THIS IS A VERY CONCISE OVERVIEW OF THE HOME SELLING PROCESS USING A PASSPORT REALTY MLS FLAT PRICE LISTING
IF YOU HAVE NEVER SOLD A PROPERTY, IT IS HIGHLY RECOMENDED THAT YOU READ THROUGH THIS INFORMATION A FEW TIMES TO BECOME COMPLETELY FAMILIAR WITH THE PROCESS.
The process by which real estate transactions are conducted has been described as "100 years of history, unhampered by progress"
When was the last time you used a Travel Agent to purchase an airline ticket or reserve a hotel room? How many homes have newspapers delivered to the driveway each day? Just like many other industries, the use of internet based technologies has had an enormous impact on how real estate transactions are conducted.
If your house isn’t on the Internet, you are missing out on the majority of Buyers looking for homes to purchase.
According to the National Association of Realtors, over 92% of all home buyers now use the internet to search for homes and 93% log onto Realtor.com to identify houses they are interested in buying BEFORE they even call a real estate agent.
A FLAT PRICE MLS LISTING will allow you to save thousands of dollars in real estate broker fees and sell your home quickly. With a little bit of study and planning, you will realize that selling a home is not as complicated as you thought.
While the process is not difficult, it is still a little more work than just hiring a Full Commission Broker to handle the sale. The use of a Flat Price MLS Listing will require you to do some of work that a agent would normally do.
The payoff is in the money! In exchange for a little work, a you may end up saving 6% of the sales price. 6% of the average area sale of $250,000 would put $15,000 of extra money in your pocket.
The payoff is in the time! Paying less fees to sell your home will allow you to price your home more aggressively and attract more potential Buyers. This will reduce the time it takes to sell the property.
This guide will provide some tips you can use to make the transactions move smoothly.
TIP 1 PREPARATION
SELL THE SIZZLE, NOT THE STEAK. Of course a potential Buyer will want to ensure that your house has no defects or problems, but, you will never get to the inspections if the house does not appeal to them at first view. There have been many cases where a Buyer doesn't get any closer than the street, because of the lack of "curb appeal" of the house.
Buyers are attracted to houses that are well kept, bright and clean. Take some time to do the work yourself or hire some professional help.
The exterior should have a well groomed yard. Cut grass and edged sidewalks are a must. Trimmed trees and bushes and mulched planting areas with some flowering plants go a long way to making a good first impression. Clean windows and screens, repaint the front door, repair broken fence panels and remove old or broken swing sets.
On the interior, remove clutter from counters and floors, rent a rug cleaner and shampoo the carpets, replace light bulbs, clean ceiling fan blades, and arrange clothing in closets. Pay particular attention to how a house smells. Pet odors and dirty laundry should be elimated. Light air fresheners from candles or sprays can be pleasant, however don't overdo it to make the Buyer suspect you're trying to mask something.
TIP 2 PRICING
There are many sources that can be used to determine the best price to offer your house for sale. The price should be based on current market pricing, rather than your opinion of what you would like to be paid.
Passport Realty provides a Comparable Market Analysis Report (CMA) as a feature of the Flat Price MLS Listing service. This CMA is the same report used by a Listing Agent to recommend a price to list your home on the MLS. The CMA is provided as part of the $299 package fee. There is no additional charge for it.
The use of the County Property Appraiser website provides a great source of information. The site can display the location of your house within your area of town or subdivision. Several layers can be added to the map to display the actual selling price of surrounding properties for the past year. This will give you a good idea of the past sales. Commercial sites such as Realtor.com, Zillow and Trulia can be used to display properties in your area currently up for sale. Keep in mind that the projected sales values are no way near as accurate as actual sales dollars values recorded on the MLS and Property Appraiser sites.
Overpricing your house can hurt on both the front end and the back end of a transaction. On the front end many Buyers will not consider a house they feel is greatly overpriced. This eliminates many potential buyers. On the back end, a Buyers financing will be greatly affected if an appraisal value of your home does not come back at contract purchase price.
When determining the asking price it also helps to calculate the price per square foot of your house and compare it to other comprable houses in your area.
