Sell Your House
The process of selling your home yourself can be a very intimidating, frustrating and time-consuming, but ultimately rewarding experience. This content will help you successfully sell your home, and we hope that you can accomplish this through your own efforts.
First off, we want to point out a few things to keep in mind as you begin your home-selling journey. We hope that this will prepare you for this trip and help you understand the highs and lows of the selling process.
Get mentally prepared and be realistic in your expectations.
- The average home takes approximately 3-4 months to sell
- Approximately 85% of all For Sale By Owner home sale attempts fail. Why:
- The number one reason For Sale By Owner attempts fail is that the homeowner selling the property prices their home too high. Make sure you have accurately priced your home relative to the market you are in.
- The second reason for failure is that the average For Sale By Owner expects to sell their home in 14 days! Yes, 14 days! We just mentioned the average successful home sale takes 3-4 months. Are you patient enough for the journey?
Set a realistic budget for completing the sale of your home…
The average For Sale By Owner home seller spends approximately $700.00 during their For Sale By Owner home selling process. This breaks down to $60.00 for their signs, $240.00 for paint and home preparation, and $400.00 for advertising. These statistics represent home sellers who successfully sold their home and those who did not successfully complete the sale of their home through the FSBO process. Keep in mind that 70% of all home sales occur because of the sign in the yard. The key is to get the potential homebuyer to YOUR yard!
What are your advertising/marketing plans? The absolute best and most cost-effective means of advertising your home are a combination of Internet Advertisement (Home Sell Network), local newspaper classified ads and brochures in your yard.
The For Sale By Owner segment of the residential real estate market is the fastest growing market today.
- In 1999, Forrester Research and the National Association of Realtors projected that the FSBO market segment would grow to as much as 50 percent by 2010, up from 20 percent of the market in 1999.
- In April of 2001, Gomez Research, a leading independent technology, and trends research firm, estimated that the FSBO market would be as much as 40 percent by 2005.
The total residential real estate home sales market was approximately 6.6-million homes in 2000 for North America, of which approximately 1-million was new construction and the remaining were pre-existing homes. This would mean that currently the FSBO-attempt market is approximately 1.5-million to 2-million homes and is expected to double over the next four years.
Did you know that the residential real estate market is the second largest market in North America? Second, only to the automobile industry, the residential real estate market has sales of approximately $1.3-trillion dollars per year. In 1999, home sellers paid over $35-billion in fees to real estate professionals for the sale of their home.
Preparing Your Home For Sale
There is a sales and marketing analogy that states: “perception is reality.” An acceptance of this analogy as fact will help you greatly in the preparation of your home for sale. What’s good, what’s bad, what’s in, what’s not, what needs work, what needs help, etc., will most likely not be as apparent to you as you might think.
The reality is that your perception is jaded! You live here! You have grown accustomed, comfortable, accepting and most likely in love with your home. Now for reality: Your home to you is a house to a prospective buyer. This building of wood, cement, bricks, and shingles will only become the buyer’s home after they have taken possession of the property and invested their time, money and emotion into the house as you have done.
What have you done to prepare your home for sale? Let’s assume that you have done the basics of thoroughly cleaning your house and removing any unsightly junk from all rooms, closets, garage, basement, attics, storage buildings, etc.
Great, the basics are done. Now for the real challenge, what is the reality of your home’s readiness for sale? Are the carpets clean? Is the paint clean, un-chipped and in good shape? Is your landscaping well kept, trimmed and orderly? The reality is that the older your home, the more likely it is that certain things need to be done to get your home in selling condition.
We will briefly highlight a few key things you should consider and do prior to placing your home “on the market” for sale. A great way to prepare your home for sale is to ask someone that you know (a neighbor, a relative, a real estate professional) for her/his honest and objective opinion of your home’s cleanliness, appearance and overall attractiveness from their perception. (Perception is reality!)
Now, this will require you to thicken your skin and you MUST promise the person or persons you ask for this assessment that you will not take this personally nor will you in a way hold their opinion and suggestions against them. If you can not do this, you may not be a good candidate to sell your home yourself.
Things to keep in mind when preparing your home for sale:
- Outside of your home being priced incorrectly relative to the marketplace and stopping your selling attempt too quickly, the primary reason your home will not sell is that the carpets are dirty. Fact, dirty carpets create an immediate perception of lack of quality and will reduce the likelihood of you successfully selling your home.
- Chipping or cracking paint around doors, windows or anywhere on your house will significantly reduce the likelihood of a successful home sale. The average FSBO customer using Home Sell Network spends $115.00 dollars on paint alone to prepare their home for sale.
