Before you sell your home, there are some basic things you should think about: is the house ready to sell? How do I set the price? How much am I going to make? These questions are all important, but the most important decision you will make regarding the sale of your home is to choose the right agent. A CRS has the experience and training to help you make the right choices. Remember, you don't know how important a good agent is until something goes wrong.
It's a question thousands of homeowners ask themselves every year. If you're one of them, you have some difficult decisions awaiting you. Selling your home can be a long and complex process, so it's important to think about all the potential implications — both positive and negative — before choosing to go it alone.
To help you make the decision that's right for you, below is a list of some of the duties and responsibilities you would face as an independent home seller.
Your first responsibility as an independent home seller is assigning your home an accurate value, meaning the highest price a ready, willing and able buyer will pay.
As part of the decision, you need to consider comparable properties in your area, current market conditions, as well as the cost of financing and its availability.
Remember that your listing should be in line with comparable properties and market trends — you don't want your home to linger on the market or sell for a lower price than you might have otherwise received.
You should remember that "For Sale by Owner" typically attracts bargain hunters who may expect you to lower your price since they too are looking to save money on REALTOR® commissions.
Independent home sellers must also market their properties to the copylic. That means:
- Putting up signage that is consistent with local ordinances
- Developing and paying for display and classified ads in your local newspapers
- Holding open houses
- Working to ensure your home gets good word-of-mouth exposure among your friends, neighbors and community organizations
As an independent home seller, you would be responsible for all showings of your home.
With that in mind, always encourage prospects to make an appointment, and discourage drop-ins.
Work to screen the "buyers" from the "lookers" — curiosity-seekers are common at "For Sale by Owner" homes.
You should also pre-qualify potential buyers to ensure they can afford to buy your home.
When the time comes to negotiate, you'll need to be prepared and informed.
Try to resolve any doubts your buyers might have, work to keep their interest high and make a final agreement as quickly and efficiently as possible.
Once an offer is made, agree on the price and terms, respond to objections and try to be responsive and flexible to legitimate concerns.
Every independent home seller should have an attorney or other qualified individual to preside over all agreements.
That individual will draw up the contract and manage the sale proceedings and closing. He or she might also help you set the closing date and time.
You should be sure to include a list of items you want written in to the contract, including personal property that is to remain with the home (the refrigerator, microwave oven, dishwasher, etc.), or items excluded in the sale.
Also remember that as the seller, you are obligated by law to disclose any material defects in your property to the purchaser.
Selling your own home takes a lot of hard work and know-how. Making even a small mistake can spell serious trouble. By working with a REALTORâ who's a Certified Residential Specialist, you gain the services of an experienced professional with advanced training in residential sales. Not only does that free you from the time consuming tasks involved with selling your home, it gives you the added expertise to help maximize the profit from your home.
- Pricing your home accurately by conducting a Comparative Market Analysis. This research will help support the price with comparable facts and statistics
- Advertising your home in the most visible outlets in your area
- Holding open houses
- Accessing out-of-town buyers through the nationwide network of Certified Residential Specialists
- Suggesting easy ways to make your home more attractive to potential buyers
- Exploring alternative financing methods that can help relieve a potential buyer's financing concerns
- Scanning the Multiple Listing Service to locate active buyers through a special nationwide network of resources
- Acting as a third-party negotiator between you and the buyer, making sure the selling price and the buying price are optimal for both parties
- Screening prospects so you don't have to expose your family to any stranger that knocks at your door
Think of the services that a Certified Residential Specialist provides as an investment, one that immediately pays for itself in the quick, efficient and successful sale of your home.
Pricing your home is both an art and a science. Achieving optimal price is the result both of objective research into comparable properties and a gut feeling about your property and the current market.
The right price should:
- Attract buyers
- Allow you to earn the most money possible
- Help you sell as quickly as possible
The simple fact is, price is the number one factor that most homebuyers use to determine which homes they want to view. And it's important to remember that, although the price is set by you, the value of the home is determined by the buyer. Try to avoid allowing your enthusiasm to impact your better judgment — overpricing is a common mistake that can cost you in the end.
