The Home-Selling Journey
Decide to Sell
Selling a home can be confusing and intimidating, and that is why you need to be certain that this is the right decision for you and your family. The first step, and probably the most important one, is to spend time exploring your "why" for selling. Selling a home comes with a lot of physical, emotional and even financial stress, so this decision is not one to take lightly. Do you NEED to sell? Or do you WANT to sell? There are many reasons why homeowners decide to sell their homes, including:
- Current home is too big or small.
- There is something about the home or neighborhood the homeowner no longer likes.
- Moving up - could be size, but also in terms of prestige, self-actualization or aesthetics.
- Deferred maintenance on the home the homeowner may not want to correct.
- Job transfers or be closer to family.
- Changes in relationships such as marriage or divorce.
- Downsizing or retirement.
- Death in the family.
Once you've have made the decision to sell, you need to establish your priorities. Based on your "why", is TIME or MONEY more important to you in the sale? MANY people want both - this is very common. The ideal home sale would result in a fast sale for top dollar. MOST of the time, however, if getting the most money for your home is important, you may need to give yourself a little more time so that more of the market is able to see your home on the market. If selling quickly is more important to you, you may not have time to attract the buyer who is willing to pay top dollar. Only the market can dictate how fast and for how much you can sell your home.
Hire Your Agent
The typical real estate transaction involves at least two dozen separate individuals...buyer's agents, listing agents, mortgage brokers and underwriters, inspectors, appraisers, escrow officers, title researchers, and a number of other individuals whose actions and decisions have to be orchestrated in order to perform in harmony and get a home sale closed. It is the responsibility of your real estate agent to expertly coordinate all the professionals involved in your home purchase and to act as the advocate for you and your interests throughout.
You also might be thinking, "Do I really need an agent? Can't I just sell my home myself?". We discuss this consideration in detail here.
Prepare Your Home
Nearly every home that will be going up for sale will need to have some kind of work done to it to make it "market ready". The first thing sellers need to do is begin decluttering the home. Since you are going to be moving anyway, you should really start packing BEFORE the home is sold or even put on the market. Begin purging personal items you no longer want or need, perhaps donating items to charitable organizations. If you are going to live in the home while it is on the market, only keep the bare minimum of personal items you need to live. It is always a good idea to start depersonalizing the home as buyers need to visualize themselves in the home; not see your memories in the home. There are a number of other things your agent might recommend to prepare the home, many of which are discussed in more detail here.
Promoting the Home
Your agent should have shared his or her plan for promoting your home while it is on the market - every agent has a different marketing plan, and you should have selected the agent whose plan is most likely to draw as many potential buyers to your property as possible. When buyers begin their home search, they first decide what locations are most appealing to them, and eventually they will narrow down to the city and even neighborhoods in which they want to live. From there, they will begin watching this area online for available homes on the market, and ones that appeal to them most online will be the ones they will want to come see in person before deciding on one to buy. Understanding more about potential buyers is discussed in more detail here.
Accept An Offer
Congrats! After all the preparation and promotion you have done, you now have an offer on your home from a potential buyer. Now that you’re hearing an offer, you need to be a businessperson. You need to approach this process with a cool head and a realistic perspective of your market. Your agent will first make sure the buyer is minimally pre-approved with a lender to buy the home, in addition to ensuring they have proof of funds for either the purchase (if they are a cash buyer) or earnest money deposit and down payment if the buyer is getting a mortgage. The three basic components of an offer are price, terms, and contingencies (or “conditions” in Canada).
Price-the right price to offer must fairly reflect the true market value of the home you want to sell. Your agent’s market research will help advise you on what is acceptable.
Terms-the other financial and timing factors that will be included in the offer.
Terms fall under six basic categories in a real estate offer:
- Schedule-a schedule of events that has to happen before closing.
- Conveyances-the items that stay with the house when you leave.
- Commission-the real estate commission or fee, for both the agent(s) who works with you and the agent(s) who work with the buyer.
- Closing costs-it’s standard for buyers to pay their closing costs, but the buyer may want to roll the costs into the loan, which would be written into the contract.
- Home warranty-this covers repairs or replacement of appliances and major systems. The buyer may ask you to pay for this.
- Earnest money-this protects you from the possibility of the buyer unexpectedly pulling of the deal and makes a statement about the seriousness of the buyer's offer.
Accomodate Due Diligence
In California, the seller is required to disclose any material facts you know about the property to ensure the buyer is making an informed decision. For example, if you know the roof is leaking, but you haven't fixed it, you should disclose this to the buyer so they are not surprised by the incremental cost they might incur by being required to fix the roof. For things about the home about which you don't know, the buyer is required (per the contract) to conduct their own investigations and inspections on the property. Unlike most major purchases, once a buyer purchases a home, they can’t return it if something breaks or doesn’t quite work like it’s supposed to, which is why inspections and investigations are an important part of the process. As a seller, it is your responsibility to accommodate the buyer and their requests for access to the property so they may perform their due diligence on the home. If the buyer finds something wrong with the house, they may try to negotiate repairs or other remedies before the inspection period has expired. Your agent can help you navigate these negotiable items through the process.
Close the Transaction
The final stage of the home buying process is the lender’s confirmation of the home’s value and legal statue, and the buyer's continued credit-worthiness. This entails a survey, appraisal, title search, and a final check of the buyer's credit and finances. Your agent will keep you posted on how each is progressing, but your work is pretty much done.
You just have a few pre-closing responsibilities:
- Stay in control of your finances.
- Return all phone calls and paperwork promptly.
- Communicate with your agent at least once a week.
- Several days before closing, confirm with your agent that all your documentation is in place and in order.
- Obtain certified funds for closing.
- Conduct a final walk-through.
On closing day, with the guidance of a settlement agent and your agent, you’ll sign documents that do the following:
- Finalize your mortgage.
- Pay the seller.
- Pay your closing costs.
- Transfer the title from the seller to you.
- Make arrangements to legally record the transaction as a public record.
Implement Next Steps
Going back to the first step, there is probably a specific reason (or reasons) you sold your home. If you were selling to move up or move down, perhaps now is the time to start looking for that new home. Many people need to sell before they buy a new home, which has two major benefits. The first is that you know exactly how much you can afford for your next home - either if you are paying cash, or if you are getting a loan, you know how much you will have for a down payment and have for closing costs. The second is that you do not need to purchase a home contingent on selling your first one - this helps strengthen your offer when it comes time to make one, in most markets. Your real estate agent can help you coordinate and plan out all of the logistics of necessary with buying and selling your homes.
FREE Pre-Listing Inspection Checklist
Get your FREE downloadable Pre-Listing Inspection Checklist and anticipate problems with the home BEFORE you sell. Proactively addressing potentially issues that might arise during the buyer's inspection period will help you save time and money later!
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