The Home Selling Process
Every seller wants the same thing - the best possible price with the least possible hassle and aggravation. Unfortunately, home selling has become a much more complex business than it was five years ago. We now have seller disclosures, a range of environmental concerns, broker representation, and other legal issues. Buyer brokerage, where Realtors® represent homebuyers is now common, and good buyer brokers want the best for their clients. The Commonwealth of Massachusetts has enacted some of the strictest environmental laws in the nation. There are countless legal stipulations regarding zoning, fair housing, property disclosure, consumer protection, and building codes that require sellers to be more careful about their responsibilities than ever before. The secondary mortgage market has tightened their lending requirements and imposed new rules, especially on condominiums.
A good Realtor® is educated to all the new rules enacted by the government and state agencies. The Realtor's job is to educate the seller as to what they need to know to sell their home, including any new regulations, in order to avoid pitfalls that could otherwise unravel a sale.
Learn What Your Property is Worth
A seller needs to understand the current real estate market, because housing is a commodity, and the value of real estate property fluctuates according to many factors including supply/demand, interest rates, and the general economy. Your home is worth only what a qualified buyer is willing to pay for it at the time it is put up for sale. A professional real estate agent, with experience in the area, should educate you about what homes in the area are selling for at the current time.
Ask the broker to prepare a comparative market analysis (CMA), which shows you what similar properties have sold for within the past three to five months and what properties have failed to sell. The analysis will compare the similarities and differences between the homes; the number of rooms, baths, their sizes, square footage of the house, lot size, improvements made, layout, condition, etc. This knowledge is valuable in order to set the best asking price for your home.
Correctly Pricing Your Home
The closer your asking price is to the market value, the faster it will sell. You want to price your home low enough to entice buyers to your home and not your next door neighbor's home. You may be tempted to price your home to meet your financial goals, but keep in mind that buyers will be looking at the same comparables you have. Your price has to reflect what the market will bear, and a good Realtor® should point that out to you. Too many times a Realtor® will take an overpriced listing in order to get the listing. But keep in mind that is not in your best interest. Typically, a home has the most exposure during the first few weeks it is on the market. The chances of getting the highest price are in the first two weeks.
The buyers are all exceptionally educated to the market. With the availability of the MLS, and all the information on the internet, they have a good idea as to the value of your home. If they feel your home is overpriced they typically will just walk out to the next home with the feeling that the seller is being unreasonable. They do not say to themselves that they like the house and will write an Offer to Purchase at a price they are comfortable with. Beginning with a high price just looses the buyers you want to capture. If a broker recommends a listing price of $1,100,000 and you put it on the market for $1,250,000, you have excluded all the buyers who could have afforded your home. The buyers in the $1,250,000 range will feel your home does not meet their needs, and the buyers in the $1,100,000 will say it is too expensive.
Another point to consider is that most brokers today are buyer's brokers, representing the buyer in the transaction. A lot of buyers will ask their broker to do a Comparative Market Analysis of the property they are interested in, before they write an Offer to Purchase.
| Click Here for a no obligation Comparative Market Analysis of your home |
Dropping Your Price .... Too Late
If you start out with a high price, than drop it later, you will never be able to recapture that flurry of initial activity you would have had with a realistic price. Your house could take longer to sell.
Even if you do successfully sell at an above-market price to an uninformed buyer, your buyer will still need a mortgage. The mortgage lender requires an appraisal. The banks and mortgage companies have very strict standards in this market. If comparable sales for the last four months and the current market conditions do not support your sales price, your house won't appraise. Your deal falls apart. Of course, you can always attempt to renegotiate the price, but only is the buyer is willing to listen.
Your house could go 'back on the market'.
Once your home goes back on the market or sits on the market awhile, it is harder to get a good offer. Potential buyers will think you might be getting 'desperate', so they will make lower offers. By overpricing your home in the beginning, you could actually end up settling for a lower price than you would have normally received.
When you interview three Realtors®, you may not want to choose the Realtor® that recommends the highest price for your home.
Preparing Your Home For Sale
Ask yourself, if you were buying this home how you would want it to look? The goal is to show a home that looks inviting, has plenty of space, and is well cared for. There are cosmetic repairs but there are also mechanical repairs to ensure that all systems and appliances are in good working condition. Both are required to get a top price. Your home should reflect the preferences of the buyers and be competitive with other homes available. The number of homes a buyer has to choose from is high so you have to make sure your home is an intriguing and compelling value. You and your Realtor® will have to make an impression on a buyer that your home is the right fit for them. Many factors are out of your control but the condition of your home, and how your home shows is not one of them.
