptance of a contingent offer and then offer some protection to you by including a kick-out clause that allows you to back out of the deal within 72 hours (or better yet 24 hours) if you receive an offer that does not contain contingencies.
Step 6 Negotiating the Offer.
The key to remember here is, you now have an offer. It may not be everything you expect but may be as good as it gets. Keep your goals in focus but also look at the offer realistically from the Buyers perspective. Would you be willing to buy your own home for more money or on better terms than the Buyer is offering? You will have three choices when an offer comes in. You can accept the offer, reject the offer or make a counter offer. You should know however- that technically- a counter offer is a rejected offer. The buyer has no binding legal tie or obligation to the contract once any minor changes are made on it. Although the price will be the main focal point of the offer, we need to review every detail and consider the offer carefully.
These details include; down payment, earnest money deposit, possession date, interest rate, loan costs and inspections- what type and who pays, home warranty, personal property items included in the deal such as washer/dryer, refrigerator etc. Remember that any little change of the original contract is technically a rejection- so only make changes if you are absolutely positive that you cannot or will not agree with what was offered.
Contingencies for example- are things that must or must not happen in order for the transaction to be valid. These in particular must be spelled out very clearly and followed up on as to not open the door to the contract falling apart. In the contract there is a due diligence period for the Buyer. At any time during this period called the Buyers Discovery Period, the Buyer may legally vacate the contract for any reason or even for no reason and not risk the earnest money deposit.
During this Discovery Period, inspections will be made, disclosure documents will be presented to Buyer,the appraisal will take place, pest inspections will ordered, the Zone report and CLUE report will be ordered and delivered to Buyer. Also during this period the Buyer may make a request for any repairs from the condition of property discovery. We will review any or all requests and prepare your Seller response. Remember that during this period, the Buyer may vacate the contract for any or no reason.
It is important that you keep your goals clear throughout the negotiations so that you keep your decisions objective- not based on emotion. It is also important to put yourself in the buyer’s shoes and not see them as the enemy but rather as someone who wants to purchase your home. Once an offer is accepted, we will open escrow and the closing process begins. The escrow period is an important part of the home selling process and one of the final steps leading to closing.
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