Remember that features of your home that you might consider upgrades, may not be. For example, your might think that painting your house a special custom color that cost much more than a standard color might allow you ask more for your house, but, Buyers expect that a house will be painted and may hate the color. Another feature that can be viewed differently by Buyers is a pool. Some Buyer may only consider houses with pools, while others may not consider them at all.
The asking price ahould be set 3-5% above the market price to allow room for negotiationand and should be set just under a whole number, such as $169,900 rather than $170,000.
TIP 3 TITLE AGENCY
Over 90% of Buyers are represented by a Buyers Agent. This might seem to put the Seller using a Flat Price MLS Listing at a disadvantage.
Even though it’s an additional expense, it may be wise to hire an Attorney who will protect your interests throughout the entire transaction. An experienced real estate attorney can help you evaluate complicated offers (those with a variety of conditions), act as an escrow agent to hold the down payment, evaluate complex mortgages and/or leases with options to buy, review contracts and handle your home’s closing process. They can tell you what things, by law, you must disclose to buyers prior to a sale and can also help you avoid inadvertently discriminating against any potential buyers.
Most of the documents used throughout the process are written with standard verbiage. A Buyers Agent will most likely present an offer on a standard North East Florida Association of Realtor (NEFAR) contract that has been thoroughly vetted thousands of times. This is not to say that some special offer conditions may sometimes present themselves, but most transactions are very routine.
In Florida, Title Agencies can handle all the administrative aspects of the transaction and have in-house legal departments that can assist you with legal issues that may arise. These services are usually offered at a substantially lower fee than through a Real Estate Attorney.
Unless you’re significantly experienced in the home selling process, having a Title Agency or Real Estate Lawyer at your side provides peace-of-mind. You know you’ve got someone looking out for your interests, not just the Buyers.
TIP 4 MARKETING
Exposure, exposure, exposure. That’s how sellers sell their home fast.
While you are allowed a 2,500 character description of your house on Realtor.com, your advertising copy should be thorough yet short, simple and to-the-point. Long, flowery prose will not make your house sound more appealing. It will simply make it harder for the home buyer to read. Make sure to provide the critical facts buyers are looking for such as the house’s number of bathrooms, a re-modeled kitchen, etc.
Most home buyers quickly scan ads, so it is important that your house stands out. For example, you may want to add a theme-line such as “Priced Below Market” or “Great Schools.” Stay away from industry jargon and use language that makes home buyers comfortable.
The staff at Passport Realty will write a great house description to appear on the MLS listing. This description will then be used by realtor.com, Zillow, Trulia and other websites in their listing. This service is included in the Flat Price MLS Lisitng fee of $299.
Home Photos Yes! A picture is worth a thousand words. The photos used in the listings are the first impression given to the Buyer. A Buyer will never purchase you home without first touring it. They will never tour it without first becoming interested by viewing the pictures. Professional photos of a house can make or break the Buyers interest. The average cost of a real estate photo shoot is $150.
Prior to a photo shoot, be sure that the home’s yard/driveway is uncluttered. Remove bikes, garbage cans and parked cars. The same applies for interior shots. People are looking to buy your house, not your possessions. Think of furniture as props and the room a stage. Move things around if you have to. Clear extra items off the counters, make the beds and straighten out the closet.
Passport realty will have a professional photographer come to your house and take pictures that are garaunteed to WOW! This service is included in the Flat Price MLS Lisitng fee of $299.
Lawn signs are one the most important marketing tools for home sellers. They attract attention to your home. Professionally produced signs telegraph to home buyers a “quality” image of your house. Directional signs also help drive buyers to your property, especially if you do not live on a busy street.
Passport Realty will provide a professional printed lawn sign that allows you to enter your phone number and MLS Listing number. This service is included in the Flat Price MLS Lisitng fee of $299.
Home Information Sheets
It is a good idea to create an information sheet (with a photo) and all the details about your home to give potential Buyers something to take with them after a tour. Keep in mind that Buyers will view multiple houses the same day and will generally be very confused as to what they remember.
Passport Realty will provide a professional produced, color layout and color photo Information Sheet for you to hand out, or, place in an info tube on the lawn sign. This service is included in the Flat Price MLS Lisitng fee of $299.
Open houses are sometimes a good way to attract buyers to your home. Typically, Real Estate Agents conduct open houses for two reasons - 1. their clients expect them and 2. they are a good way to attract buyers, not just for the open house but for all houses for sale in the Real Estate Agent’s area (yes, your competition). The fact is that very few houses sell due to a open house itself.
