Real Estate FAQ - All about selling
Many people believe they can save a considerable amount of money by selling on their own. They look at the average commission on a house, and remember stories of friends or relatives who managed to get through the process with seemingly little trouble. "People sell their own homes," they say - "so why can't I?"
Right now, over 10% of American homeowners handle their own sales. But in order to join the ranks of the successful ones, you need to realistically assess exactly what's involved. The routine parts of the job involve pricing your house accurately, determining whether or not a buyer is qualified, creating and paying for your own advertising, familiarizing yourself with enough basic real estate regulations to understand (and possibly even prepare) a real estate contract, and coordinating the details of a closing. The greatest downsides are the fact your house is only on the market when you're home, and the possibility that a mistake may cost you the money you're trying to save.
The best reason for working with real estate broker is the enormous amount of information they have at their disposal - information that can help make your house sell faster and easier. Professionals know about market trends, houses in your neighborhood, and the people most likely to buy there. They also know how to reach the largest number of people who may be interested in your house, and are trained in areas like screening potential buyers and negotiating with them. Finally, they're always "on-call," and willing to do the things most of us hate: working on the weekends, answering the phone at all hours, and always being polite about it.
What makes a house sell?
This entire document could be devoted to answering this question. But to be as concise as possible, a successful sale requires that you concentrate on five considerations: your price, terms, condition, location, and exposure. Since you can't control all of them, you may have to overcompensate in one or more areas to offset a competitive disadvantage in another.
When is the best time to list a house for sale?
As soon as you decide to sell it.
If you want to get the best price for your house, the key is to give yourself as much time as possible to sell it. More time means more potential buyers will probably see the house. This should result in more offers; it also gives you time to consider more options if the market is slow or initial interest is low.
Is there any seasonality to the market?
Peak selling seasons vary in different areas of the country, and weather has a lot to do with it. For example, late spring and early fall are the prime listing seasons in many areas because houses tend to "show" better in those months than they do in the heat of summer or the cold of winter. And of course, people like to do their house shopping when the weather is pleasant.
But keep in mind that there are also more houses on the market during the prime seasons, so you'll have more competition. So while there is seasonality in the real estate market, it's not something that should dominate your decision on when to sell.
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Probably not. Even if you're under no pressure to sell, waiting for better market conditions is not likely to increase your profit potential.
How long should it take to sell?
Average listing times vary from 30 to 180 days, according to market conditions in a particular region, town, or even neighborhood; and of course, price, terms, condition, location and exposure play an even greater role. Selling in any market is easier if you keep time on your side. Most professionals will tell you that allowing yourself at least six months will put you in a position to get a better return from their marketing efforts.
What if I can't sell my old house before we have to move?
This situation can arise for any number of reasons. For instance, getting the job promotion you've been waiting for may mean having to relocate very quickly. Another example: you finally find your "dream home," and need to get it under contract before it sells to another buyer. Whatever the reason, don't panic. You have some viable alternatives to the potential nightmare of double mortgage payments.
If you don't have to sell in order to buy a new home, renting is one option to think about. Consider the advantages and disadvantages of renting your old house. If you're being transferred, you may be able to obtain a short-term rental while you're becoming familiar with the new area. Either way, a local broker can usually help, by advising you how much you can expect to pay for rent in your new city, or what you need to charge to cover your mortgage payments and other costs you'll entail as a landlord.
Another solution available from some brokers is the guaranteed sale plan, which is detailed in the next question.
What if I do have to sell my old house first?
Some brokers offer guaranteed sale plans, which are essentially a written promise to buy your house at a pre-determined price if it doesn't sell by a certain date. The amount of the guaranteed price varies considerably between brokers.
If you opt for the guaranteed sale route, look into the ERA Sellers Security Plan. It's the only guaranteed sale plan offered in all 50 states. You'll sleep better knowing your ERA broker has the financial strength to fulfill the terms of the plan. You're also entitled to some additional benefits which are automatically included in the program.
