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8 Step Selling Process

Pre-Listing Checklist

Pre-Showing Checklist

What Home Sellers Should Know

The following steps are outlined to help you sell your home, reduce the "days on market" time, obtain the best return on your real estate investment, and minimize the disruption to your normal life.

FACT:   There are thousands of homes available for sale in any major market city.

FACT:   Homes that have Buyer appeal, have the features that Buyers want, and are appropriately market priced will sell in a reasonable amount of time. Homes that do not, will not.

I have developed the following as a brief overview for potential Sellers. If you are considering selling your home, you need to spend time with your REALTOR . Hopefully, the following will prompt you to ask the right questions, and explore each of these topics in detail until fully understood.

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Eight Steps in Selling Your Home

1. Making the decision to sell. This is an individual process unique to each homeowner and the homeowner's family and is usually driven by the fact that the current home does not meet some family need (size, location, schools, home features wanted or not wanted, etc.). No matter what the reason, the thought process usually jumps from need to the financial side of the decision and you start looking at homes on the market, both similar to what you could be selling and also what you may be buying. Many people will use on-line resources currently available and open houses, to get a "preliminary feel" for the real estate market and mortgage costs.

In this initial decision process, you may find the ideal new home, and make an offer to purchase based on the contingency of selling your existing home. This does happen at times, and Sellers are sometimes willing to accept a contingency contract. Stop, Think!  Is a contingency purchase in your best interest at this time? Would the Seller have accepted a lower price without the contingency? You have also now added time restrictions on yourself and your family, are you ready to sell your existing home, what is the true market value of the existing home, and will you now accept a lower price to close quickly to remove the contingency?

If you have thought through the process, prepared both yourself and your home for the process, selected your REALTOR , and priced your home properly for the market; then you will sell your existing home and be able to move to your next home that better meets your needs.

 

2. Preparing to sell. Preparing to sell your existing home is both a physical and a mental state for the entire family. Prior to putting your home on the market, you will want to prepare it for the highest level of Buyer Appeal possible. It is important to do this prior to placing your home on the market; you want it to be absolutely ready the first day the sign goes in the yard. If not, then the first weeks of availability will not be productive. After a several months on the market, your home could become tainted with the label...."there may be something wrong with the house" or "it is overpriced for the market".

Home Buyers will only buy what they can see. You want to attract Buyers to your look at your home and you want Buyers to come back for that important second look as they narrow their selection. The saying that "There is no second chance for a first impression" is extremely important in home sales.

At the same time, you need to keep in mind that most large capital improvements cannot be recovered in the sales price. Buyers feel more comfortable with homes they believe to be well maintained. Therefore, your efforts and resources should be focused on maintenance, repair, and cosmetic actions that create Buyer Appeal and a general warm & fuzzy feeling about the home.

Attached is a checklist of pre-listing activities you should consider in preparing your home for sale. You should also talk to your REALTOR about actions to take to generate the greatest return in Buyer Appeal and sales price.

Jump to the Pre-Listing List of Activities

Review your plans with all family members prior to listing. Not only will you generate input on things that may need to be done, you will also create buy-in to the process and an understanding of some of the disruptions that may take place preparing and during showings to prospective Buyers. Some Sellers have gone as far as holding rehearsals to discuss how things should look and what is to be said if a Buyer is present.

 

3. Select a REALTOR  After your decision to sell has been made and you are ready to put your home on the market, it is now time to finalize your selection of a REALTOR to assist you in the actual marketing and selling process. Your decision at this point of the process can minimize disruption to your life and avoid some very frustrating situations during the rest of the process.

There are several ways to select a REALTOR to represent you and your home. Obtaining recommendations from friends and family; interviewing and obtaining listing presentations from several REALTORS ; or in the case of corporate relocation, considering company recommendations. Whichever technique(s) you decide to use, it is important that after your selection, you feel comfortable with the individual REALTOR, have confidence in their ability, and trust their honest feedback and advice. You must believe that your selection is committed to work in your best interests and is committed to devote the time and effort required to sell your home at its highest market value. All REALTORS are members of the National Association of REALTORS to be legally permitted to use the REALTOR designation; and as such, must adhere to a strict Code of Ethics.

Your REALTOR should provide you with the following:

  1. Explanation of all aspects of the real estate transaction, including legal agreements and documents involved; current status of environmental issues relating to real estate property; the importance of Seller disclosure statements; an understanding of the differences between the listing brokerage, listing sub-agents, and Buyer Brokerage; and an understanding of the fee / commission structure to be used.

     

  2. While actual listing price will be covered in the next step, your REALTOR should understand and explain (to your satisfaction) the logic and process used to determine the proper listing price. This should include current market statistics, local market conditions, and recent activity in the market.

