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The process of selling your home yourself can be a very intimidating, frustrating and
time-consuming, but ultimately rewarding experience. We are committed to helping
you successfully sell your home, and we hope that you can accomplish this through your own
efforts.
First off, we want to point out a few things to keep in mind as you begin your
home-selling journey. We hope that this will prepare you for this trip and help you
understand the highs and lows of the selling process.
Get mentally prepared and be realistic in your expectations...
- The average For Sale By Owner home seller spends approximately $700.00 during their For
Sale By Owner home selling process. This breaks down to $60.00 for their signs, $240.00
for paint and home preparation, and $400.00 for advertising. These statistics represent
home sellers who successfully sold their home and those who did not successfully complete
the sale of their home through the FSBO process. Keep in mind that 70% of all home sales
occur because of the sign in the yard. The key is to get the potential homebuyer to YOUR
yard!
- What are your advertising/marketing plans? The absolute best and most cost-effective
means of advertising your home are a combination of Internet Advertisement, local
newspaper classified ads and brochures in your yard.
The For Sale By Owner segment of the residential real estate
market is the fastest growing market today.
- In 1999, Forrester Research and the National Association of Realtors projected that the
FSBO market segment would grow to as much as 50 percent by 2010, up from 20 percent of the
market in 1999.
- In April of 2001, Gomez Research, a leading independent technology and trends research
firm, estimated that the FSBO market would be as much as 40 percent by 2005.
The total residential real estate home sales market was approximately 6.6-million homes
in 2000 for North America, of which approximately 1-million were new construction and the
remaining were pre-existing homes. This would mean that currently the FSBO-attempt market
is approximately 1.5-million to 2-million homes and is expected to double over the next
four years. Did you know that the residential real estate market is the second largest
market in North America? Second only to the automobile industry, the residential real
estate market has sales of approximately $1.3-trillion dollars per year. In 1999, home
sellers paid over $35-billion in fees to real estate professionals for the sale of their
home.
Preparing Your Home For Sale
There is a sales and marketing analogy that states: "perception is reality."
An acceptance of this analogy as fact will help you greatly in the preparation of your
home for sale. What's good, what's bad, what's in, what's not, what needs work, what needs
help, etc., will most likely not be as apparent to you as you might think. The reality is
that your perception is jaded! You live here! You have grown accustomed, comfortable,
accepting and most likely in love with your home. Now for reality: Your home to you is a
house to a prospective buyer. This building of wood, cement, bricks, and shingles will
only become the buyer's home after they have taken possession of the property and invested
their time, money and emotion into the house as you have done.
What have you done to prepare your home for sale? Let's assume that you have done the
basics of thoroughly cleaning your house and removing any unsightly junk from all rooms,
closets, garage, basement, attics, storage buildings, etc. Great, the basics are done. Now
for the real challenge, what is the reality of your home's readiness for sale? Are the
carpets clean? Is the paint clean, un-chipped and in good shape? Is your landscaping well
kept, trimmed and orderly? The reality is that the older your home, the more likely it is
that certain things need to be done to get your home in selling condition.
We will briefly highlight a few key things you should consider and do prior to placing
your home "on the market" for sale. A great way to prepare your home for sale is
to ask someone that you know (a neighbor, a relative, a real estate professional) for
her/his honest and objective opinion of your home's cleanliness, appearance and overall
attractiveness from their perception. (Perception is reality!) Now this will require you
to thicken your skin and you MUST promise the person or persons you ask for this
assessment that you will not take this personally nor will you in an way hold their
opinion and suggestions against them. If you can't do this, you may not be a good
candidate to sell your home yourself.
Things to keep in mind when preparing your home for
sale:
- Outside of your home being priced incorrectly relative to the marketplace and stopping
your selling attempt too quickly, the primary reason your home will not sell is that the
carpets are dirty. Fact, dirty carpets create an immediate perception of lack of quality
and will reduce the likelihood of you successfully selling your home.
- Chipping or cracking paint around doors, windows or anywhere on your house will
significantly reduce the likelihood of a successful home sale. The average FSBO customer
using our website spends $115.00 dollars on paint alone to prepare their home for sale.
- Overgrown landscaping is a major turnoff and may prevent the prospective homebuyer from
stepping foot on your property. Fact is, landscaping has nothing to do with the quality of
your home and the beauty of your home's interior. Perception being reality means that a
buyer may perceive overgrown landscaping or a poorly kept lawn as a poorly kept home.