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In a word, realistically.
Today's residential real estate market is no place to look for easy profit. The fact is, prices have generally leveled off from their peak during the 1980's. That's not to say you can't get what your house is worth. You just have to be realistic about its value, and price it accordingly. A good place to start is by determining the fair market value.
What is "fair market value," and how do I determine mine?
Simply put, the fair market value of a house is the highest price an informed buyer will pay, assuming there is no unusual pressure to complete the purchase. It is usually not the asking price.
To get an estimate of fair market value, contact a local ERA American Office and ask for a Competitive Market Analysis (CMA) of your house. Our brokers will provide this service free of any charge, without obligation.
The analysis will give you a realistic figure based on the most salient points of the local real estate market. It will provide information about recent sales of similar houses, including how much they sold for and how long it took. The broker's price opinion is very helpful in determining the right asking price.
What's the difference between fair market value and asking price?
Generally speaking, the owner's asking price - the advertised price of a house when it goes on the market - is set slightly higher than fair market value. You can assume that some negotiation will be necessary to reach an agreement with a buyer. In most cases, the agent who presents you with the results of your CMA will be willing to help you establish a competitive pricing strategy.
Who can help me determine the right asking price?
Real estate sales agents suggest asking prices based on a wide array of information you may not have at your disposal, including recent listing and selling prices of houses in your neighborhood. If you're not completely confident in their suggestions, you may want to order an appraisal.
Next, establish clear priorities. If you had to choose, are you more concerned with selling quickly, or getting the most money possible?
Someone else - a neighbor, friend or relative - may point out advantages or disadvantages about your house that you hadn't thought about. Third-party views will help you start thinking of your house as a commodity, with positive and negative selling points. Then you should decide on a price that you feel is competitive and consistent with what other houses in your area have sold for.
How flexible should I be about the asking price?
Most buyers also leave room for negotiation when they make an offer. Thus, a certain degree of flexibility is usually called for on the part of both the buyer and seller.
While it is ultimately your decision to accept or reject an offer, or present a counter-proposal, a good agent can be of great assistance to you during the negotiating process. In fact, negotiation is one of the valuable skills an agent can offer you. As negotiations proceed - whether in writing, face-to-face, or by phone - your agent should inform you of your options in responding to each offer from the buyer. Even without such advice, a cool, rational manner in what is often a long, emotionally-charged process will usually net you a significantly higher price.
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Should I fix my house up before it goes on the market?
Unless your house is nearly new, chances are you'll want to do some work to get it ready to market. The type and amount of work depends largely on the price you're asking, the time you have to sell, and of course, the present condition of the house.
If you're in a hurry to sell, do the "little things" that make your house look better from the outside and show better inside. Read on for several specific ideas for making low-cost improvements.
What is "curb appeal," and how do I create it?
"Curb-Appeal" is the common real estate term for everything prospective buyers can see from the street that might make them want to turn in and take a look. Improving curb appeal is critical to generating traffic. While it does take time, it needn't be difficult or expensive, provided you keep two key words in mind: neat and neutral.
Neatness sells. New paint, an immaculate lawn, picture-perfect shrubbery, a newly sealed driveway, potted plants at the front door - put them all together, and drive-by shoppers will probably want to see the rest of the house.
Hand in hand with neatness is neutrality. If you're going to repaint, stick to light, neutral colors. Keep the yard free of gardening tools and the kids' toys. Remember, when a family looks at a house, they're trying to paint a picture of what it would be like as their home. You want to give them as clean a canvas as possible.
What should I do to make the house show better?
First, make your house look as clean and spacious as possible. Remember, people may look behind your doors - closet and crawlspace doors as well as those to the bedrooms and bathrooms. So get rid of all the clutter; have that garage sale and haul away the leftovers.