     

  3. Your REALTOR should explain all the different tools available to market your home, and the limitations of each. [yard signs, MLS postings, agent advertising, open houses, the Internet {what sites}, agent tours, agent lunches, magazine advertising, newspaper advertising, flyers, etc.] Additionally, your REALTOR should explain how each of these will be used in the marketing campaign for your home, how and when you will receive feedback from showings, and what will trigger a review and change of the marketing plan.

     

  4. Your REALTOR should explain in detail all of the services they will be providing to you during the entire process of marketing, negotiation, pre-closing, and closing. Together, you should decide how restrictive you will be on showings; allow everyone to view, allow only pre-qualified Buyers to view, only at particular times or on particular days - - restrictions may reduce the number of potential Buyers. Will the home be available to drive-by agents with clients after a courtesy call or "by appointment only"?

     

  5. Discuss the use of a lock box for agent access. Today, with electronic lock box devices, you can track everyone who uses the lock box; you can restrict its operation to only certain hours of the day.

     

  6. Find out if your REALTOR provides for a Home Warranty during the listing period to protect you against a major failure of appliances, cooling, or heating. Your REALTOR may provide a Home Warranty only if the listing period exceeds a certain limit.

Most listing presentations include sections on how great we are (size, volume, awards, etc) an explanation of different types of marketing approaches, and a Competitive Market Analysis (CMA) to be used in establishing the price of your home. There is nothing wrong with being great, it demonstrates resources and past performance, but focus on your specific needs as the Seller. Understand and define which marketing approaches are best for your home, how the CMA relates to your home, and how this specific REALTOR relates to you. You are creating a team effort to handle one of your most important investments.

 

4. Establish Your Selling Price

FACT:  Over one-third of the homes listed for sale will not sell, the listings will expire or the property will be withdrawn from the market.

As a pricing basis, abandon what you paid for your home, what you have actually invested in improvements, or what you need to receive to purchase your next home; the Buyer's decision will be made based on their needs and what other homes are available and at what price.

The most accurate method of establishing a listing price is the use of a Comparable Market Analysis (CMA). The CMA is a review of similar homes in the area which have recently sold and similar homes in the area which have not sold. In reviewing the homes that have sold, attention should be given to how recently the sale was completed, Days On Market (DOM), Price Discount (or sale price as a percentage of listing price), and allowances included in the final sales price.

Particular attention should be given to the homes that have not yet sold. These are the homes that will be competing with your home for the available Buyers in the area. Remember, Buyers will be working with their Buyer-Brokers and updating their own CMA on an ongoing basis as they search for their new home, attempt to view the market through the eyes of the Buyer.

Factors to consider:

  1. Time constraints have a definite impact on the price of your home. If you absolutely must sell your home and move in 45 days, then you should consider pricing on the low side of the CMA immediately to generate the greatest Buyer exposure and present the greatest value in the market relative to comparable homes available. If you require a very long period between contract and closing, you reduce the number of potential Buyers your home will attract which can translate into a lower final sales price.

     

  2. Seasonality of the real estate market can have an impact on the number of Buyers available to purchase your home. The most activity is during late spring and early summer, this allows closing and moving during summer weather and between school years. Homes without children are also driven by the school break because of the chain reaction of those with children that are attempting to sell and buy.

     

  3. Savvy Buyers will be looking at homes in terms of an investment in real estate with an eye to the future when they attempt to sell what they are now looking to buy. These Buyers will pay attention to the least expensive home in the best neighborhood so the other homes pull the value of their purchase upward. These Buyers will tend to avoid the most expensive home in a lesser neighborhood. Some unknown person in real estate once said the three most important factors in setting a home price are "location, location, and location". When pricing your home to attract Buyers, consider your home in these terms.

     

  4. Attempt to think in terms of Net Selling Price. If it is common in your area for the Seller to pay all or part of the closing cost as a condition of sale, then you need to factor this into your calculation of listing price and make it known to ALL potential Buyers. Those Buyers that need this assistance in their next home will be attracted by this technique. Those Buyers that do not require this assistance can immediately subtract the closing cost benefit to consider your home at their net Buying price. Don't plan on covering closing costs and fail to make it known, you miss both types of Buyer. Similar logic also applies to other approaches such as Seller Financing, special allowances for redecorating or something else, Lease-Purchase options, etc.

     

  5. If the home is unique in some way, it may be difficult to create an ideal set of comparable homes for a CMA. If the comparables are only slightly different, you may want to also do a square foot comparison. While a formal appraisal is usually done at the request of a lender to evaluate mortgage risk, if the home is truly without comparables the Seller may want to pay to have a professional appraisal done.

