Real Estate 102: The Real Estate Selling Process

When taken one step at a time, the selling process is actually quite simple. However, you can waste much of your valuable time (and often times that of others) if you do not take the steps necessary in the correct order. Selling your house within the time frame that works for you and maximizing value begins with seeing your house through the eyes of the potential buyer. Let’s review the basics.

Step 1 – Have a frank discussion with all who have a vested interest in the sale of your house and agree on what would be “perfect timing” for your sale to close and for you to move to your next home. This date will dictate when you will need to do begin the sales process which, depending on many factors, can be anywhere from a few months to many months.

As well, you must experience a mental metamorphosis such that the “home” you love so dearly turns into nothing more than a “house”. This shift in vocabulary is part of letting go, i.e., the emotional detachment process all sellers experience sooner or later. Your home is where your family lives and where your heart resides. Houses, on the other hand, are simple commodities sold on the open market to buyers who will determine their own value. Make no mistake; you are getting ready to sell a house.

Step 2 – Schedule some time and make a critical assessment of any needed maintenance or repairs. You may consider hiring a home inspector who can take a non biased approach to this process, particularly if you do not feel qualified and comfortable making those assessments on your own. An inspection will cost you a few hundred dollars, but it is money well spent to keep from being unpleasantly surprised when a buyer has his own inspection done, which he undoubtedly will do. If there are major repairs needed to such things as your roof or HVAC, you can decide if it's worth it to spend the money and fix it or to sell the house as-is, disclose that it needs some repairs, and set your price accordingly.

Step 3 – The time has now come for you to step into a potential buyer’s shoes and look at your house as they will see it. Many buyers make snap judgments about your house as they are approaching. And, as we all know, first impressions, good or bad, are usually lasting impressions. Buyers generally decide if they want to see the inside within the first few moments of viewing the external attractiveness (curb appeal) of your property. No matter how magnificent your house is on the inside, many buyers will drive by without even stopping if the curb appeal doesn’t say “I’m loved and cared for.” We suggest you stand across the street and look at your house as if you're a prospective buyer seeing it for the first time. If you can’t be objective, ask a friend to help you.

Be as critical as possible at this stage because buyers will certainly be critical. We want to take away any objection they may have to making an offer to purchase your house or to reduce their offer. Is the exterior paint fresh or is it peeling with perhaps some mold. If it is stucco, consider a stucco inspection and bond. Is the yard neatly groomed with no bare or brown spots? Is there a splash of color at the front entrance? Has the driveway and front walk been recently power washed? Are the gutters and downspouts free of debris? Are there trees overhanging the roof? Are the windows clean and unbroken? Is the front door freshly stained or painted? Are there light bulbs burnt out on the front porch? This step is perhaps the most important because you have one chance to make a good first impression. What potential buyers see on that first drive-by can do one of three things and two of them are not good. They can fall in love with your house (good) or make them keep driving (bad), or give them a checklist of items they can use to try to reduce their offer (also not good).

Step 4 – We have taken care of the exterior and drawn the potential buyer into your house. The rule now turns to “exteriors attract but interiors sell”! You typically don’t have to spend thousands of dollars on your house prior to putting it on the market for sale. To the contrary, little things you do generally give the biggest increase in value. Concentrate on the three Cs - clean it up, clear the clutter, and make cosmetic improvements.

Clean and polish. Your stove, oven, refrigerator, microwave, and other appliances must be spotlessly clean inside and out. Scour walls, floors, bathtubs, showers, and sinks until they sparkle. Buyers will notice strong smells as soon as they walk through your front door, so eliminate smoke, mildew and pet odors. Cleaning drapes and carpets helps get rid of odors. Dehumidifiers help musty basements. If you’re a smoker, smoke outside until the house is sold. Use air fresheners or citrus-scented potpourri to keep your house odor free.

Clear out the clutter. Clutter can certainly reduce your house’s value. Clear away kitchen counters and keep dirty dishes out of the sink. Eliminating clutter and excess furniture makes rooms appear larger. Recycle those stacks of old magazines you’ve been saving for no good reason. Recycle or donate all that stuff you’ve accumulated over the years in your attic and basement. Closet space sells houses. Get rid of all those clothes you don’t wear any more. Clean those closets out and organize them. Make them look large and roomy! Do the same with built-in drawers. Like it or not, serious buyers will inspect your closets and built-in drawers.

