Below is a general roadmap for selling your home. It lays out the home sale process in a six-stage process with each stage containing a detailed explanation and helpful tips.
For information on the services we perform for you during the sale process, please explore the links on the left navigation bar.
1. Prepare property for sale
The first stage in the selling process is to prepare the home and grounds for sale. When preparing the property it is important to view the home from a buyer’s perspective.
Below are some ideas to consider prior to listing the property for sale:
Pre-sale home inspection
It is always wise for the Seller to obtain a pre-sale inspection. Like a buyer’s inspection, the pre-sale inspection is conducted by a licensed home inspector for the purpose of assessing the structural integrity of the home, including but not limited to the: foundation, roof, heating and cooling systems, electrical, insulation and windows. An inspection may prove useful for Sellers to not only identify actual home defects but also to ward off frivolous defect claims by the buyer’s inspector.
Prepare disclosures
Under Washington state law, the Seller must disclose substantial information regarding the status of his or her home to the Buyer. Be careful to disclose all information contained in the disclosure form (Form 17) and clarify any questions with your agent.
Make repairs/improvements
While major improvements may be deferred to the Seller, making necessary repairs (window replacement, stair repair) and cosmetic improvements (interior painting, flower boxes) to your home can result in a substantially higher purchase price. In addition, yard and garden landscaping and window cleaning can greatly enhance the “curb appeal” of your home.
Neutralize décor and maintain home appearance
No home owner has the same taste in home décor. With this in mind, you may want to consider replacing out-dated carpets, painting rooms to neutral colors, and removing family and other photographs. In addition, it may be wise to kennel or keep pets outside, and to retain professional cleaning services during the time your home is on the market. A buyer is unimpressed with foul odors or clutter during a home tour.
2. Pricing
As you are likely aware, the value of your home is subjective. There is no fixed price set for the value of your home. The value of your home is the amount of money a buyer will pay. Pricing your home is thus a prediction of buyer interest, which is gauged by current home buying conditions in your area.
To assess current market conditions, numerous resources should be consulted. When pricing your home, we recommend you research the following information:
Comparable home sales
A study of comparable home sales is a home valuation method used by many lenders to appraise the value of residential real estate. By comparing your home and its dimensions and features with comparable homes that have recently sold, an appraiser will calculate the value of your home for financing purposes. Because most home sales require a buyer appraisal, it is important to begin the pricing process with a comparable home sale analysis.
Current home listings
The price of current home listings should also be studied when pricing a home. As compared to comparable home sales, the price of current home listings can reveal upward or downward market trends in home pricing. Also, if a neighboring seller misjudges market conditions and price their home too high, you obtain a distinct market advantage when pricing your home.
Assessed value
The assessed value of comparable homes should also be researched. The assessed value is an estimate of a property’s value utilized by a city or county to assess property taxes. The assessed value is usually expressed as two separate values, one for the home and the other for the land. A sharp increase in an assessed value may be indicative of an upward pricing trend in your area.
Repairs, improvements
After researching market conditions, it will be important to deduct for repairs, improvements and any structural defects in the home, if applicable. A pre-inspection report and repair estimates can be utilized to price the deductions.
In addition to researching the price, it is also important to obtain the estimated costs of selling the property, such as closing costs, commissions and taxes. This will provide you with the amount of net proceeds of your home sale.
3. Marketing the property
After arriving at the sale price, the next stage of the home sale process is to market the property for sale to potential buyers. Strategic and targeted marketing is arguably the most important aspect of the home sale.
When marketing your home, you may want to consider utilizing the following tools:
NWMLS listing
The NWMLS stands for the Northwest Multiple Listing Service. This is the preeminent home listing database for real estate agents, who utilize the service to search for homes for their clients. Your NWMLS listing will include a detailed description of your home, as well as the sale price, square footage, number of bedrooms and various other details and features of your home. The NWMLS listing also includes pictures of your home.
Website and internet marketing
By creating a website for your home, the Seller’s agent can promote your property via targeted internet marketing. Your website will have a unique URL (i.e. www.johnson-home.com) that can be utilized in pay-per-click and other internet advertising campaigns. In addition, your home’s website will be featured on your NWMLS listing, yard sign and glossy brochures. This allows potential buyers to visit your website directly rather than simply reviewing an agent’s email containing the NWMLS listing information.
Open house
An open house is a useful tool in attracting potential buyers to the property. If advertised properly, an open house offers broad exposure to agents and buyers who will tour the home and ask questions of the listing agent who presides over the open house. The listing agent must be careful in an open house setting to personally greet and monitor all visitors during the open house to avoid interior design “thieves” and other unsavory individuals.
Yard sign and glossy brochures
A distinct yard sign can attract the attention of buyers driving through your neighborhood. The yard sign must be strategically placed on your property, and should feature the name, contact information and website for your agent and broker. A professionally-designed glossy, color brochure should also be attached to the yard sign. The brochure should feature high gloss photography of your home, along with the price, agent’s contact information and a detailed description of the home’s features. If the passerby is unable to gain access to the home, he or she can pick up a brochure and contact the listing agent to schedule a private showing of the home.
Key-box
A key-box is literally a box attached to your home that contains a spare key to the home. This allows buyer’s agents to conduct client tours at the agent’s convenience. Every agent is issued a code number that identifies the agent, and provides the agent access to the key located inside the key-box.
4. Offer review and negotiation
Once your home begins attracting interest, you will likely begin receiving offers from potential buyers. In the state of Washington an offer is submitted in the form of a formal contract signed by the buyer. The contract is called the “purchase-and-sale” agreement (PSA).
When the seller signs the PSA, it becomes a legally binding contract between buyer and seller. Thus, it is very important to review each offer carefully to prepare for negotiation with the potential buyer.
