Financial Learning Center
- Plan Your Program. Start Early
- Should You Sell?
- Steps before the Listing
- Selecting a Real Estate Agent
- Listing Contracts
- Real Estate Commissions
- For Sale by Owner
- Getting an Offer
- Negotiating Items
- Entering Into a Contract
- Hiring an Attorney
- Financing the Deal
- Seller Financing Alternatives
- Before the Closing
- Home Inspection
- Sample Closing Costs for Items Paid by Seller
- The Closing
- Bridge Loans
One secret to successfully selling your home is planning. Spend some time evaluating what price you can get for your home, as well as the best time to sell and the real estate market conditions in your area. You will also need to determine whether or not to use a real estate agent. And remember that appearances count: spend some time making your home attractive to buyers.
Name Your Price
The key to your pricing strategy should be to set a price that will attract buyers and selling agents to your home. It is not wise to play games with the price. Your number should reflect the market value of the home. Check on comparables (comps) in your area. This information is easy to get if you're using a broker. Also ask several area brokers for estimates. This will give you a pretty fair idea of your price range.
SUGGESTION: Your goal should be to sell your home within 45 to 60 days of going on the market. After checking out the "comps," go no higher than 5% above those prices or you run the risk of turning off buyers.
If you're in an area where comparable sales don't exist, evaluating your home can be difficult. Consider hiring an appraiser (normally done by the buyer) to give you an estimate of your home's value.
On the other hand, you may want to consider "working backward." Estimate your proceeds after all expenses involved in the sale have been paid. Compare that to the number you need or want. Next, work backwards to arrive at your asking price. Just remember, if that number is too high relative to your neighborhood, your house will be very hard—or impossible—to sell.
Fill out the "Estimated Sales Proceeds" worksheet to get an idea of how much cash you'll have at the end of the deal.
Name Your Time
Generally, the best time to sell a home is in the spring, mainly due to the school year. Many people time their move for the summer months so they can be settled before September. They start looking in the spring, plan to have a contract set by June or so, and move in before school starts. Home sales are typically slow in the late fall and winter and absolutely dead during the holiday season.
SUGGESTION: Many people list their homes for sale in the spring, since it is a "hot" season for home sales. Consider taking a contrarian view—list in the fall when fewer homes are on the market and you have less competition.
Know the Market
An important part of your selling strategy is to understand the housing market in your area. How quickly are homes selling? Is the market getting hotter ... or colder?
SUGGESTION: See if you can get a free market analysis from an area real estate agent. Many times these will be provided free in order to generate business. If you must pay, consider doing so if the information provided seems valuable to you. Quick tip: Get a feel for how long "For Sale" signs remain up in your area. If they remain standing three to six months, you know your market is cold.
Using an Agent
Most homes sold today are sold through a real estate agent. This service comes at a price, most commonly 6% of the selling price of the home. What do you get for your buck? Is it worth it? Will you be better off with a "For Sale by Owner" transaction?
Selling your home by yourself is hard work. What you save in cash, you may pay for in time and headaches. The agent will help you with proper pricing. In a slow market, agents work hard to bring buyers to your doorstep; their bread and butter depends on it. They assist your buyer in securing financing and shepherd the closing process, helping to move it along and resolve bottlenecks. They informally pre-qualify buyers, so you have a good idea you're not traveling down a false path.
But probably the best advantage you receive from using an agent is the Multiple Listing Service (MLS). This is a computerized database of available properties listed with area member brokers. You can't use it if you sell on your own. It could be that you would have to make up the exposure it gives you through expensive advertising.
SUGGESTION: Since buyers know that an owner going at it alone saves on real estate commissions, they may expect to receive a 6% price concession when they deal on your property. Since you may need to lower your price by this amount, you could theoretically get the services of an agent free, since their fee is paid for by the higher sales price.
If you are organized, determined, patient, and have a knack for selling, you may consider doing it yourself. Keep in mind, however, that you must invest time, know all sorts of details about items like electrical and heating systems, be able to evaluate the sincerity of your potential buyers, pay for your own advertising, and generally do a lot more work.
SUGGESTION: To assist in your sale, prepare a fact sheet you can hand out to people touring your home. Include such items as: the price, the age of the home, type of construction, number of rooms and floor plan, square footage, type of heating & electrical systems, lot size, annual taxes, utility costs, extras and amenities, proximity to schools and houses of worship, and any other relevant fact that helps "sell" your home.
A fundamental law of real estate: a home with "curb appeal" moves faster. If your home doesn't already have it, decide what you can do to make it look better. It pays to have an attractive home with a well-trimmed lawn. Buyers are just naturally attracted to it.
Generally, you should concentrate on "first impression" items, such as clean windows, new door hardware or mailbox, some minor landscaping for the front and rear yard, and brightly decorated rooms.
SUGGESTION: Little details really help this process. Consider investing a few dollars in flowers or small evergreens. A little "strategic" planting in the front yard warms up your prospective buyers before they get in the door. Avoid unnecessary clutter to make your rooms look bigger.
SUGGESTION: Look at the "Appearances Count" Checklist and decide which items you need, and which you can do or afford to have done. Keep things in perspective. Don't go overboard spending money to turn your home into a palace. A few well-placed cosmetic improvements can add a considerable amount to what you can get for your home—and greatly reduce the time it takes to sell it.
IMPORTANT NOTE: If you'll be using a contractor to assist you with the sprucing-up of the property, resist the temptation to use someone who is offering you a lowball price. This may result in cutting corners and a shoddy job. Savvy buyers could have doubts about your home if they detect either substandard materials or workmanship. Whatever you saved might end up costing you in the end.
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