Selling your home is a big deal. After all, it’s likely the largest financial asset you own. The process can be confusing, especially if you’ve never sold a home before. Use this guide to learn more and prepare yourself for the path that lies ahead. When you know what to expect your chances for success are that much higher.
1 Making Sure You’re Ready to Sell
2 Choosing a Great Real Estate Agent
3 Setting the Right Price
4 Preparing Yourself and Your Home to Sell
5 Marketing and Showing Your Home
6 Negotiating and Accepting an Offer
7 Understanding the Road to Closing
Step 1. Making Sure You’re Ready to Sell
Thinking about selling your home? Wondering how you determine if it’s the right time? Read on to learn if the conditions are right for you to put that ‘for sale’ sign in your lawn.
Gauge Your Current Finances
Take a look at your current mortgage bill or other mortgage documents to find out what you owe your lender. Make sure to include any second mortgage or line of credit you might have as well. Then you can subtract what you think your home is worth to get a rough idea of your equity. Once you officially decide to sell your home, a real estate agent will be able to perform a comparative market analysis (CMA) to give you a realistic idea of what your home is worth in today’s market.
Here are some other ways to determine if it’s the right time to sell your home.
Decide if You Should Sell Your Home or Buy a New One First
A big part of the decision to sell your current home is figuring out when you should buy your next home. There’s no right or wrong answer for whether you should buy or sell first. Some people prefer to sell first so that they don’t have to carry two mortgages at a time. Others don’t like the idea of being “homeless” which is hard to avoid if you sell before you buy.
If you’re open to either, look at your current housing market. If you’re in a buyer’s market, you have a better chance of making an offer on a home contingent on the sale of your current home. If you’re in a seller’s market, homeowners are far less likely to accept a contingency that forces them to wait around.
Determine if You’re Emotionally Ready to Sell
Emotions play a big role in selling a home. They can often get in the way of a successful home sale. Check out these tips to learn how your emotions can prevent you from selling your home. If you can prepare yourself ahead of time, you’ll have a much smoother experience from start to finish.
Step 2. Choosing a Great Real Estate Agent
Finding a great real estate agent to help you through the home selling process is critical. They’ll help you set the right price for your home, help negotiate offers and walk you through every step of the home selling process. They’ll be there to give you expert advice, make sure that your interests are always protected and help you get the best price for your home.
The Benefits of Selling with a Real Estate Agent
Enlisting the help of a real estate agent with your home search is extremely beneficial. Here are some reasons why.
- They’re working for you, not the buyer. The vast majority of buyers who will come to see your home will be represented by buyer’s agents. Do you want to be the only one not represented in what is most likely the biggest transaction of your life? A seller’s agent will work hard to make sure your best interests are always top of mind.
- They prevent you from showing your home needlessly. Showing your home is a lot of work. You have to leave, sometimes at a moment’s notice, and make sure your house is spotless. A real estate agent will make sure you’re only going through all of that for serious buyers. They’ll take the time to ask the right questions and prescreen buyers before they schedule a showing.
- They can help you negotiate the best deal. An experienced seller’s agent has most likely negotiated hundreds of home sales. They’re familiar with your local market and what’s driving demand. This gives them an advantage in helping ensure you get the best price for your home. They’re familiar with negotiating tactics that buyer’s agents use, and can make sure you have the advantage.
- They keep you out of legal trouble. There are loads of paperwork involved when selling your home. It’s important that all paperwork is completed correctly by someone who knows what they’re doing. A real estate agent will work with you to complete all the contracts, addendum and disclosures correctly to minimize the risk of being sued down the line.
Finding an Agent to Fit Your Needs
Now you know that when selling a home, real estate agents do more than just schedule showings. They help you translate market data to successfully price your home. They bring years of experience in negotiating and navigating the home selling process so that you can have peace of mind. But how do you find the right agent for you?