Make cosmetic improvements. Painting isn’t expensive if you do it yourself, but be careful when selecting colors. Avoid bold colors with strong visual impact. Stick to conventional soft whites and other neutral colors that won’t clash with most prospective buyers’ tastes. If your finished basement is dark and gloomy, paint the walls and ceiling a light color.

Pay attention to anything and everything in your house that could cause the buyer to “reduce your price”. Find it and repair it before you put it on the market. Look for any hairline cracks over doors or windows and nail pops in sheet rock. Locate any ceiling stains and the source of the leak. Check for windows with cracked panes or that don’t open and shut properly. Watch for doors that stick, don’t close or don’t slide properly. Observe bathrooms for signs of mildew, rust stains in sinks and toilets, missing tiles or grout, inadequate caulking around tubs. Check for drippy faucets, slow draining sinks and tubs, and broken mirrors. Check all kitchen appliances that remain with property and be sure they are fully functional.

Always remember that buyers consider any of the above problems a sign of poor maintenance and more often than not they are correct. Their solution is a simple one. Either don’t buy and keep looking or they make significant price reductions, often totaling thousands of dollars!

Step 5 – As you are going through the exercises within the last few steps, you may as well couple them with a preparation for the inevitable buyer’s inspection, the time which many deals go astray. Please give consideration to the following items when preparing for the buyer’s inspection.

Consider hiring a professional inspector for a “pre-listing” inspection, a stucco inspector if your house is stucco, a roof inspector if your roof is past it’s life or you have had prior leaking problems, or a HVAC inspector if your heating and cooling systems are past their useful life.

Items to be conscious of include but are not limited to:

Eliminate any and all earth to wood contact around your house, including deck posts, exterior stairs, stucco, form board siding, or wood siding. Repair or replace any rotten wood.

The soil around your house should slope away from the house for at least three feet.

Repair or replace all poorly secured or disconnected rain downspouts and gutters. All gutters should be clean.

Repaint areas where the paint is peeling and worn. Determine whether widows and doors need to be resealed and, if so, we recommend a professional be retained to handle that task (keep all receipts).

Replace all defective light bulbs and electrical switches.

Ensure that all windows and doors open and close properly and latch securely, inside and outside.

Have your heating and air conditioning systems serviced by a professional HVAC contractor. Cleaning the systems and replacing filters is recommended. Display the results of this maintenance clearly on the air conditioner and furnace.

Any and all work done by either you or a professional contractor should be documented, with receipts for supplies and labor, and made available to any prospective buyers.

We know this seems like considerable work but you can rest assured it will reap the benefits of a quick sale and a sale that maximizes your equity.

Step 6 – Once these previous steps are completed, you are now ready to list your house for sale. You obviously need to decide at this point whether you want to enlist the services of a consultant or broker to help you with this process. We won’t spend much time on that decision here as it is covered thoroughly in other areas within this website. To review Flat Fee’s various service offerings ranging anywhere from FSBO Consulting to Complete Full Service, all for a flat fee, please Call or email our office.

Step 7 – Whether you choose to go it alone or engage a broker, setting the price for your house is the next and easily the most critical piece to this puzzle. Please clearly understand that your house is worth what a ready and able buyer is willing to spend, nothing more or less. Your house will have a higher value if the inventory is low in a high demand area and vice versa. Depending on what your house offers as far as amenities that certain buyers may value can also affect value. The value of your house will be contingent on both what comparable houses have sold for as well as current comparable inventory. Although there is science involved when pricing a house, it is also an art form and is best left to those who have significant experience in this process. That is why we strongly recommend you enlist the services of a consultant or broker to help you with this most critical task. Again, we at Flat Fee have options for every seller that will allow them to set a price that will drive traffic to the house which is the key ingredient to soliciting offers. Please consider the following facts relative to the market value of and how you price your house:

The buyer does not care how much you paid for the house or how much money you spent on upgrades, etc. Hopefully you enjoyed those upgrades while you lived in the house as they may have little value to the buyer.

The buyer does not care how much you “need” to clear from the sale in order to buy your next house.

The buyer does not care how much your next door neighbor allegedly sold their house for last month. We do not know the specific circumstances surrounding that sale and/or whether they are even telling you the truth.

Statistics have proven time and again that houses that are overpriced from the beginning ultimately take considerably longer to sell and sell for less money than their counterparts. Regretfully the term “overpriced” cannot be easily defined as it means different things depending on market conditions, timing, etc. Rest assured that if there are no showings and/or if six or seven people have toured the home and an offer has not been tendered, your house is overpriced. As a seller, it is the “kiss of death”. Our advice - Don’t Do It!! Don’t “test the market”. Market your house for sale when you are ready to sell at a price consistent with recent activity.

