Home Selling Process
A guide to selling your home.
Step 1:
CHOOSING A REALTOR®
Today’s real estate market is more sophisticated and challenging than ever, which makes it very important to work with a REALTOR® and company that understands the industry and is positioned to stay ahead of the game. At Lone Star Realty and Property Management, Inc., we know the Killeen/Fort Cavazos real estate market and will go the extra mile to help you achieve your goals.
STEP 2:
DETERMINING YOUR LIST PRICE
A seller must be realistic when setting a price. If the price is too high, you may not find a buyer. Too low, and you cheat yourself out of money. There are a couple of tools your REALTOR® may use to help you determine the best list price for your home.
First, a comparative market analysis uses similar data as that of an appraiser. Properties that have recently sold that are similar to your property will be considered and analyzed. Values will be given and subtracted as the sold data is compared to your property. In the end analysis, a range of values is given based on those recent sales. Active listings are also evaluated and show what your competition will be in the marketplace, once you list.
Secondly, an appraisal may be considered. Regardless of what you originally paid for your home and the cost of improvements you have made, the only price that matters is what the market will bear at the time you decide to sell. You may consider hiring an independent real estate appraiser with specialized training and experience. Don't rely on assessed valuations made for tax purposes. Such valuations may not be reliable indicators of value, as they are usually made using mass appraisal techniques. A decision to get an appraisal at this stage should be discussed with your agent, as not all appraisals can be used for all buyers.
STEP 3:
NET PROCEEDS
Once you've decided on a price range, your REALTOR® will help you calculate an estimated amount you might net from the sale. If you have owned your home for several years, you may have built up sizable equity. Equity is the difference between the value of your home and the balance on your mortgage. After subtracting what you owe on your mortgage, you’ll need to deduct what costs you will incur at closing. These may include title fees, taxes, a penalty for prepaying your mortgage, brokerage commission, attorney fees, and charges for preparing and recording documents, etc. Finally, ask your tax adviser or attorney about the tax implications of your proposed sale.
Should you find you do not have enough equity in your home to sell, your REALTOR® will discuss other options for your property such as placing your home in property management and leasing it until your equity has increased.
STEP 4:
SIGNING A LISTING AGREEMENT
A listing agreement is the contract that gives your REALTOR® the ability to sell your property during a specified time period and the compensation for that service once the home sells. The amount of compensation you pay a broker is negotiable, but each REALTOR® will generally follow the company's policy regarding compensation. The most common type of listing is an exclusive right-to-sell listing. This means that you will owe the broker a commission regardless of who finds a buyer during the listing period. In other words, if you decide to sell the house to your cousin, your broker still gets a commission. In an exclusive listing, the broker is usually motivated to work harder to sell your home.
It's possible that a REALTOR® from another company will find a buyer for your home. In that case, your broker is the listing broker, and the second agent is the cooperating broker. Many times the listing broker will agree to pay the cooperating broker a fee from the amount you pay the listing broker. Your listing broker cooperates with other brokers who procure buyers interested in your property and offers to compensate the other brokers for procuring a buyer. Cooperating and compensating other brokers is discussed in the listing agreement you sign with the listing broker.
The listing agreement will specify how long you agree to list your house with a company. You want a period that's long enough to motivate your REALTOR® to advertise your home and respond to buyers, yet short enough to allow you to change to a different company if you become unhappy.
Remember that the listing agreement is a contract. You should get a copy for your records. Your REALTOR® is bound to the terms just as you are. You can expect the REALTOR® to keep appropriate information confidential and effectively market your property.
STEP 5: MARKETING YOUR PROPERTY
In preparing your home for viewing by prospective buyers, remember that people buy on emotions. Your home has to feel right, or buyers will look elsewhere. Ask your REALTOR® and some honest friends to look at your home objectively and suggest ways to make your home more inviting and sellable. Today there are numerous television shows that discuss home selling and buying and will give sellers great insight into the process of preparing their homes for sale. Consider both the exterior and interior. Since you will be appealing to buyers' feelings, you need to pay attention to detail. An extra $50 you spend on red geraniums or new bath towels might mean a significant increase in a buyer's offer.
Clean your home thoroughly and make minor repairs such as tightening towel racks and gluing wallpaper edges. For larger repairs, consult your REALTOR® as to whether repairing the item will generate a good return on the sale. Repainting the woodwork may be worth it, but replacing the carpet may not. Hire a professional inspector to examine your house for structural and mechanical defects. Get an inspection early and you can avoid surprises.
If your home has a major problem you don't intend to correct, be candid about it. Don't paint over the watermarks on the ceiling to hide a leaky roof. Buyers will find out about the problems anyway, especially if they are smart shoppers, and hire a professional to inspect your home. In an age when lawsuits are as common as family sit-down dinners, it pays to be open about everything.