We recommend finding an agent who is a member of the National Association of Realtors and holds the designation of Seller Representative Specialist (SRS). Beyond that you’ll want an agent who knows your area inside and out and is willing to work around your schedule.
At Rocket Homes, we specialize in matching home sellers with the right agent for their unique needs. If you need help finding the best agent for you, we can help!
Step 3. Setting the Right Price
So you decided to sell your home and found a great real estate agent. Now comes a critical step in the home selling process – setting the right price to list your home at.
What Influences a Home’s Value?
Both appraisers and real estate agents will base their price opinions on comparable sales. They ideally look at sales that occurred within the last three to six months in your neighborhood. When looking for comparable sales to use as a yardstick for pricing your home they look at several factors. This includes the home’s condition, age, square footage, location factors and the number of bedrooms and baths. The sale date is also important since it will reflect the most recent changes in your market.
Typically, an important (the most important thing with real estate is location) feature to concentrate on is the number of bedrooms and baths. This usually plays a bigger role in valuation than square footage. For example, a two-bedroom home in a neighborhood of predominately three-bedroom homes will almost always sell at a discount despite the number of square feet. If most homes in the neighborhood have a certain feature – like air conditioning – the absence of that feature will also drop the price.
Your real estate agent will perform a Comparative Market Analysis (CMA) based on all of the factors above to recommend a price that is right for your home.
Deciding on Your Asking Price
Pricing is the linchpin to a successful home sale. If you set the price too high, you run the risk of turning off potential buyers. Many won’t even consider seeing a house in a desired location if it’s priced above what the market might suggest. An over-inflated price also means your house will not compare favorably with other similarly priced homes. Even worse, buyers may not even see your home when they search online since they will be using lower price points.
Resist the Urge to Overprice
The temptation to overprice is strong. Almost everyone believes their home is the exception and will fetch more than similar houses. But that is rarely, if ever, the case. Buyers today are savvy. Chances are anyone who looks at your house — with or without an agent — has spent time both online and offline scoping out properties. Most buyers and real estate agents will know right away if a property is overpriced.
An over-inflated price means your house will be competing against homes that have more amenities or features such as bedrooms and baths, square footage, or a better location. This is the main reason homes sit on the market for months, with the price usually coming down to where it should have been from day one.
Your real estate agent will help you find the sweet spot to list your home at based on your specific current market conditions. Once you decide on a price, you’re ready to prep your home to officially hit the market!
Step 4. Preparing Yourself and Your Home to Sell
There are a lot of details to take care of before you list your home and show it to prospective buyers. To help you prepare yourself and your home, check out these tips.
Some might think repairing, improving and staging your home is at the top of the to-do list. However, preparing yourself psychologically for the process ahead is really the first step to prepare your home for sale. If you are not ready, your emotions can prevent you from selling. Many sellers are surprised by the emotions that surface as they pack up and say goodbye to their homes.
It helps to focus on the end goal: finding the right buyer and closing the deal. Think of the process as selling a house, not your home. It will become easier to look at your property objectively as you remove personal items and start staging to attract buyers. When you start showing your home, potential buyers and their realtors may be overly critical. Try your best to react to those types of comments in a neutral fashion. Plus, your agent can use those insights as negotiating tactics or to improve your listing.
Repair and Replace
This is the time to fix all those little items that you’ve had on your “to do” list for years. Have a latch that doesn’t work, a leaky toilet, or an electrical outlet that doesn’t work? It might seem small, but potential buyers may see them as a sign that the home hasn’t been properly maintained. This means more work for them if they buy it.
There is a big difference between making minor and inexpensive “polishes” and “touch-ups” to your house and doing extensive and costly renovations. Be careful about how much money you spend. Buyers will be impressed by a brand-new roof, but they aren’t likely to give you enough extra money to pay for it. There are some home renovations buyers will love, however, that you can make to help increase your selling price.
