So, where do you start? What can you expect?
Preparing To List
While you can call in a Realtor for a consultation at any point, there are a few things that I recommend you do first. A good deep cleaning is one of those things. Clean those places that don't get a lot of love- baseboards, behind appliances and large furniture, ceiling corners, etc. spruce up your yard, and pack away clutter and personal items. Take care of any maintenance issues, and be sure to rid your home of any offensive smells. Most of this is very common advice, so I won't eat up your time with yet another checklist or detailed list of de cluttering advice. Head over to Pinterest or any of the numerous home improvement websites for details, if needed. But I will say this, go for fresh and clean scents, rather than a food scent or something very taste-specific like a musk. Neutralizing is the goal.
The other step is to have a clear, realistic sense of your wants and needs. Browse listings in your desired area to get a feeling for what is available and how much they're going for. Your Realtor will help with this when its time to start shopping for the next home, but it can definitely help you discover how realistic your ideal is and prepare you for what you're likely to encounter. This can also help you determine what is most important- location, home size, updates, etc. in other words, it will keep you grounded. You can't expect to get a move-in ready, updated home in a hot location for bottom dollar, so you should have an idea of what that is, both in the area you're scoping out and the area around the home you're selling. The best, hardest working Realtor still cannot make the impossible happen, so reasonable expectations are essential.
Finally, the last thing I always recommend is to get preapproved for your next purchase before listing, unless you're planning to rent. You need to be sure that you're financially ready for the next step so that you don't find yourself in a difficult situation, without a place to live. Ouch! Getting preapproved (not just prequallified, there is a difference) will ensure that your income and credit meet current lending standards before there is no turning back.
Finding A Realtor
Once you know what you want, and have at least started preparing your home for the market, you're ready for a consultation. Get recommendations from family and friends for a good Realtor, and watch for successful sales in your area. These are some good ways to find a good agent. There are unfortunately some not so great ones out there, so make personal recommendations are extremely helpful. Interview the top couple of choices and ask questions. Strong communication and guidance skills can be just as important as how many homes they've sold or awards they've won. Your Realtor can recommend trusted lenders, if you haven't yet been prequallified, or you can get personal recommendations for this, too.
There are a variety of different agents. Some are not Realtors (see the Preparing to Purchase post for more information on the difference), but the majority of real estate agents are. Think about what level of personalized service you would like to have. Do you want to see the same agent every time, or have a team that takes turns? Do you need someone there for you every step of the way (a full service Realtor), or just for the major events (a transactional or limited service agent)? Talk to agents about these things when you're interviewing to find out how they work and how their style works (or doesn't work) with your goals.
Be wary of cash back incentives and gimmicky marketing tactics. While a few extra bucks at closing may sound appealing, you have to wonder why the agent is willing to give away part of their paycheck. Some may be new to the business and trying to build up their client base, others may not be selling a whole lot. Real estate agents are almost always paid commission only, there is no salary from the brokerage. In fact, we pay our brokerages, too! So think about it this way. If they're willing to give up their own pay to get business, are they going to give easily when it comes to your money? Incentives when you are buying and selling, or if you're a repeat client are common and less concerning than a stranger's postcard in the mailbox with a coupon for a cash rebate.
Don't be afraid to ask about an agent's sales numbers! Have they sold 2 homes within the last year or 20? Might this matter to you? Especially in a challenging market, that experience could be the difference between you getting your price or sitting on the market, reducing and becoming desperate enough to accept whatever offer comes your way.
In every state commissions are negotiable, and typically the seller pays both the listing agent and the buyer's agent, if there is a 2nd agent involved. One commission rate will be negotiated with the listing agent, and then that amount is split with the buyer's agent. After that, most agents will pay the broker's cut, errors & omissions insurance, and marketing fees out of their half. In other words, the amount you see on paper may look like a lot, but you're paying for a professional service for more than a month's worth of work, and only if the home sells. Many brokerages have company policies on what they charge, but some agents can and will negotiate their rates. That said, don't expect full service for limited service rates. Evaluate candidates on their sales skills, communication with you, and use your best judgement to decide who will be the best candidate to protect your money. Choose the agent or team that suits your needs best.