- Are your windows clean? Natural light helps with the impression of your home and will
make your home seem more spacious and inviting. If you think it may need cleaned, clean
it! Perception dictates the reality of the situation to the potential homebuyer.
The most important point in the preparation of your home for sale is to address and fix
any problems with the home. Some States/Provinces have laws that will require you to
completely disclose any issues with your home and virtually all mortgage companies will
require any significant problems or issues with the home to be rectified prior to
underwriting a mortgage for the house. An inspection of your home will be required prior
to the closing of the transfer of ownership. Deal with the problems head-on and you will
eliminate a probable roadblock to a completed home sale and have one less issue to deal
with as you go through the home selling process.
Pricing Your Home For Sale
Pricing your home correctly, or incorrectly as the case may be, is the most common
reason for a home not selling. Priced correctly, you home will sell. Remember, information
is power, and just like the information available to you regarding selling your home,
there is an incredible amount of information available to the homebuyer about your home
and homes like yours that are for sale. Always assume that you are dealing with a highly
informed buyer and you will avoid embarrassment or possible contradiction during your
negotiation processes.
How Do I Price My Home Correctly?
There are several excellent ways to obtain good information about the value of your
home relative to the marketplace.
Probably the best way to obtain an accurate price for your home is by having a real
estate professional complete a competitive market analysis (CMA) of your home. This
involves having the real estate broker or agent come to your home to examine its
condition, décor, location, landscaping, etc. This is a service that can be obtained with
minimal cost to you. The downside to the CMA is that you will now be known to the
particular real estate professional and will likely be aggressively called and marketed to
by this person wanting to list and sell your home.
Another option is an Electronic Appraisal. This online valuation report establishes
property values through recent comparable home sales. It includes the sale date and sale
price for similar homes in your area, price trends by zip/postal code and county, and
more.
A third option, and probably the most effective in protecting your equity is to
have a professional appraisal done.
You may also choose to do some legwork to find out what homes similar to yours are
currently listed (priced) for sale in your neighborhood and surrounding areas. You can do
this by looking at various realty company Websites; directly calling and asking the home
seller; collecting brochures from these homes and looking at Homes For Sale magazines or
newspaper advertisements.
The bottom line is your home must be priced competitively. You know the hard work,
upgrades, custom paint, wallpaper, window treatments, etc., that you have paid for during
your time of ownership of your home. The question is, will the buyer recognize these
upgrades and be willing to pay for them. Remember, one of the first actions that occur
when a homeowner moves their home from a FSBO sale format to a real estate professional is
that they are instructed to lower the price of the home. A double whammy; the reduction in
the sale price of your home and a commission to be paid on top of the reduced price. Take
your time and get the pricing right, it may save you thousands of dollars in the long run.
A final thought regarding the pricing of your home is to determine the length of time
you are willing to take in selling your home. If you're looking to sell your home more
quickly, then your pricing will need to be more competitive than if you have no time
constraints. Potential buyers will find your home if you actively advertise your home and
provide access to good information about your home, but the buyer will quickly lose
interest if they see that your home is priced too high relative to market competition.
Marketing Your Home
Marketing your home is your chance to differentiate your home from the dozens and
potentially hundreds of other homes like yours for sale in your area. The questions you
need to address in the marketing of your home are; Why your house; What makes your house
the better option; What caused you to love this house; and What are the key features and
benefits of your house. We have quickly addressed each of these questions below, which
will help you develop a good marketing plan to use in your advertising strategies. The
idea is to get the best "bang" for your buck and most effective response from
potential homebuyers.
- Why your house?
Put yourself in the shoes of "Jane" homebuyer and ask yourself, "why did I
buy my house?" In marketing terms, you have a brief moment to impress a consumer
through an effective tagline. What is your home's tagline? Unbelievable view! Incredible
location for schools and shopping! Exceptional value for this area! When you've determined
your home's tagline, you're ready to move forward.
- What makes your house the better option?
As an example, you've decided that the marketing tagline for your home is
"unbelievable view." Your home is now probably the better option because it's
located in an area that has picturesque settings and venues, and your home has the best of
these. Do you get where we're going with this idea? Build on the idea of your tagline to
illustrate and communicate why your home is the better option.
- What caused you to love your home?