With that in mind, here are some reliable guides to use when pricing your home, all of which come recommended by the Council of Residential Specialists — a select group of REALTORS® with significant experience and advanced training in residential sales.
- How quickly you need to sell
- The amount of competition in your price category and area
- The availability, flexibility and affordability of financing
- The sale prices of similar homes sold in your area during the past six months to one year
- The original cost of the property — price is determined by today's market.
- Any investments you've made in improvements
- The cost to build your home today
- Emotional attachment
- The opinions of friends and neighbors
- You might help sell similar homes that are priced lower.
- Your home may stay on the market longer.
- You could lose market interest and qualified buyers.
- You might create a negative impression of the property.
- You could lose money as a result of making extra mortgage payments while incurring taxes, insurance and unplanned maintenance costs.
- You may have to accept less money.
- A potential buyer may face appraisal and financing problems as a result of the inflated price.
With a mix of real-world experience and advanced training, a Certified Residential Specialist has the tools necessary to calculate the fair-market value of your home based on both the marketplace and personal considerations such as your must-sell date. Remember, the right price is the key to a successful sale. So work with a Certified Residential Specialist to price your home accurately the first time.
You work with a Certified Residential Specialist because he or she is best able to sell your home quickly and profitably. But remember, your relationship with a Certified Residential Specialist is a partnership. While they market your property and screen potential buyers, it's up to you to give your home a sprucing up that can go a long way towards a speedy sale.
With that in mind, here are some helpful hints gathered from Certified Residential Specialists across the country.
Hint: First Impressions are Lasting Impressions
The exterior of your home often determines how buyers will view the interior, so:
- Make sure the front entrance is clean and inviting
- Paint or replace your front door if it's faded or worn
- Add some paint to shutters, trim and any other outside feature showing signs of wear
Hint: Beauty is More than Skin Deep
Buyers often see the surface condition of your home as a sign of what's underneath, so:
- Keep windows and floors clean
- Replace faded wallpaper and glue any areas that have come away from the wall
- Repair worn woodwork
- Repaint scarred or dirty walls in a neutral color
- Steam clean carpeting or replace it if necessary
- Repair loose knobs, sticking doors and windows, warped cabinet drawers, broken light switches and other minor flaws
- Check and repair caulking in bathtubs and showers
Hint: Accentuate the Positive
Try to see your home with a fresh perspective and arrange each room to bring our its best attributes, including:
- Open draperies and curtains to let the light in during the showing
- Remove all unnecessary clutter from your attic, basement and closets to better display spacious rooms (consider storage or a garage sale to dispose of extraneous items)
- Arrange all your rooms neatly and remove excess furniture
- Keep fresh, clean towels in the bathroom
- Use candles or air freshener to give rooms a pleasant scent
Hint: Put Your Home in the Best Light
Strategically lighting your home, even during daytime showings, can create a cozy mood and highlight positive attributes of each rooms, so:
- Avoid the use of overhead lighting that makes rooms look washed out and lifeless
- Be creative and arrange lamps to help smaller rooms seem larger, and large rooms more intimate
- Use lighting to highlight the "living areas" of your home, such as a pair of chairs near a fireplace, or a table in a breakfast area
- Put the spotlight on the strengths and potential of your home
- Create the right mood and atmosphere given the room's function, color scheme, etc.
- Accent the positive aspects and unique features of each area of your home
- Define the space
- Bring the room to life
What is an appraisal?
A home appraisal is the process of getting a qualified professional opinion on the market value of a home. Lenders use this information to determine if a loan on the property is a good risk. There are many factors that determine the value of your home — age, condition, square footage, lot size, location, improvements, recent past sales, new zoning, etc. The appraiser will compare your property with similar homes that have sold recently. It is very important that the appraiser use current information on comparables in your neighborhood. Be prepared to provide this information if you do not feel the appraiser will have the latest facts. You can access this information on the Internet or from your real estate agent. Appraisal's typically range from $200 to $400, and are ordered by the lender as part of the application process.