A liting on the MLS, or Multiple Listing Service, is absolutely imperative. It will market your home specifically to real estate agents who may know of buyers seeking a property like yours ,and, it is the pathway to multiple internet search sites such as Realtor.com, Zillow and Trulia. If a real estate agent brings you a buyer after seeing your home on the MLS, you must usually pay that agent a 2.5% to 3% commission.
You are your home’s best salesman
As every salesman knows, to be effective you have to really know your product. And who knows your home better than you? Certainly not a real estate agent, who, in all likelihood, has spent only a few moments in your house before showing it to prospective buyers.
Sell your neighborhood as well as your house. Show enthusiasm, talk about the area, the shopping, the restaurants, the parks and the schools, but, don’t get caught-up talking too much about how “your daughter spent the best years of her life in this very room.”
TIP 5 GETTING THE CONTRACT
When a home buyer makes an offer it is presented directly to you from the buyer or their agent.
Sellers have an Contract Acceptance Period, which is usually two days, to accept, reject or counter the offer. There are several aspects of the contract that should be reviewed before acceptance.
Purchase price isn’t everything. Carefully consider the purchase contract’s other terms and conditions. Too many contingencies can leave loopholes and cause a deal to collapse. Especially avoid contingencies that favor the Buyer, such as linking the escrow closing date to the buyer’s sale of their current home. If the buyer insists on such terms, include a so-called kick-out clause in the contract, that will allow you to consider other offers if the buyer isn’t able to sell within a certain period of time.
Once your offer is accepted, it becomes a binding contract, so be sure to include the necessary contingencies. Contingencies are clauses that, if not met, will render the contract null and void.
Make sure the contract specifies a specific length of time for the Buyer to perform inspections. Also ensure there is a contigency for cancelling the contract if the inspection turns up major repair problems that cannot be resolved with the Buyer.
Make sure the contract specifies a specific length of time for the Buyer to apply for and secure financing. Ensure there is a contingency for cancelling the contract if the Buyer is not approved for a mortgage within a specific period of time.
An Earnest Money Deposit proves that the Buyers are serious. After all, the Buyer is taking your home off the market for a specified period of time. Earnest money is typically between 1-5% of the purchase price, but less is possible. The money will be held in escrow by an attorney or title company.
Assess your buyer’s financial qualifications
Is the buyer pre-approved? How much of a loan is the buyer seeking? Unless you are in an active market, lenders tend to shy away from underwriting a deal in which the purchase price is higher than the nearest comparable sale and the buyer is putting less than 10% down. If this is the case, your buyer may not be able to obtain financing.
Know the home selling market
How you judge an offer also can depend on market conditions. If the selling market is slow, you may feel vulnerable, especially if circumstances are pressing you to sell. Make sure any offer you accept does not keep you in escrow longer than 30 days. In a hot market where multiple offers are likely, be wary of countering more than one offer at a time (you could end up in legal trouble if two buyers both accept your counter offer). Also be wary of offers that promise more money but contain poor contract terms such as long escrow and multiple contingencies.
If you feel the Buyers offer is insufficient, make a counter offer. Rarely is a first offer the Buyer’s absolute highest price they are willing to pay. Negotiating is part of the home selling process.
Again, if you are not using an agent, your title agency or lawyer should review the details of all offers.
TIP 6 INSPECTIONS
All standard real estate contracts specify a period of time during which the Buyer has the right to inspect your home for defects. The standard length of time is 10 days after signing the contract.
Normally, there are 3 inspections perform:
Home Inspection - a general inspection of the entire house structure and the 4 main systems: Roof, Electric, Plumbing and Heating and Air Conditioning (HVAC)
Wood Destroying Organism (WDO) - used to identify damage caused by organisms that cause structural damage such as termites.
Septic System and Well - performed on houses that are not connected to central water and sewer systems.
The Buyers Agent will notify you of the date and time of the inspection.
Make sure the contract indicates who pays for the inspection and whether you, or the seller, are responsible for any necessary work. The contract will also allow you to designate a maximum dollar value you are willing to spend for repairs.
The contract should also include a contingency to cancel the contract in case the inspection reveals any repairs that cannot be resolved with the Buyer.
