Home Selling Process: 12 Steps You Should Know
Whether you plan to sell your house on your own or hire a real estate agent, the home selling process is very similar throughout the United States. Only a few details vary among states. Here are 12 important steps to expect in the process:
Table of Contents:
- 1. Find, interview and choose a real estate agent.
- 2. Find out how much your house is worth and price it.
- 3. Make necessary repairs or replacements.
- 4. Get your home ready for the sale.
- 5. Fill out seller disclosures.
- 6. Begin to market your house.
- 7. Show your house.
- 8. Receive a purchase offer and negotiate.
- 9. Hire a Title Company.
- 10. Home inspection and appraisal.
- 11. Negotiate requests for repairs and ask the buyer to release contingencies.
- 12. Sign title and escrow documents, and surrender your keys.
1. Find, interview and choose a real estate agent.
If you don’t have time or don’t want the hassle of figuring things out on your own, then hiring a real estate agent is an option. Before choosing an agent, here are three small steps I recommend:
- Search for a few local real estate agents and explore online reviews about each agent, then contact a few good ones for interviews.
- Spend 30-45 minutes interviewing each agent, at their office or a coffee shop.
- Based on your interviews, choose an agent that you feel suits you the best.
2. Find out how much your house is worth and price it.
Although you can list your house at any price you want, but you need to understand what the market is willing to pay before pricing it to sell. The common way to find out is to view the Comparative Market Analysis report (or “the Comp.”) which lets you know the price range of similar homes that have sold recently in your community. Your agent would provide you this report to help you determine a price for your house.
3. Make necessary repairs or replacements.
This step will give you a workout before handing the responsibility over to the new homeowner. You should walk through the house with your agent and make a list of the items to clean, repair and replace prior to showing your house to potential buyers. You don’t have to repair or replace everything your agent suggests. Just see how much your house can sell for and use your common sense when deciding which are reasonable projects so you can sell the house within your expected time frame.
In this article, we’ll discuss some ideas for minor to moderate updates that may help make your home more attractive, appealing and desirable to a buyer, while increasing your profits.
4. Get your home ready for the sale.
Once repairs are made, you’ll want to go through your home and remove items that might make a room look crowded or uninviting to a buyer. You should put away personal items and give each room a fresh, uncluttered appearance (like in a model home). This helps prospective buyers imagine more freely what it would be like to own the home and adapt it to their own style.
The last step in this “readiness” process is to make sure your home is clean in every respect. Potential home buyers will look at each room, including cupboards, closets and storage areas. Be sure that all lights are working, even in the garage, and turn them on before each showing.
5. Fill out seller disclosures.
All homes in the United States are subject to lead-based paint disclosures; therefore, if you are aware of any material facts, be sure to disclose them. You should also provide full disclosure of anything that has been a problem in the house while you were the owner (leaks, faulty wiring, rodent damage, pests, cracks in concrete flooring, etc.) and explain how the situation has been corrected. It is also a good measure to disclose whether you have had pets residing in your home. This is important to people with allergies. And if your house belongs to a homeowner association, additional documentation may be required.
6. Begin to market your house.
Your agent would send someone over to take pictures of your house, then compile all information for the MLS listing and begin to advertise your home for sale. You don’t have to do much at this step, but you should try to get all the things in Steps #4 and #5 completed.
7. Show your house.
You can discuss with your agent the options how to show your house: by appointment only or access by lockbox. If you still live in the house, the appointment option is the best because it allows you time to get ready for the showing. You will want to quickly put things away to protect your privacy.
This method can be combined with a lockbox option. In this case, an appointment is made, you tidy up your house and leave a few minutes before the showing. The realtor then uses the lockbox to enter your home at the appointed time. If you no longer live in the house, then a lockbox option would be a better for you because the home is always ready for a showing. It maximizes the number of showings your agent can make.
8. Receive a purchase offer and negotiate.
If you priced your house competitively, multiple offers should come your way. If offers are lower than your asking price, don’t hesitate to make a counteroffer or ask for full price. Buyers like to “test the waters” to see how you might respond, while still making room for negotiation. Property investors and experienced real estate agents often do this to maximize benefits for their buyer.
Make sure you keep track of all offers and counter-offers from potential buyers but remember to work with one offer at a time. Together, they will give you an idea of what people are willing to pay for your house. You can then adjust your price accordingly. You should ask for a “kick-out clause” or first right of refusal if the buyer’s offer is contingent on selling a home. This will help you avoid a difficult situation.
9. Hire a Title Company.
After you accept an offer, you will be introduce to a few title companies. Most likely from your agent. However, if you have someone else in mind, your agent should honor your choice of a title company and closer and will collaborate with that party effectively to get it done. Do your duties and check all of them out. See which one offer you the best closing quote and services and select one that will help you with the closing on your home.
Meanwhile, the buyer will send an earnest money deposit to your listing broker or deposit it to the trust fund as stated in the purchase agreement/offer. This action shows that the buyer is genuinely interested in purchasing your house, and if they back out without a valid reason, that earnest money deposit is yours to keep.
10. Home inspection and appraisal.
Most likely, the buyer will hire a home inspector to inspect your entire house for damages or non-functional components. This enables the buyer to make an informed decision on the home purchase, and the buyer may ask you to repair or replace several things before moving forward with the sale.
It is during this time of the home buying process that the buyer can back out of the deal if they find something wrong with your house. So, it is important to repair or replace anything that seems fair before showing your house.
You should also make full disclosure of the things you intend to repair or replace that will come with the sale. If the buyer need to use financing to buy your house, their lender will order a third party appraisal company to appraise the current market value of your house. Based on that value, the lender will determine how much money they will lend to the buyer.
If the appraisal is lower than your asking price, the buyer may use that to renegotiate the deal. However, if the buyer cancels the contract if your home came in appraised at or more than contract price, ask your agent or lawyer about your rights. One thing to know: you will not receive a copy of that appraisal because you did not pay for it.
You want the best price and relatively short, smooth sailing. In this article, I’ll explain why it pays off to have a pre-listing home inspection. Let’s take a look.
11. Negotiate requests for repairs and ask the buyer to release contingencies.
If the buyer requests repairs or replacements, you can request to see the exact wording the inspector used from the home inspection report. You then can determine if it is fair to repair or replace those items. You don’t have to accept all the things the buyer requested, but that can be the reason for the buyer trying to renegotiate the price or cancel the contract. After you and the buyer agree to move forward with the transaction, make sure your agent have the removal of contingent items in writing.
12. Sign title and escrow documents, and surrender your keys.
Before you sign the final documents, communicate with your agent to make sure the title company and mortgage lender have everything covered for you. Once the paperwork is signed and the closing is completed, you will relinquish your keys to the new owner.
Don’t forget the mailbox key if you are in a homeowners’ association. The title company will send the closing documents to the county for documentation (replacing your name with the new owner’s name as the owner of the house). The net proceed funds can be wire to your bank with a small fee or it can be a live check given directly to you once the closing is complete.
Congratulations! I hope you find this article helpful. If you do, please share it on your Facebook page for us. Thanks!