Step 8 –Now that the hard work has been completed, the fun begins!! People unrelated to you will invade your privacy and look in your cabinets and closets!! Please take all valuables and place them in a safe place, such as a safe!! They will opine on your decorating and choice of furniture. They will be critical of everything!! However, we simply do not care. We want them to see themselves living in your house. Keep your house clean and uncluttered at all times and they will be able to see themselves living there which is another reason to price it right. It should sell quickly and you can go back to your normal way of life after the house is under contract. People will lie to you and tell you they will be there at 2:00 and will neither show up nor call. Sad but true. This can be a very frustrating time but you need to be prepared to deal with the frustration. This problem is why many FSBO clients elect to utilize a broker eventually so potential buyers can have access to the house through the lockbox system rather than the owner always having to let buyers into the house. Assuming you have prepared the house properly and priced it right, a reasonable offer should be forthcoming in a relatively short period of time depending on buyer demand at your price point.

Step 9 – You have done all the right things and now an offer is tendered which you need to evaluate. Do not take anything personally from this point forward. We are now in the midst of a business negotiation in the hopes of reaching a successful conclusion. The buyers offer is just that, an offer, for us to consider and most likely counter. There are many facets to an offer not the least of which is the price. However, we need to dig much deeper to determine the validity of the offer. When are they proposing to close and does that meet your timetable? Have they included any contingencies to the offer that need to first be satisfied? Are they credit worthy (can they afford your house)? Do they first have to sell their house before they can buy yours? Can you reasonably expect their house to sell within the allotted time frame? What are your options if it doesn’t? Are they asking that you contribute to their closing costs? Is that amount reasonable and customary? Which of the inspection paragraphs have they chosen to include in their offer? How many days do they have to secure their financing? What happens if they can’t get their financing? How many special stipulations have they elected to include? Is all that they are asking reasonable? At this juncture is where you may most need a Flat Fee Realty consultant. They will bring logic and control to this process when the varied emotions involved often derail many transactions that should become win/win deals for both buyer and seller. Always remember that buyers very seldom make offers on houses that they do not want to buy. Once an offer is made they have an emotional investment in your house. It takes a certain level of business acumen and experience to successfully negotiate to a successful conclusion.

Step 10 – You now have an executed contract that meets your expectations. However, do not rest now as much work is yet to be done. Many deals fall apart during the contract to closing phase either because the buyer is unable to secure the necessary financing, the house does not appraise for the amount of the sale, or the buyer and seller cannot agree on what should be done as a result of the inspection. However, when a competent broker has been engaged, they can typically work through this difficult time as they know what is reasonable as well as how to maneuver through this challenging terrain. The sales agreement is a legal document and should be treated as such. You must pay particular attention to the dates within the contract which, if missed, can lead to a breach of the contract. When you engage Flat Fee Realty, your consultant will have a contract to closing plan specific to your transaction with important date milestones included that will not allow you to miss critical deadlines that could invalidate the contract if missed. This is often a very traumatic time in the process and must be given appropriate consideration. In our opinion, the Contract to Closing phase is when a competent real estate consultant is invaluable to as you prepare to sell perhaps your most valuable asset.

Step 11 – You have now arrived to the day of closing, the day that should be celebratory and uneventful. However, without the proper preparation, it can be stressful. With a competent closing attorney, there are seldom issues to deal with on the part of the seller save any discrepancies in the HUD settlement statement, which Flat Fee would review for you prior to closing. However, the buyer can sometimes have last minute surprises from their lender that can affect the closing and the loan funding. You do not receive your proceeds until the buyer’s loan is funded. As a side bar, the closing attorney represents the bank, not you or the buyer and therefore cannot dispense legal advice. Often times sellers, as they have a limited role in the actual closing (the buyer has to sign all the loan documents), can arrange to sign their documents a day or so early and have their proceeds wired to their bank by the closing attorney.

As you can see, there is much work involved with selling a house. However, it is our intent at Flat Fee Realty to be your support throughout this process, to the extent you need us to be, particularly in those areas where and times when you need us most. Although we cannot guarantee a sale without any problems, we feel confident that your experience will be pleasant and stress free and, best of all, you will only pay for those services you need.

Call or email our office to get started now!