THE EVERYTHING GUIDE TO SELLING YOUR FIRST HOME
How to figure out exactly what you want, and how to work with the experts who’ll help you get it.
Selling, a famous salesman once said, is essentially a transfer of feelings.
You love and cherish your home. You want the next owner to fall in love with it, too — through photos, through words, and through the experience of walking through your front door. But, perhaps most, you want to get the price you want.
This isn’t a small task. Selling a home requires work. It requires time. The journey isn’t always easy. There will be frustrations. But when you seal the deal and move on to your next chapter — wow, what a blissful, boss feeling.
Below, we preview each step in your journey. We’ll discuss how to know what you want (and what your partner wants, if you’re selling together). How to understand the market, and ways to make a plan. And most importantly? How to create relationships with experts and trust them to help you get the job done. Now, let’s talk about selling your house.
Know, Exactly, What You Want
First things first: You need to know what you want (and what your partner wants) in order to sell your home with minimum frustration. Why are you moving? What do you expect from the process? When, exactly, should you put that For Sale sign in the yard? We can help you get your thoughts in this process.
Do Your Research
Unless you bought your home last week, the housing market changed since you became a homeowner. Mortgage rates fluctuate, inventory shifts over time — these are just a few of the factors that affect the state of the market, and every market is unique. Educate yourself on what to expect. What You Need To Know About Researching Home Prices
Interview and Select an Agent
This is the most important relationship you’ll form on your home selling journey. Pick the right agent and you’ll likely get a better sales price for your house.
Questions to find a great listing agent
Price Your Home
How much is your home worth? That’s the … $300,000 question. Whatever the number, you need to know it. This is how your agent will help you pinpoint the price. Check out The INS and OUTS of Setting a Price for Your Home
Prep Your Home for Sale
Today, home buyers have unfettered access to property listings online, so you have to make a great first impression — on the internet and IRL. That means you’ll have to declutter all the stuff you’ve accumulated over the years, make any necessary repairs, and get your home in swoon-worthy condition. Here’s how to stage your home. How to Make Buyers Fall in Love with these tips and tricks, your house will be swoon-worthy in no time ⇒
Market Your Home
Home buyers look at countless listings online. The best-marketed homes have beautiful photos and compelling property descriptions, so they can get likes — which can amount to buyer interest — on social media. Some agents are even using videos, virtual tours, texts, and audio messages. It’s time to consider how to promote your property.
Showcase Your Home
One of the best ways to get buyers in the door is to have an open house. This is your chance to show off your home’s best assets, and help buyers envision themselves living there. Know how your agent will organize, advertise, and host the event to ensure it’s a success.
Negotiate With the Buyer
To get the best deal for you, you’ll likely have to do some negotiating. Your agent will help you craft a strategic counteroffer to the buyer’s offer, factoring in not only money, but contingencies, etc. Let’s talk about how to ask for what you want. What you Need to Know to Get the Best Deal for You ⇒
Negotiate Home Inspection Repairs
Ah, the home inspection. It’s as much a source of anxiety for buyers as it is for sellers. Nonetheless, most purchase agreements are contingent on a home inspection (plus an appraisal, which will be managed by the buyer’s lender). This gives the buyer the ability to inspect the home from top to bottom and request repairs — some even could be required per building codes. The upshot: You have some room to negotiate, including about certain repairs. Once again, your agent will be there to help you effectively communicate with the buyer. Navigating the Home Inspection ⇒
Close the Sale
Settlement, or closing, is the last step in the home selling process. This is where you sign the final paperwork, make this whole thing official, and collect your check. Before that can happen though, you’ll have to prepare your home for the buyer’s final walk-through and troubleshoot any last-minute issues.
Before Accepting — or Rejecting — an Offer
It’s not always about the money (except when it is).
The day will come — and it will be a wonderful, joyous, do-a-happy-dance day — when you receive an offer, or multiple offers, for your home.
And on that day, you’re going to face a question you may not have previously considered: How do you
know if an offer is the best one for you?
Your listing agent will be a big help here. They will understand and help you suss out the merits and faults of an offer because — believe it or not — it’s not always about price.
One buyer’s beautifully high offer might not look so good anymore, for example, if you discover that it’s contingent upon you moving out a month earlier than planned. Or, conversely, you may prefer speed over price, particularly if you’re moving to a new city.