Your marketing tagline is likely the essence of why you purchased your home. Having said
this, you need to express what caused you to love your home in a well thought out, easily
understood and recognized presentation. Building on your tagline of "unbelievable
view," you now need to state something like: "You'll love this home because it
meets the needs of today's active family at a great value while providing the best view in
this area." Bottom line, what caused you to love and buy your home will likely be a
contributing factor in why the next buyer of this house will buy it as well.
- What are the key features and benefits of your house?
You've got the potential buyer's attention through your tagline and information about what
makes your home better and easy to love. Now it's time for the close. Emotion, impulse,
impression, etc., gets the buyer's attention, but the features and benefits
"closes" the sale.
It's now time to provide real, detailed and applicable information as to what your home is
all about. Once again, focus heavily upon what makes your home different and the better
option. For example and building on the tagline and information used in the prior
sections, you would communicate that "in addition to an incredible view and great
value, this home has geothermal heat that will save you in excess of $3,000.00 per year in
normal heating costs; a thirteen course basement that allows for eight-foot ceilings if
the basement is finished; the kitchen appliances in this home are two years old and cost
$7,000.00 when replaced; etc. Get detailed and outline every "key" feature and
benefit of your home.
A sound marketing plan will significantly improve the effectiveness of your advertising
and greatly increase the likelihood of a successful home sale. Just like pricing your
home, the marketing plan you develop should be carefully thought out and make sense to
you. Run your marketing plan by some of your friends and peers to get their thoughts about
the story you plan to tell. What seems to make sense to you may not be received in the
same manner by others, so input from outside sources will greatly help you develop an
effective marketing plan that helps you achieve your goal.
Advertising Your Home
There are a multitude of advertising options available to you to tell the potential
homebuyer that your home is for sale. The key to your advertising is to have the various
advertising outlets you are using work in concert with one another to result in the sale
of your home. Please keep in mind that not all options, or possibly even the best options,
for the advertising of your home are discussed here. What we have tried to focus on are
the advertising outlets that seem to be most universally used with the greatest results.
- Signs, signs, signs!
Sounds simple enough. Right? Ask yourself a question, why do so many companies spend so
much money on those billboard advertisements that you drive by on your way to work,
school, shopping, etc. each day? A little known fact that you may or may not know is that
the real estate professionals estimate that 70 percent of all homes sell because of the
sign in the yard.
- The key here is to have a very good, professional, easy-to-read yard sign with a highly
visible contact information in your yard.
- Equally important is that you place directional "Home For Sale" signs at all
high traffic intersections that direct the potential homebuyer to your home. Ask the
homeowners or business owners at the high-traffic intersections near your home for
permission to put a directional sign on their property. Most people will welcome your
request and want to help you sell your home. Put as many of these signs out as you
possibly can. Remember, these are your billboards.
- Brochures
A great, great way to give the potential homebuyer stopping at your yard sign and looking
at your home detailed information. Nothing's more frustrating to a potential homebuyer
than taking the time and getting up the nerve to get out of their car to take a brochure
and find the box is empty. Check your brochure box often, not only to fill it, but to make
sure that it's upright and in good condition.
- Internet Advertising
First, there's no cheaper way or more effective way for you to tell the story of your home
and reach the largest audience possible. Second, the Internet is the fastest growing
advertising segment of the real estate market. According to Gomez Research, over
80-million potential homebuyers searched for real estate on the Internet in October 2000,
and this number was projected to double by the end of 2001. Keys to remember here:
- Provide as much information about your home as possible. You have a potential
homebuyer's exclusive attention when they are looking at your home. Homebuyers want
information! Tell them everything that's applicable to your home. This is why we have
developed our ads to contain so many details about your home. An informed homeowner
contacting you is a much stronger candidate for buying your home. It's quality you want,
not quantity!
- Show as many good photos of the key features of your home as possible. Don't be afraid
to have professional photographs of your home taken. Remember our earlier section about
perception being reality.
- Consider a virtual tour of your home. This is a great way to allow a potential homebuyer
to "walk" through your home before physically coming to your home. This is
another great way of getting pre-qualifying your buyer by continuing to provide them
information and ensure their interest, saving you time and aggravation.
- Newspaper Classified Advertising
The most commonly used and most costly of the three advertising avenues discussed in this
memo, the newspaper classified advertisement is an effective way to let people know your
home is for sale. The key is to use it for that purpose and then direct the potential
buyer to your other advertising venues to save money and ensure that you are getting the
best bang for your buck while providing the most information possible to the potential
buyer.
