The housing market keeps sailing along. The only headwind that could take it off course is the lack of inventory for sale. The National Association of Realtors (NAR) reports that there&
The Selling Process
Dated: December 26 2019
The process of selling a home involves several steps, each with its own set of unique obstacles. We’ve broken down each to help you understand the basics, whether you’ve sold a home before or not. Each sale is different, and some will be smoother than others, but an experienced Realtor will guide you through the process, from Just Listed ot Just Sold!
When you’ve decided it’s time to sell your home, because you’ve outgrown it, you don’t need the space anymore, or you want/need to be in a different location, the first step is a consultation with a Realtor with experience in your area. Let’s say, for example, that you’re moving from Plano to Fort Worth. Sure, a Fort Worth agent can sell your Plano house, but do they know the schools? Do they know the community’s best and worst features? When is the last time they’ve even been to Plano? It’s best to have a local expert list your home and then use a Fort Worth expert to buy the next one, unless you can find someone that truly does know and have experience working in both areas. You can interview multiple agents as well, to find the one or two that will be the best fit.
During your consultation, the Realtor will walk through every room of your house, and around the exterior, making notes and pointing out things you can do to improve the value and marketability. They may suggest things like minor repairs, painting, and staging- strategic furniture arranging and decorating to show off your home’s best features, photograph well, and allow foot traffic to flow naturally through the home. They’ll discuss pricing, timing, and your goals. Expect about an hour for all of this, plus question time and then you’re likely to have a to-do list to work on. If you need assistance with contractors to tackle some of those things for you, your Realtor will likely have several to recommend. If you are listing your home for sale “as-is,” expect a lower sales price, unless your home did not need anything done. Most homes, however, need just a handful of fixes and some deep cleaning. Change your HVAC filters, make sure all light bulbs are working, and declutter every surface, closet, etc. Once your “homework” is done, and your home is show-ready, your agent will have professional photos taken and then will begin marketing your home online, through open houses, and to buyer’s agents through an area-wide network called the Multiple Listing Service (MLS for short).
Once your home is officially on the market, prospective home buyers will enter your home with their own licensed Realtor, according to the showing instructions you and your agent discuss (usually by appointment only). An electronic lock box controls access hours, and records the name of each agent, inspector, or appraiser that opens the box. Your agent and their team will likely hold a few open houses as well. Prospective buyers will tour the house, look inside closets, and consider whether or not it is a fit for their own needs. Remember that you’ve customized your home and it’s decor for your tastes, and everyone else will have their own. Don’t be offended if the DIY project you love or your favorite paint colors aren’t someone else’s favorite, too. Each person has their own unique idea of what their ideal, perfect home will look like. If you’ve done a lot of customization, consider offering a decorating allowance- a credit to the buyer at closing to pay for things like repainting to suit their own ideas. It only takes one person!
After that one person falls in love with your home, they’ll make an offer to purchase it via their agent. Some negotiation back and forth is typical, to come to just the right price, closing date, and terms for both parties. After executing a contract, the buyer will hire a third-party licensed inspector to check out the home on their behalf. A house can’t “pass” or “fail” an inspection. The inspector will visually inspect and test the function of all major systems and appliances in the house- electrical, plumbing, etc. as well as the roof, exterior, and foundation visible around the perimeter. They’ll compile a report for the buyer with recommendations for further investigation of any deficiencies. It’s rare for an inspection report to show no deficiencies, regardless of how well maintained a home is. Aging homes will often have some signs of wear and tear. In addition, building codes are constantly changing, and inspectors must note when a system does not meet today’s codes. This does not mean the system is in need of repair, however, it is simply a disclosure unless the issue presents a health or safety hazard (like aluminum wiring). It is then up to the buyer to seek estimates, request repairs, or renegotiate the price to offset the costs of anything concerning them. Your listing agent will help obtain estimates for requested repairs to help you make an informed decision, and then expect some more negotiations back and forth before everyone comes to terms once again.
The next step in the process will be an appraisal, in most cases. An appraisal is usually required for any home purchase involving a mortgage, unless there is a large down payment. Banks occasionally waive the appraisal requirement when the buyer is financing significantly less than the expected value, and appraisals are completely optional on a cash purchase. During this process, a licensed appraiser will enter the home, take a few photos and measurements, make notes, and observe similar houses nearby. They will compile a report, using this information and other available home sales data in the area and standardized formulas, that will provide a professional opinion of value. Banks will use this value to determine how much they will lend a buyer to purchase the home. Most banks have requirements for the appraisal, based on the loan type. For example, most FHA and VA home purchases will require the home to appraise for 100%, or more, of the home’s contract purchase price. Conventional loan limits vary, and may offer a little flexibility. If the appraisal comes in lower than the contracted price, additional negotiations may be necessary again. However, Texas Realtors have an optional contract form that addresses most common appraisal discrepancies up front so there won’t be any surprises.
After these hurdles have cleared, most of the work will take place “behind the scenes,” between the bank, title company, and your agent while you get busy with packing and moving arrangements. The contract will be considered firm at this point, and the buyer’s loan documents will go through the underwriting process for final approval. Once all of this is done, a final disclosure will be sent to the buyer. Closing can happen as early as 3 business days after this disclosure has been approved and signed. At closing, the sellers sign a smaller stack of papers than you might remember from your home purchase, since a great deal of those are mortgage-related. Bring a key and any funds due. Plan to be fully moved out and leave the house clean by the closing time, unless other arrangements have been made in writing for a temporary possession. Then it’s time to celebrate your successful sale! Or get busy moving in to your new home, as is often the case. Either way, congratulate yourself and your agent for a job well done. Selling a home is never considered “easy,” but with expert guidance, it shouldn’t be too difficult either.
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Scott and Tammy Watson are the Owners and Team Leads for GroupWatson, Keller Williams. With 47 years of combined real estate experience, a "Client First Philosophy" is exemplified by providing excepti....