Declutter and Clean
Decluttering helps to minimize or eliminate distractions that could otherwise take a buyer’s focus away from the things that really matter. Toss or sell anything you aren’t planning on taking with you. Clear out closets. Overstuffed closets send a signal to buyers that the house might not have enough storage.
Garages, most basements, storage areas and laundry rooms all need similar treatment. Don’t forget about your lawn, too. Curb appeal is important. Check out these tips on how you can use your lawn to sell your home.
Cleaning is critical after you have finished decluttering your home inside and out. Really scrub and polish every single area from top to bottom, removing dust and dirt in every crevice. Don’t forget to look up, too. Remove cobwebs and dust moldings, replace burnt-out light bulbs, dust existing bulbs and polish light fixtures. Doing a thorough job ahead of time will make keeping the house in show-ready shape a breeze later.
Stage Your Home
One of the most powerful ways to make buyers want to purchase your home is to stage it well. It can be as simple as cleaning, removing extraneous items and repainting. Or it can require a clean sweep that involves storing belongings off-site, redecorating, and even renting furniture and art to make your place show well.
Staging helps potential buyers envision your house as theirs. To do that, they need to see the details of your house. Your goal in staging is to think like a buyer to help sell your home and entice them to linger in each room so they can absorb its features and see its benefits.
- Consider the view from each doorway. How can you encourage visitors to step in each room? A small scenario often works, such as an arrangement of an easy chair and lamp that is partly visible from the door.
- Use fresh flowers that are visible from the door to entice visitors to enter the room.
- Make sure seating is arranged so it is open to visitors, not with backs to them, which can discourage them from entering the room.
- If your furniture is badly outdated or worn, consider storing it and bringing in a few bright, clean rental pieces.
For more advice, check out these staging ideas to make your home more memorable to buyers.
Step 5. Marketing and Showing Your Home
Once you’ve prepared your home to sell, your real estate agent will start working on marketing your home to buyers. This involves working with you to get photographs of your home, creating a detailed home listing that highlights your home’s best features, posting your home online and more.
Marketing Your Home
Your agent will use a variety of tactics to get buyer’s exposed to and interested in your home. Some of the primary things your agent will do are outlined below.
- Home Listing. Before your home officially hits the market, your real estate agent will create your home’s online profile. This includes all of the details about your home for buyers to see. A well-crafted online profile can really make your home stand out from the crowd.
- Multiple Listing Service (MLS). The biggest tool in the real estate agent’s arsenal is the MLS. This is a private database used by licensed agents to find homes for buyers. If you work with a real estate agent they will get your home listing on the MLS and syndicated to all of the popular home search websites.
- Yard Sign. Your real estate agent will make sure you have a visible sign on your front yard to let potential buyers know that your home is for sale. It’s a great way to attract house hunters out actively looking in your neighborhood.
- Flyers and Direct Mail. Your agent may create property flyers to market your home. These flyers can be attached to a yard sign or left at open houses and showings to highlight the key information about your property. It’s a great way to stay top of mind with interested buyers.
- Video. Some agents create video tours of your home to allow buyers to see what your home has to offer before they visit your home in person. Remember, in today’s world your home’s first showing is online so it’s critical to make the best impression possible. You may to add a blurb about professional photography to this section. There is a big difference between professional photos and once taken from your agent’s cell phone. I’d consider it the most important part of a home’s marketing plan.
- Social Media. Many real estate agents will share your property on their social media pages and with their network of buyer’s agents and other professionals. This is a great way to generate a lot of additional exposure for your property.
Preparing for Home Showings and Open Houses
If every space isn’t sparkling, clean again or have a professional cleaning done. The key to readying your house for showings is all the deep cleaning, which you’ve already done, and advance planning to make it easier to keep it “buyer ready” day-to-day. Here are some things that can help you stay ready.