- When placing your newspaper classified advertisement, consider putting the least amount
of information possible with a guiding phrase such as: "See details at Lapine-FSBO.com/123456" where the six-digit number is your Lapine-FSBO.com ad number. Remember, you are charged a per-line charge
for your classified ad, so limit the amount of space you use.
- Vary your ads. If you are going to run ads for a number of weeks, change your ad so that
it causes the person scanning the ads to read your ad again. Static ads will be overlooked
after one or two times and your ad effectiveness will be significantly diminished.
What is the MLS?
The Multiple Listing Service is a database of homes for sale Run by the local Board of
Realtors, the MLS is the traditional method agents use to find homes for their buyers or
advertise their listings to other agents. MLS listings include detailed information about
the property. Besides address and selling price, a listing generally includes the number
and size of rooms, annual property taxes, local schools, selling agent and more. Most
include an exterior photo of the home.
To MLS or Not To MLS; Separating Fact From Hype
The Multiple Listing Service (MLS) was and is a fantastic way for real estate brokers
to provide information to one another, allowing each broker's agents to cross-sell all
properties for sale in a given market, greatly expanding the sales force of all properties
for sale in a given market. The Internet has greatly reduced the need for a printed MLS
book due to the availability of this information in real-time on the Internet to brokers,
agents, home sellers and homebuyers. Brokers have unfortunately not grasped and accepted
the fantastic opportunity that the Internet has created to provide the consumer with much
more information about each home listed for sale. The MLS still does have application in
that it is looked at by potentially thousands of real estate agents in your market each
month that might have a prospective buyer for your home.
- Benefits of MLS Advertisement:
There is one very significant benefit to having your home listed in the MLS
listing...EXPOSURE! The fact that you have your home for sale will now be known to the
hundreds, if not thousands of real estate brokers and agents in your market. To benefit
from this exposure, you will need to be willing to "co-op" a real estate agent
if they bring a buyer to purchase your home. Co-op means that you will cooperate in a
commission incentive to the real estate agent. Typically buyer's agents will make between
2% and 3% of the sale price of the home. If you are willing to do this, you should
indicate this clearly in your Internet and classified advertising as well as your yard
brochures.
To have your home listed on the MLS in your area, you will need to contract with a real
estate broker or agent in your area that is a member of the local real estate association
that prints and manages the MLS for that area. If your interest is purely to have your
home listed on the MLS, you can contract with the real estate broker or agent for a
one-time fee to cover the cost of them listing your home in the MLS. This is a fairly new
concept in real estate and not all agents and brokers will be anxious to provide this
service.
In many areas of North America, when a home is listed on the local MLS, the property
appears on aggregator websites like MSN HomeAdvisor, Yahoo! Real Estate, Realtor.com and
local state websites. Many of the multiple listing services send their inventory directly
to these sites to enable even more exposure for the homeowner. In today's transient
society, people from all over the U.S. use these various websites to search for homes far
in advance of their actual transfer taking place. Many people research and identify homes
they would like to see from the Internet. They supply the list to the buyer's agent
located in the area to which they are relocating, so that the agent can set up showing
appointments. When relocating buyers are in town for the purpose of finding a home, time
is limited and every minute counts. Buyer's agents quickly become critical to the
transferee's home search. Homebuyers relocating to new areas rely heavily on assistance
from a buyer's agent. Moving to a new area usually calls for help from a local real estate
professional, therefore the MLS can be key to exposing your home to relocating buyers.
- "Hype" of the MLS:
- Your home won't sell if it's not listed on the MLS. Baloney! Your home may sell more
quickly, sell for more money, have a more qualified buyer make contact with you, or none
of the above, but your home can sell with or without the MLS. As we've already discussed,
an MLS listing is good if you're willing to co-op a real estate professional.
- Nobody will find your home for sale if it's not listed on the MLS. Oh really? Why is it
then that real estate professionals disclose that 70 percent of home sales occur because
of the sign in the yard? Multiple directional Home For Sale signs placed in key, high
traffic locations will likely help the sale of your home as much or more than an MLS
listing.
- If your home's not listed on the MLS, agents will not bring a buyer to you. Well maybe,
but if the agent has an interested buyer and you're indicating a willingness to pay them a
commission if they bring a buyer, they'll bring the buyer!
