In a NutshellThe process of selling your home is a lot more than just putting it on the market and waiting for a buyer. Here are some tips for selling your home that can help you get through each step of the process.
So you’ve decided to sell your house. In an ideal world, this process would be simple and painless.
But in reality, there are a lot of moving parts to the process, and some of them are out of your control. Here are some tips for selling your house that can help you through the process and the decisions you’ll need to make, as well as some potential problems you might encounter.
- Deciding whether to hire an agent
- Setting the price
- Listing the property
- Appraisal issues
- Negotiating and being flexible with your buyer
- Is your buyer qualified?
Deciding whether to hire an agent
For many people, the decision to hire a real estate agent to help sell their property may be a no-brainer. A good agent can help you each step of the way with things like preparing and staging your home, reviewing offers, negotiating with potential buyers, handling the closing process and more.
If you don’t have real estate experience, it generally makes sense to hire an agent to save yourself from having to figure everything out on your own.
That said, real estate agents are expensive, typically charging a commission amounting to 5% or 6% of the sale price. If you’ve sold houses before and have a good handle on the process, you may choose to go the “for sale by owner” route. This way, you can potentially save thousands of dollars by doing more of the work yourself.
Setting the price
Pricing your home as accurately as possible is a crucial part of the process. If you start too high, you may turn off potential buyers who would’ve been interested at a more reasonable price.
If you’re using an agent, they’ll typically run a comparative market analysis to help set the listing price. The analysis uses homes in the area that have sold recently — known as comparables or comps — to estimate the fair market value of your property.
Your agent will likely look at a few homes that have sold in the last three to six months that are similar and located close to yours and how much they sold for. Then they’ll look at the differences between the comps and your home to make adjustments. They’ll also consider the current market conditions.
If you’re going it alone, you’ll need to do this process on your own. Here are some factors to consider.
- Lot size
- Square footage
- Number of bedrooms and bathrooms
- Age and condition of the property
- Special features
- Date, terms and financing of comp sales
Listing the property
Before you list your property, you’ll need to prepare it for photos and showings. If you have an agent, they can help you with the staging process, which can include deep cleaning the home and moving things around — and sometimes removing certain things entirely — to create the best possible first impression.
Once your home is ready and the photos have been taken, you or your agent will list the home on the multiple listing service, or MLS — a database that provides information about properties that are currently for sale.
Before a buyer can get financing to buy your home, the property typically must be appraised. This is generally a requirement by mortgage lenders to ensure that the home is worth what the buyer is paying.
Appraisals use “comps” or properties comparable to your own to help determine the value of your home. If there’s a gap between the listing price and the appraised value, the deal could fall apart unless you make up the difference by lowering the price or providing some other concession.
Unfortunately, the appraisal process — and the appraiser’s decision — is out of your hands. But be prepared to make adjustments depending on what comes back.
Negotiating and being flexible with your buyer
Once offers start to roll in, you’ll have a few choices with each one. You can accept the offer, reject it or present a counteroffer.
If you’re in a market with more demand than there are homes, you may not have to do much negotiating because you’ll likely have multiple offers to consider. But in a buyer’s market, where there are more houses to choose from, you may need to do some negotiating to convince a buyer to choose your property.
For example, you may agree to a lower asking price, or if there’s an issue with the home that came up during the inspection, you may agree to pay for repairs or a replacement but still keep the original sale price. The important thing is to understand the current market conditions and what other options buyers have in order to determine how flexible you need to be.
Is your buyer qualified?
The last thing you want is to take the time and energy of working with a buyer only for the deal to collapse because they can’t obtain financing. It’s important to make sure you’re working with potential buyers who have a high probability of getting approved for a mortgage loan.
You can do this by requiring a preapproval letter from a mortgage lender.
After the sale
Once you’ve agreed to an offer, there are a few things you’ll need to keep in mind.
- Seller closing costs — In addition to paying agent commissions for both the buying and selling agents, sellers may also need to pay for title insurance, title search, transfer tax, prorated property tax and more.
- Tax implications — If the sale of your home meets certain federal tax conditions (such as whether your profit exceeds the exclusion amount or you don’t meet the residency requirement in the current tax year where applicable), you’ll need to report some or all of the profit on your tax return as a capital gain. Most long-term capital gains tax rates are 20% or lower, but in some instances, they can be higher.
- Closing paperwork — To prepare for closing, you’ll need the necessary paperwork. If you have an agent, they’ll help you determine what you’ll need, but some common documents may include your home’s original purchase contract, property survey, mortgage documents, certificate of occupancy and more.
Now that you have some good tips for selling a home, take the first step and decide how you want to proceed, either on your own or with a real estate agent. Begin getting your home ready for the staging, listing and showing process, and start looking for the next place you’re going to live.
While this process has a lot of moving parts and can be stressful, the more proactive you are throughout the selling process, the more prepared you’ll be.