Selling

Planning the Sale

Once you have made the initial decision to sell, you will immediately be faced with another tough question - is it best to hire a real estate sales associate or try to sell the house yourself?

To sell and market a house requires specialized skills, is time-consuming, and costs money. Are you prepared to buy advertising space? Advertising is one way to let the buying public know your house is on the market. If not, can you afford the time it will take to sell your house with only a sign in the yard? Are you willing to stay close to home for days, weeks, maybe months to show your house? Do you possess the necessary legal and financial knowledge to answer the buyers' questions, negotiate a contract, or close a sale?

If you answered "No" to any of the above questions, perhaps hiring a real estate firm to help would be the most efficient way to sell your house. They can be indispensable to you in the following ways. A real estate professional will:

A real estate professional will:
Access the Multiple Listing Service (MLS)
Assist with pricing based on Comparative Market Analysis.
Provide a detailed marketing plan.
Screen potential buyers for financial qualifications.
Suggest ways to make your property more attractive to buyers.
Show your home whether or not you are there.
Answer potential buyers' questions.
Present all offers.
Assist with negotiating the best sale price.
Facilitate the closing process.

The Right Price

Determining the "right" selling price for your home will take some work. If the set price is too low, you could lose thousands of dollars. If it is too high, the home may not sell within your time frame, costing you time, money, and anxiety. The "right" price is a balance between the maximum amount the current housing market will allow, your "competition," and your own time limits in selling. A reasonable time frame for selling a house may be between 30 and 90 days. If a house is on the market too long, potential buyers may avoid the house, wondering if something is wrong with it.
An excellent first step is to have a Comparative Market Analysis done on your house. This information details the current housing market in your area, showing you what houses similar to yours have sold for recently. The market analysis should also list your "competition" - houses like yours which are also on the market. With this information in mind, you will also want to consider the following points before deciding:

Do I Have Enough for a Down Payment?

A down payment is the money you pay up front toward the house. The more cash you pay as a down payment, the less money you will pay each month on the mortgage, and the lower the interest costs will be over the life of the mortgage. Typically, a conventional lender will require 20 to 25 percent of the purchase price as a down payment.

In some cases, involving an excellent credit history and sufficient income, lenders will agree to a 10 percent down payment. This may give you more cash for other moving expenses, but will also increase your monthly mortgage payments.

Loans through the Federal Housing Administration (FHA) or Veterans Administration (VA) carry very attractive down payment requirements of five percent or less. There is usually a maximum on the amount of money you can borrow with these types of loans, and VA loans are only available to veterans. FHA and VA loans are available at competitive interest rates. An additional benefit is that the seller may pay part of the points. In addition, when the time comes to sell, the next buyer may be able to assume the loan, subject to certain conditions.

If permissible, secondary financing may be used as an alternative to way to finance your new home. This means that the seller may hold a second mortgage for 10 percent of the purchase price, while the buyer puts 10 percent cash down.

Typically, conventional lenders are willing to accept a lower down payment if private mortgage insurance (PMI) is secured. PMI protects the lender in case of default on the loan. It will cost more, but it can reduce your down payment to 10 percent.

This is an important factor in pricing. Look at both the area in which the house is located as well as the surrounding neighborhood. Does the house back up to a busy street, is it on a cul-de-sac, etc. Try to put yourself in the buyer's position: what are the tradeoffs and advantages of your property?

Does your house have specific features that set it apart from other houses in the area, such as a spectacular view, a pool, mirrored closets, and room additions?

Has the house been adequately maintained during your stay? Are there minor or major repairs that could make a difference in the immediate sale of your house?

Potential buyers will want to know the age of the plumbing, furnace, roof, appliances, etc. If anything has been replaced, this could add to the value of your property and the sales price.

Is today's market a "buyer's market" or a "seller's market"? A "buyer's market" means there are several similar houses for a buyer to choose from. Usually, interest rates are attractive and prices are steady. A "seller's market" is the opposite. Interest rates may be low or high, but housing prices are on the rise, and there are few houses to be sold.

How long do you have to sell this house? What was the average time on the market on a comparable home? Can you wait while a buyer arranges financing? Does your purchase of another home depend on this deal closing quickly?

With these points in mind you should be able to determine a fair price for your house. A word of caution: Avoid the temptation to "pad" the price excessively, thinking it will give you negotiating room. Most buyers have limitations on how much they can spend. If your property out-prices other properties in the neighborhood, it could remain on the market longer than you wish. Even though you may be planning to lower the price later, studies show that the longer a house is on the market, the lower the price at which it is finally sold, compared to the original list price.

Although not a specific part of the price setting process, concerns about the amount of profit realized from the sale, tax regulations regarding the sale of property, and settlement or closing costs should be addressed. This is particularly true in markets with a predominance of FHA/VA buyers or areas where lender "points" are absorbed by the seller.

Costs

Anticipated costs of selling include the mortgage pay-off amount, any early pay-off penalty, the real estate broker's fee, other loans against the property (perhaps for a pool or room addition), the price of inspections, taxes, and other seller's costs. Your net profit can be estimated by subtracting these costs from the sales price. But, remember, this is only an estimate. Any change in the numbers or closing date will alter the final figure.