Your listing agent will have a sense of what you want financially and personally — and can help you
determine whether the offer at hand satisfies those goals.
Before the first offer rolls in, here’s what you need to know about the offer evaluation process, including
the main factors that should go into making a decision — accept or reject? — with your agent.
5 Important Things — Other Than Price — to Consider When Evaluating an Offer
Want to fetch top dollar for your home and walk away with as much money in your pocket as possible?
Of course you do. You’ve gone through the time-consuming process of setting your asking price, staging your home, promoting your listing, and preparing for open houses — and should be rewarded for your efforts.
Your first instinct may be to just pick the highest bid on the table. But the offer price isn’t the only thing worth considering.
When vetting offers, evaluate these five areas in addition to price:
1.The Earnest Money Deposit
One important consideration when weighing an offer is the size of the earnest money deposit. The EMD is the sum of cash the buyer is offering to fork over when the sales agreement is signed to show the person is serious (i.e., “earnest”) about buying your home. This money, which is typically held by a title company, will go toward the buyer’s down payment at closing.
A standard EMD is 1% to 3% of the cost of the home (so, that would be $2,000 to $6,000 on a $200,000 house). If a buyer tries to back out of an offer for no good reason, the seller typically keeps the EMD. Therefore, the higher the earnest money, the stronger the offer.
2. The Contingencies
Most offers have contingencies — provisions that must be met for the transaction to go through, or the buyer is entitled to walk away from the deal with their earnest money. Contracts with fewer contingencies are more likely to reach closing, and in a timely fashion.
Here are five of the most common contingencies:
- Home inspection contingency. This gives the buyer the right to have the home professionally inspected and request repairs by a certain date — typically within five to seven days of the purchase agreement being signed. Depending on where you live, you may be required to make home repairs for structural defects, building code violations, or safety Most repair requests are negotiable, though, so you have the
option to haggle over which fixes you’re willing to make.
- Appraisal contingency. For a mortgage lender to approve a home buyer’s loan, the home must pass appraisal — a process during which the property’s value is assessed by a neutral third The appraisal verifies that the home is worth at least enough money to cover the price of the mortgage. (In the event the buyer can’t make their mortgage payments, the lender can foreclose on the home and sell the property to recoup all — or at least some — of its costs.) Generally, the home buyer is responsible for paying for the appraisal, which typically takes place within 14 days of the sales contract being signed.
- Financing Also called a loan contingency or mortgage contingency, a financing contingency protects the buyer in the event their lender doesn’t approve their mortgage. Although the timeframe for financing contingencies can vary, mortgage lenders report that buyers generally have about 21 days to obtain mortgage approval.
- Sale of current home contingency. Depending on the buyer’s financial situation, their offer may be contingent on the sale of their home. Usually, buyers have a window of 30 to 90 days to sell their house before the sales agreement is voided. This contingency puts you, the seller, at a disadvantage because you can’t control whether the buyer sells their house in time.
- Title Before approving a mortgage, a lender will require the borrower to “clear title” — a process in which the buyer’s title company reviews any potential easements or agreements that are on public record. This ensures the buyer is becoming the rightful owner of the property and the lender is protected from ownership claims over liens, fraudulent claims from previous owners, clerical problems in courthouse documents, or forged signatures.
3. The Down Payment
Depending on the type of mortgage, the buyer must make a down payment on the house — and the size of that down payment can affect the strength of the offer. In most cases, a buyer’s down payment amount is related to the home loan they’re taking out. Your chief concern as a seller, of course, is for the transaction to close — and for that to happen, the buyer’s mortgage has be approved.
Generally, a larger down payment signals the buyer’s financial wherewithal to complete the sale. The average down payment, according to the NATIONAL ASSOCIATION OF REALTORS®, is 10%. Some mortgage products, such as FHA and VA loans, allow for even lower down payments.
If, by chance, the appraisal comes in higher than your contract’s sale price, the buyer with a higher down payment would more likely be able to cover the difference with the large amount of cash they have available.
4. The All-Cash Offer
The more cash the buyer plunks down, the more likely the lender is to approve their loan. That’s why an all- cash offer is ideal for both parties. The buyer doesn’t have to fulfill an appraisal contingency — whereby their lender has the home appraised to make sure the property value is large enough to cover the mortgage — or a financing contingency, which requires buyers to obtain mortgage approval within a certain number of days. As always, having a sales contract with fewer contingencies means there are fewer ways for the deal to fall through.