This stage of the sale process involves:
Offer review
In order to ensure the buyer is qualified to purchase your home, it is important to review: the offer price, proposed contingencies, type of financing, earnest money, closing terms, and all other offer provisions and addenda. Most importantly, a careful review of the buyer’s pre-approval issued by the lender should be performed by the listing agent. If a buyer has not obtained a pre-approval or if the pre-approval is vague or ambiguous, the Seller will be in a highly compromised position is he or she selects an offer from such a buyer. Once a Seller accepts an offer, the Seller’s home is tied up with the buyer until the buyer either purchases the home or the sale is canceled.
Client collaboration
When reviewing an offer, it is important that the listing agent fully explain all offer details and the ramifications of accepting each offer to the Seller. By collaborating with the client, the listing agent can explore options with the Seller and formulate a strategy for negotiating and making counteroffers to interested buyers. It is also important, that the Seller understand that when you sign an offer, a binding contract is created that gives rise to affirmative and good faith obligations to which the Seller must comply.
Negotiation
When negotiating, always remember that everything is negotiable. A successful negotiation requires that the agent and Seller work as a team. In formulating a negotiation strategy, the Seller’s individual needs and the current market conditions must be clearly identified and discussed in great detail. Whether negotiating price, a sale contingency or any other offer detail, it is important to always keep in mind that, by submitting an offer, a buyer wants what you have. As a result, the Seller has significant leverage in the negotiations, and oftentimes, a buyer is willing to do anything to purchase your home.
- Cooperation and patience
When negotiating, a cooperative, rather than adversarial, stance usually produces the best results. In the spirit of give and take, you may want to plan your negotiation strategy so you give up something you want in exchange for the buyer giving you something they want. Patience is an important, yet often overlooked, element of negotiating a home sale in today's market.
- The changing market
The real estate market can change quickly. When the market is strong and home prices are rising, there may be minimal risk in waiting for a higher price. This is the case when there are plenty of buyers and the listing inventory is low. However, prices change with economic trends or when the amount of homes for sale increases. Remember the most current market value may differ from sales that occurred only a few months ago. Generally speaking, the longer your home stays on the market, in a down market, the lower your ultimate sales price is likely to be.
- Multiple offers
Some homes will attract multiple offers. Sellers often wonder what happens if another buyer comes along during the negotiating process and makes a written offer. If another buyer comes along with an offer, the seller is free to consider any and all written offers. In our area, a fully executed contract is when both seller and buyer have received the signed contract, required attachments and addenda with the signatures (and/or initials as required) of all the parties. However, great care should be taken when negotiating multiple offers to make sure you do not enter into agreements to sell your home to more than one buyer!
- Be willing to walk away
Sometimes it is best to stand firm during negotiations. If you and your buyer are still far apart in price and terms, you may not want to reveal your "hand" (best price and terms). The time expended in negotiating with a difficult buyer can be costly in terms of time and opportunity cost. Therefore, you should not hesitate to walk away from an inferior offer or difficult buyer.
5. Sale contingencies
After accepting an offer, the next stage of the selling process is the contingency period. If the buyer’s offer contains contingencies, such contingencies must be performed before the sale becomes final. Although most contingencies involve the buyer’s concerns (i.e. financing, inspection, home sale), the Seller should remain vigilant in responding and negotiating during this period.
The property may need to be formally appraised, surveyed, inspected, and possibly some repairs may be needed per the offers contingencies. Depending upon the specific terms and conditions contained in the sale documents, you may be responsible to review reports and provide a timely response, and the buyer may be responsible to respond to your comments.
If, on the other hand, any problem arises during the contingency period, the buyer must provide formal notice to the Seller of any such problem within a certain number of days. In the event a home fails inspection or financing problems arise, the buyer may propose repairs, price reductions or may invoke a right of rescission and cancel the transaction when providing notice.
If the buyer proposes modifications, then the Seller has a certain number of days to respond to the buyer’s offer to modify the sale terms.
Keep in mind that even if something arises at this stage of the process, your agent should carefully explain the details to you and explore various creative solutions to either re-negotiate the terms or cancel the sale.
6. Escrow and closing
After the buyer accepts your offer, the sale documents are delivered to the lender and escrow. Escrow is a neutral third party in your home sale transaction that is responsible for ensuring that all provisions of the purchase and sale agreement are fully performed and all lender requirements are met.
The duties of escrow in your home sale transaction include:
- Preparing the written escrow instructions
- Requesting a title search of the property to obtain a title report
- Receiving lender requirements and ensuring appraisals, insurance and documents are performed to the lender’s satisfaction
- Receiving and depositing into the escrow account the buyer’s purchase funds
- Preparing the deed or other documents related that will evidence the transfer of title from Seller to buyer
- Calculating taxes, interest, insurance and rent payments according to instructions from buyer and seller
- Recording deed and any other documents with the applicable city or county, as instructed by the lender
- Requesting the issuance of the title insurance policy
- Closing escrow when all of the instructions of the buyer and seller have been carried out
- Distributing funds to Seller, Seller’s lender(s) and any other persons or entities authorized to receive sale proceeds
- Preparing final HUD sale statements that accounts for the disposition of all funds deposited in escrow.
On the other hand, Escrow does not:
- Explain the significance any contract or sale document or offer legal advice to Buyer or Seller
- Negotiate between the buyer, seller and lender
- Offer investment advice.
Your move
Finally, remember to cancel all utilities, cable, phone, and coordinate your move well in advance of moving day. This will ease the stress of your move considerably.
Questions
We welcome all of your questions regarding your home sale. To contact us, please call us at: (206) 909-8777 (toll-free: 1-800-206-6612), or send us an email at: info@navigationre.com.
