SELLING
Selling real estate property, commonly referred to as a real estate sale or property sale, is the process of transferring ownership of a piece of real property from one party (the seller) to another party (the buyer) in exchange for a specified amount of money. This transaction involves legal and financial procedures to ensure a smooth transfer of ownership rights.
Selling a house can induce stress, and the pressure intensifies when time is limited. Whether the urgency is due to a new job, financial constraints, or personal circumstances, there are effective strategies to enhance your home’s appeal, reduce its time on the market, and draw favorable offers. Discover how to expedite the process of selling your house
Steps to Selling a House
Selling your home involves careful preparation, pricing, presentation, and marketing to attract potential buyers and achieve a successful sale. By following these steps, you can increase your chances of selling your home quickly and at a favourable price. So, let’s delve into the key steps that can help you navigate this journey and ensure that your home-selling experience is not only smooth but also maximises your returns.
Step 1: Get Prepared
Prior to delving into the considerations of putting up for-sale signs, enlisting a real estate agent, or seeking potential buyers, it’s prudent to take a moment to evaluate your current financial standing and engage in some initial organization before things become overwhelming. To initiate your home-selling journey, we suggest commencing with fundamental preparatory tasks that can be promptly addressed.
⦁ Assess Your Home’s Valuation
Home value, synonymous with current market value, denotes the potential sum your residence could command if listed on the market at present. Recognizing the worth of your home serves as a pivotal factor in determining an opportune selling timeframe and establishing an appropriate asking price. Additionally, it assists in discerning whether any repairs or upgrades are warranted prior to listing. Given the substantial financial significance of your property, making well-informed decisions during the pre-sale phase is crucial.
Fluctuations in home value are frequently attributable to market shifts. As demand surges, prices tend to ascend correspondingly, and vice versa. Notably, factors such as economic conditions, job market dynamics, and interest rates wield significant influence over home value—elements beyond individual control. However, there are measures that can be taken to potentially enhance your home’s appreciation over time, such as strategic upgrades and prudent renovations.
Determining your home’s worth can be facilitated through online resources like:
⦁ Calculate Your Home Equity
Home equity embodies the value of your ownership stake in your dwelling, calculated by subtracting the outstanding mortgage from the property’s market value. Some lenders express your position as a loan-to-value (LTV) ratio, representing the portion of your home’s value that constitutes debt. While few lenders permit borrowing against the full extent of home equity, during normal economic conditions, you might be able to borrow between 80% and 90% of your available equity. Your home equity value is the disparity between the current market value of your home and the total sum of debts, mainly your primary mortgage, registered against it.
For instance, if your home is worth $250,000 and your mortgage is $150,000, your equity would be $100,000.
⦁ Estimate Your Net Proceeds
Net proceeds denote the ultimate profits a seller garners once all initial expenses are deducted from the total proceeds of a sale. The estimation process involves several steps:
- Begin with the projected sale price of the home, which can be obtained from recent comparables, appraisals, or input from real estate agents.
- Deduct your mortgage balance and any other liens or loans tied to the property that must be settled at closing.
- Estimate closing costs, typically amounting to 2-5% of the home’s sale price, covering fees such as title, attorney, inspection, and real estate commissions.
- Account for any concessions you might offer to buyers, such as covering a portion of their closing costs, which reduces your proceeds.
- Factor in potential capital gains taxes if you’ve resided in the home for less than 2 of the last 5 years; federal capital gains tax rates generally range from 15% to 20%.
- Subtract expenses for necessary repairs or fixes to prepare the home for sale, including painting, carpet cleaning, and repairs identified during inspections.
- Consider selling-related costs like staging, moving, storage fees, or temporary rentals, which can collectively amount to several thousand dollars.
- Incorporate a contingency cushion of 5-10% to accommodate unforeseen expenses that may arise during the sale process.
- Utilize an online closing cost calculator for a more precise estimation based on factors such as sale price, location, and loan details.
- It’s advisable to consult a financial professional to ensure accurate incorporation of all tax implications and sale-related expenditures in your net proceeds estimate.