5. The Closing Date
Settlement, or “closing,” is the day when both parties sign the final paperwork and make the sale official. Typically, the whole process — from accepting an offer to closing — takes between 30 and 60 days; however, the average closing time is 42 days, according to a report from mortgage software company Ellie Mae.
Three days before closing, the buyer receives a closing disclosure from the lender, which he compares with the loan estimate he received when he applied for the loan. If there are material differences between the buyer’s loan estimate and closing disclosure, the closing can’t happen until those amounts are reviewed and approved. But this is rare.
Some transactions can take more time, depending on the buyer’s financing. For example, the average closing time for a Federal Housing Administration (FHA) loan is 43 days, according to Ellie Mae.
Whether you want a slow or quick settlement will depend on your circumstances. If you’ve already purchased your next home, for instance, you probably want to close as soon as possible. On the other hand, you may want a longer closing period — say, 60 days — if you need the proceeds from the sale to purchase your new home.
When Should You Make a Counteroffer?
Depending on the circumstances, you may be in the position to make a counteroffer. But every transaction is different, based on the particular market conditions and your home. In some circumstances, you can be gutsy with your counteroffer. In others, it might serve your goals better to give in to the buyer’s demands. Your agent can provide helpful insight about when and why a counteroffer will be the right thing for you.
For instance: If you’re in a seller’s market — meaning that homes are selling quickly and for more than the asking prices — and you received multiple offers, your agent may recommend you counteroffer with an amount higher than you would have in a buyer’s market.
If you choose to write a counteroffer, your agent will negotiate on your behalf to make sure you get the best deal for you.
A caveat: In many states sellers can’t legally make a counteroffer to more than one buyer at the same time, since they’re obligated to sign a purchase agreement if a buyer accepts the new offer.
When Does an Offer Become a Contract?
In a nutshell, a deal is under contract when the buyer’s offer (or seller’s counteroffer) is agreed upon and signed by both parties.
At that point, the clock starts ticking for the home buyer’s contingencies — and for the sweet moment when the cash — and home — is yours.
Needs to Know About Closing
Walk-throughs, closing costs, and other items to check off your list before the big finish!
Closing time. The end of the road. The last hurrah — and hurrahs are in order.
If you’re here, then you’ve found a buyer, negotiated home repairs, and are ready to move out — and on. But before you can make this sale official (and get paid!), you still have a few items to cross off your list.
Here, we’ve laid out everything you need to know to have a successful settlement.
Closing Is the Final Step
Closing, or “settlement,” is when both parties sign the final ownership and insurance paperwork, and the buyer becomes the legal owner of the home.
Typically, closing day takes place about four to six weeks after you signed a purchase and sale agreement. During this window, the buyer’s purchasing funds are held in escrow until all contingencies, like the home inspection contingency and appraisal contingency, are met.
Your agent will be able to answer questions and offer support through closing. Here’s what to expect from the
process, start to finish.
Before You Close, You’ll Have a Final Walk-Through
Most sales contracts give the buyer one last chance to do a walk-through of the home within 24 hours of settlement. This is their chance to check that the property is in good condition, and to make sure the agreed- upon repairs were completed.
In most cases, no problems arise at this stage of the transaction. (If something is amiss, your agent can walk you through it.) The final walk-through mostly gives buyers peace of mind knowing that you, the seller, have adhered to the conditions of the sales contract and home inspection-related repairs.
Follow These Steps to Prepare for the Final Walk-Through
To help ensure that the walk-through goes smoothly, take these six steps ahead of time to prepare:
Step #1 — Clean house
Your home should be spotless for the final walk-through. Assuming the buyer is taking ownership on closing day, you should be fully moved out at this point. But moving can be messy. After purging, packing, and moving, you may want to do one more deep cleaning.
Step #2 — Leave owner’s manuals and warranties.
Make the buyer’s life easier by providing all manuals and warranties you have for home appliances. Print physical copies and put these documents in one place for the new owner. If you have receipts from contractors for repairs, leave them with the manuals.
Step #3 — Provide a vendor list
Give the buyer contact information for home contractors or maintenance companies that you’ve used in the past. These vendors are familiar with your home, and the new owner will appreciate having a list of servicers they can trust will take good care of their new home.