- Considerations:
The MLS is a wonderful way to expand your advertising reach and certainly has value. If
your goal is to make real estate professionals in your area aware that your home is for
sale and that you are willing to pay them a buyer's agent commission if they bring a buyer
to you, there are other means of accomplishing this that may be more effective and less
expensive.
Your advertisement on this site is ready to print in brochure form that will indicate your
willingness to pay a real estate agent if they bring a qualified buyer to you. Consider
printing the brochure from your advertisement on this website and mail this
advertisement directly to the dominant real estate brokerage agencies and the top real
estate professionals in your area. You may get more personalized attention through this
direct-mail program.
When you involve the MLS or a direct mail program in the sale of your home, prepare to
have the real estate brokers and agents in your area contacting you about selling your
home for you. Don't be surprised or offended, it's their job! To minimize this, consider
indicating on your advertisements and brochures a statement that says: "No listing
agent solicitations please." This will likely limit the number of calls you will
receive.
If you decide to pursue placing your home on the MLS, think of this as a part of your
overall selling strategy, not in place of your advertising program. With proper
understanding and reasonable expectations, the MLS can be another excellent part of your
overall home selling process.
Open House Ideas and Execution
Real estate professionals have compelling arguments for and against the Open House
concept. Keeping in mind that your goal is to sell your home, you should make your
decision whether to hold an Open House based on the activity that you're seeing from your
advertising efforts and the strength of the market in which your home is for sale.
Market Conditions
- Hot Market:
If you are in a "hot" or "sellers" market where homes are in demand,
then an Open House may make sense to create a competitive environment among several
potential homebuyers. Having an Open House might result in several potential homebuyers
attending this event at the same time, expediting the sale of your home.
- Cool Market:
A buyers market may necessitate holding an Open House or multiple Open Houses to allow
access to potential homebuyers who have many options and aggressive sellers. In this
market environment, you need to use all tools at your disposal to show why your home is a
better value compared to the other houses for sale that the potential buyer might be
considering.
Open House Dates and Advertising
- First, determine the date or dates that you will hold your Open House. Typically Open
House events are held on either Saturday or Sunday depending on the market where your home
is located. If you are unsure of the day of the week that Open House events occur in your
market, watch the newspaper advertisements and directional "Open House" signs to
determine which day of the week to hold your Open House. Don't go against the grain here.
Potential homebuyers are likely accustomed to the day of the week established in the
market and will look for Open House events to attend on this day. Make sure that the dates
you select do not conflict with other major events in your area. Consider sporting events,
school events, religious holidays, etc.
- Second, determine the hours to hold your Open House. Again, consult the standard times
that Open House events are held in your area. An Open House should not exceed three hours
for your benefit and should be held in the middle of the afternoon if possible.
- Third, decide how you will make the public aware that you are holding your Open House.
Here's what we suggest:
- Place Classified Advertisements in your local newspaper in the days leading up to the
Open House and the morning of the event.
- Indicate your Open House dates and times on your yard brochures.
- Indicate your Open House dates and times on your Internet advertisement.
- Finally, and most importantly, place Open House directional yard signs at all key
intersections from the highly traveled routes nearest your house, at each intersection
involving a turn toward your house from the major thoroughfares, and in your yard on the
day of your event.
Open House Strategies
- Have all applicable information about your home clearly displayed with copies of the
information available for the potential buyer to take with them. This information can
include anything applicable. Date the home was built; neighborhood, school, tax
information; utility cost history; key features and benefits of the home; etc.
- Consider inviting a reputable mortgage company in your area to have one of their loan
originators present at your Open House to offer mortgage loan information and pre-approval
to potential homebuyers attending your event.This is a great service to the homebuyer and
may sway them to buy your home. You will likely find many mortgage companies in your area
interested in participating in your Open House. (The mortgage company might even be
willing to help with advertising costs if you reference that the company's originator will
be present. It never hurts to ask!) If you are unable to schedule a loan officer to sit in
your open house, make sure you at least provide buyers mortgage forms.
- Have all curtains and blinds open to highlight your windows and the natural light your
home receives.
- Have all lights on to create a very bright environment.
- Consider boiling potpourri or bringing cinnamon sticks in apple juice to just below a
boil to create a pleasant aroma in your home. But don't let it burn! In this case though,
less is more, don't overdo scenting you home.