     

  6. One school of thought is to set the listing price high with the understanding that you can always revise it downward if needed. This initially makes the Seller feel very good in that he may receive a higher price than expected; occasionally people do win the lottery. After a period of time the Seller then becomes frustrated in that no offers have been received and he has to lower his expectations with a price decrease. What has also happened is that the home may have missed several serious Buyers because of the higher price and the home has become "stale" on the market having also missed the most active time during early the weeks of the listing period.

Points to Remember - Set your initial price based on what comparable homes are selling (or not selling) at in your market area. Buyers buy what they see, price your home to attract them to look at it closely both the first time and a second time. Flexibility on timing and flexibility in accepting the structure of a sales contract are both beneficial to Buyers and add value to your home relative to other homes available.

 

5. Actively Market the Home For Sale Having your home listed will not force the Buyers to come to your door. Your marketing plan should pull both Buyers and REALTORS to your home to present the product you are attempting to sell. A recent survey conducted by National Association of REALTORS focused on 2001 activities with the following results.

How did Buyers first learn of the home they actually purchased during 2001?

48% Real Estate Agent

15% Yard Sign

8% Internet

8% Friend, Neighbor, Relative

7% Newspaper Ads

41% of all home Buyers used the Internet as one of their search tools

In Step 3 you developed a marketing plan with your REALTOR and possibly modified the plan in Step 4. Now is the time to put that plan into action, and audit the plan and results for revision. You should also now be prepared to show your home to potential Buyers. Attached is a checklist of pre-showing activities you should consider. You should also talk to your REALTOR about these pre-showing activities to generate the greatest return in Buyer Appeal and sales price.

Jump to the Pre-Showing List of Activities

 

Usually within the first 24 to 48 hours after listing, the Yard Sign is in place and your REALTOR has entered your listing into the Multiple Listing Service (MLS) database, announcing to the world that you plan to sell your home. From the survey above, these two actions start to address almost two thirds of the Buyer awareness approaches. If this hasn't been done, you should know why it hasn't.

If your marketing plan includes agent tours or agent luncheons, these should be done early in the marketing cycle to introduce your home to area real estate professionals as a new property available on the market while it is still fresh. Again, these real estate professionals represent 43% of the ways Buyers will find your home; help them find your home before the all of the others available.

Brochures or Flyers, if they are well done, provide a method for distinguishing and remembering your home from others that Buyers may view. This tool also provides a method for you to provide additional information on the features of your home that may not appear in the MLS database. You have the ability to use photos or other creative approaches to reinforce those features you wish to stress. High quality brochures should be easily available in the home to any potential Buyer viewing the home. Your REALTOR may also provide a Brochure Box to be used with the Yard Sign as part of your marketing plan. Your REALTOR should work with you in the development of the brochure and provide an adequate supply for both in-house use and the Brochure Box.

Your REALTOR should use the Internet to attract Buyers and generate sales leads. Most REALTORS have their own Internet websites designed to attract Buyers and where they can feature their listings for sale. Additionally, your REALTOR should have a method of transmitting your home listing to the major Internet search resources to maximize the exposure of your home. Remember, 41% of all home Buyers use the Internet for part of their home search, you should know all of the ways that your REALTOR plans to use the Internet to promote your home.

The use of the Open House varies from area to area, as do the benefits. If it was determined in your marketing plan that holding an open house was part of the overall plan to attract Buyers; then do it, but do it right. Make sure the open house is well advertised in advance. Nosey neighbors are expected to attend your open house, keep in mind they have friends and family that may be interested in buying a home in your neighborhood. Some REALTORS will go as far as sending a separate mailing to neighbors to make sure they are aware of the open house. Make sure your REALTOR has made arrangements for your open house to be adequately hosted and supervised, you may even want to provide refreshments.

The marketing plan for your home may include advertising in the newspaper, area magazines and the distribution of individual flyers directly to real estate offices. All of these approaches have value to you and costs to your REALTOR . The pre-listing work with your REALTOR should have included a discussion and an understanding of the type of print advertising to be used in marketing your home.

 

6. Obtain and Negotiate a Sales Contract If the preceding steps were done properly, you should be receiving offers on your home.

Multiple offers are a Seller's dream, usually resulting in higher prices and more favorable terms. There is a higher probability of generating multiple offers if the home is priced right for the market. Keep in mind, your REALTOR has the obligation to tell you about all offers and provide you with professional advice to protect your financial interests. You do not have to accept the higher of two offers; the lower priced offer may be from a better-qualified Buyer or offer more favorable terms and conditions. However, if you do receive a full price offer you may owe your agent a full commission and even be sued in court to sell your home. Use your REALTOR to assist you in evaluating any offer received.