Step #4 — Check for forgotten items
Do one more check throughout the home to make sure you’re not leaving anything behind. One exception: You may want to leave unused or leftover paint cans in the colors currently in use within the home — but confirm with the buyer first.
Step #5 — Turn off water shut-off valves
The last thing you want before closing is a flood. With the buyer’s permission, turn off your house’s main shutoff valve 24 hours before closing.
Step #6 — Lock up
Until settlement is complete, you’re legally responsible for the home — meaning you’d be liable if there’s a break-in before closing. So, the day before settlement make sure to close window coverings and lock the entry doors. If a house looks un-lived in, it’s a welcome sign to burglars. It’s a good idea to leave a porch light on, or to set an interior light to turn on and off with a timer.
If the final walk-through reveals an issue with the house, don’t panic. The standard protocol is for the buyer’s agent to immediately alert the listing agent that there’s a problem. Then, both parties work together to solve it. Typically, either the closing gets delayed or there’s additional negotiation, such as monetary deduction of the sales price. In other words: There are options, and your agent can help you through this.
Up Next: The “Closing Disclosure”
Let’s assume the final walk-through is smooth sailing. (Woo-hoo!) What happens next? You’ll get info about your closing costs from the title company.
Meanwhile, the buyer’s mortgage lender must provide the buyer with a Closing Disclosure, or CD, three business days before settlement. This is a formal statement of the buyer’s final loan terms and closing costs. As the loan borrower, the buyer is entitled to a three-day review period to see if there are any significant discrepancies between their CD and Loan Estimate (LE) — a document buyers receive when they apply for a loan. The LE outlines the approximate fees the buyer would need to pay.
In most cases, there are no major differences between the CD and LE. However, if certain closing costs differ by 10% or more between the estimate and the disclosure, the buyer’s loan has to go back to the mortgage lender so that cost differences can be reviewed. If that happens, closing is usually delayed until the issue is resolved.
Expect to See These People at the Closing
The closing typically takes place at the title company, attorney’s office, or the buyer’s or seller’s agent’s real estate office. (Unless you live in a state that allows for electronic closings — eClosings — with remote notaries. In that case, the involved parties can opt to sign documents digitally.)
The list of legally mandated attendees will depend on your state, but usually you’ll be joined by:
- Your agent
- The buyer
- The buyer’s agent
- A title company representative
- The loan officer
- Any real estate attorneys involved with the transaction
Remember to Budget for Closing Costs
Closing costs can vary widely by location, but you’ll generally pay closing costs of 5% to 10% of the home’s sales price. So, on a $300,000 home, you can expect to pay anywhere from $15,000 to $30,000 in closing costs. In most cases, these costs are deducted from your proceeds at closing.
Closing costs for sellers typically include:
- The commission for the listing agent and buyer’s agent
- Transfer taxes or recording fees
- Loan payoff costs
- Unpaid homeowner association dues
- Homeowner association dues included up to the settlement date
- Prorated property taxes
- Escrow, title, or attorney fees
Be Sure to Bring These Things to Closing
At the closing you should have:
- A government-issued photo ID
- A copy of the ratified sales contract
- House keys, garage remotes, mailbox keys, gate keys, and any pool keys
- A cashier’s check, or proof of wire transfer, if your closing costs are not being deducted from the sales price. (Yes, it’s OK to use a cashier’s check — especially if you don’t want to deal with the hassle of a wire transfer, which can take time to With a cashier’s check, you’re guaranteed the money you need for settlement will be there at closing.)
Don’t Forget to Dot These I’s and Cross These T’s
Before you rush off to pick out paint samples for your new place, remember to do these two steps that are often overlooked by sellers:
Transfer utilities. Don’t want to pay for the new owner’s utility bills? Coordinate with the buyer so that utilities
— including not only gas and electric but also water and cable — are transferred to the buyer on closing day.
Change your address. You obviously want your mail to be sent to your new home. Setting up a forwarding address will also ensure that you can be reached if there are any post-closing matters. You can file a change of address with the U.S. Postal Service.
Finally: Celebrate!
At last, your home is officially sold. Congratulations!
Give yourself a pat on the back — and then start settling into your new phase of life.
Source: National Association of Realtors