A Step by Step Overview of the Whole Confusing Home Selling Process
Here is a detailed description of everything that will happen between now and the time you have officially sold your home.
The first time I sold a home I was overwhelmed by the process. Even though I had been through the process when I bought it, selling was a whole different thing. It was 1994, years before I became an agent myself. The market had crashed and there was such a glut of co-ops on the market and so few buyers that the Realtors didn’t want to take on additional properties, so I was forced to sell it myself. It was an awful experience with lots of frustrations and uncertainty that I wouldn’t wish on anyone. That’s why when I became an agent, I was determined to explain how the process worked to my clients and remove as much of the uncertainty and frustration as I could.
Our first basic step is reviewing your plans and goals. This will determine everything else. The questions you should ask yourself (if you haven’t already) are:
1. When do you need to move?
2. You probably have a number in your head of what you want to sell your home for. What’s that based on?
3. How motivated are you?
4. What are your contingencies if you can’t sell within your required time frame?
5. What do expect from your Realtor?
The answers to these questions will determine how the home is priced and the amount of prep work that will need to be done. For example, if you want to sell quickly, then all the necessary repairs need to be made and it needs to be priced low and perfectly staged… and kept in showing condition at all times.
If, on the other hand, you can afford to keep it on the market for a while (i.e., longer than the average number of Days on Market for your area), we have more flexibility with the price and condition of the home.
There are several forms that I will have you sign before we can discuss marketing and staging. These forms are:
1. The Exclusive Right to Sell form: This is our Listing Agreement and will show the listing price, my commission and all the other specifics that I will review with you.
2. The Agency Disclosure form: This is the form that The New York Department of State requires that all buyers and sellers sign. It is designed to protect the consumers and explains that I will be representing you in this transaction.
3. The Property Condition Disclosure form: When you meet with your attorney (after we have an accepted offer with a buyer) he will give you the option of either filling out a questionnaire that requires you disclose the condition of the property. You can either fill out the form or pay a $500 fee to waive it. Your attorney will advise you to pay the fee. I am simply required to tell you about the form. (This form is not required for condos and co-ops.)
4. Lead Paint Disclosure form: This form is required when selling a property that was built before 1978. If you have knowledge of lead paint in your home, you are required to disclose it.
My Marketing Plan
I spend a lot of time and effort on Marketing your home because I believe if I can get a buyer to instantly fall in love with a home, everything else is easy.How many times have you heard a home owner say, “We fell in love with the house as soon as we walked in.” The negotiations, the inspection and the closing – all the things that are normally fraught with contention – smooth away when the buyer is motivated by love.
This is the most important part of the marketing plan. We will look at the “comps;” similar houses in the neighborhood that have sold in the last six to 12 months. These are the successes. We will also look at the “expires;” houses that didn’t sell before the Listing Agreement expired. These are the failures. We will learn from the failures and model ourselves after the successes. We will also look at the current inventory because this is our competition.
Additionally, we will look at The Average Number of Days on Market. That number along with your motivation will help determine the price. For example, let’s say The Average Number of Days on Market is 150 for houses in your area. And the comps suggest that your house should be listed at $500,000. If you’re very motivated to move quickly; in less than 150 days, then you would price the house at around $450,000 – $475,000. If, on the other hand, you’re not motivated and can afford to wait for more than 150 days, then you can price it a little higher; say $525,000 – $550,000.
Even if your home as been professionally decorated, it doesn’t mean it’s “market-ready.” What appeals to you won’t appeal to buyers. In this market, most buyers want four things:
It takes about a week between the time I take the photos and the time the house officially goes on the market. That gives me enough time to do the marketing and the Virtual Tour. Once it goes live, I will send you the listing and you can have me make any changes to it that you want. Unfortunately, with the current MLS system, we don’t have the capability of emailing a listing that isn’t live.
“Going Live” means it will be listed on MLS; the Multiple Listing Service. MLS is a cooperative database that allows agents to share the information about their listings with other licensed Realtors who are members of the service. There are 12,000 agents who are members of MLS in Westchester and the surrounding counties. They are our sales force. Each day they review all the new listings that have come on the market that match their buyers’ criteria. If they have a possible buyer for your home, they will send it to their buyer and if the buyer likes what he sees, the agent will schedule a showing.