After you've cleaned, try to correct any cosmetic flaws you've noticed. Paint rooms that need it, regrout tile walls and floors, remove or replace any worn-out carpets. Replace dated faucets, light fixtures, and the handles and knobs on your kitchen drawers and cabinets.
Finally, as with the outside of your house, try to make it easy for prospective buyers to imagine your house as their home. Clear as much from your walls, shelves, and countertops as you can. Give your prospects plenty of room to dream.
Use the ERA "Show and Sell" Checklist to get specific ideas on how to make your house look its best. Additionally, ask your agent for any company brochures or videos on the subject. Such materials are free and extremely helpful to most homeowners.
Should I make any major home improvements?
Certain home improvements that are useful to almost everyone have been proven to add value and/or speed the sale of houses. These include adding central air conditioning to the heating system, building a deck or patio, basement finishing, some kitchen remodeling (updating colors on cabinets, countertops, appliances, panels, etc.), and new floor and/or wall coverings, especially in bathrooms. Improvements that return less than what they cost are generally items that appeal to personal tastes, like adding fireplaces, wet bars, and swimming pools, or converting the garage into an extra room.
The challenge that comes with any home improvement designed to help sell your house is recouping your investment. There's always the risk of over-improving your house - that is, putting more money into it than neighborhood prices will support.
So how much is too much? Professional renovators have found that, no matter how much you improve any given house, you're unlikely to sell it for more than 15% above the median price of other houses in the neighborhood, whether you do $1,000 worth of work or $50,000. That's why you might want to ask your agent's opinion about the viability of recouping the cost of any major renovation you have in mind before you start the work.
Should I do the work myself?
If you have the time and talent, do-it-yourself improvements are the most cost-effective way to go. Painting, wallpapering, replacing cracked trim and old plumbing fixtures - the difference between work done by a competent amateur and a professional is usually time and money. Just make sure you don't tackle something you can't handle - this is no time for "on-the-job training!" If you're not experienced, it may be worth calling in a professional.
Larger jobs involving mechanical systems (heating, electrical, plumbing, etc.) or work that must meet local building codes are another story. Even if you or the family handyman know exactly what you're doing, it's not a good idea to engage in this type of work unless you're licensed to do so. Your efforts could make you responsible for more than you realize if something you worked on goes wrong after you sell.
Am I liable for repairs after I sell?
In certain situations. If the buyer's inspection reveals major problems with your house's structure or mechanical systems (heating, electrical, plumbing, etc.), the buyer may wish to negotiate the price downward on the basis of anticipated repair costs. So even though the repairs won't be made until after the sale, practically speaking, you'll be paying for them.
Sometimes, repairs may be required before the transfer of title takes place. This is especially true in sales that involve financing that's insured or guaranteed by the government (FHA/VA loans, for example).
You may have also heard about lawsuits involving sellers who failed to disclose major problems before the sale - like an addition to the house that wasn't built to code. Most states now maintain very specific disclosure laws that require sellers to disclose any pertinent information relative to the condition of the property. For example, most states require sellers to notify buyers about the presence of any lead-based paint. It is important for you to be knowledgeable about your state's disclosure laws.
These are just a few good reasons to retain a lawyer or agent who knows as much about the condition of your property as you do. It's also a good idea to get the buyer's written acknowledgment of any major problems when you accept their offer.
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What about home warranties? Are they available to sellers as well as buyers?
Yes they are, and they're worth investigating. It's our belief that an Home Protection Plan for ERA is one of the best selling points you can add to your house. In fact, a 1996 survey conducted by an independent market research company for ERA shows that houses covered by the Home Protection Plan for ERA sell an average of 15 days faster than comparable houses without the protection.
It's easy to see why. After a buyer has invested substantial cash savings in a down payment and moving expenses, the last thing they want to worry about is a costly home repair. With the Home Protection Plan for ERA, they don't have to.