Buyers are influenced by the home's operating systems. They want to know that the roof and gutters are in good shape, windows and doors have good seals, the electrical is up-to-date, and the plumbing is in good working order. "Repairs are one of the few ways the buyer has to judge the honesty of the seller and the integrity of the home. If smaller items for repair have been overlooked or ignored, the buyer will assume that larger, more important items have also been neglected".
Your home has to be camera-ready. As the saying goes, " you only get one chance to make a good impression". If a buyer does not like the pictures on the internet, they will not ask their Realtor® for a showing. 'Home Staging' is the very best proven way to get top dollar for your home as you prepare it for sale. Homes that are staged sell faster and for more money. This is because staging sets the scene throughout the house to create immediate buyer interest in the property. Home staging does not mean you have to hire a professional to do the staging. The basis of home staging is to clean out the clutter in order to give the home more space. Once the clutter is out, items can be rearranged to have the rooms look larger.
If you are serious about selling your home, you need to make sure that your home tells buyers that you are serious.
Click on the title above to go to the page giving a detailed description on preparing your home for sale, with a list of professionals specializing in services that may help you in preparing your home for sale.
Exclusive Listing and the Listing Agent
Exclusive Listings
When a seller chooses a real estate agent to market and sell a property, the seller engages in a relationship with that agent to accomplish their mutual goal, to sell the property. Often, a Seller and a Realtor® choose to arrange an exclusive right to sell listing. Under an exclusive right to sell agreement, the listing broker is given the right to earn a fee for professional services if the property is sold by anyone, including a buyer located through the efforts of the owner.
Listing Agent
A listing Agent is engaged to help you sell your home. The Agent works with you to determine the asking price, make your home presentable for sale, inform you about laws and regulations such as fair housing requirements, septic regulations and lead paint laws. The listing agent sets up all the showing appointments and accompanies all buyers and buyer broker's during the showing. Any forms or disclosure documents required by law can be obtained through the listing agent. The listing agent is the seller's advocate during sale negotiations, presenting all written offers to the seller and making sure the buyer is qualified. It is the listing agent who makes sure that all documents are signed on time and delivered to all the parties.
For a more detailed list of my role as your broker please read my marketing plan
Other Agents and Their Role in Selling Your Property
There are:
Buyer's Agents (exclusive agents),
Disclosed Dual Agents (represent both buyers and sellers),
Co-operating Agents (authorized by the seller to cooperate with agents from other firms to help sell
their property)
Any of these agents may provide information on financing and legal representation, and may accompany buyers to the home inspection, however, only the buyer's agent can assist in formal price negotiations on behalf of the prospective home buyers.
All real estate agents must act fairly with all parties, including those to whom they are not contractually obliged.
Seller's Agent
A seller can engage the services of a real estate agent to sell his property (called the listing agent) and the real estate agent is then the agent for the seller who becomes the agent's client. This means that the real estate agent represents the seller. The agent owes the seller undivided loyalty, reasonable care, disclosure, obedience to lawful instruction, confidentiality and accountability, provided, however, that the agent must disclose known material defects in the real estate. The agent must put the seller's interests first and negotiate for the best price and terms for the client, the seller. (The seller may authorize sub-agents to represent him/her in marketing its property to buyers; however the seller should be aware that wrongful action by the sub-agents may subject the seller to legal liability for those wrongful actions).
Buyer's Agent
A buyer can engage the services of a real estate agent to purchase property and the real estate is then the agent for the buyer who becomes the agent's client. This means that the real estate agent represents the buyer. The agent owes the buyer undivided loyalty, reasonable care, disclosure, obedience to lawful instruction, confidentiality and accountability, provided, however, that the agent must disclose known material defects in the real estate. The agent must put the buyer's interests first and negotiate for the best price and terms for their client, the buyer. (The buyer may also authorize sub-agents to represent him/her in purchasing property; however the buyer should be aware that wrongful actions by the sub-agents may subject the buyer to legal liability for those wrongful actions.).
Dual Agent
A real estate agent may act as a dual agent representing both the seller and buyer in a transaction but only with the express and informed consent of both the seller and buyer. Written consent to dual agency must be obtained by the real estate agent prior to the execution of an offer to purchase a specific property. A dual agent shall be neutral with regard to any conflicting interest of the buyer and seller. Consequently a dual agent cannot satisfy fully the duties of loyalty, full disclosure, and obedience to lawful instruction which is required of an exclusive seller or buyer agent. A dual agent does, however, still owe a duty of confidentiality of material information and accounting of funds.