Then:   accept,   counter-offer,   or   reject   the offer.

Since offer acceptance or rejection ends the actual negotiation, the focus of the rest of this section will be counter-offers. Usually a counter-offer is a rejection of any prior offers or counter-offers, but you will want to consider the substance of those prior offers as you negotiate toward an acceptable outcome for both Buyer and Seller. The following are points to be considered as you receive or create counter-offers.

  1. If you make a counter-offer you may include time limits for acceptance, there are valid good and bad points in including time limits, discuss these with your REALTOR .

     

  2. Contingency agreements can severely restrict a Sellers ability to market their home. Accepting a contingency sales agreement should be considered if it generates an unusually high price for the home and/or if other prospects of selling the home are very remote. Usually, a Seller requires a "kick-out" provision in the contingency which will permit continued marketing of the home with the stipulation that the Contingent Buyer must react if the Seller receives other valid offers and/or a time limit expires. Failure to react on the part of the Contingent Buyer, releases the Seller to accept and/or negotiate with the other Buyer.

     

  3. Inspections to be ordered and paid by the Buyer are to be expected. These may be general home inspections and/or specific inspections of the roof, foundation, water supply, environmental concerns, etc. Each of these inspections requested by the Buyer should be defined in the sales agreement as well as the remedy required should a finding result from the inspection. The sales agreement should state the period of time available for the Buyer to have the inspections conducted as well as the period of time for the remedies (agreement on correction or price allowance) to be done. If the Seller has completed the initial disclosure documents properly, defects disclosed prior to price negotiation should have been included in the sales price. Sellers should be sensitive to the results of the inspections if the sales transaction is not completed; there may be additional defects now known and a legal obligation to include these defects in disclosure documents.

     

  4. Buyers may request and include in the purchase/sales agreement that a Home Warranty be purchased to insure against any failure of heating or cooling systems or major appliance. Sellers may want to also consider providing the Home Warranty as protection against any future legal action by the Buyer.

     

  5. Mortgage loan approval of the Buyer is usually included in the home sale agreement as a condition of sale. A good home sale agreement will state the mortgage interest rate the Buyer is willing to accept, the amount of down payment the Buyer has agreed to make, as well as the closing costs the Buyer agrees to pay. As the Seller, you should evaluate the probability the Buyer will have in obtaining a Mortgage loan in your evaluation of the Buyer's offer. A Buyer that has been pre-qualified by the lender has less risk than one that has not. Keep in mind that the lender will also require several conditions be met before granting the loan. Lender requirements may include title search, termite inspections, property surveys, and appraisals. If the home has been priced correctly for the market and if the Buyer is qualified with a substantial down payment, then the Seller should not be overly concerned about the results of appraisals. The Seller should think about the proposed closing date when evaluating the loan conditions of the agreement; is the closing date beyond what the Buyer can expect to lock-in interest rates if mortgage rates increase.

     

  6. The closing date is important in many ways. As the Seller you receive your money at closing. You also will be expected to move out of your home prior to closing; so you can give the keys to the Buyer the day of closing. If you will have a double move, temporary housing for a period and then a second move into your permanent new home; you should consider these additional costs when evaluating the proposed closing date

Evaluate offers received and create counter-offers carefully, take time and read the fine print to understand all of the terms and conditions included. Use your REALTOR to assist you in resolving any questions that you may have.

 

7. Post-Negotiation / Pre-Closing After the agreement has been accepted by both Buyer and Seller a number of activities take place in preparation for the Closing.

The Buyer, with a copy of the sales agreement in hand, completes the mortgage application process for the actual home to be purchased. The lender then initiates the appraisal, title searches, surveys and other steps required for loan underwriting.

The Buyer initiates inspections stipulated in the purchase agreement. After the inspections are completed, the Seller reviews the findings for corrective action or other remedies.

Your REALTOR will be coordinating all of the individuals requiring information and access to the home to complete the pre-closing steps to meet the Closing date. During this period, your home should continue to be maintained in the same condition as would be done for showings, and your REALTOR will advise you on your interaction with those involved.

If the Seller is a non-citizen, additional documentation must be prepared prior to closing to meet tax requirements, your REALTOR will insure this documentation is completed.

The final pre-closing step usually takes place on the day of the Closing. It is a final walk through inspection by the Buyer to confirm that the home is the same at closing as it was at the time the sales agreement was accepted, that the Seller has removed all personal property from the home, and that the home is "broom clean".