Mortgage companies want to know that the sale price is consistent with the fair market value of the house before they approve your loan. Most appraisals come out near the asking price, but if it doesn't the lender may not approve your loan. They need to be sure that if you default on the loan, they will be able to recover their investment.
We recommend that you choose a state licensed appraiser. These are the only appraisers who meet the federal requirements of appraisal courses, continuing education, experience and licensing tests. Each state certifies appraisers according to federal guidelines, but only half the states require actual licenses.
Here are some things to look for:
- Is the appraisal company a professional organization? Are the fees reasonable? Will they process the report quickly? Can they provide references? Are they licensed in your state?
- What is the appraiser's specialization? Are they knowledgeable and experienced in your area and with your property type?
- Does the appraiser have access to the best data sources?
Although appraisals must comply with federal guidelines, they are still a subjective process. It can sometimes be difficult to determine the market value. Remember market value is not necessarily what the property is worth, but what someone will pay for it. When there are fewer houses on the market than buyers, market values increase. When there is an abundance of homes, values drop. In active markets, and those where properties vary within neighborhoods, it may be difficult to establish exact values. Also each appraiser is different. Some tend to appraise on the high side; others are more conservative. Two separate appraisers working on the same property, with the same data may come up with two different values. This is important to remember if the appraised value comes out below the agreed upon purchase price. The appraiser will inspect and measure the home (although this is not considered a home inspection) and compare it with at least three comparable homes in the area that have sold within the past six months. They will then adjust the appraisal to account for difference in the properties.
The value of the appraisal will affect your loan. If the appraised value is different than the purchase price, the lender will base the loan on the lower of the two numbers. This may hinder your ability to purchase the house. If you get an appraisal that is lower than the asking price, there are some things you can do.
- First contact the appraiser and ask for a review of the appraisal. Go over the report with the appraiser, they may not be aware of some improvements or recent changes to the local market.
- If you are still unhappy with the appraisal or disagree with the results, talk to your lender. They may be able to review the market value with other appraisers or order another appraisal.
- Get a copy of your appraisal. Sometimes, if the mortgage lender orders the appraisal, the appraiser gives copies only to the lender. Be sure your lender and appraiser agree to give you a copy of the appraisal.
- Another option is to renegotiate the purchase price with the seller using the appraisal as a bargaining tool.
- You could also increase your down payment to the mortgage company. They may overlook the difference if you put more money down, thus lowering their risk.
- Most important, make sure you feel comfortable with your appraiser and with the final report. Remember, you can always get a second opinion.
How garage sales can help you sell your home.
It's no secret that clutter-free, clean homes appear more attractive to potential buyers. So, if you're thinking about selling your house in the new future, holding a garage sale is a great first step toward presenting your property in the best light. Garage sales help:
1. Rid the house of clutter. A home with less clutter is easier for a CRS-designated Realtor? to sell.
2. Earn extra cash. Extra money is always helpful during and after a move.
3. Acquaint or re-acquaint with neighbors. Who knows? Maybe the neighbor knows a potential buyer.
4. Decrease moving costs with fewer boxes to pack and move.
How to Start
Go through one room at a time. Ask each member of the family to help by looking through his/her own belongings, especially in closets and drawers for items they no longer use or like.
"It might be a good idea to have a multi-family garage sale and consolidate with neighbors and friends. The families can share the cost of advertising and promotion, and will have a larger selection of items creating more of a draw," advises Toni Sherman, CRS, GRI, of Coldwell Banker Residential Brokerage in Glen Ellyn, Ill., and a past president of the Council of Residential Specialists. "A few days before the sale, contact a local CRS-designated Realtor? for complimentary, professional-looking garage sale signs."