Keep Children and Pets Out of Sight
During showings and open houses, make care arrangements for children and pets ahead of time. If possible, have someone watch your children, preferably off the premises. If you are unable to have your pets off the property, consider crating them. Then they won’t be in the way and there won’t be a chance that someone will inadvertently let them out the door. Better yet, set up a secure corner or space for their crates. Dress it up with new bedding and a few toys in coordinating colors. Be sure water bowls are sparkling. If necessary, buy new ones and, yes, make sure they blend with the color scheme.
Don’t Forget About the Details
If you don’t have a place to keep dirty laundry, decide ahead of time where you will stash your gym clothes or your child’s soccer uniform. Decide where you can keep toiletries out of sight during showings. If you can, purchase a new set of towels for each bathroom and only bring them out when buyers are coming through or for an open house.
Right before a showing, give fixtures and faucets a quick once over to renew the shine. Make sure counters and sinks are clean. Be sure the view from any doorway is attractive, especially powder rooms and small bathrooms since some buyers might not actually go into the room. Make sure what they can see is bright and appealing. Don’t forget what’s reflected in the mirror too.
Make sure to open the shades and turn on the lights (even during the day) before a showing. General advice is to make everything light and bright, but also let common sense be your guide. If the lights in your kitchen can be as bright as an operating room, you might want to bring them down a bit.
Step 6. Negotiating and Accepting an Offer
When selling a home, negotiating is by far one of the most important things in the process. Your agent will serve as your expert negotiator and will work on your behalf to make sure your best interests are represented. They will hopefully save you a lot of money in the process. Remember, they have plenty of motivation to help you sell your home, too. Their livelihood and reputation depend on getting their clients what they want.
Have realistic expectations
Whenever you are in a negotiating situation, it helps to remain flexible and open. This includes maintaining realistic expectations. It is rare that you will get everything you want while negotiating. Think about what you are willing to give up and what are absolute deal breakers.
Be honest and upfront about any damage or flaws a buyer may point out about your house. Discuss these problems, and let the buyer know they are welcome to have any perceived damage or defect inspected—at their own cost if it’s a major concern. If there is indeed a problem, you can offer to reduce your asking price to help offset the cost of repairs.
Think twice before rejecting a low offer
There is always the chance that you will receive a low offer. Here are some things you can do to make the most of the situation.
- Do not take it personally. This can make you look weak in the negotiation process.
- Try to understand the buyer’s motivation. You may learn something important, even if you ultimately reject the offer.
- Make a counteroffer. Consider the buyer’s position and work with your agent to find a middle ground by reducing your asking price, or explain how you arrived at your current asking price.
- Negotiate other terms to counterbalance a low offer. There are things your agent can do to work with a low offer. For example, seller concessions, home warranties, closing dates, post-closing occupancy or quick closing/occupancy might help.
The longer it takes to sell your home, the less likely you are to receive your asking price. The longer you have to drag out the process—and pay the mortgage. It might be worth your while to talk to your agent about accepting the deal if you’ve been on the market a while. The negotiating part of the process can be tricky, but with an experienced agent by your side you’ll be set up for success.
Step 7. Understanding the Road to Closing
Congratulations – you accepted an offer on your home! Now what? Before you do anything, take a moment to savor that signed purchase agreement. It’s a major milestone! But it also means you have a new set of tasks ahead of you. Read on to learn about the final steps to get you to a successful home sale.
Prepare for the Appraisal and Inspection
Two of the biggest steps to closing on a house are the appraisal and the inspection. An appraisal is an estimate of the fair market value of a home, typically ordered by a buyer’s lender during the mortgage loan process. This means a licensed appraiser will evaluate your home’s value based on things like age, condition, upgrades, location and the surrounding housing market. The purpose is to let a lender know the proper loan amount to provide. If an appraisal comes in below the sale price, a buyer and seller may need to renegotiate to cover the difference.
Similar to an appraisal, a home inspection is ordered by the home buyer to evaluate the structure and systems of a home, from the roof to the foundation. It covers things like the home’s heating system, air conditioning, plumbing, electrical systems, windows, doors, ceilings and floors. The main purpose is to find out if any major repairs are needed, in which case you may need to cover the cost. Sometimes listing agents will recommend having a pre-inspection completed before putting the home on the market. This allows the seller to identify and address any potential issues prior to putting the home on the market.