- Overgrown landscaping is a major turnoff and may prevent the prospective homebuyer from stepping foot on your property. Fact is, landscaping has nothing to do with the quality of your home and the beauty of your home’s interior. Perception being reality means that a buyer may perceive overgrown landscaping or a poorly kept lawn as a poorly kept home.
- Are your windows clean? Natural light helps with the impression of your home and will make your home seem more spacious and inviting. If you think it may need cleaning, clean it! Perception dictates the reality of the situation to the potential homebuyer.
- The most important point in the preparation of your home for sale is to address and fix any problems with the home. Some States/Provinces have laws that will require you to completely disclose any issues with your home and virtually all mortgage companies will require any significant problems or issues with the home to be rectified prior to underwriting a mortgage for the house. An inspection of your home will be required prior to the closing of the transfer of ownership. Deal with the problems head-on and you will eliminate a probable roadblock to a completed home sale and have one less issue to deal with as you go through the home selling process
Pricing your home correctly, or incorrectly as the case may be, is the most common reason for a home not selling. Priced correctly, your home will sell. Remember, information is power, and just like the information available to you regarding selling your home, there is an incredible amount of information available to the homebuyer about your home and homes like yours that are for sale. Always assume that you are dealing with a highly-informed buyer and you will avoid embarrassment or possible contradiction during your negotiation processes.
How Do I Price My Home Correctly?
There are several excellent ways to obtain good information about the value of your home relative to the marketplace.
- Probably the best way to obtain an accurate price for your home is by having a real estate professional complete a competitive market analysis (CMA) of your home. This involves having the real estate broker or agent come to your home to examine its condition, decor, location, landscaping, etc.
This is a service that can be obtained with minimal cost to you. The downside to the CMA is that you will now be known to the particular real estate professional and will likely be aggressively called and marketed to by this person wanting to list and sell your home.
- Another option is an Electronic Appraisal. This online valuation report establishes property values through recent comparable home sales. It includes the sale date and sale price for similar homes in your area, price trends by zip/postal code and county, and more.
- A third option is a Neighborhood Snapshot that contains an incredible amount of information about the area where your home is located. The Snapshot is a 33 page document containing information about the public and private schools located near your home; crime statistics for the area where your home is located; demographics including age, income, education, marital status and children ratios for the residents of the city and county in which your home is located; plus current information of the 25 homes closest to yours that have most recently been sold and what the characteristics and sale price of each home was.
You may also choose to do some legwork to find out what homes similar to yours are currently listed (priced) for sale in your neighborhood and surrounding areas. You can do this by looking at various realty company websites; directly calling and asking the home seller; collecting brochures from these homes and looking at Homes For Sale magazines or newspaper advertisements.
The bottom line is your home must be priced competitively. You know the hard work, upgrades, custom paint, wallpaper, window treatments, etc., that you have paid for during your time of ownership of your home. The question is, will the buyer recognize these upgrades and be willing to pay for them.
Remember, one of the first actions that occur when a homeowner moves their home from a FSBO sale format to a real estate professional is that they are instructed to lower the price of the home. A double whammy; the reduction in the sale price of your home and a commission to be paid on top of the reduced price. Take your time and get the pricing right, it may save you thousands of dollars in the long run.
A final thought regarding the pricing of your home is to determine the length of time you are willing to take in selling your home. If you’re looking to sell your home more quickly, then your pricing will need to be more competitive than if you have no time constraints. Potential buyers will find your home if you actively advertise your home and provide access to good information about your home, but the buyer will quickly lose interest if they see that your home is priced too high relative to the market competition.
Marketing Your Home
Marketing your home is your chance to differentiate your home from the dozens and potentially hundreds of other homes like yours for sale in your area. The questions you need to address in the marketing of your home are; Why your house; What makes your house the better option; What caused you to love this house; and What are the key features and benefits of your house. We have quickly addressed each of these questions below, which will help you develop a good marketing plan to use in your advertising strategies. The idea is to get the best “bang” for your buck and most effective response from potential homebuyers.
- Why your house? Put yourself in the shoes of “Jane” homebuyer and ask yourself, “why did I buy my house?” In marketing terms, you have a brief moment to impress a consumer through an effective tagline. What is your home’s tagline? Unbelievable view! Incredible location for schools and shopping! Exceptional value for this area! When you’ve determined your home’s tagline, you’re ready to move forward.
- What makes your house the better option. As an example, you’ve decided that the marketing tagline for your home is “unbelievable view.” Your home is now probably the better option because it’s located in an area that has picturesque settings and venues, and your home has the best of these. Do you get where we’re going with this idea? Build on the idea of your tagline to illustrate and communicate why your home is the better option.