⦁ Create a Clean and Tidy Environment
In the endeavor to sell your home promptly, one crucial step, particularly when time is limited, involves enhancing the visual appeal of your home’s interior to attract a broader spectrum of potential buyers. A few essential measures to consider include:
- Secure a storage unit and stow away extra belongings or large furnishings that may contribute to a crowded, small, or untidy appearance in rooms.
- Organize closets to showcase available storage space, allowing potential buyers to envision ample room for their belongings. Avoid overfilling closets, as creating an impression of spacious storage is important.
- Undertake a thorough cleaning of every room, addressing areas such as baseboards, kitchen cabinets, bathroom tiles, and carpets. In cases where time is limited, engaging professionals for assistance could be beneficial.
This preliminary groundwork and organization lay the foundation for a successful and streamlined home-selling process.
Step 2: Choose a Representation Strategy
When embarking on the journey to sell your house, a pivotal decision awaits: whether to opt for a “for sale by owner” (FSBO) approach or enlist the services of a real estate agent. In 2018, a mere 10 percent of sellers who had recently sold their homes pursued the FSBO route, while another 10 percent initially attempted to navigate the process independently before eventually enlisting professional assistance. The choice between these two avenues demands careful consideration of their respective advantages and drawbacks, with factors like the urgency of the sale, local market conditions, and any intricate aspects of your property that may necessitate expert negotiation skills playing a crucial role.
Selling Your Home: FSBO Considerations
If the FSBO path aligns with your strategy, several steps merit attention:
- Allocate ample time to adequately prepare your home for listing and effectively market it across diverse channels. This highlights the comprehensive effort that real estate agents dedicate due to the multifaceted nature of their role.
- Undertake research into recent comparable sales within your locality to inform your pricing decisions.
- Remain adaptable with your schedule, accommodating showings, or employing a lockbox for seamless accessibility.
- Approach feedback from agents and potential buyers with an open mind, valuing constructive input without taking it personally.
Enlisting a Real Estate Agent: Key Considerations
Should you decide to engage a real estate agent, the following steps are advised:
- Seek referrals from trusted sources to identify potential agents.
- Conduct comprehensive interviews with each prospective agent, exploring their expertise and aligning visions.
- Be proactive in negotiating the terms of your agreement to ensure a mutually beneficial contract.
- Place trust in your chosen agent’s professional advice throughout the home-selling process.
Everything you need to know about Real Estate Commission
The common range for real estate commission is 5% to 6% of the final sale price of the property. Within this, the buyer’s agent typically receives a commission of 2.5% to 3%, while the seller’s agent garners a corresponding 2.5% to 3%. However, these figures can fluctuate based on individual agents and geographic location. Real estate agent commissions encompass a broad spectrum of services integral to the home-selling process. This includes determining an optimal price, strategic online and offline marketing, skillful presentation to potential buyers, negotiation of transaction details, active involvement during inspections and appraisals, and ultimately guiding the sale to closure.
Payment of Commission
In the context of a home purchase, buyers are typically not responsible for real estate agent commissions, although they are accountable for closing costs. Conversely, sellers are responsible for commission payments to both their listing agent and the buyer’s agent upon the successful conclusion of the home sale.
| Breaking Down Commision Costs |
|---|
| -Home Sale Price: $150,000 -> 5% Real Estate Commission: $7,500 |
| -Home Sale Price: $200,000 -> 5% Real Estate Commission: $10,000 |
| -Home Sale Price: $250,000 -> 5% Real Estate Commission: $12,500 |
| -Home Sale Price: $350,000 -> 5% Real Estate Commission: $17,500 |
| -Home Sale Price: $500,000 -> 5% Real Estate Commission: $25,000 |
Division of Commission Between Agents
Commission distribution traditionally sees an even split between the buyer’s agent and the listing agent. In a scenario where a home sells for $250,000 with a 6% commission, the total commission of $15,000 is divided equally, with each agent receiving $7,500. However, it’s worth noting that post this initial division, the commission may undergo further subdivision between the broker and the agent. On average, the agent’s share from a 6% commission amounts to around 1.5%.
Step 3: Set the Right Price
When preparing to sell your home, choosing the appropriate sale price is a pivotal step. Consider the following guidance to ensure you set an optimal price:
- Research Comparable Sales: Study recently sold houses in your neighborhood from the past six months, assessing aspects like size, bedrooms, condition, and upgrades. This analysis helps establish a reasonable price range.