The warranty offers protection for you and your buyer, covering repair or replacement costs for breakdowns to most major systems and built-in appliances up to a year or more after the date of closing. In many states, there is no additional cost for coverage to sellers who provide coverage for their buyers except for a small deductible if you make a claim. And when you consider the returns - a quicker sale, a better chance of selling, and the peace of mind that comes with knowing 24-hour emergency service is always just a phone call away - it's hard to imagine a better investment.
How do I reach the right potential buyers?
There was a time when selling a house was simple. Your real estate agent would put a sign in the front yard, an ad in the paper, and wait.
Of course, agents still do those things - but that's far from all they do. Today, people are moving further and more frequently than they used to; it's not unusual for upwardly mobile executives to relocate across the country more than once in a year. The result is that the pool of potential buyers for your house is much larger and spread far wider than ever before, and the competition to reach them is fierce.
Because you'll probably need to cast a wider net to find the right buyer, choosing a real estate company that offers the sophisticated marketing techniques that define likely buyers, where to find them, how to reach them, and how to persuade them to buy one house over another has never been more important. The fact is, virtually everything we've discussed up to this point, from pricing to home improvements, the Competitive Market Analysis to the "For Sale" sign in the yard, is part of a marketing process that's put into motion when you decide to work with a good broker.
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What's an MLS, and why do I need one?
A Multiple Listing Service, or MLS, is one innovation that makes it easier to reach a large number of prospective buyers and dramatically increase the exposure of a property.
Quite simply, it's a system under which participating brokers agree to share commission on the sale of houses listed by any one of them. So, for example, if you list your house with one broker and another broker actually sells it, they share the commission. The advantage to you is clear; more people have an interest in selling your house.
Over the years, the MLS concept has grown from a strictly local sales tool into a powerful national marketing system. That's due largely to ERA, whose pioneering use of the fax machine led to the development of the nation's first, and still the largest, interstate shared listing system.
How important is advertising?
Advertising remains one of the most important components of the marketing process. But again, it's not as simple as it used to be, at least not in the hands of a good broker.
Many people don't realize how costly advertising can be - a single page of photo listing ads run by a local real estate office in your local newspaper can cost anywhere from several hundred to several thousand dollars. Yet it's a far more cost-effective way to go than the three or four-line classified ad you would probably run you were selling the house yourself. Here's why:
Your classified ad requires a prospective buyer to find it amidst the dozens of others on the page, and be impressed enough by its message to call in response. In contrast, the broker's ad is designed to "find the buyer" - with its large size and easy-to-read layout, the eye-catching photographs and professionally written descriptions, plus the fact that it includes not just one, but several houses for sale.
How does the inclusion of other houses benefit yours? The power of numbers, plain and simple. Fewer than 5 % of buyers actually purchase the first house they call about. When they call to respond to the broker's ad, on the other hand, they're likely to be shown a number of houses similar to the one they initially express interest in seeing.
And that's just advertising in the local newspaper. Brokers today, especially larger ones, employ a variety of other proven advertising methods, including the Internet, magazines, radio, TV, and direct mail.
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What should we expect from an open house?
As another valuable part of the marketing process, the open house offers prospective buyers the chance to view houses in a low-pressure, "browsing" atmosphere. With that in mind, you shouldn't expect it to generate a sale, at least not directly. What you should look for is traffic, and calls to your agent for private showings in the days following the open house.
Open houses are always valuable, even if very few people show up. Such a situation can indicate that the price is too high; it may also lead you to look for ways to improve curb-appeal. Try not to draw your own conclusions - your agent will give you a full report on open house activity, and offer a professional assessment of its results.
Agents often hold an open house for other agents shortly after a house is listed. This event, usually held mid-week when real estate people can give it their full attention, can be as important to your efforts as your listing in the local MLS. The more professionals who see your house, the more prospects you're likely to reach.
Should we try to avoid being at home when the house is shown?