- What caused you to love your home? Your marketing tagline is likely the essence of why you purchased your home. Having said this, you need to express what caused you to love your home in a well thought out, easily understood and recognized presentation. Building on your tagline of “unbelievable view,” you now need to state something like: “You’ll love this home because it meets the needs of today’s active family at a great value while providing the best view in this area.” Bottom line, what caused you to love and buy your home will likely be a contributing factor in why the next buyer of this house will buy it as well.
- What are the key features and benefits of your house? You’ve got the potential buyer’s attention through your tagline and information about what makes your home better and easy to love. Now it’s time for the close. Emotion, impulse, impression, etc., get the buyer’s attention, but the features and benefits “close” the sale.
It’s now time to provide real, detailed and applicable information as to what your home is all about. Once again, focus heavily upon what makes your home different and the better option. For example and building on the tagline and information used in the prior sections, you would communicate that “in addition to an incredible view and great value, this home has geothermal heat that will save you in excess of $3,000.00 per year in normal heating costs; a thirteen course basement that allows for eight-foot ceilings if the basement is finished; the kitchen appliances in this home are two years old and cost $7,000.00 when replaced; etc. Get detailed and outline every “key” feature and benefit of your home.
A sound marketing plan will significantly improve the effectiveness of your advertising and greatly increase the likelihood of a successful home sale. Just like pricing your home, the marketing plan you develop should be carefully thought out and make sense to you. Run your marketing plan by some of your friends and peers to get their thoughts about the story you plan to tell. What seems to make sense to you may not be received in the same manner by others, so input from outside sources will greatly help you develop an effective marketing plan that helps you achieve your goal.
Advertising Your Home
There is a multitude of advertising options available to you to tell the potential homebuyer that your home is for sale. The key to your advertising is to have the various advertising outlets you are using work in concert with one another to result in the sale of your home. Please keep in mind that not all options, or possibly even the best options, for the advertising of your home are discussed here. What we have tried to focus on are the advertising outlets that seem to be almost universally used with the greatest results.
- Signs, signs, signs! Sounds simple enough. Right? Ask yourself a question, why do so many companies spend so much money on those billboard advertisements that you drive by on your way to work, school, shopping, etc. each day? A little-known fact that you may or may not know is that the real estate professionals estimate that 70 percent of all homes sell because of the sign in the yard.
- The key here is to have a very good, professional, easy-to-read yard sign with a highly visible contact information in your yard.
- Equally important is that you place directional “Home For Sale” signs at all high traffic intersections that direct the potential homebuyer to your home. Ask the homeowners or business owners at the high-traffic intersections near your home for permission to put a directional sign on their property. Most people will welcome your request and want to help you sell your home. Put as many of these signs out as you possibly can. Remember, these are your billboards.
- Brochure: A great, great way to give the potential homebuyer stopping at your yard sign and looking at your home detailed information. Nothing’s more frustrating to a potential homebuyer than taking the time and getting up the nerve to get out of their car to take a brochure and find the box is empty. Check your brochure box often, not only to fill it, but to make sure that it’s upright and in good condition.
- Internet Advertising: First, there’s no cheaper way or more effective way for you to tell the story of your home and reach the largest audience possible. Second, the Internet is the fastest growing advertising segment of the real estate market. According to Gomez Research, over 80-million potential homebuyers searched for real estate on the Internet in October 2000, and this number was projected to double by the end of 2001. Keys to remember here:
- Provide as much information about your home as possible. You have a potential homebuyer’s exclusive attention when they are looking at your home. Homebuyers want information! Tell them everything that’s applicable to your home. This is why Home Sell Network has developed our ads to contain so many details about your home. An informed homeowner contacting you is a much stronger candidate for buying your home. It’s quality you want, not quantity.
- Show as many good photos of the key features of your home as possible. Don’t be afraid to have professional photographs of your home taken. Remember our earlier section about perception being the reality.
- Consider a virtual tour of your home. This is a great way to allow a potential homebuyer to “walk” through your home before physically coming to your home. This is another great way of getting pre-qualifying your buyer by continuing to provide them information and ensure their interest, saving you time and aggravation.
Newspaper Classified Advertising
The most commonly used and most costly of the three advertising avenue discussed in this memo, the newspaper classified advertisement is an effective way to let people know your home is for sale. The key is to use it for that purpose and then direct the potential buyer to your other advertising venues to save money and ensure that you are getting the best bang for your buck while providing the most information possible to the potential buyer.
When placing your newspaper classified advertisement, consider putting the least amount of information possible with a guiding phrase. Remember, you are charged a per-line charge for your classified ad, so limit the amount of space you use.
Vary your ads. If you are going to run ads for a number of weeks, change your ad so that it causes the person scanning the ads to read your ad again. Static ads will be overlooked after one or two times and your ad effectiveness will be significantly diminished.
What is the MLS?