- Professional Appraisal: Engage a qualified appraiser to conduct a thorough valuation, factoring in market data, condition, and enhancements. While this service comes with a fee, it offers an expert assessment.
- Leverage Real Estate Agent Expertise: Consult experienced agents who possess updated insights into pricing trends specific to your locality. Their input can inform a well-suited asking price.
- Evaluate Property Condition: Consider any necessary repairs or updates that could enhance your home’s value. Calculate associated costs to ensure the property is in top selling condition.
- Compare Current Listings: Examine prices of comparable homes currently listed for sale. Aim for competitive pricing, avoiding overvaluation or undercutting relative to similar properties on the market.
- Align with Your Goals: Factor in your desired timeline. A lower price may expedite a sale, while a higher price might extend the listing period. Prioritize based on your objectives.
- Understand Local Market Dynamics: Analyze the prevailing market conditions—whether it’s a buyers’ or sellers’ market—and consider supply and demand factors.
- Submit basic property information via the company’s website or app.
- Provide supporting evidence, such as photos, reflecting the home’s condition.
- The iBuyer estimates the property’s value and extends an offer along with details on service charges and closing costs.
- Upon acceptance of the initial offer, a detailed home evaluation follows, leading to a final offer. Any necessary repairs might lead to adjustments in the offer.
Several technology-enabled companies provide streamlined home-selling experiences:
– Opendoor: The largest iBuyer, offering online valuations and cash offers in over 30 US metro areas.
– Offerpad: Provides fast cash offers, focusing on mid-size cities in 19 states.
– Orchard: Concentrates on 15 midwestern metro markets, aiming for modernized real estate experiences.
– Knock: Purchases homes and leases them back to sellers before reselling, prioritizing customer satisfaction.
– Clever Offers: Presents both cash and mortgage solutions for quick sales.
– EasyKnock: Buys homes and then leases them back, allowing sellers to earn equity.
– UpEquity: Employs a tech-powered iBuyer platform to modernise real estate processes.
Online Resources for Pricing Guidance:
Utilize these websites to help determine an appropriate price:
– Zillow.com: Offers Zestimates and recent sale prices for neighbourhood comparables.
– Redfin.com: Provides estimates based on public data and insights from Redfin agents.
– Realtor.com: Examines the listing and asking prices of similar active homes.
– Homes.com: Searches for closed sales in the vicinity using specific details.
– Trulia.com: uses home specifics to estimate a suitable price range.
– HomeDisclosure.com: Generates a Value Report based on property details.
– HomeValue.com: A calculator considering home facts and area sales activity.
Step 4: Complete Home Improvements
– Consider getting a pre-inspection to identify and fix potential issues.
– Opt for popular improvements like updated appliances, solar panels, etc.
– Enhance curb appeal by cleaning, landscaping, and making your home inviting.
– Decide whether to sell as-is or invest in improvements before selling
Step 5: Stage Your Home
– Declutter, clean, and depersonalize your home to make it more appealing.
– Choose a staging plan that fits your budget and local market demands.
– Remove pet and kids’ belongings to help buyers visualize their own lives in the space.
Step 6: Market Your Listing
– Advertise your listing across multiple channels to reach a wide range of buyers.
– Invest in professional marketing photos and consider video tours.
– Craft an enticing listing description that highlights your home’s best features.
– Schedule showings to accommodate potential buyers and gather feedback.
Revolutionizing Home Marketing with Virtual Tours
One of the most recent and highly effective strategies for promoting properties is the utilization of virtual tours. Virtual tours, also referred to as 3D tours or 3D walkthroughs, empower prospective buyers to digitally explore a home listed for sale. This online experience grants users the ability to navigate through various sections of the house from different viewpoints, akin to Google Maps’ Street View, but for interior spaces.
| Leading Virtual Tour Providers |
|---|
| 1. Matterport (matterport.com): This platform crafts 3D models and virtual walkthroughs utilizing advanced depth-sensing cameras, ensuring remarkable quality. |
| 2. BoxBrownie (boxbrownie.com): Providing professional real estate photography along with virtual staging and tours, starting from $149. |
| 3. Cupix (cupix.com): Generates MLS-compatible 3D virtual tours, which can be embedded on websites for seamless integration. |
| 4. IMMOviewer (immoviewer.com): Offering real estate virtual tours with innovative features like dollhouse view and HDR imaging. EyeSpy360 (eyespy360.com): Specializing in interactive virtual tours, photos, and floor plans catered to real estate needs. |
- Enhanced Market Exposure: Increased visibility of your listing attracts a higher number of potential buyers, potentially leading to multiple offers and a higher sale price.
