Buyer & Seller Information
HOW SELLING WORKS
There are many different steps in a successful real estate transaction!
Setting the Asking Price
When setting a price, cheapest the important thing is to be realistic. If the price is too high, you may not find a buyer. Too low, and you cheat yourself out of money.
Regardless of what you originally paid for your home and the cost of improvements you have made, the only price that matters is what the market will bear at the time you decide to sell. Don’t rely on assessed valuations made for tax purposes. Such valuations may not be reliable indicators of value, as they are usually made using mass appraisal techniques.
Importance of Comparative Market Analysis
Whether or not you get an appraisal, your Agent can develop a comparative market analysis. The analysis may also point out market fluctuations caused by general economic conditions, business plans like Bruce Power, number of listings etc., as well as long-term trends.
If you have owned your home for several years, you may have built up sizable equity. Equity is the difference between the value of your home and the balance on your mortgage minus what costs you will incur in closing. These may include title fees, taxes, a penalty for prepaying your mortgage, brokerage commission, lawyer fees, and charges for preparing and recording documents.
Listing agreement details
After you choose an Agent, you will most likely sign a listing agreement–a contract in which you agree to allow an Agent to sell your home during a given period and pay the Agent a fee when your home sells. Most Agents are independent contractors who work for a company operated by a licensed real estate broker.
The amount of compensation you pay a broker is negotiable, but the Agent will generally follow the company’s policy regarding compensation. The amount of the fee will be spelled out in the listing agreement. Make sure you understand how the fee will be paid before signing.
Most common type of listing
Agents will ask for a listing agreement that gives them the right-to-sell your property. This means that you will owe the broker a commission regardless of who finds a buyer during the listing period. In other words, if you decide to sell the house to your cousin, your broker still gets a commission.
It’s possible that an Agent from another company will find a buyer for your home. In that case, your broker is the listing broker, and the second agent is the cooperating broker. Many times the listing broker will agree to pay the cooperating broker a fee from the amount you pay the listing broker. Your listing broker cooperates with other brokers who procure buyers interested in your property and offers to compensate the other brokers for procuring a buyer. Cooperating and compensating other brokers is discussed in the listing agreement you sign with the listing broker.
Terms and Duration
The listing agreement will specify how long you agree to list your house with a company. You want a period that’s long enough to motivate your Agent to advertise your home and respond to buyers, yet short enough to allow you to change to a different company if you become unhappy with the Agent’s service.
Remember that the listing agreement is a contract.
Get your home ready
In preparing your home for viewing by prospective buyers, remember that people buy on emotions. Your home has to feel right, or buyers will look elsewhere. Your Agent is the best source of honest and specialized feed-back regarding the staging of your home to sell. Consider both the exterior and interior. Simple and inexpensive things like a pot of flowers or an assorted towel in the bathroom can make a great impression on buyer’s emotion.
For larger repairs, consult your Agent as to whether repairing the item will generate a good return on the sale. Repainting the woodwork may be worth it, but replacing the carpet may not.
Importance of Disclosure
If your home has a major problem you don’t intend to correct, be candid about it. Don’t paint over the water marks on the ceiling to hide a leaky roof. Buyers will find out about the problems anyway, especially if they are smart shoppers and hire a professional to inspect your home. Even months after the closing you a liable for undisclosed major problems or damages to the new buyers.
Marketing your house to buyers
As part of the overall marketing strategy, your Agent may arrange a tour of your home for local REALTORS® and perhaps schedule an open house for the public. Your Agent may also run ads in local newspapers, Web sites, and other publications tailored specifically for the type of home you are selling.
When the showings begin, keep your home clean and ready. Your Agent will try to give you advance warning before showing your home but be prepared anyway. If people drop by and are not with an Agent, it’s best not to show them your home. Ask for their names and phone numbers and refer them to your Agent.
Why you should not be present for showings
When an Agent comes to show your home, it’s best if you are not there. Many buyers feel like intruders when the owner is present; they tend to hurry away. Letting the buyers walk through your property at their own pace will help put them at ease. They will feel free to look around and ask questions. If you must be there, let the Agent handle the showing. Be courteous, but avoid engaging the buyer in conversation. The Agent needs the buyer’s complete attention to show your home properly.
Real Estate Agents are required by law to make your property available to all persons without regard to race, color, religion, national origin, sex, disability, or familial status. Your Agent will not discuss any matter that may potentially discriminate against any person.
Finally got an offer
When a buyer makes an offer on your home, your Agent will contact you promptly. The Agent will scrutinize the document, review it with you carefully, and answer your questions. The written offer lays out all the terms of the proposed transaction–the price the buyer is willing to pay and the financing terms–and becomes a binding contract if you sign it.
The offer may be contingent on the buyer selling a home first or obtaining an inspection. Ask your Agent how these terms affect you and whether the offer is in line with the market. The offer describes the property, states who pays for which closing costs, and specifies dates of closing and possession. Along with making the offer, the buyer should place a good faith deposit as well with you Agent’s Brokerage Firm. The deposit money will be kept in an trust account and applied to the buyer’s down payment or closing costs when the sale closes.
In reviewing the offer, you have three options: accept, reject, or make a counteroffer. A counteroffer is a rejection of a buyer’s offer with a simultaneous offer from you to the buyer.
You accept the offer
Once you and the buyer agree on terms and sign the contract, the buyer will generally have to find a lender and apply for a loan. Your Agent may monitor the loan process, which could last several days or weeks. During this time, your Agent will also be busy coordinating other arrangements to prepare for the final sale.
If the buyer requires it, your Agent can coordinate an inspection of your home. A buyer may hire an inspector to review many items in the property such as the structural components, mechanical items, electrical systems, and plumbing systems. The inspector will report to the buyer the items that the inspector finds to be in need of repair. Most likely, the buyer will provide a copy of the inspection report to you and may ask you to complete certain repairs. Don’t be surprised if the inspection notes some items in need of repair. An inspector is trained to see items and defects that are not obvious to you and your Agent.
The sale formally ends at the closing table. In most transactions, the closing lasts less than an hour and often occurs at your lawyer’s office. All the relevant documents should be ready for the signing formality.
Transactions and Documents
The sale actually consists of two transactions: 1) transferring the property to the buyer, and 2) paying off the existing mortgage on your home (or allowing the buyer to assume your mortgage). To transfer the property, the title company will present documents proving that you have the title. Proceeds of the sale may be disbursed at closing or shortly thereafter, once all the paperwork and verification have been processed.