The Multiple Listing Service is a database of homes for sale Run by the local Board of Realtors, the MLS is the traditional method agents use to find homes for their buyers or advertise their listings to other agents. MLS listings include detailed information about the property. Besides address and selling price, a listing generally includes the number and size of rooms, annual property taxes, local schools, selling agent and more. Most include an exterior photo of the home.
To MLS or Not To MLS; Separating Fact From Hype
The Multiple Listing Service (MLS) was and is a fantastic way for real estate brokers to provide information to one another, allowing each broker’s agents to cross-sell all properties for sale in a given market, greatly expanding the sales force of all properties for sale in a given market. The Internet has greatly reduced the need for a printed MLS book due to the availability of this information in real-time on the Internet to brokers, agents, home sellers, and homebuyers. Brokers have unfortunately not grasped and accepted the fantastic opportunity that the Internet has created to provide the consumer with much more information about each home listed for sale. The MLS still does have application in that it is looked at by potentially thousands of real estate agents in your market each month that might have a prospective buyer for your home.
1. Benefits of MLS Advertisement: There is one very significant benefit to having your home listed in the MLS listing…EXPOSURE! The fact that you have your home for sale will now be known to the hundreds, if not thousands of real estate brokers and agents in your market. To benefit from this exposure, you will need to be willing to “co-op” a real estate agent if they bring a buyer to purchase your home. Co-op means that you will cooperate in a commission incentive to the real estate agent. Typically buyer’s agents will make between 2% and 3% of the sale price of the home. If you are willing to do this, you should indicate this clearly in your Internet and classified advertising as well as your yard brochures.
To have your home listed on the MLS in your area, you will need to contract with a real estate broker or agent in your area that is a member of the local real estate association that prints and manages the MLS for that area. If your interest is purely to have your home listed on the MLS, you can contract with the real estate broker or agent for a one-time fee to cover the cost of them listing your home in the MLS. This is a fairly new concept in real estate and not all agents and brokers will be anxious to provide this service.
In many areas of North America, when a home is listed on the local MLS, the property appears on aggregator websites like MSN HomeAdvisor, Yahoo! Real Estate, Realtor.com, and local state websites. Many of the multiple listing services send their inventory directly to these sites to enable even more exposure for the homeowner.
In today’s transient society, people from all over the U.S. use these various websites to search for homes far in advance of their actual transfer taking place. Many people research and identify homes they would like to see from the Internet. They supply the list to the buyer’s agent located in the area to which they are relocating so that the agent can set up showing appointments. When relocating buyers are in town for the purpose of finding a home, time is limited and every minute counts. Buyer’s agents quickly become critical to the transferee’s home search. Homebuyers relocating to new areas rely heavily on assistance from a buyer’s agent. Moving to a new area usually calls for help from a local real estate professional, therefore the MLS can be key to exposing your home to relocating buyers.
2. “Hype” of the MLS:
- Your home won’t sell if it’s not listed on the MLS. Baloney! Your home may sell more quickly, sell for more money, have a more qualified buyer that contact you, or none of the above, but your home can sell with or without the MLS. As we’ve already discussed, an MLS listing is good if you’re willing to co-op a real estate professional.
- Nobody will find your home for sale if it’s not listed on the MLS. Oh really? Why is it then that real estate professionals disclose that 70 percent of home sales occur because of the sign in the yard? Multiple directional Home For Sale signs placed in key, high traffic locations will likely help the sale of your home as much or more than an MLS listing.
- If your home’s not listed on the MLS, agents will not bring a buyer to you. Well maybe, but if the agent has an interested buyer and you’re indicating a willingness to pay them a commission if they bring a buyer, they’ll bring the buyer!
3. Considerations: The MLS is a wonderful way to expand your advertising reach and certainly has value. If your goal is to make real estate professionals in your area aware that your home is for sale and that you are willing to pay them a buyer’s agent commission if they bring a buyer to you, there are other means of accomplishing this that may be more effective and less expensive.Your Home Sell Network advertisement is ready to print in brochure form that will indicate your willingness to pay a real estate agent if they bring a qualified buyer to you. Consider printing the brochure from your advertisement on Home Sell Network and mail this advertisement directly to the dominant real estate brokerage agencies and the top real estate professionals in your area. You may get more personalized attention through this direct-mail program.
When you involve the MLS or a direct mail program in the sale of your home, prepare to have the real estate brokers and agents in your area contact you about selling your home for you. Don’t be surprised or offended, it’s their job! To minimize this, consider indicating on your advertisements and brochures a statement that says: “No listing agent solicitations please.” This will likely limit the number of calls you will receive.
If you decide to pursue placing your home on the MLS, think of this as a part of your overall selling strategy, not in place of your advertising program. With proper understanding and reasonable expectations, the MLS can be another excellent part of your overall home selling process.
