Selling Process
How the Selling Process Works
Selling a home can be a stressful event. It’s your home, the one you lived in and created memories and love. That emotional attachment can be difficult to part with.
Using an agent to help you sell that home will give you unbiased professional advice and manage the stress of selling your home.
Deciding To Sell
Why are you Selling? Are you looking to move to a larger home, relocating to a new area for work, downsizing with the kids out of the house, too big of a headache to upkeep and/or too much of a financial strain, or moving to be closer to work or school districts? There are various reasons why someone would want to sell their home. Each seller has different motivations. Knowing why you are selling and the consequences are important. For example:
Not enough space/moving closer to work: You could sell your home and then find out you are priced out of a larger home in the area. Knowing what the market conditions are can help you determine if buying a larger home makes financial sense or maybe considering renovations or an addition.
Too much of a financial strain:
You might sell your home and like above not find a suitable home for less. Looking at your expenses, refinancing at current lower rates could be an alternative to selling your home. If facing foreclosure, you also have alternatives such as forbearance, refinancing, or local and Federal programs to help homeowners in distress.
Relocating: How long are you planning to relocate. Will you buy or rent at your new location, how much is your home costing you, and how much will you net from selling your home, and how much a new one will cost you are questions you should ask. If planning to return, maybe renting your home and creating positive cash flow could be an alternative.
Knowing why you are selling and the consequences (what will I buy after for how much, how much will I get for my home, what are my tax liabilities) will make it easier for you to determine if selling your home is right for you and meet your financial and lifestyle goals.
Is the Market Favorable?
Working with us, you will receive the most up-to-date market information and understand if the market is favorable and which steps to take to have a successful outcome. Home prices, demand, supply, rates, financing conditions (loose or tightening), homebuyer preferences, terms and conditions, and types and number of contingencies made on offers in the local area will affect your home price.
With us, you will know exactly how the market is doing and how it impacts your home and determine if it is the right time or wrong time to sell. A good agent will look out for your best interest even if that interest says to walk away and not sell.
How will it impact my Finances?
Selling your home has financial and tax implications. We will work with you to determine the potential proceeds of selling your property, and understand the known tax implications. It would be best for all sellers to consult with tax professionals to get professional advice on tax liabilities and planning estate strategies to reduce those tax liabilities.
When Should I Sell?
Is the market right for selling your home and how much time do you have to sell your home are important questions to ask. If you need to sell quickly, we can give you a market analysis and marketing plan to aggressively get your home to market and sell quickly for the best price. If there is no need to sell quickly, you can take steps to prepare your home for listing.
Making repairs, maintenance, upgrades, and renovations can increase your home appeal to homebuyers and dramatically increase your returns. We can review the current market conditions, and buyer trends to determine which repairs and upgrades to make to and better market your home, and using analytics determine the options that will maximize your returns.
Who Will Sell My Home?
You can decide to sell your home yourself. There could be good reasons to go that route. However, statistically FSBOs, For Sale by Owner, already have a buyer before putting the home for sale (75% of the time). They tend to sell their home to friends, family, or investors that have shown interest in their home or estate purposes before listing and many cases never go on the market at all.
FSBOs also receive fewer offers and less for their home. Marketing a home isn’t easy. Being able to market your home to as many potential buyers is the best way to gather as much interest and as many offers as possible and guarantee the best price and fastest closing time. Agents use tools, networks, and marketing to maximize your home visibility and attract buyers. Agents will also navigate the endless paperwork, advise and help negotiate offers, and get you to closing on time.
Pricing My Home
One of the most difficult things to do is to price your home right. FSBOs have difficulty pricing their homes right to get offers and sell quickly. It takes a lot of market data to create a pricing strategy that will effectively attract the most number of buyers and offers. Understanding why a home down the street sold and why another up the street didn’t is important to understand along with many other market factors how to price a home to sell.
Pricing your home right will get people through the door and bidding. The wrong pricing and all you will hear are crickets, forcing you to reduce your price and reduce your appeal. If you are a buyer and see a home drop in price what would you think? Is there something wrong with the house? If they take a $50,000k price cut then maybe they will take $85,000. Buyer psychology is important to understand and how your price will appeal or repel them.
Preparing to Sell
If you have time to sell your home then one of the best things to do is prep it for sale. From minor cosmetic touch-ups to major renovations, one can do a lot to increase the appeal and value of their home. We can help you determine which ones will make sense and will return the most for your investment The following are a few things you can do to prep your home for sale:
- Deep Clean and Declutter: This is one of the simplest ways to increase your home value. Making a home clean and spacious to potential buyers can increase the perceived value of your home.