The Showing Process
Once we are live, the agents will be able to see it on MLS and since MLS feeds the information to literally hundreds of real estate sites, buyers will be able to see it too. So you could be getting requests for showings in as little as a four hours after it goes live. I use a showing service called Centralized Showing Service or CSS. The buyer’s agent will call CSS and schedule a showing. CSS will call you and say, “___ (the name of the agent) from ___ (the name of the agency and she would like to show your place from “___ to ___” They will usually give an hour window; like from 12 – 1. That means they can show up anywhere from a little before 12 to 1 and stay up to ½ hour. So, you should make arrangements to have the property clean and leave by 11:45. Just to play safe, don’t return until around 1:30.
If you’ve ever gone house hunting yourself, you know how hard it is to keep to a schedule. You also know how uncomfortable it is when the seller is home. That’s why it’s a good idea for you to not be home during the showings.
The agent will leave her business card to show that she was there. But sometimes the agents forget. They also forget sometimes to close lights, close blinds, put shower curtains back to the position they found them, etc. This sort of stuff comes with the territory.
CSS will be sending you an email confirmation and they will also send an email to the agent requesting feedback. Not all agents are considerate or professional enough to send feedback (or helpful feedback). But if they do send feedback you and I will be getting emails with it.
How to get ready for a Showing
Here is a simple checklist of things to do before a showing; or better yet, if you are getting a lot of showings, things to do every morning:
- If you have an answering machine, turn down the volume.
- Open blinds/shades/curtains and let the sun in.
- If there are hard to reach lights, turn them on. If a room is dark or has dark corners, turn on the lights.
- Put away all valuables.
- Let me repeat, put away all valuables.
- Spray air freshener if needed.
- Put away the dish drain board if you have one.
- Put away bills and paperwork and other personal items.
- Put out the flyers and marketing materials I gave you.
- Throw out the kitchen trash and empty wastepaper baskets.
I will call you as soon as we get an offer. An offer will include:
- Down payment
- Closing date
But negotiating is more than just coming to an agreement on the price. We also will look at when the buyer wants to take possession, how he is financing the purchase and if he needs to sell a property in order to move. If the other terms of the offer are favorable, then it might make sense to accept a lower price.
Here’s my favorite illustration of this concept: Have you ever watched those cooking shows like Chopped or Iron Chef? Imagine two chefs in a competition for a grand prize of $10,000. They are making different dishes but they both need a lemon. There’s only one lemon left in the kitchen. What do they do? Cut the lemon in half?
What if one chef needs the lemon for the lemon juice and the other needs it for the lemon zest? Well they can divide the lemon so that each chef gets what he wants, right?
That’s what we will try to accomplish in the negotiation process. If you want a fast closing and the buyer can accommodate you, then you might accept a lower price in return, right?
Important: An offer is not binding. We can still show your house up until you sign the contract. It’s a good idea, in this market, to have a second buyer as a back-up in case the first deal doesn’t go through. But if you don’t want to continue to show your home, that’s fine; I will just need something in writing from you to confirm it.
It takes a few days to negotiate back and forth. During this time it’s a good idea to call your attorney to give him a “heads up” that you are working towards a deal. If you don’t have a real estate lawyer (and I emphasize that you need a lawyer who specializes in real estate) I will be happy to recommend one.
Once we have an accepted offer, the buyer will have your home inspected to determine if there are any serious structural defects or necessary repairs. The inspector’s report will also detail maintenance items that the buyer should be aware of once they purchase the property. If you believe your house has any issues, you might want to have it inspected before it goes on the market. That way we will be prepared to address any issues the buyer brings up.
Depending on the results of the inspection, you may have to have repairs done, or allow a credit at the closing so that the buyer can fix the problems.
Going to Contract
Please note: what happens from here on in is typical of a New York State transaction. The rest of the country operates differently.