Open House Ideas and Execution
Real estate professionals have compelling arguments for and against the Open House concept. Keeping in mind that your goal is to sell your home, you should make your decision whether to hold an Open House based on the activity that you’re seeing from your advertising efforts and the strength of the market in which your home is for sale.
- Hot Market: If you are in a “hot” or “sellers” market where homes are in demand, then an Open House may make sense to create a competitive environment among several potential homebuyers. Having an Open House might result in several potential homebuyers attending this event at the same time, expediting the sale of your home.
- Cool Market: A “buyers’ market” may necessitate holding an Open House or multiple Open Houses to allow access to potential homebuyers who have many options and aggressive sellers. In this market environment, you need to use all tools at your disposal to show why your home is a better value compared to the other houses for sale that the potential buyer might be considering.
Open House Dates and Advertising
- First, determine the date or dates that you will hold your Open House. Typically Open House events are held on either Saturday or Sunday depending on the market where your home is located. If you are unsure of the day of the week that Open House events occur in your market, watch the newspaper advertisements and directional “Open House” signs to determine which day of the week to hold your Open House. Don’t go against the grain here. Potential homebuyers are likely accustomed to the day of the week established in the market and will look for Open House events to attend on this day. Make sure that the dates you select do not conflict with other major events in your area. Consider sporting events, school events, religious holidays, etc.
- Second, determine the hours to hold your Open House. Again, consult the standard times that Open House events are held in your area. An Open House should not exceed three hours for your benefit and should be held in the middle of the afternoon if possible.
- Third, decide how you will make the public aware that you are holding your Open House. Here’s what we suggest:
- Place Classified Advertisements in your local newspaper in the days leading up to the Open House and the morning of the event.
- Indicate your Open House dates and times on your yard brochures.
- Indicate your Open House dates and times on your Internet advertisement.
- Finally, and most importantly, place Open House directional yard signs at all key intersections from the highly traveled routes nearest your house, at each intersection involving a turn toward your house from the major thoroughfares, and in your yard on the day of your event.
Open House Strategies
- Have all applicable information about your home clearly displayed with copies of the information available for the potential buyer to take with them. This information can include anything applicable. Date the home was built; neighborhood, school, tax information; utility cost history; key features and benefits of the home; etc. A very good tool to use during Open House events is Neighborhood SnapShots. As we have referenced to you before, these reports provide excellent information about your neighborhood and community.
- Consider inviting a reputable mortgage company in your area to have one of their loan originators present at your Open House to offer mortgage loan information and pre-approval to potential homebuyers attending your event.This is a great service to the homebuyer and may sway them to buy your home. You will likely find many mortgage companies in your area interested in participating in your Open House. (The mortgage company might even be willing to help with advertising costs if you reference that the company’s originator will be present. It never hurts to ask!) If you are unable to schedule a loan officer to sit in your open house, make sure you at least provide buyers mortgage forms.
- Have all curtains and blinds open to highlight your windows and the natural light your home receives.
- Have all lights on to create a very bright environment.
- Consider boiling potpourri or bringing cinnamon sticks in apple juice to just below a boil to create a pleasant aroma in your home. But don’t let it burn! In this case, less is more, don’t overdo scenting your home.
- Make sure that all areas of your home look neat and organized. This includes the basement, closets, and garage.
- Set a vase of fresh flowers in a visible location.
- Set the kitchen or dining room table as you would for company coming for dinner.
- Display a sign-in notebook or a simple sheet of paper so that you can collect information to contact a potential buyer at a later time to get their impression of your home.
- Make sure all pets are secured and out of the main areas of the home. You may love your pet, but not all people will.
- Soft background music is a nice touch and highlights any sound system that you might have in the home.
- Candles placed in various locations also add a nice ambiance to your home.
- Don’t have an Open House every day or even every week. Make your Open House a restricted event that stimulates a potential homebuyer to attend.
- Don’t be defensive! Be prepared for comments that you may not appreciate about decorating, layout, cost, area, etc. You’re selling, they’re buying. You’ve got to bite your lip and display grace in the face of criticism.
- Be aware not to smother the attending potential homebuyers during their visit. Greet them warmly at the door and be available to answer any questions they might have but do not become a “tour director.” Allow people to roam at their own pace.
- Have fun! It’s your time to shine!
Screening Your Prospective Buyer: The Good; The Bad and The Best!
When you’ve made it this far, it’s exciting. But don’t celebrate quite yet. Having a prospective buyer is the first goal of every home seller. Whether you’re selling your home yourself, using a full-service real estate professional or some variation of the two aforementioned methods, the objective is to find serious, able and willing prospective buyers.
Your responsibility at The Prospective Buyer phase of your home selling journey is to qualify the interested buyer. Say this over and over again: “Interested may not mean able! Serious may not equal willing!” The point we’re trying to make here is that you must get past the enthusiasm of the prospective buyer and ensure that he or she can actually meet the criteria to purchase your home.
