Understanding the Home Selling Process

Step 1 – Decision to Sell

Where You Headed?
Planning to sell your house? If so, you obviously need to have a plan for moving into your new home (or wherever you might be moving).

Start by researching the housing market in the area you’re moving to. That way, you’ll have a pretty good idea how much money you’ll need to purchase the second home. Then you can more accurately factor in your other moving costs.

Any Contingencies?
Another thing to consider before you put your house on the market is what kind of offers / contracts you’ll accept. Are you planning to make the sale of your house contingent upon the successful purchase of your new home? If so, be sure to talk to your agent about it early on. That way, he or she can help you formulate the paperwork to support those plans.

Step 2 – What is my home worth?

Detach Your Emotions
Living in a house creates emotional value. It’s where you come home to at the end of a long day. It’s where you relax and unwind. Maybe it’s where you watched your child’s first steps, or saw them off to school each day.

But something you have to remember when selling a house is that emotional value doesn’t translate into financial value. Instead of basing your asking price on what the home is worth to you, base it on what it might realistically be worth to a buyer in the current market.

Speaking of “asking price,” it’s best to avoid the phrase altogether. “Asking” price suggests that you don’t really expect the house to sell for that price. It’s a subtle point, but psychologically significant. Use “selling price” instead, or simply say “the house is priced at X.”

Your Agent’s Advice
Work closely with your agent to determine your price. Based on past experience, your agent should have a knack for determining a price that balances profit with realism.

Here are some additional items to consider when pricing your home:

What are Homes Selling for?
Look at recent home sales in your area, as well as homes that are currently on the market. Focus on homes that are similar to yours. The industry term for this is “comps,” short for comparable sales.

Comparative Market Analysis (CMA)
Comparative market analysis (“market analysis” or “CMA” for short) is a phrase you’ll hear a lot when preparing to sell your house. The point of the CMA is to compare your house to similar houses in your area that have recently sold (or are currently listed for sale). Armed with this information, your agent can help you determine a realistic selling price that takes current market conditions into consideration.

Keep in mind, though, that the CMA is not a formal appraisal. Only a licensed home appraiser can give you a formal appraisal of your home’s value. But in most cases, a well-rounded CMA will be enough to help you set a price.

Factor in the Upgrades
Upgrades to a home (a deck, a pool, new vinyl siding, etc.) will usually increase the value of the home. They probably won’t increase the value dollar-for-dollar based on what you paid for them, but they’ll help nonetheless. So be sure to tell your agent about the things you’ve done to improve your home.

Supply and Demand
Do some research to determine the current state of supply and demand in your area. Your agent will help in this regard, but you should also read the newspaper on a regular basis to keep track of market conditions.

Step 3 – How do I read my home for sale?

Multiple Listing Service
The Multiple Listing Service, or MLS, is a computerized database of virtually all the homes for sale in a specific area. By listing your home in the MLS, you’re showing it to a large number of real estate agents representing a large number of buyers.

But not just anyone can list a home in the MLS. Real estate agents have access to it, but “regular folks” have to pay hundreds of dollars to use the service. This is yet another benefit to having a real estate agent.

“For Sale” Sign
The yard sign is one of the oldest but most reliable forms of home marketing. Home buyers routinely drive through the areas they want to live in. So a well-placed sign in front of a house that appeals to them almost always leads to a phone call.

Make sure your agent puts the sign in a location and angle that maximizes its visibility. Try driving down the street, as a potential buyer might, to see if the sign is readable. Can you read the phone number clearly enough to write it down?

Signs are great at generating phone calls. They also tend to get the neighbors talking, and this unleashes the powerful word-of-mouth marketing machine. And that brings us to our next point…

Word of Mouth
Don’t underestimate the power of neighbors talking. Word of mouth can often lead to sale. Your neighbors might have a friend or family member who’d love to live near them. Best of all, you don’t have to do much to create word-of-mouth. Just put a sign in the yard!

Flyers and Brochures
If you use a real estate agent, he or she will likely help you prepare a flyer for your house. Your flyer should include the basics, such as price, square footage and the like. But it should also go beyond those basics to promote everything that’s great about the house.

Whether you’re creating your own flyer, or having your agent help, there are some things you can do to improve the end product. Try making a list of everything you like about the house. Is it located in a cul-de-sac with no through-traffic? Is it conveniently close to shopping or schools? Are there certain architectural features you enjoy, like a deck or pool? Does it have a great view?

Take this information and create a “Top Ten Reasons You’ll Love This House.”

Be sure to include an attractive, full-color photo on the flyer. Place the flyers somewhere prominent in the house, where visitors can easily find them (perhaps near the entry). Chances are, your agent will handle these details for you. He or she may even put the flyers or brochures into a tube or box attached to the yard sign. That way, people can get all the details even if they don’t come inside.

Your Agent’s Advice
Perhaps your greatest marketing tool is your agent’s experience and insight. Agents sell houses for a living, so most of them strive to learn everything there is to know about marketing a house.

How to Take Great House Photos
If you’ve ever shopped for a home online, you’ve seen them. You know … those house photos that are dark, blurry, fuzzy, grainy or any combination of the above. Or what about those photos that show the roof of the house with everything else blocked by trees?

You’re left asking: “Why bother? Why waste my time driving out to a house like that?”

Never underestimate the power of pictures. Home shopping is as emotional as it is analytical. Sure, buyers will scrutinize the price, conditions, location, etc. That’s the analytical side. But the emotional side comes first. After all, who would waste their time reading property details if the property itself doesn’t get their pulse racing.

In other words, the property photo is one of many forks in the road on the path to a sale. It either continues the process (if they like the photo) or terminates it (if they don’t).

This is both natural and necessary. If the photo shows a ranch-style house and the buyers want a colonial, the photo will terminate the process — and rightfully so. It would waste everyone’s time if they came out for a visit.

But here’s where photo quality comes in. If the photo shows a two story colonial, and the buyers are looking for a two story colonial … they’re faced with a different decision. Are they looking for that two-story colonial? Is it worth their time to read the property details and possibly pay a visit?

Maybe you’re taking the photos yourself. Maybe your agent is going to take them. Regardless, there are things you can do to enhance those photos … which in turn improves the overall listing … which in turn brings more prospective buyers to see the house … which in turn increases the likelihood of a sale!

Prep the Property
I call this part the “low-hanging fruit,” because it’s an easy fix that can make a big difference. We’re not going for major overhauls here. Rather, we’re looking for simple, low-cost items that can improve the home’s appearance for photos (and for general curb appeal).

Step 4 – Closing the transaction

A day or two before the actual closing, you should receive a final HUD settlement statement from your lender. This statement will list all the charges you’ll have to pay at closing. Review it carefully with your agent.

What Happens on Closing Day? In a nutshell — a lot of paperwork, and all of it important. The closing agent, generally an escrow company representative, will list all remaining monies that you owe the seller (remainder of the down payment, prepaid taxes, etc.), as well as any money the seller owes you (unpaid taxes and prepaid rent, if applicable).

When you’re comfortable that you understand all the documentation, you’ll sign the mortgage. You’ll pay all remaining closing costs. The deed will be recorded in the state’s Registry of Deeds.

Congratulations! You’re now a homeowner!