- Make sure that all areas of your home look neat and organized. This includes the
basement, closets and garage.
- Set a vase of fresh flowers in a visible location.
- Set the kitchen or dining room table as you would for company coming for dinner.
- Display a sign-in notebook or a simple sheet of paper so that you can collect
information to contact a potential buyer at a later time to get their impression of your
home.
- Make sure all pets are secured and out of the main areas of the home. You may love your
pet, but not all people will.
- Soft background music is a nice touch and highlights any sound system that you might
have in the home.
- Candles placed in various locations also add a nice ambiance to your home.
Notes
- Don't have an Open House every day or even every week. Make your Open House a restricted
event that stimulates a potential homebuyer to attend.
- Don't be defensive! Be prepared for comments that you may not appreciate about
decorating, layout, cost, area, etc. You're selling, they're buying. You've got to bite
your lip and display grace in the face of criticism.
- Be aware not to smother the attending potential homebuyers during their visit. Greet
them warmly at the door and be available to answer any questions they might have but do
not become a "tour director." Allow people to roam at their own pace.
- Have fun! It's your time to shine!
Screening Your Prospective Buyer: The Good; The Bad
and The Best!
When you've made it this far, it's exciting. But don't celebrate quite yet. Having a
prospective buyer is the first goal of every home seller. Whether you're selling your home
yourself, using a full-service real estate professional or some variation of the two
aforementioned methods, the objective is to find serious, able and willing prospective
buyers.
Your responsibility at The Prospective Buyer phase of your home selling journey is to
qualify the interested buyer. Say this over and over again: "Interested may not mean
able! Serious may not equal willing!" The point we're trying to make here is that you
must get past the enthusiasm of the prospective buyer and ensure that he or she can
actually meet the criteria to purchase your home.
Get ready, put away your defenses, expect a "low-ball" offer, understand that
the faults of your home will be exploited and realize that through all this, you may
actually get your home sold. When the offer comes, the fun begins!
The Offer - This Is Business Not Personal
You've come a long way baby! For those of you old enough to remember the cigarette ads
of the 70's, you'll appreciate that statement. For those of you not old enough to remember
these ads, congratulations for being at this point so early in your life. You really have
come a long way if you're at the point of the offer. The game is on and the negotiations
have begun.
There are excellent books, tapes, training seminars and just about anything you can
imagine about negotiation and "winning." We will offer some thoughts and ideas
to you, but please understand, every person has a style all their own and what works for
one person may not work for another. There are basic things about the offer and subsequent
negotiation process that you should keep in mind and prepare for that will likely help you
achieve your goal and meet your expectations.
Probably the most important thing to decide as you move into the negotiation phase is
to determine your absolute bottom line price you are willing to accept and how much longer
you are willing to keep your home on the market. The best negotiators are not afraid to
walk away from a deal. Master this and you master the art of negotiation.
- The Offer
Expect it to be lower than what you hoped and asked for. If you're prepared for this
scenario, then you can't or won't be caught off guard and put on the defensive. Having
said this, if someone is truly interested in your home, they will offer a reasonable price
as a basis to begin the negotiation. If the offer is off the wall, then look the offering
party in the eye and ask them point blank if they're really interested in buying your home
or are they simply "tire-kicking."
What constitutes a reasonable offer? This is somewhat determined by the market your home
is located in and the tradition of pricing versus final sale price. Do some research and
find out what "percentage off the original asking price" is typical for homes
sold in your area. Remember, you've done research to determine what your home is worth, so
your final sale price should be a similar percentage below the asking price relative to
market tradition.
- The INEXACT art of negotiation!
- First, don't show your hand through emotional outbursts of joy or aggravation when you
receive the initial offer. A good negotiator will recognize that they may have offered too
much if you show too much enthusiasm and not allow any upward movement of the offer price.
Conversely, show a good negotiator that you're aggravated and they may move on to another
home feeling like there is no way they will reach a mutually agreeable price with you, or
they will feel that you're up against a wall and "needing" to sell your home,
which will immediately prevent upward movement on the price of your home.
- Second, don't respond to the offer immediately unless the amount offered is exactly what
your asking price is or above. There are several reasons why you shouldn't respond
immediately. First, it's best to have a cooling-off period to let your emotions get in
check, allowing your calmer head to prevail. Next, there's no harm in making the
prospective buyer sweat a little about the offer they submitted. Remember, if the prospect
has gone so far as to see your home, qualify for a mortgage and make an offer, then it's a
safe bet to assume that they want your house! The key here is to respond within 24 to 48
hours so you keep the process moving forward.
