Selling Property
Selling a home can be motivated by different factors: job relocation, downsizing / upsizing, or moving on to other investments. But whatever reason you decide to sell, getting the most for your investment is by far the ultimate motivation for the homeowner. This requires having the right perspective in mind—that you are selling a house, and that it is an investment.
Most homeowners declare “we are selling our home.” But it is important to clearly make the distinction between a home and a house. The home is where we live, where our children grow up; it’s where we create many memories of our intimate moments. Selling a home carries sentimental emotions. And because of this, it becomes difficult to make sound decisions. A house is a building, and a home is a place. A home has a very personal meaning because it is a place of comfort, family, where the heart is. A house is a permanent structure, built for people to live in. There is no feeling or connection with a built object. This distinction is important if you desire to get the most out of your investment.
Once this distinction is made, the homeowner’s perspective is one in which he or she is able to ask the right questions:
• Am I ready to sell?
• Do I hire an agent?
• What price should I sell it for?
• When is the best time to sell?
• What do I need to do to get it marketable?
• What happens after it sells?
Ready to Sell
Asking yourself (or yourselves if you live with a partner) is a question that needs to be thought out, especially if you are downsizing or upsizing, or investing. But it may not be a choice if you have been relocated for job reasons. Once you’ve decided that you are ready to sell, it is only the first step of many. It is the psychological step and it sets off a series of other steps that will be necessary to prepare the house for selling.
Hiring an Agent
Most people hire an agent when they are ready to sell. However, you may think about doing it yourself if you have experience in marketing, access to a multi-listing service, and can handle negotiations and real estate contracts. In either case, you will need to prepare the house to make it marketable. More on this later.
An agent usually works on commission (generally 5-6% of the sale price), but has the knowledge and resources to get you to the place you need to be to sell your house. A good agent will establish a list of steps with a timeframe that makes sense for you. They are there to take the highly emotional factors out of the equation and deal directly with potential buyers. Your agent works for you and has fiduciary duty and confidentiality with the homeowner. They are experienced in pricing the home, marketing it right and negotiating the sale of the home. There are many other issues that an agent will handle, such as:
• Inclusions / exclusions
• Conveyances
• Water/well rights
• Working with title and title companies
• Working with appraisers, surveyors and home inspectors
• Working with lenders and other aspects of finance
Pricing the House
Once you’re ready to put the house on the market, listing it for the right price will make a difference in maximizing the value while keeping it competitive so that it sells. Your agent will conduct a comparative market analysis and will likely get a licensed appraiser to conduct an official appraisal on your house. The market analysis will look at active listings in your area—those that are currently on the market—as well as properties that have recently sold. The recently sold (within 1-3 months) prices are more indicative of the price your house will sell for. A good agent will also look at pending listings, off-market/withdrawn/canceled listings, or expired listings (more on Comparable Market Analysis).
When to Sell
The best time to sell is generally in the Spring or Summer, when people are least busy with work, or their kids are off from school. The Winter season, particularly around the holidays, is the worst time to sell. With people busy for the holidays, along with the cold weather, the Winter season will have fewer buyers looking, and the time to sell will be longer. The Fall season is generally the middle of the two, which could make it ideal for sellers, since there would not be as many competing sellers.
Getting the House Marketable
Getting the house ready for showing starts by de-personalizing and de-cluttering the space. An experienced agent will tell you that buyers will try and identify the space as their own, and with less signs of someone else and less clutter, it makes it easier for the buyer to imagine that space. You might want to consider lighting up and redecorating your space to “neutralize” it, making it more buyer-friendly for showing.
It may be necessary to hire a professional cleaning crew that will sweep through the entire house, cleaning from top to bottom, and deep cleaning carpets as necessary (if you have pets, consider limiting them to a specific area). If the house has not had a recent painting, then it may be necessary to repaint the entire house, both inside and outside, to make it appear fresh. Damaged fixtures and other maintenance items will need to be repaired before showing. This will be a good time to make sure that tables, countertops and other surfaces are cleared, making the area look larger and more spacious. If you and your agent plan of having multiple showings, it might make sense to have things “modularized” such as trays of decoration or china that can be place on surfaces, or easily slid in and out of cabinets and drawers.
If you maintain your own yard, it might behoove you to spruce up the yard and garden, giving the house more curb appeal. If you’re in a condominium or townhome with HOA maintenance, then you won’t need to worry, but if not, you may want to hire a professional landscaper to take care of weeding, mulching and gardening. You might also want to consider plants and flowers for the interior, giving more natural life to the inside space. Minimal improvements always make sense, but expensive upgrades may not always pay off once the house is sold.
After it Sells
After your house sells, you will want to celebrate! But make sure you and your agent have a checklist. The checklist should be in sync with the closing timeframe, and should include important items such as:
• Follow-up on terms outlined in the contract
• Repairs included in the contract
• Inspection amendments (if necessary)
• Schedule movers and/or storage rentals
• Termite or other fumigation letters
• Change of address package from post office
• A collection of information for new owners (i.e., warranty information, receipts for appliances, owner’s manuals, repair/contractor information, dates, etc.)
• Contact utilities, subscriptions, internet and other services for disconnects or transfers
• Attend a final walkthrough
• Provide remotes, keys to house, gates, pools, mailboxes, etc.
The closing date, and working up to it, will be a big event that will hopefully go smooth, particularly if you have a checklist that addresses your key tasks. The closing will be handled by the agent and a closing escrow company, who makes sure that all parties assigned provide what is necessary to complete the transaction.
Some people will have a contingency of the purchase of another home prior to selling their home, but for those who don’t, do not feel pressured to buy. Taking your time to find another property will give you an opportunity to make good choices. Just keep in mind that you have two years to defer taxes on your capital gains. If you are able, you may consider putting your proceeds in a money market fund with a reasonable rate of return, daily access to your funds, and check-writing privileges. If your agent has done a good job, you may want to consider retaining the agent to help you find your next house.