I will issue a Memo of Understanding that details the terms of the agreement and everything that is included in the deal. It will also list any contingencies (things that have to happen in order for the deal to close). Your attorney will use this document to draw up the contract. He will send it to the buyer’s attorney and the buyer will sign it and put down a deposit. This is usually 10% of the purchase price. If the buyer decides to back out of the deal, you get to keep the deposit. If they aren’t able to get a mortgage and the deal is contingent on the mortgage, then they get the deposit back.
Then you will meet with your attorney to sign the contract. The sooner all of this happens, the sooner the buyer can submit the fully executed contract to their mortgage lender along with his mortgage application.
At his point, I will take the house off the market. It will show on MLS as being in contract. I will also inform CSS that there are no more showings.
If the buyers are getting a mortgage, their bank will arrange for an appraiser do a formal appraisal to confirm that the property is worth at least the sale price. Even if a buyer is willing to pay your agreed-upon price, that doesn’t mean that the bank will lend the money. Why? Because if the buyer defaults on the loan, the bank will be left with a property that is not worth what they have paid for it.
The appraisal takes anywhere from 10 to 30 minutes. The buyer’s agent and I will be there to supply supporting comps and recent sales to justify the sale price.
It takes the appraiser a couple of days to issue and submit his report to the bank. So, we should know fairly quickly if the property has appraised at or below the sale price.
Then it takes two to four weeks for the bank to review the application. During this time, you can contact movers to get estimates. We don’t have a closing date yet, but the end is in sight.
Meanwhile, your lawyer will order a Title Search to make sure that you are the true owner of the property and that there are no other claims on it.
Once the bank has everything they need, and the underwriter has reviewed and approved your application, they will issue a Commitment Letter. Sometimes the Commitment Letter will include a list of additional documents that the buyer has to supply or update. Once that’s done, the bank will be ready to close and the lawyers will schedule a closing date. I’m usually the last one to know when that date is, so if you could keep me in the loop, I would appreciate it. You can now also schedule the movers.
The “Talk Through”
In addition to the “Walk Through” which will happen right before the closing, if I’m selling a big, complicated house, I like to schedule a “Talk Through” with you and the buyers. It’s your chance to explain how things work; any idiosyncrasies that the house has that the buyer should know about.
The closing is the meeting where all the paperwork is signed and the property is officially handed over to the buyer. So, you have to be completely moved out by then. After you move out please arrange for your home to be cleaned and make sure everything has been removed. According to the contract the home must be “broom clean.”
The day before or the morning of the closing the buyer’s agent will arrange for a Walk Through of the house. They will go through the house to make sure everything works. Believe me, if they see that the place is clean, the closing will go that much smoother.
The closing is usually the bank’s lawyer’s office and takes anywhere from 45 minutes to two hours. There will be a lot of people at the closing: you, your lawyer, me, the buyer, the buyer’s lawyer, the buyer’s agent, the bank’s lawyer and the title company. You’ll be signing a lot of papers that your lawyer will review with you. Here’s a secret: it’s OK for the seller to get there a little late. The buyer does most of the paper signing. The seller doesn’t have as much to do and the whole process can start without you.
Bring your photo ID and if the closing is in White Plains or any downtown area of a city, bring quarters for the parking meter.
Something that’s good to know, if you can’t be at the closing you can get a Power of Attorney so that you can sign the papers in advance your lawyer or someone you designate can represent you at the closing.
At the end of the closing, you will give the keys to the new owner plus the garage door remote and any other keys you have (mailbox, shed, clubhouse, etc.). Your attorney will send you the Closing Documents. Be sure to keep them in a safe place.
We will take a moment to say “Hooray” but just a moment, because chances are, you’ll have to run back to your new place and finish unpacking. I’ll be around to help in any way I can with resources and advice even after you move in. So, there it is in a nutshell (well a rather big nutshell). There will be more details that will pop up along the way, of course, but this covers the basics. If you have questions about the process please feel free to ask them at any time. If you know of anyone else who is planning to move, please feel free to pass a link to this page on to them and let them know I would be happy to help.