It's tough to get rid of clothing because of personal attachments or memories. Of course, some special-occasion clothes, such as wedding dresses and baptismal gowns are keepsakes. But it's the day-to-day clothing that needs to be examined carefully. When choosing what to keep and what to sell, keep these questions in mind: " When did I last wear this? If it's longer than a year, place it in the garage sale pile. " Does it have a stain? If you have tried to get the stain out and cannot, give it away; or if it's a very visible stain, throw it out. " Am I still comfortable wearing this? Sometimes we can't seem to get rid of something but don't like wearing it. If that's the case, get rid of it. " Does it fit? If the clothing item is two sizes too small, don't wait to wear it until you lose weight, especially if you have held onto it for a long time. " What toys and clothing have the kids outgrown? Children's items are especially popular at garage sales, so be sure to include anything that doesn't fit or they no longer use.
If there are duplicate houseware items, select the better one and sell the other. Be sure small appliances work correctly. If they don't, consider throwing them out instead of selling them to someone else.
China, Trinkets and Valuables
Every home has odds and ends that sit unused, collecting dust. This can include extra settings of china, gifts from relatives and trinkets perceived as valuable. Real estate agents, like CRS designees, advise homeowners to sell them at a garage sale, consignment shop or online through a service such as eBay. Everyone knows that one person's trash is another person's treasure.
For homeowners planning to buy new furniture, downsize or change decorating schemes, CRS designees advise parting with furniture now rather than incurring extra moving costs. Keep family heirlooms and furniture deemed useful, but remember that well-maintained furniture and exercise equipment are especially big sellers.
Organize and Decide on Prices
Once the inventory is collected, it's time to sort everything by category. Group all clothing together on tables, bookshelves or mobile clothes racks, and do the same for toys, housewares and small furniture/appliances.
Determine the cost of each item based on estimates from lists of donated items. Booklets with this information are available through tax accountants, the IRS or groups like the Salvation Army or Goodwill Industries. Clearly affix price stickers to all items.
Assign each family member a job for preparing the items and then an assignment for the day of the garage sale. This might include managing the cash drawer from noon to 2 p.m. or answering questions about furniture from 8 to 10 a.m. Also, discuss price reductions with anyone who is working the sale, so everyone deals with buyers in the same way.
Notification About the Garage Sale
Homeowners can publish a brief notice about their garage sale in a local newspaper a week to a few days before, depending on its frequency. At least a day before the sale begins, post signs around the neighborhood with a clearly marked address and arrow pointing in the right direction. Much of the traffic at garage sales stems from people living or walking/driving through the neighborhood.
"If a homeowner is considering a move in the near future, spring and early summer are the best times to hold a garage sale and rid the house of clutter," Sherman says. "Before showing a home, it's important for home sellers to use a critical eye on the house inside and out. An organized, tidy home really does increase the interest of potential buyers."
Should I remodel before selling?
Remodeling or refurbishing a home requires a serious investment of both time and money. For many homeowners, the result is a home with quality appliances, luxury amenities and unusual touches that make it truly their own. But when it comes time to sell, many homeowners find that potential buyers don't fully appreciate the invested time, effort and money. In fact, Remodeling magazine's 2004 Cost vs. Value report, which compares cost-to-construct for a selection of remodeling projects, found that the average recouped at resale was 80.3 percent of the total dollars spent on the remodel.
"A great-looking property that's priced realistically will always sell faster than one without upgrades," says Wendy Furth, CRS, of RE/MAX Olson & Associates in Northridge, Calif. "Sellers who've recently remodeled typically tell their agents the price of each fixture. But, as a CRS-designated Realtor?, it is my responsibility to educate clients that they will likely not recoup those exact dollars. As hot or cold as the residential real estate market is, the dollar-for-dollar cost of remodeling doesn't sway market value."
Preparing a Home to Sell
For homeowners considering a move in the near future, completing several smaller household projects instead of an intensive remodel can work wonders. Following are a few ways to get started, but contact a local CRS-designated Realtor? for further information on increasing curb appeal, showing off the home's special features and ultimately increasing resale value.
First on the list for Furth's clients is to "clean up the mess," she says. "Homeowners should remove all personal objects from prospective buyers' eyes, and pack them away in boxes. This is the toughest part but also the most important. Once trinkets and clutter are packed away, go through the house and closets, and do it again."
