Step 1 - Deciding to Sell
Are you ready?
The home selling process typically starts several months before a property is made available for sale. It's necessary to look at a home through the eyes of a prospective buyer and determine what needs to be cleaned, painted, repaired and tossed out.
Ask yourself: If you were buying this home what would you want to see? The goal is to show a home which looks good, maximizes space and attracts as many buyers - and as much demand - as possible.
While part of the "getting ready" phase relates to repairs, painting and other home improvements, this is also a good time to ask why you really want to sell.
Selling a home is an important matter and there should be a good reason to sell - perhaps a job change to a new community or the need for more space. Your reason for selling can impact the negotiating process so it's important to discuss your needs and wants in private with your Coldwell Banker Schmidt Sales Associate who lists your home.
Coldwell Banker has developed a set of service standards based on experience and understanding gained from millions of home sellers.
Step 2 - When To Sell
When is the best time to sell?
The marketplace tends to be more active in the summer because parents want to enroll children in classes at the beginning of the school year (usually August). The summer is also typically when most homes are likely to be available.
Generally speaking, markets tend to have some balance between buyers and sellers year-round. In a given community, for example, there may be fewer buyers in late December, but there are also likely to be fewer homes available for purchase. So, home prices tend to rise or fall because of general demand patterns rather than the time of the year.
Sellers often wonder whether or not they should take their homes off the market for the holidays. Generally speaking, you'll have the best results if your house is available to show to prospective buyers continuously until it sells. After all, the holiday season is a wonderful time to show your home while it's filled with the sights and smells of the season.
Sellers are encouraged to sell when their property is ready for sale, there is a need or desire to sell. Your local Coldwell Banker Schmidt Sales Associate will help you in determining the best time to sell based upon your local current market conditions.
To assist you in deciding exactly when to sell your home, take these things into consideration:
Sell your home before you buy a new home
Pro - You'll know exactly how much you have to spend on your new home because you'll already have the earnings from selling your present home.
Con - The home of your dreams may not be on the market right now and you could be forced to a move several times and or rent for some time. Buy a home before you sell your home.
Buy a home before you sell your home.
Pro - You'll have found your perfect home, and you can put your existing house up for sale.
Con - You won't know exactly what your net proceeds are until you sell your home. You also won't know how long it will take to sell your home. Make sure your agent assists you by pricing your home competitively. You'll also need to discuss with your agent the special financing options available to you if you wait to sell your home. Buy a home contingent upon the sale of your home.
Buy a home contingent upon the sale of your home.
Pro - In this scenario, you are not obligated to buy the house you've found unless you sell your house.
Con - You are never certain whether that dream home is really yours until your have an acceptable offer on your existing home AND it is closed. Also, you tend to lose your negotiating power as a buyer in this scenario.
Step 3 - Preparing To Sell
When first impressions count the most!
There's no need to spend a ton of money remodeling your home before you sell. A few key improvements could significantly increase your selling price and make for a faster home sale.
The general rule in real estate is that buyers seek the least expensive home in the best neighborhood they can afford. In terms of improvements, this means you want a home that fits in the neighborhood but is not over-improved. For example, if most homes in your neighborhood have three bedrooms, two baths and 2,500 sq. ft. of finished space, a property with five bedrooms, more baths and far more space would likely be priced much higher and likely be more difficult to sell.
Improvements should be made so that the property shows well, is consistent with the neighborhood and does not involve capital investments, the cost of which cannot be recovered from the sale. Furthermore, improvements should reflect community preferences.
Cosmetic improvements - paint, wallpaper and landscaping - help a home "show" better and often are good investments. Mechanical repairs - to ensure that all systems and appliances are in good working condition - are required to get a top price.
Ideally, you want to be sure that your property is competitive with other homes available in the community.
Step 4 - Closing the Deal
You've found the home of your dreams, but there's still a lot to be done before you can actually close on the house.
There are literally hundreds of points that you can negotiate in a real estate transaction, and it is important to feel confident about negotiating with potential sellers, or there may be a danger that a seller will talk you into agreeing to terms in a contract that are not in your best interest.
There are many potential points that can protect and enhance your purchase, including financing and home inspection contingencies. Most purchase contracts, even if they are standard documents, contain boilerplate language that may not fit your situation and may in fact be unfavorable to you. Your Coldwell Banker Schmidt Sales Associate will explain the language, so that you can make an educated decision in order to make the best possible purchase decision.
There are two types of contingencies found in most transactions - a financing contingency, which makes the purchase conditional on the buyers' ability to obtain a loan from a lender, and an inspection contingency, which allows the buyers to have professionals inspect the property to determine potential property issues prior to entering a binding contract to purchase. You could forfeit your Earnest Money deposit under certain circumstances, such as by terminating a purchase without legal reasons provided for in the contract. In order to protect your position, your Coldwell Banker Schmidt Sales Associate sees that the purchase contract contains provisions which protect your purchase interests, including a clear and marketable title, having the seller agree to maintain the property in its present condition until closing and making any agreed-upon repairs to the property.
Deciding what stays with the property is a negotiable item. If sellers want to take fixed items out of a house, they must specify so in the sales agreement. Appliances that are not built in such as washer, dryer, refrigerator, portable dishwasher, portable microwave, and freestanding stove are not automatically included in the real property, just as anything is else not permanently attached to the property.