If your lender charges a penalty for paying off your mortgage before its due date, the amount charged is usually deductible.

Homeowners may also qualify for an immediate deduction of many of these costs if the move is prompted by a job transfer to another city, and the costs are not reimbursed by the employer.

For further tax information, consult a tax accountant specializing in real estate matters in advance.

Closing costs will vary from area to area. Your sales associate can provide categories and the approximate amounts of settlement costs you will be expected to pay. These may include various fees and miscellaneous closing costs negotiated by the buyer to be paid by the seller.

In many states pest inspections and termite reports are required before a house can be sold. Even if these inspections are not state mandated, most lenders will require them. If termites are discovered they must be eradicated, and the proof documented. Inspection prices vary. Shop around for a good price, but use a reliable company. Check with your sales associate about laws in your state.

The Listing Agreement

After choosing a real estate company, you are ready to sign the listing agreement. This agreement will state how much brokerage fee, or "commission," shall be paid, who will receive it, who has the right to produce potential buyers, and how long the agreement is valid. It should also include a list of personal property that will go with the house. The length of the listing contract will vary.
In the "Exclusive Right to Sell" agreement, the listing company is entitled to a commission regardless of who sells your property. If another office produces a buyer the commission you pay is shared between the two companies.

A listing agreement is a binding contract. Read it through carefully and ask questions until you understand every part of the agreement before signing.

Financing Options

When the time comes to negotiate a sale, it is best to be aware of the current financing available to the buyer. With the help of your real estate professional, review the mortgage climate - are loans in abundance or hard to obtain? If the buyer isn't able to qualify for enough money, you may want to offer a second mortgage out of your profits (if this is allowed by the first lender). Does your property qualify for VA/FHA loans? Is your current loan assumable?
Does the buyer expect you to pay any of the discount points connected with the cost of his loan? Determine your time limits in waiting for financing to be secured by the buyer, including alternatives.

Preparing to Sell

Of course, any major repairs should be completed before showing the house, if a top-selling price is expected. Limit your repairs to functional parts of the house, such as the roof, plumbing, and major appliances. Cosmetic changes like new carpeting and draperies may not match your future buyer's tastes, and could even discourage the sale.
The key words to remember in preparing your house are neat and clean, sparkling clean, and clean enough for royalty to visit. Take a look at your house as if you were seeing it for the first time. You may not notice crowded closets and untidy flower beds, but potential buyers will!

  1. When potential buyers drive up to your house, what they see will make a lasting first impression. Keep the grass mowed, edged and the weeds pulled. trim trees and bushes away from windows, and put children's toys in the garage. Plant some flowers to add a touch of color.
  2. If your house needs painting do it now. A good paint job will more than pay for itself in the selling price. Try to maintain the neighborhood look when choosing paint; you don't want your house to be remembered as "the green one with the blue door."
  3. Remove oil stains from the driveway. Buy an inexpensive drip pan to avoid further stains. Replace a weather-beaten mailbox. Make sure your doorbell works. remove torn screens. Clean outdoor light fixtures. Repair loose brickwork and fill cracks in the walk and driveway. In other words, make your house a showpiece from the curb to the front door.
  1. A coat of paint will brighten the interior walls. Choose neutral shades of white, off-white, beige, or light pastels that will coordinate with most decor. This inexpensive investment will increase the show ability of your house.
  2. Clear out closets and cupboards. Have a garage sale or donate your unused items to charity. With less clutter, your closets will appear bigger. Remove all necessary furniture to make your rooms seem more spacious.
  3. Open the curtains and pull up the blinds. Turn on as many lights as possible. Give your house an airy look. Fresh flowers bring color, fragrance, and a touch of spring that enhances a room.
  4. The bathroom should be absolutely spotless. Remove any stains from fixtures, repair dripping faucets, and polish the mirrors. Add a sanitizer to the toilet bowl and keep the lid down. Wash and fluff bathroom rugs, and hang fresh towels. Potpourri or scented soaps add a nice fragrance to the air.
  5. A clean kitchen tells the buyer that the house has been well cared for. Remove excess pots, pans, bowls, and clutter from the cupboards. Clean the oven inside and out. Run a lemon through the garbage disposal for a fresh smell. Make sure all appliances are working.
  6. When a sales associate is showing the house, keep children and pets under control. Also, turn off the televisions and stereos. The noise may distract tired clients, causing them to overlook many fine features.
  7. Check garages and basements for debris. A two-car garage should have plenty of space for two cars. Brighten basements with the highest wattage lighting allowed and clear away any cobwebs.

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Branches Realty specializes in the Washington metro area, providing home buyers and sellers with professional, responsive, and attentive real estate services. Give them a call! They're eager to help and would love to talk to you.

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BRANCHES REALTY

Phone

(301) 641-4609

Email

[email protected]

Address

632 Sligo Avenue Silver Spring, MD 20910

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