- Curb Appeal and Garden: The first thing prospective homebuyers will see is your front yard and front façade. Have the grass cut, put down some mulch, trim the bushes, fix the gutters, plant some flowers, put in a black door (homes with black doors statistically sell for up to $6,000 more than with a door of another color). First impressions count.
- Property Repairs: Simple repairs and upgrades can instantly bring value to your home. Stopping a door from creaking, repairing or replacing handles and knobs, a fresh coat of paint, new carpeting, and lighting can change the look and feel of a room. Lighting is especially important. From changing light bulb color/intensity to new fixtures, a home can turn instantly brighter and warmer to buyers and is relatively inexpensive.
- Disclosures and Inspections: This is a tricky one. There are legal requirements for disclosures. If you know something is broken then you have to disclose it and potentially have to pay to repair it or negotiate the repairs. Having a home inspection before you list can help you determine what needs to be fixed or upgraded but also subjects the seller to legal disclosures. The procedures involved in disclosures are there to protect the seller and buyer equally and avoid issues during closing and even after. At the same time having a home inspection report available to buyers can reassure them and forgo their own home inspection getting you to closing faster. Once you know, you have to disclose.
Home Selling Guide
Lights, Camera, Action
Now that your house is ready it’s Lights, Camera, Action. We will bring the technology to your home to market it globally or down the street online. We do this with professional photography, 3D tours, video, and drone photography. We bring the lights and the cameras to your home and make it a star overnight. We understand that the world and buyers have changed. Putting up a sign and an ad in the local newspaper isn’t going to attract the attention your home deserves. So we have developed a marketing plan that takes full advantage of today’s technologies and innovation to reach and appeal to buyers. To learn more check out our marketing strategy plan.
What is a Good Offer?
If you didn’t know what your home was worth then how would you know what is a good offer. The good news is you got an agent that did a great CMA (Comparative Price Analysis) and priced your home right and got multiple offers above the asking price. But….
The Price Is Not Always Right: It might be the right price but is it the right offer. Is the offer negotiable? Does it have too many contingencies, is there another offer with fewer contingencies and a faster time to closing that can save you a mortgage payment and lower your costs? Will the buyer get the financing and be able to close at all?
These are some of the questions we will advise you on and determine the offer to accept at the right price on the best terms. We take our ethical and fiduciary responsibility very seriously. It’s our reputation and your home. We will help you fairly negotiate contractual terms to your best advantage making sure all parties find a win-win scenario beneficial to all. We will always advise you on the pros and cons of every offer, your net proceeds, potential roadblocks and issues, and liabilities.
Contingencies: Contingencies are conditions that must be met before a contract becomes legally binding. For example, a buyer may ask for a contingency asking that the contract is binding once an inspection and/or appraisal has been made. If the buyer cannot perform the inspection due to no fault of theirs, then the contract can not be binding. Contingencies are a way out and to reduce risk. If the inspection is contingent that there are no major issues like the foundation cracking, roof about to fall in, a buyer can walk away. Contingencies can work both ways, for buyers and sellers, to walk away or reduce risk.
Say there is no closing time contingency or on financing. Would you as a seller want to wait forever to close or the buyer to obtain financing? No, you would want to back out and find a better offer or go with a backup offer. Too few contingencies and either the buyer or the seller have no way to back out if something goes wrong. Too many and it could drag out the closing process. The key is to find the right Goldilocks amount that makes sense for both the buyer and the seller. An agent’s role is to help you determine what contingencies make sense and are in your best interest.
Pre-Approved vs Pre-Qualified financing offers: Pre-qualification is usually the first step in the mortgage process, and pre-approval is the next step. Pre-qualification means the buyer supplied their financial history and other documents to the lender which reviewed them to estimate how much mortgage they may qualify for. The lender did not do an extensive review and verification and could potentially change the numbers after verifying the information.
Pre-approval is very similar, but it requires more extensive documentation and verification of income, assets, debts, and a hard inquiry on a buyer’s credit. A hard inquiry is a request for someone’s full credit history. Pre-approval will tell the lender how big or small a loan a buyer can take on as they verified their information and are guaranteed to be approved for. For sellers, pre-approved is better as it tells them that the buyer’s offer is less likely to have issues with financing and more likely to close on time.
After Acceptance
Once you accepted the offer the next step is to sign a finalized contract called the purchase agreement. It outlines the following information:
- Identifies all the parties (buyer and seller)
- Includes a Legal description of the property
- Condition of the home
- Property disclosures
- Includes financial details such as purchase price, buyer financing or cash offer, earnest money deposit amount, closing costs (and who will pay what)
- Contingencies
- Items conveyed in the sale (appliances, fixtures, etc.)