She also identifies the front door as one of the most significant, simple fixes in a soon-to-be listed home, as it gives the first impression and is usually a good indicator of the rest of the home. Next, invest in a home inspection prior to any more work to identify troubled areas, hire a handyman to touch up simple paint issues and purchase a sellers' home warranty to protect against unforeseen challenges.
How to Ensure Remodeling Success
Before remodeling, Furth suggests a few things to ensure a successful outcome. First and foremost, "have a plan and stick to it," she advises. This means:
- Determine the budget. How much hard cash will be spent?
- Set a deadline. The last thing homeowners want is for a project to drag on forever. For owners planning to sell in the near future, a place to start is to determine what season is ideal for marketing the home.
- Identify the rooms. Select how much of the property to remodel and stick to that decision.
- Think of future buyers. Owners remodel for themselves but also for future buyers. Stay within reason because outrageous upgrades and specific appliances may never claim their true value at resale.
Hot Remodeling Trends
The Personal Retreat
Homeowners increasingly view their homes as a personal retreat away from the stresses of daily life. This includes meditation or yoga rooms, elaborate exercise rooms with surround sound, window seats for reading and relaxing, and household office space for sorting mail and charging cell phones. The National Association of Home Builders also says many homeowners now create the ultimate spa experience at home with cascading rainfall shower heads, showers and tubs with frameless edges, his and hers spaces, and furnishings such as decorative accents and chaise lounge chairs.
Luxurious Outdoor Living
Outdoor living spaces are now considered an extension of the living room, rather than a place for a picnic. Outdoor fireplaces are popular, and homeowners place them near custom-designed gardens, patios and decks designed for both relaxing and entertaining, says REALTOR? Magazine. Plus, creating a luxurious, practical outdoor space is often less expensive than building an addition to the home.
A Home for All Stages
Home buyers seek functional properties with personality, rather than the cookie-cutter homes of yesteryear. Lighting fixtures and tiling are often used to create a specialized feel, says REALTOR? Magazine.
Functional also means accommodating family members in all stages of life. Baby boomers' current homes may provide shelter as they age, so reinforced tubs and shower enclosures to accommodate grab bars are a sought-after feature. Many homeowners create spaces to host extended family visits or aging parents. In California, Furth has noticed many homeowners add space for another generation. "The Asian and Latino ways of living with several generations residing under one roof is becoming very popular," she says.
Thinking about selling your home yourself? Weigh the pros and cons of FSBO's for yourself.
"Should I sell my home myself? It's a question thousands of homeowners ponder each year, and the majority is motivated by a perception that the For Sale By Owner (FSBO) process saves sellers time and money.
"FSBOs often make the decision to sell their houses themselves because they think the market is hot, and the home will sell quickly," says John MacGilvary, CRS, of Prudential Verani Realty in Londonderry, N.H. "Certainly, they want to save the commission and quite honestly feel the market affords the opportunity to maximize their net return."
Unfortunately, the do-it-yourself approach doesn't always end successfully. Before making a decision, here are a few things to consider.
1. REALTORs? sell homes for more money.
Some 61 percent of FSBOs sell their homes themselves to avoid paying the commission fee. However, the typical FSBO home sold for $25,200 less than an agent-assisted home. That's $163,800 for FSBOs, compared to $189,000 for agent-assisted homes.*
2. REALTORs? understand the ins and outs of the complicated transaction process.
It is a REALTOR's? job to guide and support clients during the sale of a home. They also help mitigate the overwhelming and time-consuming contracts, forms and disclosure statements required throughout the process. The most challenging tasks for FSBOs include: preparing/fixing up the home for sale; getting the price right; understanding and completing paperwork; selling within the time planned; and attracting potential buyers.*
In addition to their deep knowledge of the real estate process, MacGilvary reminds FSBO sellers that CRS-designated REALTORs? care about where and when they want to move, as well as how much money is needed from the transaction. "CRSs demonstrate client service by involving sellers as much as they'd like. On the front end, agents know that marketing the home effectively leads to broader exposure. They appropriately follow-up with each prospect and alleviate a common FSBO fear of missing out on reaching the right people."