You should definitely plan to be out of the house during any open house your agent has scheduled; the same goes for first showings to prospective buyers. People often feel uncomfortable speaking candidly and asking questions in front of current owners. You want them to feel as free as possible to picture your house as their "dream home."
Who actually sells my house -- a broker or an agent?
Both. In legal terms, a real estate agent is an individual trained and licensed to act for other people looking to buy or sell a piece of property. While that definition applies to both broker is permitted to collect fees and/or commission for such work. Thus, the sale agent - with whom you have most of your day-to-day contact - works on behalf of, and is compensated by, the broker.
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Will my agent be present at the closing?
If you wish. While their presence is not required by law, both the buying agent and the selling agent may attend the closing. Even though most of the procedures are handled by the lenders, title companies and in some cases an attorney, you'll find your agent to be a valuable source of information and counsel, especially if any last-minute problems arise.
Good agents are also extremely helpful in the days immediately prior to the closing. They'll help you prepare by giving you a step-by-step preview of the entire process and what will be expected of you. And they'll make certain you bring all necessary documents and other information.
What makes a sales agent effective?
We like to think good training and experience make the best agents. But the truth is, not every agent is right for every seller. And that's why we suggest you follow this simple formula to help you decide whether a particular agent will work well for you:
COMPETENCE + COMFORT = CONFIDENCE
Competence: When you first meet with real estate agents, they'll do their best to show you that they have what it takes to sell your house. You can expect to see a portfolio of credentials, past achievements, sales volume and letters of recommendation. Look for evidence that their background is relevant to your needs - someone whose portfolio includes success with houses in your price range, preferably in your immediate neighborhood.
Comfort: The importance of being comfortable with your agent as a person cannot be overstated. You're going to be dealing with this individual on a regular basis, maybe for months, during a time that can be emotionally trying for you and your family. Indeed, your agent may well become something of a family member, who shares in the tension, anticipation, frustration, and ultimately the joy of selling your house.
It takes a unique combination of those two characteristics to inspire the confidence a homeowner needs to maintain peace of mind through the process of selling a house. It's something every ERA agent strives for. "Just the kind of help you'd expect from a friend is more than a slogan. It's our way of doing business.
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How do I find the agent that's right for me?
A good place to start is by talking to friends, neighbors, relatives - anyone whose recommendation you trust.
Another way to find an agent well-suited to sell your house specifically is by responding to local advertising from agents - such as those "just sold" mailings you find in your mailbox from time to time. The very existence of such self-marketing efforts suggests that they may have more to offer you than the agent who picks up the phone when you call the local real estate office.
Do I have to pay a commission even if I find the buyer?
That depends of the type of listing you agree to. If you sign an exclusive agency contract, you may still sell the house on your own without paying a commission. In an exclusive right-to-sell agreement, you owe a commission even if you find the buyer.
What is the advantage of an exclusive right-to-sell?
The answer is incentive - it affords agents the protection they need to know their time and effort will not go unrewarded. That's one reason the great majority of residential listings are marketed under exclusive right-to-sell agreements.
What if my agent doesn't produce?
Besides commission, the most important matter you negotiate at the time of listing your house with a broker is the duration of the listing contract. Terms vary, but listing agreements are seldom for less than three months or greater than one year.
So what if you find yourself dissatisfied midway through a nine-month contract?
While the listing contract is legally binding, some brokers offer homeowners an "out" if they are unhappy with the services they are receiving. The ERA Commitment to Service is one example.
Why list my house with an ERA American broker?
Exclusive services that can make selling your house faster and easier, unparalleled expertise in local and national markets - those are some of the reasons why no one can sell your house more effectively than an ERA American broker.
Beyond that, we're sincerely interested in helping make the experience of selling your home as smooth and easy as possible. So even if you're not ready to list your house quite yet ... if you simply have questions about the market in your area, price or mortgage trends, anything at all about real estate as it relates to you ... just pick up your phone and call the ERA American office nearest you. It's "Just the kind of help you'd expect from a friend."
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