- Reduced Showings: Virtual tours offer a comprehensive understanding of a home’s floor plan and flow. If a specific layout doesn’t align with a buyer’s preferences, they can determine this without necessitating an in-person showing, saving both your time and theirs.
- Attracting Non-Local Buyers: A more detailed view of your property appeals to distant and international buyers, enabling them to make well-informed decisions without the need for travel.
- Minimized Casual Interest: Virtual tours deter nosy neighbors or curious onlookers from attending open houses or showings, as they can satisfy their curiosity online.
Step 6: Due Diligence
During the due diligence period, several essential actions must be taken to facilitate a seamless home selling process:
⦁ Home Inspection: Potential buyers commonly conduct a home inspection to identify any property issues. Necessary repairs or adjustments may be negotiated based on the inspection findings.
⦁ House Appraisal: A home appraisal, required by the buyer’s lender, evaluates the property’s market value. Ensuring your home is in good condition and providing relevant documents is crucial for an accurate appraisal.
⦁ Clearing Title: Collaborate with your attorney or title company to resolve any title-related issues that might affect property ownership, such as liens or boundary disputes.
⦁ Address Repairs: If repairs were agreed upon or identified in the inspection, promptly complete them and retain documentation.
⦁ Moving Plans: Begin preparing for your move, organizing packing and logistics.
⦁ Final Walkthrough: Ensure your home is in the agreed-upon condition before closing, including any repairs or fixtures.
Both buyers and sellers encounter various costs during due diligence, depending on circumstances and location:
| For Buyers | For Sellers |
|---|---|
| Home Inspection: Costs range from $300 to $500 or more, depending on property size. | Pre-Listing Inspection: Similar to a buyer's home inspection |
| Appraisal: Typically between $300 and $500. | Repairs and Remediation: Cover costs of addressing inspection findings. |
| Title Search and Insurance: Around 0.5% to 1% of purchase price. | Title Search and Insurance: Similar to buyer's costs. |
| Survey: Varies based on property complexity. | Real Estate Commission: Usually 5% to 6% of sale price. |
Step 7: Moving out
Prepare for moving costs, which can range from $80 to $100 per hour for local moves.
Moving is expensive, but it’s also important to time it right: According to the 2018 Zillow Consumer Housing Trends Report, 61% of sellers also buy within a year. Consider temporary accommodation if you’re simultaneously buying and selling so you won’t have to worry about perfectly timing your sale and purchase, which rarely happens.
Step 7: Fulfilling Closing Obligations
– Complete repairs and certifications as agreed upon.
– Submit property disclosures, detailing known issues affecting the home’s value or safety.
– Review estimated closing costs, which can be 8% to 10% of the sale price.
– Attend the closing appointment to sign legal documents.
– Hand over the keys according to the agreement.
– The settlement agent records the new deed, pays off your mortgage, and ensures a smooth closing process.
Avoid These Mistakes When Selling Your Home
The process of selling your home can unexpectedly become time-intensive and emotionally demanding. Having strangers scrutinize your personal spaces and openly critique your decor can feel invasive. To compound matters, they may offer a lower price than you believe your home deserves. Navigating this intricate transaction without prior experience can lead to errors. To facilitate a successful home sale, consider the following fundamentals
- Maintain Emotional Composure: Focus on the business aspect and prevent emotions from clouding judgment.
- Engage a Real Estate Agent: While it incurs a commission fee, a professional agent eliminates uncertainty from the selling process.
- Establish a Realistic Price: Set a reasonable selling price to attract potential buyers.
- Timing Matters: Factor in the time of year; if possible, avoid listing during the winter months.
- Preparations are Key: Ensure your home is in its best possible condition to stand out in the market.
- Optimise Your Listing: Dedicate time to your listing, incorporating numerous high-quality interior and exterior photographs