- The Good (Interested and Serious)
Near the beginning of this guide, we discussed the sales term “tire-kicker,” referring to those people that will inquire about your home, attend your Open House events and even call for a private showing of your home, with no real interest in buying your home. First, understand we’re not suggesting there is anything wrong with someone doing the things we just mentioned. Rather we are trying to help you separate the interested from the informational. What you want to be able to quickly and effectively do is to determine the inquirer’s real interest and does he or she justify classification from you as a good, interested and serious prospective buyer. To help you “pre-approved” the inquirer, we have listed some questions below that you might consider integrating into your initial conversation.
- When do you plan to purchase the home you’re currently looking for?
- Have you been pre-approved for your mortgage at the cost-level of our home? If not, refer the inquiring prospect to the mortgage company that you have contacted for help with this very situation. Or provide them a mortgage form. Do not ask the inquirer about their personal and confidential financial ability. You will almost certainly lose the prospect, or at best frustrate them.
- Does our home fit within the level of home size and cost that you are interested in buying?
- Do you have a home to sell and is it currently for sale? If there is a home to sell, simply ask the inquirer when they anticipate beginning their selling process and do they intend to move into a different home prior to selling their home.
- What questions regarding my home can I answer for you?
The questions you ask simply help you understand the quality and intent of the inquirer. You have to ultimately make the list of criteria that you will accept for a prospective buyer and the amount of time you are willing to commit to this person.
- The Bad (Unable or Unwilling)
“Bad” may be too strong a classification for this inquirer. Unable means that this person either does not have the means (ability) to qualify to purchase your home, the timeframe for purchase that meets your expectations or the desire to purchase your home. You’re looking for a buyer, not a friend. Remember our discussion early on in your selling journey. You must remove the emotion of selling your home and approach this as the business transaction that it truly is. Your time is valuable. You’re paying the mortgage, utilities, upkeep, etc. of the home you are trying to sell, so you need to separate the good from the unable. If the inquirer is unwilling, no problem. The purchase of a home is very much about emotion and if the inquirer doesn’t click with your home, better to find this out as early as possible so that you can focus your time and energy on finding the right and willing buyer. Wish the inquirer well and move on.
- The Best (Willing and Able)
This is the prospect you want! This is your “target” customer and you should make yourself available to meet their schedule, answer their questions, supply them with the additional information that they request and work to sell them on why your home should become their home. This is what you’ve prepared for and your goal should now be to secure an offer from this GREAT prospect. The willing inquirer now graduates to serious prospect status and is deserving of your time and energy. The able inquirer should not be ignored because they have the financial means to buy your home. Patiently answer their questions, find the information they are requesting and remember, your goal is to secure an offer! The basic idea to remember here is simple: ASK THE PROSPECT IF THEY WOULD LIKE TO BUY YOUR HOME! ASK FOR THE OFFER! The difference between a good salesperson and a sales “wannabe” is that the good salesperson asks for the offer.
Get ready, put away your defenses, expect a “low-ball” offer, understand that the faults of your home will be exploited and realize that through all this, you may actually get your home sold. When the offer comes, the fun begins!
The Offer – This Is Business Not Personal
You’ve come a long way baby! For those of you old enough to remember the cigarette ads of the 70’s, you’ll appreciate that statement. For those of you not old enough to remember these ads, congratulations for being at this point so early in your life. You really have come a long way if you’re at the point of the offer. The game is on and the negotiations have begun.
There are excellent books, tapes, training seminars and just about anything you can imagine about negotiation and “winning.” We will offer some thoughts and ideas to you, but please understand, every person has a style all their own and what works for one person may not work for another. There are basic things about the offer and subsequent negotiation process that you should keep in mind and prepare for that will likely help you achieve your goal and meet your expectations.
Probably the most important thing to decide as you move into the negotiation phase is to determine your absolute bottom line price you are willing to accept and how much longer you are willing to keep your home on the market. The best negotiators are not afraid to walk away from a deal. Master this and you master the art of negotiation.
- The Offer
Expect it to be lower than what you hoped and asked for. If you’re prepared for this scenario, then you can’t or won’t be caught off guard and put on the defensive. Having said this, if someone is truly interested in your home, they will offer a reasonable price as a basis to begin the negotiation. If the offer is off the wall, then look the offering party in the eye and ask them point blank if they’re really interested in buying your home or are they simply “tire-kicking.”
What constitutes a reasonable offer? This is somewhat determined by the market your home is located in and the tradition of pricing versus final sale price. Do some research and find out what “percentage of the original asking price” is typical for homes sold in your area. Remember, you’ve done research to determine what your home is worth, so your final sale price should be a similar percentage below the asking price relative to market tradition.