(Non-Agent) Facilitator
When a real estate agent works as a facilitator that agent assists the seller and buyer in reaching an agreement but does not represent either the seller or buyer in the transaction. The facilitator, and the broker, with whom the facilitator is affiliated, owe the seller and the buyer a duty to present each property honesty and accurately by disclosing material defects about the property and owe a duty to account for funds. Unless otherwise agreed, the facilitator has no duty to keep information received from the seller or buyer confidential. The role of facilitator applies only to the seller and buyer in the particular property involving the seller and buyer. Should the seller and buyer expressly agree, a facilitator relationship can be changed to become an exclusive agency relationship with either the seller or the buyer.
Summary of Agency
I have just given you all the legal terminology for the different types of agency representation and the role of the broker according to the Massachusetts Association of Realtors and the Greater Boston Real Estate Board. In 2005, the Greater Boston Real Estate Board mandated that at the first personal meeting with a buyer to discuss a property, the broker must have the buyer sign a "Massachusetts Mandatory Licensee Consumer Relationship Disclosure Form". To read a sample of the form please click here.
Marketing Plan
You have priced your home to sell and you have prepared your home for sale. Now you need a broker who will be able to market your home effectively.
Your marketing plan must have two main objectives:
To make sure your property is displayed on all the top internet sites, and
To make sure it is properly networked to agents & buyers & advertised to the largest audience
possible
| Click Here to Read My Marketing Plan |
Showing Your House to Homebuyers
A. Convenience and Availability
Your house should be available to show, even though it may be occasionally inconvenient for you. Sometimes a buyer is from out of town and decides your house could be perfect, but they are only available for a short time. Or a woman took a day off from work, which took a lot of trouble to arrange, to go house hunting. Do not worry how your house looks, or that you are at home. Your home might be the right one and you have lost a sale if you refuse the appointment. These days it is very difficult for some people to arrange time to look for houses when they work full time, raise children, and have a plate full of responsibilities. The home seller is the one that bends for the buyer. I know you feel just a as hassled but you are the one with the house to sell.
B. Why You should Not Be Home
Homebuyers feel like intruders if you are at home when they visit, and they might not be receptive toward viewing their home. By not being home it allows buyers the opportunity to imagine themselves as the owner. It also prevents you from inadvertently saying something that could improve the buyer's negotiating position. If you absolutely cannot leave, try to remain out of the way in one room. Do not move from room to room. Do not volunteer any information but answer any questions the buyer or agent may ask.
1. Do not talk about what you have done to the house. The buyer is seeing the house in its present
state. They do not want to know how it was and what you did.
2. Do not mention warranties and guarantees. You may need to use them as negotiating points
later.
3. Do not offer any personal information about yourself, your situation, your job, or any family
members.
4. Do not mention other buyers or the number of showings that you have had.
5. Do not mention anything about the size of the house or its rooms. A "cozy" room may appear
small to some buyers, while others may be looking to downsize.
c. Lighting
When you know someone is coming to tour you house, turn on all the indoor and outdoor lights, even during the day. At night, a lit house gives a 'homey' impression when viewed from the street. During the daytime, turning on the lights prevents harsh shadows from sunlight and it brightens up any dim areas. Your house looks more homey and cheerful with the lights on. Make sure all your fixtures work well, especially the outside.
D. Fragrances
Do not use scented sprays to prepare for visitors. Many people find the smells of those sprays offensive, not to mention some may be allergic. If you want to have a pleasant aroma in your home, have something natural, or put a drop of vanilla extract in a pot. It will smell like you have been cooking. Place a lemon down a disposal and grind it.
E. Pet Control
If you have pets, make sure your listing agent puts a notice in the MLS listing. The last thing you want is to have your pet running out the front door and getting lost. If you know someone is coming, it would be best to try and take the pets with you while the home buyers tour your home. If that is not possible, it is best to keep the dog in a penned area in the backyard or a cage in the home. Try to keep indoor cats in a room, and put a sign on the door. A notice alerts buyers who may be allergic.
F. Kitchen Trash
Especially if your trash can does not have a lid, make sure you empty it every time someone comes to the house, even if it is kept under the kitchen sink. Remember that you want to send a positive message about every aspect of your home. Kitchen trash does not send a positive message. You may go through more plastic bags than usual, but it is well worth it.
