Selling your home is a very simple process isn’t? You simple contact a real estate agent, tell them what you want for your home and they list it. Correct? No it’s not quite that simple even though you won’t have any trouble finding a Realtor® to list it for you. Buying and selling real estate is one of the largest financial decisions most people make during their life-time. Both are very legalistic processes. Every action we take is based on own personal decision that we make which have consequences. Those consequences can be either good or bad. Since selling a home could affect you financially for years to come, we need to make sure all our decisions provide favorable consequences. A few weeks ago I wrote about the process of buying real estate so today I want to address the process of selling a home.
Selecting a Realtor
First and foremost select a Realtor® who has a good reputation, is honest, trustworthy, and has integrity. Another important character you should look for is someone who doesn’t tell you what you want to hear, but instead, tells you what you need to hear. After interviewing several Realtors®, select one that you feel you can openly communicate with and hire them to represent your best financial interests. This is generally done by entering into as agency agreement for that agent/broker/agency to represent you. If you don’t thoroughly understand the relationship, ask them to explain it until you do understand.
State and Federal Laws
Ask them to explain all state and federal laws governing the sale of real estate in your area. This is very important because laws vary from state to state. For example, Alabama is a Caveat Emptor state which places all the responsibility upon the buyer to do their due diligence in regards to inspecting every aspect of a home prior to closing. In many other states, the legal system places responsibility on the seller to disclose any possible known defects in the home. State laws regulate what information has to be disclosed to a prospective buyer but Federal law demands that all visible or hidden defects which affect a person’s health and/or safety must be disclosed to every potential buyer. Thus make sure you inquire about laws that could affect you.
How much do I get?
Next, the issue that most sellers are concerned with is the amount of money they will receive from the sale of their home. Naturally this can only be determined by deducting all expenses from the list price. The largest of those expenses are the payoff of the mortgage, cost of marketing the home for sale (commission) and title insurance. Most other expenses are minimal. Most of these expenses are the same for everyone selling a home with the exception of the mortgage amount, because some people have paid off their mortgage.
Most people have a preconceived idea of what they will take for their home but they don’t know for sure what their home is worth. Let’s be truthful, we all think our home is worth more than other homes in the neighborhood because it’s our home. From a potential buyers view point it is only a house until they purchase it and live there long enough that it is considered their home. So let’s refer to it as a house rather than a home because one can’t sell their emotions attached to the house. Even though you may have certain amenities that other houses in the area don’t have; other houses may have some amenities that you don’t have. The very best way to determine a list price is for the Realtor® to perform a Comparable Market Analysis to determine the current market value. This will be very close; if not the same value that an appraiser would derive at when doing the appraisal for a loan. If a house is listed for more than 5- 10% over current market value, it could cause the house not to sell. If it is listed below current market value; it would probably sell quickly but it cost the seller more money than is necessary. A Realtors® job is to help the seller get as much for their house as possible, but not more than probable. I think it is important for sellers to understand that they don’t determine what a house sells for. The buyer determines what they are willing to offer, based on current market value, then the seller determines if they are willing to sell for the amount offered. In the sale of real estate, the buyer is always in control.
Are they truthful?
A seller should understand that the Realtor® wants to sell the house for all they can get because it means they earn a higher commission. However, if the seller tells the Realtor®, “I’ll list it with you but you have to get your commission above this amount, because I want this much money after closing;” and if the Realtor® increases the price to net the seller that amount of money, the Realtor® has broken the law. At least in Alabama, net listings are illegal. If you hire a Realtor® who is willing to take a net listing, you might want to ask yourself, “Is he going to be dishonest with me on something else?” Remember I encouraged you to hire someone who is truthful?
Things a seller needs to know
There is another important step in the process of selling a house that very few owners think about and Realtors® are hesitant to mention because they don’t want to offend the seller. The house must be clean, well decorated and appealing to a prospective buyer. This is a very sensitive topic to discuss so in many cases, nothing is said about it. Prospective buyers will overlook dust and even some things left lying around because they realize it is being lived in. One very important thing is for the house not to be cluttered. The less furniture occupying a house makes the rooms look larger; the more spacious, the better. If a non-smoker enters a home where smoking takes place, the odor is a huge turn-off. The offensive odor leaves a lasting impression that may keep a buyer from making an offer. Pets are another issue that should be addressed. Pets should never be present when a house is shown. Matter of fact, I like to have cookies in the oven when I’m showing a house so that a pleasant fragrance is in the air. Room colors are very important to the perception of a prospective buyer. You may like colorful rooms but when you get ready to sell your house, you might consider painting the entire inside white or off-white. This makes the rooms look more spacious, fresh and appealing. Remember that we are marketing to the majority of people; not the exceptional few. Another thing I would warn a seller about is if you have a light fixture and something in the house that you have a strong attachment to, remove it from the house. If you don’t, that will be the one thing they will include with their offer. I have seen more sales opportunities fall apart over a chandelier or drapes than one can conceive. Remove the temptation and the item won’t be a problem. Lastly, the interior of a house can be perfect, but if the lawn is not well tended to provide curb appeal, the power of the first impression is lost and can never be regained. First impressions, whether inside or outside, never go away. I have taken people to a showing where the curb appeal was so poor and they didn’t even want to see inside the house.
I realize some of the things I just shared with you can be very sensitive to discuss with a Realtor® but they are things that can make the difference between selling and not selling a house. Remember one of the characteristics to look for in a Realtor® was someone you could communicate with. Be totally honest and open with them and demand that they are the same with you. The Realtor® can do more to help you than you can ever realize. Their main purpose is to protect and represent your best financial interests so treat them respectfully and listen to what they tell you. It’s to your benefit.
Ask your Questions
Should you have specific questions concerning various issues, please let me know and I’ll research the answer for you. I also want to encourage you to subscribe to our “News & Updates” weekly report so you can stay abreast of issues that might affect you when buying or selling real estate. If you haven’t visited my website, please go to www.AlabamaRealEstateInstitute.com and view previous articles.