As part of the overall marketing strategy, your REALTOR® may arrange a tour of your home for local REALTORS® and perhaps schedule an open house for the public. Your REALTOR® may also run ads in local newspapers, Web sites, and other publications tailored specifically for the type of home you are selling. When the showings begin, keep your home clean and ready. Your REALTOR® will try to give you advance warning before showing your home but be prepared anyway. If people drop by and are not with a REALTOR®, it's best not to show them your home. Ask for their names and phone numbers and refer them to your REALTOR®.
When a REALTOR® comes to show your home, it's best if you are not there. Many buyers feel like intruders when the owner is present; they tend to hurry away. Letting the buyers walk through your property at their own pace will help put them at ease. They will feel free to look around and ask questions. If you must be there, let the REALTOR® handle the showing. Sit quietly and be courteous, perhaps go outside, but avoid engaging the buyer in conversation. The REALTOR® needs the buyer's complete attention to show your home properly.
REALTORS® are required by law to make your property available to all persons without regard to race, color, religion, national origin, sex, disability, or familial status. Your REALTOR® will not discuss any matter that may potentially discriminate against any person.
STEP 6:
NEGOTIATING AN OFFER
The REALTOR® will notify you when an offer comes in. They will scrutinize the document, review it with you carefully, and answer your questions. The written offer lays out the terms under which the prospective purchaser is willing to offer you the price the buyer is willing to pay and the financing terms--and becomes a binding contract if you sign it.
The offer may be contingent on the buyer selling a home first or obtaining an inspection. Ask your REALTOR® how these terms affect you and whether the offer is in line with the market. The offer describes the property, states who pays for which closing costs, and specifies dates of closing and possession. Along with making the offer, the buyer may place some earnest money with the escrow agent as a sign of good faith. The earnest money will be kept in an escrow account and applied to the buyer's down payment or closing costs when the sale closes.
Options:
You have three options when presented with an offer: accept, reject, or make a counteroffer. A counteroffer is a rejection of a buyer's offer with a simultaneous offer from you to the buyer. Carefully review the figures compiled earlier to determine your net proceeds--closing costs may be quite different from earlier calculations. Discuss the possibilities with your REALTOR®, your attorney, and a tax adviser.
Seller Disclosure Notice:
In most residential sales, Texas law requires that the seller deliver a seller's disclosure notice to the buyer on or before the effective date of purchase. This document provides important information about the seller's knowledge of the condition of the property. Complete the notice to the best of your knowledge and belief. Your REALTOR® will most likely ask that you complete the notice at the time the listing is first taken. Copies of the completed notice will be made available to those looking at your property.
Lead Base Paint:
If your property was built before 1978, federal law requires that before a buyer is obligated under a contract to buy the property, the seller shall: 1) provide the buyer with a lead hazard information pamphlet (as prescribed by EPA); 2) disclose the presence of any known lead-based paint or hazard; 3) provide the buyer with a lead hazard evaluation report or records available to the seller, and 4) permit the buyer to conduct a risk assessment or inspection for the presence of lead-based paint or hazards. A contract for the sale of property built before 1978 must contain a statutorily prescribed Lead Warning Statement to the buyer. Your REALTOR® will provide you with the forms necessary to comply with the law and will suggest procedures to follow in order to comply.
Acceptance:
Once you and the buyer agree on terms and sign the contract, the buyer will generally have to find a lender and apply for a loan. Your REALTOR® may monitor the loan process, which could last several weeks. During this time, your REALTOR® will also be busy coordinating other arrangements to prepare for the final sale.
Title Search:
As part of the process, the title company may order a survey of your property and research the title to your home, making sure the chain of title is clear. Clearing the title may require paying off liens--that is, any monetary claims against your property. Examples are mechanic's liens, unpaid state, and federal tax liens, court judgments, and probate considerations (if a co-owner has died). The product of the title search can be in the form of title insurance, abstract of title, or certificate of title, depending on what is commonly used in your area.
Inspection & Repairs:
If the buyer requires it, your REALTOR® can coordinate an inspection of your home. A buyer may hire an inspector to review many items in the property such as the structural components, mechanical items, electrical systems, and plumbing systems. The inspector will report to the buyer the items that the inspector finds to be in need of repair. Most likely, the buyer will provide a copy of the inspection report to you and may ask you to complete certain repairs. Don’t be surprised if the inspection notes some items in need of repair. An inspector is trained to see items and defects that are not obvious to you and your REALTOR®. No matter how new or well-maintained a home is, an inspector may find some items in need of repair.
STEP 7:
CLOSING
In most transactions, the closing takes less than an hour and often occurs at the title company. Your REALTOR® and the buyer's agent may be present. A title company officer or escrow agent will preside. Be sure to bring your driver's license to the closing (DPS identification cards and passports are also acceptable).
The sale actually consists of two transactions: 1) transferring the property to the buyer, and 2) paying off the existing mortgage on your home (or allowing the buyer to assume your mortgage). To transfer the property, the title company will present documents proving that you have the title. Proceeds of the sale may be disbursed at closing or shortly thereafter, once all the paperwork and verifications have been processed. When you give your house key to the new owners, the sale is complete.