So, how do you prepare for these home evaluations?
- Ensure that there’s easy access to all areas of your home (basement, crawlspaces, attics and utility rooms) and take care of the little things that could raise bigger questions.
- Replace burnt out light bulbs, which could point to potential electrical problems.
- Eliminate slow drains with any of your sinks to remove doubts about the plumbing.
- Change your furnace air filter and be sure your smoke and carbon monoxide alarms are working.
The purpose of a home inspection is to identify major defects in your home that would require a major investment of time or money. If there’s an inspection contingency in your purchase agreement, that means the buyer can sometimes negotiate repairs based on the findings of their home inspector or potentially cancel the contract. Keep that in mind if the home buyer comes to you with their list of issues.
Your agent will need to do some negotiating here. Resist agreeing to fix all cosmetic issues like cracked tiles or loose doorknobs, as these are minor inconveniences that a buyer could have easily seen when touring the home. Major defects you should address include mold, electrical issues, lead paint or leaking roofs – the types of issues that will require major investments of time or money.
Get Your Paperwork in Order
You’ve already filled out two of the most important forms to sell your home – the listing agreement & purchase agreement. As you move through the closing process, your agent and title company will work with you to provide additional paperwork to reach the finish line. Here are some of the most common documents you’ll need.
- Title Work. This when the title company or attorneys review title work to confirm no additional liens or encumbrances, confirm taxes and assessments are paid and prepare the deed and documents for closing.
- Property taxes. Have your most recent tax statement ready, which will give the buyer an idea of what they’ll need to pay after purchasing your home.
- Loan documents. Gather paperwork on your first mortgage – and second mortgage or home equity lines of credit if applicable.
- Property survey. This is usually ordered by the buyer. It shows the boundaries of your property and where fences, driveways and other structures are located. You probably received this when you bought your home. If not, try checking with your lender or title company who may have a copy. If all else fails, you might need to contact a local engineering firm to produce a new one.
- Plans and permits. If you’ve done any work on your home like additions or upgrades, you’ll probably need to show documentation that proves everything was above board.
- Homeowner’s insurance information. Make sure you have the documents that detail your current policy for the home – and be sure not to cancel your policy until after closing.
After the terms of your purchase agreement have been met and all the loan paperwork is ready, your escrow agent will fill out and deliver settlement statement. This form details all transfers of money. It’s important for you and your agent to review this statement before your closing day when you’ll sign all the final documents.
Close with Confidence
On the day of your closing, make sure you bring your photo ID. When you meet with the buyer and their real estate agent, you’ll sign all the paperwork required to transfer ownership of your home. (These items below are typically included and reflected on the seller’s settlement statement).
If you’re making a profit after all expenses are paid off, you should receive proceeds at closing. If not, you should have a cashier’s check ready to square your end of the bargain.
Next Steps After Closing
After you get through the closing, you’re almost home free. You might feel like you’ve been tying up loose ends for a month by now, but chances are there a few more to go. Here are some common to-dos to get through before you exit your home for the final time.
- Submit a change of address form to the post office
- Call your homeowner’s insurance agent to cancel your policy, as you may receive a refund for any prepaid premiums
- Close accounts for things like utilities and newspaper subscriptions
- Stack up appliance manuals, receipts, warranties, security alarm codes, etc. on the counter
- Close all the curtains and blinds, turn off all the lights and lock all the doors on your way out
- Once you lock up and head out, your home closing to-do list should be complete. And that means you’re ready to start the next chapter of your life – free and clear!
You officially sold your home! Give yourself a pat on the back. It’s no easy feat and is an accomplishment worth celebrating.
If you need advice about buying a home, we have you covered there too. Check out our detailed home buyer’s guide to learn more.