The Initial Consultation
In preparation for the consultation, locate any important documents related to the home and have them ready. Do you have the survey map, previous appraisal reports, etc.? These documents may be helpful, and could save you some money as the sale progresses. Most homeowners keep these with their original closing documents. You'll also need any recent inspection reports and major repair receipts. The time period varies by state, but any inspection reports from the last 4-5 years are commonly required to be attached to the condition disclosure. You'll also need 1-2 spare keys. I recommend 2- 1 for the lockbox, and 1 for the agent to store in their office, just in case the lockbox fails or another agent leaves with the key in their pocket after a showing. Discuss your expectations, goals, and preferences.
Typically, listing a home happens in 2 or more steps. The agent will schedule a consultation to come tour your home and get a good look at its condition, as well as the general area. This is an essential step in pricing the home correctly. They will also point out things that need to done to ensure success, and that can be done to increase the potential market value. Most can recommend professional stagers, cleaners, and contractors, if needed. If you know you'll need help preparing your home for the market, this could be a reason to do a consultation early on.
Be prepared to discuss your goals, if you didn't already during the interview. The agent needs to know your ideal timeframe for the move- when you'd like to move or when you absolutely must be done. They'll discuss market conditions and price ranges, along with how each will likely perform in the current market. Make sure the agent is on the same page. If your goal is to move right away and top dollar is less of a concern, be wary of an agent that will only list when the house is perfect, and vise versa. But again, be realistic. If updates are needed, and you don't want or have time to do the work, don't expect top dollar.
Your agent will most likely want to get paperwork out of the way during this consultation. Expect to sign agency disclosures, a listing contract, and any related addenda (additional documents related to the property, such as an HOA form). These are all legal documents, with responsibilities on each side. The gent has a duty to you as their client, and you have a duty to your agent. Most listing agreements are the Exclusive Right to Sell variety, meaning you agree to work with only one agent. After all, you've established a trust relationship with this person and want them to be loyal and motivated to successfully sell your home.
You'll be given property condition disclosures to complete, and possibly some forms to have notorized. Be sure to complete disclosure forms fully and honestly to the best of your knowledge. Not disclosing an issue you are aware of or have repaired previously could come back to bite you after the sale. I cannot stress this enough. Honesty really is the best policy when it comes to disclosures. The small financial losses you might expect if there has been an issue are nothing compared to the liability expenses if you wrongfully fail to disclose them.
The Listing Process
Most of the time after the initial consultation, you'll need a few days to get things ready. However, for some, your home may be ready to go that day. Either way, once the home is ready to list, the agent will need 1-2 hours to collect all of the data. Each agent and client handles this differently.
During this time, your agent will take measurements, collect information on systems and appliances, and either take photos or have a professional photographer come to do this. They may also have a videographer take video to create a virtual tour, or a drone photographer take aerial photos. Some may have floor plans created. This will vary by market expectations and the price range of the home. Aerial photos are seen more in high end home sales.
Showings
Your Realtor most likely discussed showing procedures with the listing contract paperwork. If not, then they'll discuss them with you when they are preparing the listing data and photos. Most use a showing service- a third party that handles scheduling. They can be quite convenient for you, too, since you can set time limits (like no showings after 9 PM), and approve showing requests by text, phone, or online. Others handle the scheduling on their own.
Before any showings take place, put away any valuables, prescription medications, or weapons. Lock them in a safe or remove them from the home when you'll be away. While showings will occur with licensed agents, thefts can and have occurred in the past. Realtors don't typically background check their clients (most do require loan preapproved however), and criminals do buy homes. And while we do enter the home for showings with our buyer clients, we are not always able to watch each family member as they go from room to room. Couples and families often split up when touring homes, seeking their own individual must-have features in each one. You can reduce the risk and potential heartbreak of a theft by removing or putting away tempting items.
When your home is being shown, it's best not to be there unless there is a special situation. Home buyers need time to imagine living in the home with their things. When the owner is present during a showing, buyers often feel like they're intruding, making it hard to focus on the thought of living there. If they can't imagine themselves living in the home, they probably won't imagine writing any offers either.
Also have a plan for pets. Many homeowners will put pets in a crate, room, or garage when they're away for showings. Others request advance notice so that they can take their pets with them, or have a friend or neighbor come take them out. And others still have asked close family or friends to temporarily keep their pets while their home is on the market. Know your pets. Are they aggressive or cautious with new people? Dogs are often protective of their homes and owners, so even a friendly dog might be uncomfortable with a stranger in your home when you aren't there. If this is the case, it's best to ensure that they'll be out of the home or crated to avoid an uncomfortable situation for you and potential buyers. Be sure that pet waste is regularly cleaned up from the yard, and that litterboxes and small animal cages are cleaned frequently. Use fresh or clean scented air fresheners to ensure that buyers are greeted with a pleasant aroma instead of pet smells that you may be used to.