3. REALTORs? know how to market the home effectively.
Getting the word out is essential for a successful and timely sale, so agent-assisted sellers benefit from frequent use of a wide array of marketing tactics. FSBOs rely mostly on yard signs, newspaper advertisements and open houses to incite buyer interest. Only 24 percent use the Internet to market their homes, while 72 percent of agents do.*
"The biggest challenge for FSBOs is getting enough exposure for their home," MacGilvary continues. "The newspaper captures only 1 percent of potential buyers, the Internet captures 16 percent, and the Multiple Listing Service (MLS) captures 51 percent.
"When FSBOs convert to listing with a REALTOR?, they find the tools we use to reach potential buyers very valuable. We go beyond the MLS by reaching buyers who visit www.REALTOR.com, AOL, Yahoo! and MSN. CRS-designated REALTORs? in particular enjoy extensive relocation networks that bring in buyers from all over the country."
4. REALTORs? are trained to overcome objections, negotiate and remain impartial.
Selling and buying real estate is an emotional process for homeowners. When its time to negotiate price, REALTORs? are their clients' advocates and can compile statistics and research, balance offers and counteroffers, and handle many of the contingencies that can be frightening and frustrating for buyers and sellers working alone.
"FSBOs underestimate the amount of follow-up required," MacGilvary says. "Potential buyers tour their homes, but the owners typically are not sales people and end up telling more than selling. The pride of ownership doesn't translate into a sale follow-up does. When REALTORs?, instead of owners, work with buyers, it helps shield the emotion of buying and selling away from the negotiation."
5. REALTORs'? clients are satisfied.
In 2004, 83 percent of sellers worked with a real estate agent. The majority of sellers who work with agents believe they benefited from their REALTORs'? experience and knowledge of the real estate market, as 80 percent report they would use their agent again or recommend him/her to others. Of FSBOs who sold their home, only 50 percent said they would sell their current home themselves.*
MacGilvary frequently talks with FSBOs in his area to make sure they're equipped with the proper information. "I focus on their dreams and how real estate will help achieve them. Many times, I conduct a market analysis and develop a marketing plan to show these sellers how to get where they want to go on time. Even if they continue to market their own home, I've provided them with valuable tools."
*The 2004 National Association of REALTORs? Profile of Home Buyers & Sellers
Frequently Asked Questions by Home Sellers.
Frequently Asked Questions by Home Sellers
Is there a "best time" to put my house on the market?
Answer: Along with economic factors such as supply and demand, the time of year you choose to sell can impact both the length of time it takes to sell your home and its ultimate selling price. Weather conditions are more or less of a consideration depending upon where you live. Typically, however, the real estate market picks up around February, continues strong through late May and June, and tapers off during July and August. September through November generally marks a rally not as strong as late winter and spring, followed by a slowdown from Thanksgiving through and beyond the Christmas and New Year holiday period.
How should I price my home?
You must take into account the prevailing state of the real estate market and ecopyly local market conditions. The real estate market continually changes, and market fluctuations affect property values. So it is critical to determine your listing price based on the most recent comparable sales in your neighborhood.
A comparative market analysis provides the background information on which to determine your listing price. Review the comparable sales data provided to you by the different agents you've interviewed. If all agree on a specific price range, you're wise to go with this consensus. And be wary of an agent whose opinion of value is much higher than the others.
What's the downside, if any, of pricing my home on the high side?
Several factors may come into play:
- You might help sell similar homes that are priced lower.
- Your home may be on the market longer.
- You could lose market interest and qualified buyers.
- You might create a negative impression of the property.
- You could lose money as a result of making extra mortgage payments while incurring taxes, insurance and unplanned maintenance costs.
- You may have to accept less money.
- A potential buyer may face appraisal and financing problems resulting from the inflated price.
How long should it take to sell my home?
Here again, it depends upon market conditions. But if your home is priced right and in good condition, you should be able to expect the minimum market time in your area. On the other hand, if your home is overpriced and needs work, the opposite likely will be true.