Typical the inspections will include:
Plumbing – checks for leaks, dripping faucets and toilet tank leaks
Electrical – checks that the circuit breaker panel and all circuits are safe
Exterior – checks for foundation settling, wall cracks, paint peeling
Interior – signs of leaks in walls or ceilings, structure and general condition
The Roof – checks for age, leaks or damage
Windows and Doors - checks for good condition and seals
Insulation – in all living spaces
Appliances – checks that they work
HVAC - Heating and Air Conditioning - checks age and function of unit and ducting
Radon Gas – checks for the presence of an odorless and colorless gas that is hazaedous
Lead-Based Paint – checks for these products in older homes
Asbestos – checks for presence in homes built in the early 1970s and before
If you own a older house, or if you have only fixed things when they broke, you might want to pay an inspector to do a pre-listing inspection for you. This is the same as a Home Inspection and will point out defects that might dissuade a Buyer.
This is particularly important if:
- the house is older than 1980
- the roof is more than 15 years old
- the HVAC system is more than 10 years old
- you suspect the plumbing is copper, galvanized pipe or polybutalene
- you suspect the electrical system might have a Stab-Loc Breaker Panel or aluminum wiring
You can educate yourself on the problems associated with these particular systems with a simple internet search.
Once the Buyer receives the inspection reports, they will compile a list of items they want you to repair or replace. This is sent to you on a standardized form called a Repair/Replacement/Treatment Agreement (RRTA). The RRTA lists the nature of the defect and what the Buyer would like you to do to remedy it.
The form comes to you as one long list but you can address each item on the list idividually.
There are 3 options for each item listed.
- Accept to repair/replace the item as requested
- Decline to repair/replace the item as requested
- Agree to an alternative remedy than what is requested by the Buyer
In deciding how to respond, keep in mind that there's a difference between repairing a defect, and upgrading an item. For example, if you have a bath vanity with a broken door hinge, repairing or replacing the hinge is different than installing a brand new vanity.
The RRTA is signed and returned to the Buyer who can either accept or decline your decisions. Keep in mind that many sales have been cancelled because of a dispute over RRTA requests. It's best to keep and open mind and be ready to negotiate to a compromise.
TIP 7 FINANCING
Most Buyers will submit a contract with a contingency for them to obtain a loan from a mortgage lender for the purchase price.
The Mortgage Lender will have certain requirements that must be met before they committed to giving the Buyer a mortgage loan.
These usually include the following:
- an Appraisal of the value your home to make sure they are not loaning more than the house is worth
- a Survey to make sure that the property boundaries are properly laid out
- a Title Search to determine if there are any liens against your property.
The contract will specify who paids for these reports. Generally, the Buyer will pay for the Appraisal and Title Search and the Seller will provide a copy of an existing survey or pay to have a new survey performed.
When these reports are completed to the satifaction of the Mortgage Lender, they will issue a commitment to provide a loan at closing
Some Buyer's may submit an offer that they will fulfill by paying cash at closing. In this case, the requirements are up to the buyer, but they generally require all 3 reports discussed.
TIP 8 CLOSING
Closings usually occur 30 – 45 days after you have signed the sales contract.
The day of the closing, the Buyer will do a “walk through” of the property to make sure all agreed repairs are completed and that the home is in the same condition as when the buyer made their offer. If problems arise at this point, the closing can be delayed or still take place, with funds held in escrow to remedy the problem.
There are a few items that should be completed just before closing:
Utilities – Water, gas and electric meters will be read on the day of closing and the Seller will owe for the utility usage up until that day. You should notify the utility company that the Buyer is going to transfer the account to their name.
Service Contracts – If the Buyers are taking over any service contracts from you, they will pay you for the unused portion of those contracts that have been pre-paid. These could include pest control, pool and/or lawn services and home maintenance contracts.
Home Warranty – It’s highly recommended that the Buyer purchases a home warranty. This will cover the repair or replacement costs in case items such as appliances break down after you purchase the home. The contract will specify who is going top pay for the policy.
At the closing, all monies will be collected, any existing loans or liens will be paid, the deed will be transferred, and insurance will be issued insuring a free and clear title.
The Seller will receive the proceeds of their home in a cashiers check or by wire transfer directly to their bank account.