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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 new 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 zonings, fair housing, property disclosure, consumer protections, 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 and regulations enacted by the government and state agencies. The Realtor's job is to explain to the Seller what they need to know to sell their home, including any new regulations that are pertinent, in order to avoid the pitfalls that could otherwise unravel a deal.
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 properties 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 your area, should educate you about what homes in your 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, lot sizes, square footage of the house, improvements made, condition, layout, etc. This knowledge of market value is valuable in order to get the best offers for your home.
Correctly Pricing Your HomeThe closer your asking price is to market 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 help meet 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 all the information on the internet they have a good idea of the market value of homes. If they feel a home is overpriced they typically 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 home 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 $1,250,000 and you put it on the market for $1,400,000, you have excluded all the buyers who could have afforded your home. The buyers in the $1,400,000 range will feel the home does not meet their needs, and the buyers in the $1,250,000 range 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. Some 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. For a no obligation Comparative Market Analysis of your home just click the link here. Dropping Your Price...Too Late If you start out with a high sales price, then 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 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 three months and current market conditions do not support your sales price, the house won't appraise. Your deal falls apart. Of course, you can always attempt to renegotiate the price, but only if 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 recommended the highest price for your home.
Preparing Your Home to SellAsk yourself; if you were buying this home how would you 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 control but the condition of your home and how your house shows is not one of them. Buyers are influences 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 your property. This will then lead to your home selling for the highest possible price in today's market. Home staging does not mean you have to hire a profession to do the staging. The basis of home staging is to clean out the clutter in order to give the home more space. Once all 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 of preparing your home for sale with a list of professionals specializing in services that may help you in preparing your home.
Exclusive Listings and the Listing AgentExclusive Listings
Listing Agent
It is the listing agent who will assist in coordinating deadlines and closing dates, making sure all documents are signed, sealed and delivered on time.
Other Agents and Their Role in Selling Your PropertyThere are buyer's agents (exclusively), and disclosed dual agents, who represent both buyers and sellers, cooperating agents who are authorized by the seller to cooperate with agents from other firms to help sell the 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 prospective home buyers. All real estate licensees must act fairly with all parties, including those to whom they are not contractually obliged. For example, a seller's agent who is aware of a material defect in the property must disclose the fact to buyers, although he or she is not required to conduct his/her own search to determine such problems. Likewise, a buyer's agent may disclose to buyers (if he/she knows) how long a property has been on the market, the willingness of the seller to accept a price below the asking price, or the seller's motivation for selling (i.e. bankruptcy, divorce, etc.). A disclosed dual agent can, in some cases, work with both buyer and seller - even in the same transaction. A disclosed dual agent cannot offer undivided loyalty to the seller or the buyer but must treat all parties honestly and fairly.
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Showing Your House to Homebuyers
A. Convenience and Availability
Your house should be available for show, even though it may occasionally be 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. Do not worry about how your home looks, or about being home. Your home may be the right one and you would have lost a sale if you refused the appointment.
B. Why You Should Not Be Home
Homebuyers feel like intruders if you are home when they visit, and they might not be as receptive toward viewing your home. By not being home is 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 in an out of the way area of the house, and do not move from room to room. Do not volunteer any information, but answer any questions the agent may ask.
1. Don't talk about what you've done to the house, it's a no-win game. Either the buyer does not
like the improvements and doesn't want to pay for them, or the buyer thinks you have not done enough and wants to discount your home.
2. Don't mention warranties and guarantees. We may need to use them as negotiating points later.
3. Don' offer personal information about you, your situation, your job, or any family members.
4. Don't mention other buyers or the number of showing you have had.
5. Don't mention anything about the size of the house or its rooms. "Cozy" rooms may appear small to
buyers, while other buyers may be looking to downsize.
C. Lighting
When you know someone is coming by to tour your home, 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 that some may be allergic. If you want to have a pleasant aroma in your house, have a potpourri pot or something natural. Or turn on a stove burner (or the oven) for a moment and put a drop of vanilla extract on it. It will smell like you have been cooking. Place a lemon down the disposal and grind it.
E. Pet Control
If you have pets, make sure your listing agent puts a notice with your listing in the multiple listing service. 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 to take the pets with you while the homebuyers tour your home. If you cannot do that, it is best to keep dogs in a penned area in the back yard. Try to keep indoor cats in a room when you expect visitors, and put a sign on the door. Most of the time, an indoor cat will hide when buyers come to view your property, but they may panic and try to escape. A notice alerts any buyers who may be allergic.
F. Kitchen Trash
Especially if your kitchen trash can does not have a lid, make sure you empty it every time someone comes to look at your home even if your trash can is kept under the kitchen sink. Remember that you want to send a positive image 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 will be worth it.
G. Keep the House Tidy and Neat
Not everyone makes his or her bed every day, but when selling a home it is recommended that you develop the habit. Pick up papers, do not leave empty glasses in the family room, keep everything freshly dusted and vacuumed. Try your best to have it look like a model home or an empty home 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 about a property. 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 are 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 acknowledgment.
Filling out a seller's disclosure form and providing full disclosure makes it clear to the buyer that the price reflects its disclosed condition. Disclosure hels reduce misunderstanding and that might create liability after the sale.
From Offer to Purchase to the Closing
By law, real estate agents are required to present all offers that are in writing to a 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 renegotiation in price. For example, the seller may accept the offer to purchase price, but need an additional month for the closing date. 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 can include home inspection, financing approval and clear title. A negotiation can last 24-48 hours. Letting a negotiation linger can kill the sale. Earnest Money Deposit | typically $1,000.000 to bind the offer |
| Contingencies | home inspection clause, mortgage clause, etc |
| Closing Date | when you want money to exchange hands and the deed to be recorded at the Registry of Deeds |
| Down Payment | usually 5% or 10% of the purchase price is offered as a down payment at the signing of the Purchase and Sale Agreement |
The buyer's letter of preapproval needs to be checked with the originator, so the home does not come off the market and then need to be placed back on the market due to a 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. This 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 prevent a pre-sale inspection).
B. Smoke Detectors and Carbon Monoxide Detectors
Massachusetts state law also 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 from department before closing. Click Here to read the New 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, familial status (children), or national origin. Furthermore, state law prohibits practices that deny access to housing based on age, ancestry, marital status, sexual orientation, status as a veteran or member of a military service 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 on 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 homebuyers and tenants known information about the presence of lead-based paint and the hazards of lead paint prior to a sale or lease being executed. Your REALTOR® is aware of all of this state and federal rules and the required disclosure documents 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 came from the Massachusetts Association of Realtors Seller's Guide 2008
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