- The INEXACT art of negotiation!
First, don’t show your hand through emotional outbursts of joy or aggravation when you receive the initial offer. A good negotiator will recognize that they may have offered too much if you show too much enthusiasm and not allow any upward movement of the offer price. Conversely, show a good negotiator that you’re aggravated and they may move on to another home feeling like there is no way they will reach a mutually agreeable price with you, or they will feel that you’re up against a wall and “needing” to sell your home, which will immediately prevent upward movement on the price of your home.
Second, don’t respond to the offer immediately unless the amount offered is exactly what your asking price is or above. There are several reasons why you shouldn’t respond immediately. First, it’s best to have a cooling-off period to let your emotions get in check, allowing your calmer head to prevail. Next, there’s no harm in making the prospective buyer sweat a little about the offer they submitted. Remember, if the prospect has gone so far as to see your home, qualify for a mortgage and make an offer, then it’s a safe bet to assume that they want your house! The key here is to respond within 24 to 48 hours so you keep the process moving forward.
Third, be honest, responsive and fair. If you’re willing to work with the prospect, tell them in your response. If you’re miles apart, tell them! The idea here is to simply do unto others as you would have them do unto you. Remember, this is a stressful time for the buyer as well and the last thing you want is a cold-feet situation where you lose the buyer.
- The Response
Write down your response to the offer you have received outlining why you are responding to your counter-offer. You should counter-offer if the original offer received is in any way less than your asking price.
Be direct and firm with your counter-offer. Now is the time to tell the prospective buyer your bottom-line. The last thing you should do at this point is ambiguous. If the offer is ridiculous, thank them for the offer and simply say you’re not interested. If the offer is in the ballpark, state that you appreciate the offer, want to sell your home to them and the amount on your counter-offer is the bottom. Don’t drag this out.
Take into consideration the timing of the deal. Is it worth something to you if you close quickly?
Outline in your counter-offer the specifics of the deal that you are willing to accept: earnest money (1% is a good benchmark) at the time the contract is signed, closing date, time that you have to move out after closing (usually 30-days or less), etc. The more you take control of the transaction at this point, the better odds you have of closing the deal.
The offer stage is a very interesting time during the home selling process. The fun, friendly banter and excitement are replaced by serious conversation and negotiation. The more you recognize this and are prepared for this scenario, the better this part of the transaction will be for you.
If you are concerned about the negotiation phase of selling your home, you may want to consider having a real estate attorney or real estate professional (broker or agent) help you with this process. There will obviously be fees involved if you use the services of an outside resource, but they might negotiate a higher sale price of your home resulting in more money for you. The other consideration about using an outside resource for negotiation is that this might cause your prospective buyer to now use a third party to help them as well, which could cost you more money and time. If we seem to be somewhat ambiguous here, it’s because this is not a simple process and there are innumerable possible scenarios that you may encounter.
Be patient, relax your defenses and always keep your end goal of successfully completing the sale of your home in the forefront of your mind and you will do great. You’re almost homeless, which is a good thing when you’re selling a home.
The Contract and The Closing
Did you get IT? Is IT in your hands? Really? And they said it couldn’t be done! Just for fun, let’s think of IT as “I Triumphed.” What you got through IT was a commitment from a prospective buyer to buy your home! Now, transform the commitment into a signed, legal document committing the prospective buyer to complete the purchase of your home.
Reiterating our theme throughout that selling your home is not easy, but that it is doable, the completion of the Real Estate Contract can be a fairly systematic process if you have done the initial work to have a good contract that meets the state and local requirements of your area and that you have a working understanding of this document.
The Real Estate Contract
Step 1: Have a real estate contract that meets the requirements for the area that your home is located. Probably the best resource for this contract is a local attorney in your area with experience in residential real estate sales transactions. Another excellent resource is a local Title or Escrow Company that can also serve as the closing agent for this transaction.
Quick Note: There are many attorneys who specialize in helping owners selling their homes themselves by offering a Contract Package to the home seller that includes the required forms and a commitment to review the documents for a modest fee. It might be in your best interest to look for this type of service. The key here is to ask the attorney if he or she offers this type of service or would be willing to perform these functions for a pre-determined, set fee. You’ll find many attorneys will be happy to do this for you.
Step 2: Understand what the real estate contract, disclosure statement, escrow form, etc. for your area contains and what you need to do to fill these documents out completely and accurately. Again, a real estate attorney can be very helpful here as well as Title and Escrow companies.
As a part of your research and preparation, explore the responsibilities of the homebuyer and the home seller within the market that your home is located. As an example, the party who bears the burden of the closing costs of the transaction may vary by market, as well as responsibility for appraisal, inspection, etc. A good title/escrow company can likely provide this information to you.