Occasionally, if the agent knows of a buyer, either one they're working with or one that a coworker has been working with, they may ask you to allow them to see it before showings have officially begun. This is up to you, so speak up if you're uncomfortable. This could lead to an extremely quick sale, if one of those buyers likes the house and makes an offer. However, the more market exposure your house gets, the better your chances of getting the best price. If the buyer offers you a good price and terms, feel free to take it. But if top dollar is your main goal, more so than quick and convenient, don't feel like you have to respond until the house is up for everyone in the market to see.
Feedback and Communication
A good real estate agent will communicate with sellers on a regular basis to discuss showing activity and feedback. Buyers' agents often share feedback to let the seller and their agent know what features they liked about the home, or what issues kept them from considering it. This can be helpful in determining if price adjustments or condition improvements are necessary. Keep in mind that some feedback will be negative, no matter how great the house is. It simply will not work for every buyer, and that's ok. It just has to be a good fit for the right one.
Your agent can use the tools they have available to monitor showing activity and compare it to the averages for your area. If your home is getting significantly less showings than comparably sized and priced homes in the area, you need to take a close look to figure out why. Is the price too high? Is there a problem with the condition! Is there something nearby deterring buyers? Or has competition suddenly increased? Market conditions can change, so adjustments and new strategies are sometimes needed. Buyers usually buy homes after considering 3 main factors- location, condition, and price. Location cannot be changed, so condition and price are the factors that a home seller and their agent can control. If the condition is poor, the price needs to reflect that. In contrast, a home in "turn-key" condition, meaning it is ready to move into on day 1' will warrant a higher price.
Offers
If everything has been done right, one or more offers will come in after a reasonable amount of time on the market. This length of time varies by area, price range, and current market conditions. Most listing agreements will require the agent to present every offer, even if they know it is lower than your bottom line, but you can instruct your agent to do otherwise. Offers most often arrive by email on a contract form filled in with the property information and offer details- like the closing date, type of financing to be used, and who will be paying for what at closing. As the seller, you have 3 main options to use on any offer received- accept, reject, or counter-offer. Counter-offers are probably the most common. After receiving and reviewing an offer with your agent, there may be just a few things in it that you disagree with, so you'll revise these items and send that back the buyer, or it may be done more casually- via phone or email discussion. This might go on a couple of times before everyone is in agreement. Note that a seller can only "work" or counter one offer, and then can only accept one offer. After all, there is only one house to sell. Multiple offers are nice to drive the price up, but present some special challenges. If multiple offers are more common in your area and current market, be sure to hire an agent that understands how best to handle this situation.
Offers can be to purchase the home as-is, or a buyer may request a repair that is obvious during showings. This does not preclude a buyer from negotiating repairs after the inspection, however. More on inspections and repairs shortly.
After agreeing on all terms, each party (the buyers and sellers) will sign the contract, and then the agent will execute it. The executed date is day number zero when counting all contract deadlines.
Inspections, Appraisal, and Repair Negotiations
Congratulations! You've accepted an offer. One of the first things that most buyers will do will be to schedule inspections. Inspectors perform visual inspections and test the functioning of all major systems in the home. This helps the buyer understand what they're buying and to discover any potential issues or concerns to address. Buyers may have additional inspectors come in for pest inspections, often required for government insured loans, or to take a closer look at any one system.
When the buyer schedules inspections, be sure the inspector has access to all major appliances, breaker boxes, attic and basement entrances, etc. Pay special attention to those appliances in the garage that may be blocked with your boxes or personal belongings. Also be sure that all utilities are connected and left on for inspections. Many inspectors are state licensed and will have access to your home via the same lock or system as the buyer's agent. Buyers may attend inspections, or more commonly will meet the inspector once they're finished to review the report.
Inspectors almost always find something. Even on newer homes, there will be some amount of wear and tear, maintenance, or code changes. Building codes change frequently. Any time a home's systems or wiring do not meet current building codes, it must be disclosed on the inspection report. A good inspector will explain this and discuss whether it is still safe or poses a concern.
A buyer's response to inspections and requests for repairs will vary with each person,may well as the price and market conditions. Some won't ask for a single repair, some will send you an itemized list, and then other will simply request a credit and do the repairs on their own after closing. As with an offer, you can respond to a repair amendment by accepting, rejecting, or countering. Consider that some repairs could affect the buyer's financing, if not completed. Consult your agent for repair negotiations and advice on responses.