- Third, be honest, responsive and fair. If you're willing to work with the prospect, tell
them in your response. If you're miles apart, tell them! The idea here is to simply do
unto others as you would have them do unto you. Remember, this is a stressful time for the
buyer as well and the last thing you want is a cold-feet situation where you lose the
buyer.
- The Response
Write down your response to the offer you have received outlining why you are responding
with your counter-offer. You should counter-offer if the original offer received is in any
way less than your asking price.
- Be direct and firm with your counter-offer. Now is the time to tell the prospective
buyer your bottom-line. The last thing you should do at this point is be ambiguous. If the
offer is ridiculous, thank them for the offer and simply say you're not interested. If the
offer is in the ballpark, state that you appreciate the offer, want to sell your home to
them and the amount on your counter-offer is the bottom. Don't drag this out.
- Take into consideration the timing of the deal. Is it worth something to you if you
close quickly?
- Outline in your counter-offer the specifics of the deal that you are willing to accept:
earnest money (1% is a good benchmark) at the time the contract is signed, closing date,
time that you have to move out after closing (usually 30-days or less), etc. The more you
take control of the transaction at this point, the better odds you have of closing the
deal.
The offer stage is a very interesting time during the home selling process. The fun,
friendly banter and excitement are replaced by serious conversation and negotiation. The
more you recognize this and are prepared for this scenario, the better this part of the
transaction will be for you.
If you are concerned about the negotiation phase of selling your home, you may want to
consider having a real estate attorney or real estate professional (broker or agent) help
you with this process. There will obviously be fees involved if you use the services of an
outside resource, but they might negotiate a higher sale price of your home resulting in
more money for you. The other consideration about using an outside resource for
negotiation is that this might cause your prospective buyer to now use a third party to
help them as well, which could cost you more money and time. If we seem to be somewhat
ambiguous here, it's because this is not a simple process and there are innumerable
possible scenarios that you may encounter.
Be patient, relax your defenses and always keep your end goal of successfully
completing the sale of your home in the forefront of your mind and you will do great.
You're almost homeless, which is a good thing when you're selling a home.
The Contract and The Closing
Did you get IT? Is IT in your hands? Really? And they said it couldn't be done! Just
for fun, let's think of IT as "I Triumphed." What you got through IT was a
commitment from a prospective buyer to buy your home! Now, transform the commitment into a
signed, legal document committing the prospective buyer to complete the purchase of your
home.
Reiterating our theme throughout that selling your home is not easy, but that it is
doable, the completion of the Real Estate Contract can be a fairly systematic process if
you have done the initial work to have a good contract that meets the state and local
requirements of your area and that you have a working understanding of this document.
The Real Estate Contract
- Step 1
Have a real estate contract that meets the requirements for the area that your home is
located. Probably the best resource for this contract is a local attorney in your area
with experience in residential real estate sales transactions. Another excellent resource
is a local Title or Escrow Company that can also serve as the closing agent for this
transaction.
Quick Note: There are many attorneys who specialize in helping owners selling their homes
themselves by offering a Contract Package to the home seller that includes the required
forms and a commitment to review the documents for a modest fee. It might be in your best
interest to look for this type of service. The key here is to ask the attorney if he or
she offers this type of service or would be willing to perform these functions for a
pre-determined, set fee. You'll find many attorneys will be happy to do this for you.
- Step 2
Understand what the real estate contract, disclosure statement, escrow form, etc. for your
area contains and what you need to do to fill these documents out completely and
accurately. Again, a real estate attorney can be very helpful here as well as Title and
Escrow companies.
As a part of your research and preparation, explore the responsibilities of the homebuyer
and the home seller within the market that your home is located. As an example, the party
who bears the burden of the closing costs of the transaction may vary by market, as well
as responsibility for appraisal, inspection, etc. A good title/escrow company can likely
provide this information to you.
- Step 3
Review the contract, disclosure statement and applicable forms with the buyer. Assuming
that the information is acceptable to both you and the buyer, sign the contract and all
accompanying forms. It's a good idea, and may be required, to have a witness to this
signing, so you'll want to have a third party present or complete the signing of the
contract in the presence of another person. A Notary Public is a great resource to serve
as your witness. Upon reaching this point, it's time to start the closing process in
motion.