G. Keep the House Tidy and Neat
Not everyone makes their bed every day, but when selling a home it is recommended that you develop the habit. Pick up the papers, do not leave empty glasses in the family room, keep everything dusted and vacuumed. Try your best to have it look like a model home or an empty house with furniture.
Seller's Responsibilities
Seller's Duties to Condition of the Property
When answering questions about their property, every seller has the duty to respond fully and accurately to any request for information. This is true whether the information is requested directly by a prospective buyer, or by a real estate agent who, in turn may pass along the information to a prospective buyer. Answers that are misleading or half-truths are improper and the seller may be liable for them. If the seller does not know the answer he or she should not guess, but should qualify the answer with this acknowledgement.
From Offer to Purchase to Closing
By law, real estate agents are required to present all offers that are in writing to the seller. Once a seller receives an Offer to Purchase he or she may counter offer, by accepting the offer with additional stipulations, including but not limited to a renegotiated price. For example, a seller may ask for a higher purchase price, accept the closing date, and include some fixtures.
Buyers and sellers should be careful when making offers and counter offers to ensure that they understand all the terms and conditions in the offer and any contingencies included therein. Common contingencies in an offer to purchase include a home inspection and clear title. A negotiation can last 24-48 hours. Letting a negotiation linger a long time oftentimes causes one party to walk away and loose interest.
Earnest Money Deposit - typically $1,000 to bind the offer
Contingencies - home inspection clause, terms to be included in sale, length of time of contingencies, conditions in which contract is not binding if not met
Down Payment - usually 5% or10% of the purchase price is offered as a down payment at the signing of the Purchase and Sale Agreement
- Closing Date - when you want money to exchange hands and the deed is recorded at the Registry of deeds
The buyer's letter of preapproval needs to be verified with the originator, so the home does not come off the market and then need to be placed back on the market due to lack of finances. Between the Offer to Purchase and the Purchase and Sale Agreement is when the buyer has all the home inspections.
The seller's agent will assist in finalizing the terms of the sale between the buyer and seller in the form of a written Purchase and Sale Agreement. The agreement once signed is a binding contract to which the buyer and seller will be obligated. Often an attorney prepares the final Purchase and Sale Agreement.
Legal Obligation of a Seller
A. Title 5
Massachusetts law requires that a property that is serviced by a septic system, cesspool or other private waste disposal system be inspected within two years before the sale or within six months after the sale (if weather conditions prevents a pre-sale inspection).
Only licensed inspectors and soil evaluators may conduct such inspections. Should the system fail an inspection, the buyer and seller may negotiate who will pay to repair or replace the system, or if the agreement for sale contains a contingency the buyer may choose to withdraw.
B. Smoke Detectors and Carbon Monoxide Detectors
Massachusetts state law requires that all residential structures be equipped with smoke detectors and carbon monoxide detectors, and it is the owner's obligation to receive a compliance certificate from the local fire department before closing.
Click Here to read the Smoke Detector Regulations Effective 4/5/2010
C. Carbon Monoxide Detectors
All homes in Massachusetts equipped with fuel burning equipment that produces carbon monoxide or has a garage adjacent to living areas are required to have Carbon Monoxide detectors installed on every level of the home, excluding unfinished basements, attics and crawl spaces. A detector must be placed within ten feet of every bedroom door.
D. Fair Housing
The Federal Fair Housing Act makes it illegal to deny or restrict a choice of housing to any person on the basis of race, color, religion, sex, disability, familiar status (children), or natural origin. Furthermore, state law prohibits practices that deny access to housing based on age, ancestry, marital status, sexual orientation, status as veteran or member of a military or recipient of public or rental assistance.
E. Lead Paint
The Commonwealth's lead paint statute requires lead abatement in residential dwellings built before 1978 when a child under the age of six resides in the property. Specifically, the law stipulates that property owners must remove or cover (encapsulate) dangerous levels of lead on surfaces measuring five feet from the floor or below. Property owners are required to disclose to home buyers and tenants known information about the presence of lead based paint and the hazards of lead paint prior to the sale or lease being executed. Your Realtor® is aware of all the state and federal rules and the required disclosure requirements that are mandated by law. Be sure to read and complete these documents carefully and ask questions if you are unclear about your responsibilities.
| Some sections of this article taken from the "Massachusetts Association of Realtors Seller's Guide 2010". |
For any questions on the home selling process feel free to email or call me.
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