- All seller concessions, repairs, or credits
- Timelines and deadlines
- Date of Closing
Once the purchase agreement is signed and the earnest money is deposited, the buyer has the legal right to purchase the property if all agreed-upon conditions are satisfied. You’re now moving the sale into escrow.
Selecting a Closing Agent.
Usually, a title company and sometimes an attorney will be selected as the closing agent. Their role ensures a clear title to real estate. They will research the complete recorded history of your property and certify that your title is free and clear of encumbrances (eg. mortgages, leases, or restrictions, liens) by the date of closing; and all new encumbrances are duly included in the title.
Inspections and Appraisals
In normal times buyers will have the property inspected by a licensed inspector within the agreed-upon time frame (today we are seeing homes close with few to no contingencies). If the purchase agreement has a contingency on a home inspection and there are major issues they can back out of the deal.
If there is a contingency on the condition upon obtaining financing, then the property will be appraised by a licensed appraiser to determine the value for their lender. The appraiser is chosen by a third party. It is always good for agents to prepare a packet for the appraiser with all the information about the home including CMAs. If the seller opted to have a home inspection before listing, this document would also be provided to help the appraiser conduct a thorough appraisal.
Other Contingencies.
If any other contingencies exist on the contract they will need to be fulfilled as well. Some other contingencies include:
- Association Contingency: If there is a homeowners association, there could be a clause based on the review of the association documents and financials.
- Kick Out Clause: This is usually a short-term clause that is only good for a few days. It would state that if a better offer comes within the given time frame, a seller can move forward on a purchase agreement with a new buyer after giving the first buyer notice.
- Home sale contingency: It is basically what is says. The buyer might need to sell his current home first before buying yours. If they can’t sell it then you or they can back out. As a seller, you probably won’t want to wait for months and miss out on other buyers.
Once the outcome of the inspection, financing and others contingencies have been successfully resolved within the allotted time then you are ready to close. Sometimes they don’t and as a seller, you will have to decide how to respond to them. Maybe the home inspector finds a leak and you will have to negotiate to have it repaired or discounted on the purchase price. Maybe the appraisal comes below the selling price and the buyer can’t make the difference.
The good news, just because the appraiser said so doesn’t mean it’s final. We would ask for a copy and review it. Then send a response with copies of all comps and supporting documentation, and ask based on the merit of the arguments that the appraiser reconsiders their determination. A second appraiser can also be requested as well, if the buyer agrees and is willing to pay for it.
Closing Day
It’s closing day. You aren’t done yet but only a few more yards remain before the finish line. What’s left to do:
Cancel Home Services and Utilities: Reach out to all the services your paying for your home to cancel any services. I will provide you with a list of telephone numbers and emails of common services you want to cancel. We will also help you find movers as well.
Final Walk-Through: The final walk-through is just a formality in most cases. The buyer visits the property the day before or the day of closing to verify that the home is still there, all is in working order, and that there are no extra items left behind.
Closing
Your closing will likely be held at the office of the title company or attorney selected. You’ll want to bring two form of identification and all relevant paperwork you received or signed. The agreements signed at closing are between the buyer and seller, but also between the buyer and the lender. You only need to worry about the ones between you and the buyer.
After all the documents are signed, all the closing costs and escrow items are paid, all fees and cost are settled (most will be for the buyer), your mortgage is paid off, you are wired your profits on your home, and the change of title is sent over to the courts to be recorded. Congratulations you just sold your home.
The whole process took about 74 days. The average time to sell a home in the Washington, D.C. in 2020 was 39 days to get an offer and an additional 35 days to close for a total of 74 days.
Highest Legal, ethical, and fiduciary standards
To have a successful sale a legal and binding agreement between a buyer and a seller. Local and Federal laws are just the tip of the iceberg. We make sure we do our due diligence to create a beneficial and binding legal agreement between all parties and protect you our client. Some important tips to keep in mind to make the selling process end successful:
- Maintain written records of everything: For transparency and clarity it is best to maintain records of everything. All agreements including offers, counter offers, contingencies, addendums, and other aspects of the offer, sales process be in writing. The documentation requirement is daunting but we are here to assist you in drafting and will keep copies of everything.
- Keep and stick to a schedule: All dates, deadlines must be clearly stated and meticulously tracked to make sure of compliance to the terms of the offer and contract. Staying on top of milestones and deadlines will ensure a smoother flow of negotiations and settlement. During the entire sales process we will keep you constantly updated and record and track milestones using technology such as slack, project management tools giving you full visibility and transparency across the entire process.