Step 3: Review the contract, disclosure statement and application forms with the buyer. Assuming that the information is acceptable to both you and the buyer, sign the contract and all accompanying forms. It’s a good idea and may be required, to have a witness to this signing, so you’ll want to have a third party present or complete the signing of the contract in the presence of another person. A Notary Public is a great resource to serve as your witness. Upon reaching this point, it’s time to start the closing process in motion.
Note: Make sure you have the Buyer’s earnest money prior to your signing the contract. The amount of earnest money received should be noted in the contract.
The Real Estate Contract
The closing can be handed off to the title/escrow company. Depending on your market’s policies or tradition, the mortgage company that your buyer is using to finance the home purchase (assuming that your buyer is not paying cash for the home purchase) may dictate the title company that is to be used. If your buyer is paying cash, you simply need to agree upon a mutually acceptable Title/Escrow company or real estate attorney to handle the title transfer.
Key points to address are:
- Date of closing
- Time of closing
- Location of closing.
- Any necessary documents and payments needed at closing.
Title/Escrow; Inspection; Appraisal; Mortgage
Whew, you’ve got to be feeling very good when you’ve made it to this point in your home selling process. The points we’re going to discuss here may be apparent to you and we simply are offering this information for your consideration and use if needed.
Title/Escrow: The Title/Escrow Company’s role in the home selling transaction is really one of the more important parts of the process. The Title/Escrow company can greatly help you navigate through the closing transaction process. We suggest that you contact a reputable Title/Escrow company before you finalize your contract. Ask the Title/Escrow company for a list of items that you need to gather for the closing, for suggestions relating to the real estate contract and any other pertinent information to complete the real estate transfer.
The role of the Title Company is to do exactly what the name suggests, to handle the transfer of the real estate title and all the legal filings that are part of the real estate sale. Depending on the state in which you live, the Escrow company may or may not handle the title work. The Escrow Company’s role is to handle the holding and transferring of funds, such as earnest money, during the transaction.
You should research the local and state laws of your community to determine which of these types of companies you need to work with. Remember, we suggest that you involve the Title/Escrow companies in your home selling process as early as possible because of the invaluable support and guidance they offer. It’s likely one or more Title/Escrow businesses in your area that specializes in helping homeowners selling their homes themselves. Ask the companies you contact if they have a program such as this to help you.
Note: If the title policy on your home is less than five years old, then ask the Title Company if they will do the new title search for a discounted rate. Some companies will discount the cost of this service when the title search is a follow-up to a more recently completed prior search.
Inspection: Your home will require an inspection prior to the closing and transfer of ownership. The bank or mortgage company that is handling the loan for the property typically schedules the inspection. In the event that there is no lender involved, the buyer of the property may or may not require an inspection to be performed.
You might consider having an inspection performed on your home prior to or during the selling process in order to have this information available for the potential buyer. Also, having an inspection completed prior to the contract being agreed upon may expedite the completion of the sale.
The party who bears the cost of the home inspection will vary by area. This may be defined in your final real estate contract. If you are not willing to bear the cost of the inspection, be sure to outline this point in your sales contract.
Appraisal: Like the home inspection, an appraisal of your home will be required prior to the completion of the sale. The bank or mortgage company involved in the loan will require this as well. If no lender is involved, the buyer will likely not require an appraisal. If the buyer does want an appraisal of the property without lender involvement, we suggest that you have the buyer bear the burden of this cost if at all possible.
Having an appraisal of your property completed when you are beginning the selling process makes sense. This is the best way to establish a competitive price for your home and an excellent way to defend your asking price when a potential buyer begins negotiating the purchase price of your home. Another benefit to having an appraisal done early in the home selling process is that it allows you to establish a fair price. If you use this strategy, it will be more difficult for potential buyers to argue the price you’re asking. Be sure that you have a certified appraiser perform an appraisal that you have completed so that you know proper customs and ethics are being maintained.
Who bears the cost of a home appraisal once again depends upon your area and the purpose. In all likelihood, the lender will bear this cost and factor it into the closing costs assigned to the buyer.
Mortgage: The mortgage company or bank lending your buyer the money may ask for information about your home directly from you as well as access to your home. Help them! Make the lender your best friend by helping them gather all needed information and documents to complete the loan to your buyer.
Hey, how are you feeling? You’re in the home stretch and you’ve saved yourself potentially thousands of dollars by selling your home yourself. Great job! We’re proud of your effort and tenacity and hopefully, we have been helpful to you during this process. In the meantime, relax and enjoy the process. It’s all about time, patience and good planning.
Thank you very much for allowing us to work with you. We’re here for you and are rooting for you to succeed in selling your home. Please let us know what we can do to help.