January 16, 2020 closing costs, home selling, investment, listing your home, moving, must-do's, negotiations, planning, what to expect
Its time to sell your home! Could be for a job transfer...could be that you've outgrown your home...could be that you're an empty nester looking to downsize. Either way, if its your first time to sell, or if its been a long time since you've sold a property, a quick refresher course could be beneficial! So, lets talk about what to expect....
First Things First
I know you're first inclination might be to jump onto one of the popular public websites for their "electronic estimate". I get it...I do. Its easy, and doesn't require making that phone call to your Realtor...I mean, me. :) But what I try to get all of my clients to understand, is that a computer algorithm will NEVER be a substitute for real-life knowledge and experience.
That being said, don't hesitate to make that call. This is our job, and this is what we get paid to do. The first thing I'll tell you is that I need to lay eyes on the house. Not to critique your housekeeping skills, but to get a feel for it, and see the features so that I can make the proper and accurate comparisons.
I'll take the data from that meeting and get to work. This can take a little bit of time, so I usually prep my clients for a couple of days so that I can budget, in some cases, several hours to research the competition and recently sold homes. I go through each detail of your home, as well as the recent solds (going back 6 months) and see how they compare to each other. This helps to drill down to a price-per-square-foot that an appraiser should assign to your home. Some Realtors will input this into a fancy presentation...and thats all fine and dandy. I find that I like to break this down for my clients, plain and simple. "Here are the comparable homes that have recently sold, and this is how they compare to yours. This is why yours is worth more or less, etc". Based on this data, I'll give you the most likely "selling range" that you should be expecting to sell within...and an asking price that should get us there. Theres more to it than that, but this is the basic process...
The Costs Involved
Most people just want to know the bottom line. "How much are you charging for your services, and what will I walk away with?". Each situation is unique, and brokerage fees can vary, so we won't cover that here. But, we can talk about fees and costs that are in addition to the brokerage fee. Most settlement fees from the title company are split between the buyer and the seller. And, the title insurance policy is typically (not always) a fee that falls onto the seller. On top of that, you'll be responsible for the property taxes up to that point for the current year. (if you have an escrow account, hopefully the balance is enough to cover this portion). I put together a Seller Net Sheet for my clients...or a spreadsheet that outlines the costs involved for each type of financing that a buyer may come to them with. Yes...as odd as it sounds, the buyer's loan type can affect your bottom line, as there are different costs involved that may fall onto a seller. I'll plug in the seller's mortgage payoff amount, tax rate, estimated closing date (for tax purposes) and any other fees involved. This will give us an estimated net profit that you can expect to walk away with. In my opinion, being as accurate as possible with these number is of the upmost importance!
Prepare To List
When I give you the price that I think your home is going to sell for, its going to come with a to-do list to get it ready for sale. I have to prepare my clients for my sometimes-brutal honesty...because if I think it needs to be moved/removed, I'm going to tell you! Again, part of what you're paying for is almost two decades of experience in helping people buy or sell homes.
In most cases, professional photography is a must. Because...how do people find homes today? Online. You MUST put your best foot forward...as the photos can make or break a listing in a matter seconds. Don't underestimate this piece of the process! You're home needs to be ready for pics, and to be viewed by potential buyers. Pick up your shoes, empty the kitchen sink, put away anything that is unnecessary, clear off your countertops, mow your lawn, trim your hedges, and clean like you've never cleaned before!
Live On The Market
Once your home goes live in the MLS, expect showing notifications anytime. A sign will go into the yard, and a lockbox onto the door. Here in the San Antonio metro area, we have a 3rd party service called ShowingTime, that will contact you by call or text to notify you of a request to show by an agent or broker. You're typically expected to not be present during these time slots...and believe me, your presence is uncomfortable for a potential buyer, so unless its an absolute must, leave!
We Got An Offer!
Awesome...we have an official offer! We might negotiate, we might not...depending on your comfort level. If we agree to terms, they'll submit an earnest money deposit (held by the title company) and an option-money check made out to you. This is a fee paid to you, for a certain number of days, for the buyer to have the unrestricted right to cancel for any reason whatsoever. During this time, the buyer will have an inspection (or multiple inspections) and make any repair requests...and even though you're committed to this buyer right now, you may still receive showing requests from other agents/buyers. Around here, we usually see option periods range from about 7 to 10 days, but they can vary. If we make it through the option, we move to Pending...meaning, barring any roadblocks in the buyers financing (or a few other items), we can start to rest a little easier that the sale is going through. Also, showings by other agents will be halted at this time.
The buyer's lender will still need to send out an appraiser to run their own numbers. The bank needs to make sure that the buyer isn't paying more than what the house is actually worth, or that there are not any major repairs needed to the house that could affect its value. Assuming that we "make value" on the appraisal, we'll keep on moving down the road to closing.
Preparing For Closing
As we get closer to closing, you'll want to make sure that your schedule is relatively flexible in the days before and after our estimated closing date. Lenders sometimes need an extra day or two...or the opposite, they have everything ready to go early! Remote closings are a possibility, but also a nuisance for all parties involved. If you or your spouse cannot attend, make sure to obtain a Power of Attorney well ahead of time to allow one partner to sign for the other.
Obviously, you'll want to leave the home as clean as possible for the new owners! It doesn't have to be perfect...I mean, it is a pre-owned home, but I always say, "leave it how you would want to find it". The buyers will almost always do a walkthrough prior to closing...usually the day before closing, or the morning of. This is to make sure that you've removed all of your belongings, left any negotiated items, and completed any requested repairs.
Luckily, the seller's side of closing is a piece of cake. Remember when you bought the house and you signed and inch-thick stack of paper and you thought your hand would fall off? Not the case on this end. Usually anywhere from about 12-20 signatures...15 minutes and you're out the door! Once both parties have signed, it can take at least a couple of hours to get funding approval from the bank, and even more time for checks to be cut. So, be patient...it could be the following day before you receive your check or wire transfer.
I truly hope this post has been informative! Obviously I can't cover every single situation that could arise during the process, but I've tried to cover the basics here. Please feel free to reach out for any clarification, or with any other questions! Take care, and please share!