As a seller, what are my disclosure obligations?
Obligations to disclose information about a property vary from state to state. The focus on disclosing defects has become more intensive in recent years, often including locally mandated disclosure forms for revealing any material defects. Typically, you must disclose all the facts affecting the value or desirability of your property that are known or accessible only to you. For example, you are required to indicate any significant defects of which you are aware about the home's major systems, the presence of environmental hazards, room additions or repairs made without the necessary permits or not in compliance with building codes, zoning violations and much more.
What should I do to prepare my house for sale?
There are many things you can do to make your home show better without spending a lot of money. Following are some things you can do to make sure would-be buyers are impressed when they arrive, also known as "curb appeal."
- Paint your front door, shutters, trim and any other outside features showing signs of wear;
- Wash windows inside and out, replace screens or glass as needed;
- Replace faded wallpaper and/or glue areas that have come loose;
- Repair worn woodwork;
- Repaint scarred or dirty walls in a neutral color;
- Steam clean carpeting or replace it, if necessary;
- Repair loose knobs, sticking doors and windows, warped cabinet draws, broken light switches and other minor flaws;
- Check and repair caulking in bathtubs and showers;
- Open draperies and curtains to let the light in during the showing;
- Keep fresh, clean towels in the bathroom;
- Use candles or air freshener to give rooms a pleasant scent; and
- Strategically light your home, even during daytime showings, to create a cozy mood and highlight positive attributes of each room.
Many discount real estate brokerages charge a very modest fee for services. Why shouldn't I use one of them to sell my home?
Typically, all discount real estate brokers do is to put homes in the multiple listing service. They won't guide you through the sales process, market or show your home, qualify your prospective buyers, handle the often-delicate negotiations with buyers or do many other vitally important things that a full-service real estate professional will do on your behalf and best interest.
How can I be sure a buyer is qualified and that the loan is not on shaky ground?
This is another valuable service your listing agent will provide. An agent representing you as seller should communicate with the lender in advance and have some assurance that the buyer is pre-approved for a loan at the onset of the contract negotiations. Ideally, the buyer is a non-contingent buyer and a pre-approved buyer.
Do I have to sell to the person with the highest offer?
No. If you prefer a lower-priced offer, perhaps with a better-qualified buyer and/or more attractive terms, you can accept that offer instead. Or you can give counteroffers to one or more of the buyers. Beware, however, that if you turn down a full-priced offer, you may owe your agent a full commission even if you decide not to sell your home.
Can I back out of my contract with one buyer and accept a new, higher offer from a second buyer?
It is very unwise to try to back out of the contract because a purchase offer that's accepted is a legal contract that the buyer can seek legal remedies to enforce.
Who is responsible for making repairs, if any, as a result of home inspection reports conducted for the buyer?
Because the buyer orders one or more home inspections doesn't obligate the seller to make repairs or modifications as a result of those inspections. Typically, however, inspection reports are used to negotiate repairs of major problems, or environmental or safety hazards that may be noted. The purchase contract should provide guidance for these negotiations.
How do I calculate the net proceeds on the sale of my home?
From the proposed purchase price you typically subtract:
- Balance on your present mortgage;
- Other liens, if any, such as equity loans and judgments;
- Broker's commission;
- Legal costs of selling, such as escrow agent's and attorney's fees;
- Transfer taxes;
- Unpaid property taxes and water bills; and
- If required by the contract, items such as the cost of survey, termite and other inspections, necessary repairs, buyer's closing costs and more.
What if as a potential seller, I decide to defer selling and, instead, rent my home?
If and when you decide to sell your home, you will not be eligible for a tax-free capital gain - up to $250,000 for one person and up to $500,000 for two - unless you've lived in the home as your primary residence for at least two of the five years before you sell.
Is the tax-free capital gain on a home sale a one-time benefit? Also, must I reinvest that gain in another property?
The answer to both questions is no. You can qualify for a capital gain with each primary home you own and sell and can do this every two years if you so choose. As well, it is not necessary to re-invest your proceeds in another home.