Agreed upon repairs are required to be completed before closing, or the buyer may delay closing. In Texas, repairs must be performed by licensed contractors (where licenses are typically required), unless agreed otherwise in writing. Keep the receipts to pass along to the buyer and show proof of completion. This will also allow the buyer to go back to the repairman or company for warranty issues, instead of looking for you!
An appraisal will most likely be scheduled as well. If the buyer is paying cash, the appraisal is optional, but is required for any type of financing. The appraiser will visit your property, take notes, and measure each room. They will compare the house to similar houses that have sold in the area and then provide the bank and buyer with their opinion of the value. If the value comes in lower than the agreed upon purchase price, the buyer may have an option to terminate the contract. You can renegotiate the price, or the buyer may pay the difference in cash at closing. Again, these strategies vary widely with each buyer and with market conditions.
Under Contract
As a seller, there isn't a lot for you to do once you're in contract, which is nice since you'll be busy packing, moving out, and often searching for another home at the same time. So what are some key things to do?
First, if you didn't provide key documents to your agent when the house was listed for sale, you'll be required to do so now. These documents will include property condition disclosures, survey plat map (if available for re-use), and any documents showing changes in ownership like a deed, divorce decree, will, etc. the first two are more common. Deeds are recorded with the county, so most of the time a title company will access this information through county records. the latter are required if changes in ownership have been more recent and are not yet recorded. You'll also need to provide information to the title company, such as each owner's social security number and your current mortgage account number for payoff and tax purposes.
Note that the title company will perform several searches and will locate any liens associated with the property or current owners. These will be verified by the title company, and if valid, must be cleared prior to closing. Clearing a lien is usually done by deducting the costs from your proceeds on the closing statement and paying the creditor. The most common lien is the mortgage note or deed of trust. Others could include unpaid income or property tax liens, and mechanic liens for unpaid work performed on the house. Also, if you are not a U.S. citizen, you may have to have additional taxes withheld. Consult your title company for more information on these tax requirements.
After that, the seller won't have much to do on the contract side until closing. Expect the buyer to schedule a final walk-through the day of or day before closing, and occasionally additional showings in between for measurements or estimates. When packing, be sure that you do not pack up any keys, garage door openers, fixtures or accessories (as defined by the contract), unless they were specifically excluded in the contract. These will include things like blinds, curtains, light fixtures, and fireplace equipment.
Closing typically takes place either at the title company office or at a remote location with a mobile notary. All sellers must sign, or if one seller will be unavailable, a Power of Attorney form may be used, but should be prepared in advance. Your time slot will be scheduled, and for a seller, signing takes approximately 20-30 minutes. Once all parties have signed, documents will be sent to the necessary parties for funding. Funding is usually quick if the buyer purchased with cash. If a loan is used, funding typically happens in about 2 hours or less. If closing happens at the end of the day, however, funding most likely will not occur until the following business day.
If you agreed to transfer possession of the house at closing and funding, you should be completely moved out and have the clean, empty house ready to go at the time of closing. If a temporary lease is being used, a specific date will be agreed upon for you to turn over the house. Either way, when possession is delivered, you'll give your keys, garage door openers, and accessory keys (like to mailboxes or shed locks, etc.) to your agent or the title company, who will then pass them along to the buyer. Often, agents will advise home sellers to leave all of these in a drawer in the home, and bring just one key to closing.
After the Sale
Congratulations on a successful sale! Once the sale has closed, schedule utilities to be disconnected (or taken out of your name at least), cancel your homeowner's insurance policy, and forward your mail. If you had an escrow account with your mortgage company, the unused funds will be mailed to you, usually within about 30 days. (Make sure your former mortgage company has your new address!)
If you made a profit of more than $250,000 in the sale, consult your CPA or tax professional to determine any special tax forms you may need, and how much you may owe Uncle Sam. Capital Gains taxes are complicated.
If you had a Homestead or any other tax exemptions on your former property, contact the county tax department (or appraisal district) to find out if you need to fill out any forms to transfer these exemptions to your new property or to notify them that you no longer own this one.
After all that, pour yourself a celebratory drink! Selling a home can be a daunting process, but one with huge rewards.
Written by Maggie Hernandez with Group Watson- Keller Williams Realty
(214) 682-7002 www.GroupWatson.com