 

8. The Closing This is the final step in completing the transaction. If both the Buyer and Seller have completed all actions required in advance, the closing becomes a formality of signing documents and exchanging money and ownership. All parties to the Closing should be reminded to have photo identification (driver's license, passport, etc.) with them at the Closing and that all funds required to complete the closing should be available in the form of a cashier's check or prior wire transfer to the Closing Agent. Your REALTOR will work with you in determining any documentation or funds required during the Closing.

Congratulations, you have sold your home.

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Pre-Listing: Buyer Appeal CheckList

 

The goal is to prepare your home and generate Buyer appeal prior to placing the sign in the yard. Avoid large capital improvements that may not be recovered in the sale price and focus on maintenance, repair and cosmetic actions that maximize space and indicate the home has been well maintained.

EXTERIOR

  1. Street Appeal - Lawn should be cut, trimmed and well-kept, hedges should be trimmed, trees pruned, and the flowerbeds weeded to present a well-manicured look.
  2. Approach Appeal - Either the front door or the garage door will be the first part of the home viewed closely, apply fresh paint to both. Check the operation of all doors and locks to open properly and easily.
  3. Check foundation, steps, walkways, walls, patios, for cracks and crumbling; repair or replace as required.
  4. Check windows and exterior trim for peeling paint; repaint if needed.
  5. Clean and align gutters and drains; insure all drainage away from the home is functioning as designed.
  6. Inspect and clean chimney.
  7. Repair / replace loose or damaged roof shingles.
  8. Repair / replace loose siding and caulking
  9. Remove anything that is not required, de-clutter the exterior, rent separate storage for items not needed.

INTERIOR

  1. Clean house completely; remove all clutter, maximize the impression of space
  2. Make any mechanical repairs needed; so everything is working right (address it now or in the inspection).
  3. Repaint walls and trim where appropriate - light neutral colors maximize space and are less likely to conflict with Buyer's decorating tastes.
  4. Make sure interior smells good; eliminate smoke, animal, musty, and other odors.
  5. Replace carpets or flooring where appropriate - Light neutral colors maximize space.
  6. Replace broken or cracked windowpanes, moldings and other woodwork.
  7. Repair cracks, holes or damage to plaster, wallboard, wallpaper, paint, and tiles.
  8. Clear counters, cupboards, closets, attics, garage, and basement of all items that are not required (discard, rent storage, or hold a sale).
  9. Check cracks, leaks and signs of dampness in the attic and basement; repair where needed.
  10. Clean windows inside and out.
  11. Inspect, repair, and clean plumbing, heating, cooling, and alarm systems.
  12. Repair dripping faucets and showerheads.
  13. Eliminate stains in sinks, showers, or tubs.
  14. Inspect and replace caulking in tubs and showers.
  15. Make the kitchen more attractive with new cabinet hardware, paint, curtains
  16. Clean each room thoroughly, remove clutter, and MAXIMIZE SPACE.

Ask your REALTOR and others for honest comments and suggestions to improve the overall Buyer appeal of your home. Accept honest feedback received.

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Post-Listing / Pre-Showing: CheckList

 

  1. Clean and Clear Shows Well
  2. Hire professional cleaning service prior to and during showing period.
  3. Keep garage door shut
  4. Clean and clear out closets; make closets look spacious by removing items.
  5. Put away jewelry, cash, and valuables.
  6. Buy special new towels and linens for show when buyers are expected.
  7. Plan to display clean fine china and glassware on dining room table during showings.
  8. Keep counter tops cleared
  9. Clear dressers, bookcases, shelves, etc of clutter
  10. Clear bathroom area of items (shower, counter tops, tubs,); think about model homes or show houses.
  11. Replace burned out light bulbs.
  12. Open all drapes and blinds when Buyers are expected.
  13. Turn on lights when Buyers are expected; bright is better.
  14. Clean dirty carpet and wall smudges.
  15. No dirty dishes in sink.
  16. No laundry in washer/dryer.
  17. All dirty laundry in hamper.
  18. All clean laundry neatly put away.
  19. Empty waste baskets, and trash bins, litter boxes, etc.
  20. Contain or remove pets
  21. Check and avoid smells. Use baking soda in high smell areas, use flowers / potpourri to mask odors, heat some vanilla on the stove, and avoid strong smelling foods.

Buyers can feel intimidated if the Seller is present during a showing, plan to be away from the home.

If a Buyer shows up at your door without a REALTOR , politely obtain contact information but do not show the home, have them contact your REALTOR for an appointment. Many REALTORS obtain vehicle license numbers, photocopy driver's license and other information, and at times even bring a third party with meeting with a Buyer for security reasons.

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