Earnest Money Deposit
This is a deposit paid by the prospective buyer of real property as evidence of the good faith intention to complete the transaction. The amount can vary, depending on the value of the property, and it serves as a source of payment of damages to the seller if the buyer defaults. The amount of earnest money may also play into the negotiation strategy your Coldwell Banker Schmidt Sales Associate employs. Once the offer is mutually accepted, the earnest money is held in trust by either the listing agent firm or the selling agent firm and is credited toward the buyer's purchase price at closing. If closing fails to occur, the defaulting party may lose any claim they have to the earnest money deposit.
The Contract of Sale otherwise known as the Purchase and Sale Agreement is a legal document which binds the buyer to a set purchase price and binds the seller to convey the title. The contract also services as the initial directions to the escrow company to begin processing the transaction. When your Coldwell Banker Schmidt Sales Associate prepares your Purchase and Sale Agreement, make sure you are perfectly clear about the following details:
Who is paying the various expenses of the sale, including closing costs?
Sellers customarily pay for the real estate commission, title insurance, the State transfer tax, one-half of the closing fee, some document preparation, and their portion of the year's taxes and assessments. Buyers customarily pay for ½ of the closing fee, their portion of the year's taxes and assessments, and their loan fees. Occasionally sellers and buyers decide to share the expenses of buying and selling. This must be negotiated during the purchase offer time and often depends on local real estate market conditions, other terms of the purchase contract, and timing considerations.
Some lenders will allow a credit from the seller to the buyer for a portion of the buyer's nonrecurring closing costs. But they usually won't allow a credit that reduces the amount of the buyer's down payment, or that includes any of the buyer's recurring closing costs, such as fire insurance premiums, interest on the buyer's new loan, property mortgage insurance and property taxes. Lenders' policies vary on how large a credit for nonrecurring costs will be allowed.
What is the actual closing date?
The closing date is the stated in the contract. It is set in the original purchase agreement by agreement between the buyer and seller. It is always nice to set a closing date that leaves you enough time to prepare to move in, and which doesn't cost you unnecessary money. The date of closing can affect your closing costs (make sure to ask your lender for a good faith estimate).
What is the date of occupancy?
Many times the seller will request to remain in the property after closing, in part to assure that closing actually occurs without the seller having moved from the property. If that is the case, the seller actually becomes the tenant of the buyer after closing, so proper documentation is needed.
Home warranties are becoming more of a standard in homebuying and home selling transactions. The home seller may have already purchased a home warranty. If not, you should consider buying a policy yourself at closing. The Coldwell Banker Consumers Best Home Protection Plan will cover the cost for repairs or replacement to most mechanical systems or most major built-in appliance for one year from the date of closing for one year. Ask your Coldwell Banker Schmidt Sales Associate for details.
A professional building inspection will bring to light problems or repairs that are recommended to be made on the home. The Sellers’ limitation for any and all repairs is a point of negotiation at time of contract. In the event that the estimated cost of repairs exceeds this limitation, the buyer and seller enter into re-negotiations on how the repairs are to be addressed. Your Coldwell Banker Schmidt Sales Associate is skilled at helping you achieve your goals during this stressful phase.
An appraisal is an opinion of a property's monetary value usually completed at the request of the lender and for the lender's benefit. Appraisers consider numerous factors such as square footage, construction quality, design, floor plan, amenities, energy efficiency, lot size, topography, view and landscaping. Other issues taken into account are neighborhood quality and a property's proximity to transportation, shopping and schools.
Title/Escrow & Insurance
The final stage of a closing occurs with the transfer of title from one party to another. The commitment for title insurance is normally ordered when the real estate contract is agreed to by both buyer and seller. The policy of title insurance is sent to the buyer by title company agent after closing has occurred. The title or abstract company handles the escrow, which is a third party that transfers the money and documents (including title and deed) from the buying and selling parties. The escrow company prepares documents, draws up the closing statements, obtains necessary signatures, records documents and receives and disburses funds.
Now that you've found a home to purchase, you want to protect your investment with insurance. Most buyers get a comprehensive homeowner's insurance policy, which provides coverage for fire damage, water damage, personal possessions, personal liability, vandalism, theft, loss of use of the house, and many other coverages, including personal property and furniture. If you are financing your home purchase, your lender will require you to buy at least basic hazard insurance. Be sure to talk to your insurance representative fully about insurance options.
After The Closing
Once you've bought your home, make sure to keep your papers in order and know your rights as a homebuyer.
Of course, one of the best parts about buying a home is the tax break you receive from the government.
1. Interest on your mortgage
2. Property Taxes (but water or sewer assessment may not be)
3. Some Closing Costs (including home inspections, appraisals or loan application fees)
4. Loan points (deductible in the year that you pay them; in a refinance, the points are written off in increments over the term of the loan)
What Is Not Deductible?
1. Home improvement Expenses
2. Homeowner and Co-op dues
3. Insurance Expenses
Note: Be sure to consult with your tax counsel about the tax benefits of owning your home.
For free publications from the Internal Revenue Service, call 1-800-TAX-FORM and ask for the following publications:
521 "Moving Expenses"
541 "Tax Information on Partnerships"
551 "Basis of Assets"
555 "Federal Tax Information on Community Property"
590 "Individual Retirement Arrangements"
908 "Bankruptcy and Other Debt Cancellation"
936 "Home Mortgage Interest Deduction"
Make a File
File all closing and settlement papers, including escrow papers, title report and your purchase and sale agreement. Also file your loan documents, inspection reports and insurance information.