Note: Make sure you have the Buyer's earnest money prior to your signing the contract. The
amount of earnest money received should be noted in the contract.
The Real Estate Contract
The closing can be handed off to the title/escrow company. Depending on your market's
policies or tradition, the mortgage company that your buyer is using to finance the home
purchase (assuming that your buyer is not paying cash for the home purchase) may dictate
the title company that is to be used. If your buyer is paying cash, you simply need to
agree upon a mutually acceptable Title/Escrow company or real estate attorney to handle
the title transfer.
Key points to address are:
- Date of closing
- Time of closing
- Location of closing.
- Any necessary documents and payments needed at closing.
Title/Escrow; Inspection; Appraisal; Mortgage
Whew, you've got to be feeling very good when you've made it to this point in your home
selling process. The points we're going to discuss here may be apparent to you and we
simply are offering this information for your consideration and use if needed.
- Title/Escrow
The Title/Escrow Company's role in the home selling transaction is really one of the more
important parts of the process. The Title/Escrow company can greatly help you navigate
through the closing transaction process. We suggest that you contact a reputable
Title/Escrow company before you finalize your contract. Ask the Title/Escrow company for a
list of items that you need to gather for the closing, for suggestions relating to the
real estate contract and any other pertinent information to complete the real estate
transfer.
The role of the Title Company is to do exactly what the name suggests, to handle the
transfer of the real estate title and all the legal filings that are part of the real
estate sale. Depending on the state in which you live, the Escrow company may or may not
handle the title work. The Escrow Company's role is to handle the holding and transferring
of funds, such as earnest money, during the transaction.
You should research the local and state laws of your community to determine which of these
types of companies you need to work with. Remember, we suggest that you involve the
Title/Escrow companies in your home selling process as early as possible because of the
invaluable support and guidance they offer. It's likely one or more Title/Escrow
businesses in your area that specializes in helping homeowners selling their homes
themselves. Ask the companies you contact if they have a program such as this to help you.
Note: If the title policy on your home is less than five years old, ask the Title Company
if they will do the new title search for a discounted rate. Some companies will discount
the cost of this service when the title search is a follow-up to a more recently completed
prior search.
- Inspection
Your home will require an inspection prior to the closing and transfer of ownership. The
bank or mortgage company that is handling the loan for the property typically schedules
the inspection. In the event that there is no lender involved, the buyer of the property
may or may not require an inspection to be performed.
You might consider having an inspection performed on your home prior to or during the
selling process in order to have this information available for the potential buyer. Also,
having an inspection completed prior to the contract being agreed upon may expedite the
completion of the sale.
The party who bears the cost of the home inspection will vary by area. This may be defined
in your final real estate contract. If you are not willing to bear the cost of the
inspection, be sure to outline this point in your sales contract.
- Appraisal
Like the home inspection, an appraisal of your home will be required prior to the
completion of the sale. The bank or mortgage company involved in the loan will require
this as well. If no lender is involved, the buyer will likely not require an appraisal. If
the buyer does want an appraisal of the property without lender involvement, we suggest
that you have the buyer bear the burden of this cost if at all possible.
Having an appraisal of your property completed when you are beginning the selling process
makes sense. This is the best way to establish a competitive price for your home and an
excellent way to defend your asking price when a potential buyer begins negotiating the
purchase price of your home. Another benefit to having an appraisal done early in the home
selling process is that it allows you to establish a fair price. If you use this strategy,
it will be more difficult for potential buyers to argue the price you're asking. Be sure
that you have a certified appraiser perform any appraisal that you have completed so that
you know proper customs and ethics are being maintained.
Who bears the cost of a home appraisal once again depends upon your area and the purpose.
In all likelihood, the lender will bear this cost and factor it into the closing costs
assigned to the buyer.
- Mortgage
The mortgage company or bank lending your buyer the money may ask for information about
your home directly from you as well as access to your home. Help them! Make the lender
your best friend by helping them gather all needed information and documents to complete
the loan to your buyer.
Hey, how are you feeling? You're in the home stretch and you've saved yourself
potentially thousands of dollars by selling your home yourself. Great job! We're proud of
your effort and tenacity and hopefully we have been helpful to you during this process. In
the meantime, relax and enjoy the process. It's all about time, patience and good
planning.
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