You’ve made the decision to sell your home. It’s a big step and a major life transition, but with some planning and homework, you can do it!
It’s not unusual to experience mixed feelings when you’re selling your home: elation, excitement, fear, frustration. This is probably the biggest decision you’ve ever made, and emotions come with the territory.
Be prepared for the ups and downs that can come with the process: You can buffer yourself from home-selling highs and lows by becoming a knowledgeable seller. You’re less liable to feel anxious and stressed if you understand what’s happening every step of the way.
Don’t sell your home with your eyes closed. Research the market and explore comparable neighborhoods in your area to find out what your house is really worth. Talk to your Realtor about location, curb appeal, average days houses are on the market, know your priorities, and anticipate some compromises along the way.
Just keep your “eyes on the prize” and it will all be worthwhile.
Selling and buying a home may seem a bit overwhelming, like learning a new language. Points, PMI, pre-approval, escrow, title search – there’s a lot to absorb. Relax. Take a deep breath. There’s nothing involved in selling your home that’s beyond your abilities. Millions of people have done it, and so can you.
You can find plenty of help along the way, including books and Internet resources, as well as professionals to guide you. Your real estate agent, mortgage lender, attorney and moving company can be a wealth of information. And don’t forget to turn to family members and friends for advice and support through the process.
So prepare for an often exciting, sometimes frustrating, occasionally anxiety-provoking ride! The more you know about the process, the less stressful you’ll find it. In brief, these are the basic steps involved in selling a home:
Like most home sellers, you’ll probably decide to work with a real estate agent. At your initial meeting, you’ll discuss the type of listing agreement you will sign, the length of your contract and what percentage of the sales price you will have to pay. Don’t forget cheaper is not necessarily better.
For example, houses put on the market with a lower than normal percentage, typically take much longer to sell. The reasons are simple. More than 85% of all homes in the US sell through Multiple Listing Services (MLS) as a co-broke. If a co-broke agent had a buyer and had to choose between two houses to show, they would typically show the house with a higher percentage rate because that means they will make more money. Usually, an agent who earns less money on a sale will put less work into advertising and marketing the property. A lot of times, a co-broke agent that is interested in making more money will be more likely to encourage their buyers to put in a higher offer.
Receiving an Offer
Your agent will work with you to review a purchase offer. The offer will include things like a cash deposit (“earnest money”) to show good faith, any contingencies the buyer may have, a letter of approval from a lender and the dates they are to adhere to for the process. You will then accept their offer, reject it, or most likely make a counter offer.
Get Everything in Writing
During the home-selling process, you may have become quite friendly with your agent, a buyer, or perhaps both. Selling a home is like embarking on any business venture, so it’s wise not to let friendship dull your good business sense. Verbal agreements do not hold water in the world of home selling and buying – you need to put everything in writing, regardless of your relationship with the real estate agent or buyer.
If the Buyer does not make a full price offer, you probably want to counter their offer. It is not uncommon to counter back and forth for several rounds.
When the sales contract is accepted and signed by you and the Buyer, your agent opens what is termed either “escrow” with an escrow agent or “title” with an attorney or title company (the terms and the type of entity it is opened with varies by state). This usually happens within 10 days of signing the contract. The escrow/attorney/title company holds all funds, including the initial deposit, until instructed by you and the Buyer (or your agents) to distribute them.
The escrow/attorney/title company will search the chain of title for the property for the buyers and prepare a preliminary report. This document will show who owns the property and what liens, if any, have been placed on it.
After the contract is signed, the Buyer will usually have 7-10 days to inspect the property and document its condition. They will hire a licensed professional home inspector to do the job.
Purchase and Sales Agreement
About two weeks into the agreement, your home has been inspected, you have ironed out any differences with the buyer and you are ready to sign the P&S agreement. Your agent and or your attorney will review the agreement with you and once everyone is satisfied you and the buyers will sign.
Now that the purchase and sales agreement has been signed, the next step will be an appraisal. The buyer’s lender will order an appraisal on your home to ensure that the purchase price is equivalent with the appraised value. Your real estate agent will work with the appraiser in advance and supply a list of comparable home sales in the area to justify the sales price.
Emotions are at an all-time high. Between assembling the paperwork, scheduling inspections, and scrambling to get those loose ends in order, you forgot about how much fun it will be to have sold your home and move on! But there’s just one more step you have to take to make your dream a reality. Close the deal.
The closing is the proverbial “signing on the dotted line” – the process that transfers the home title from your name to the buyer. The weeks and months of anticipation are all settled in the couple of hours that a closing takes.
Generally, the closing occurs at the office of an attorney, a realtor’s office, or the registry of deeds. Closing procedures vary depending on where you sell your home. In some locations, the buyers and sellers attend the closing, along with the buyer’s and seller’s real estate agent. Typically, the closing agent will review all of the home sale components and obtain signatures to finalize all the agreements.
What to Expect at the Closing
It may seem like you’re faced with paperwork at every juncture of the home-selling process, but it all culminates at the closing. A number of documents are typically dealt with at this time:
- Settlement statement
- Loan papers
- Title insurance
- Homeowners’ insurance
- Title or deed
- Down payment
- Closing costs
- Tax stamps
The closing is your final opportunity to make certain that everything related to selling your home is correct. That’s why it’s important to do some preparation before you attend the closing, so that you understand exactly what’s involved.
What Will You Need
Compile what you need and review all documents beforehand to help to make the closing as trouble-free as possible. Your real estate agent may go over the various items with you in advance.
It does take a little time to get organized for the closing, but its well worth the effort. Once it’s over, you’re now on your way to new adventures.