Selling your home can be just as rewarding as buying it, but sometimes it can be twice as stressful. I believe your experience completely depends on your expectations, and in turn, the quality of your realtor. The most contentious transactions I've seen, both first and second hand, were situations where the seller over-valued their home and their agent failed to hedge expectations. I get it, its hard to defend your opinion in the face of terror, which for us, is losing a listing or a buyer, but I think its necessary given the alternative. I've lost two potential listings so far and I know it was because of my proposed listing price. I completely understand why some sellers think their place is worth more then it is; most have lived there for several years and have put in the sweat equity of keeping the place up. All of that being said, if you even whisper the term, 'new listing' within two miles of an agent, your phone will instantly starting vibrating.
Whether you want to sell your house so you can upgrade to another, move out of the area, capitalize on an investment, or downsize after retirement, the same first steps must be made; finding a real estate agent to list your property. Some might pause after reading that and think, "Well, I could always sell it myself" which could work out, but it could also lose you the chance to sell your house at or above market value. One of the biggest issues that FSBO's (For Sale By Owner) run into, is a lack of exposure on their listings, which can destroy the whole sales plan. If you don't capture the markets attention when your listing first hits the market, your losing out on a potential multiple offer bidding war, resulting in a higher sales price. Even more, after your listing is no longer new to the market, it will be overlooked because of the never ending stream of new listings that will overshadow it. All licensed Realtors (members of the National Association of Realtors) have access to and use MLS, or Multiple Listing Service. This database is how all Realtors post and share their listings with other Realtors in the area. This complex omission is just one example of why I think FSBO's are a bad idea, another would be the massive amount of liability you would encumber by fabricating and relying on your own contracts and paperwork. Not to mention orchestrating showing(s) access, offer negotiation, title and escrow document delivery and execution, all on top of buyer verification to ensure you don't waist 45 days on an unqualified buyer. A quality real estate agent serves as a solid foundation, upon which you can build your dreams of selling your home above market value in a timely fashion. Of course these services do come with a cost, which brings me to the second rubbing point when deciding to sell.
In California it is standard practice for the seller to pay a 6% commission fee at the close of escrow. For example, if your house sells for $300,000 then $18,000 would be deducted from your proceeds, $9,000 would be sent to the listing agent's brokerage and the other $9,000 would be sent to buying agent's brokerage. The brokerage would then take their cut (various by brokerage) and the rest would be given to the agent. Another cost to keep in mind is the escrow closing costs, which are influenced by a few different factors including sales price, but tend to be around $800-$1,200 for sales that split escrow fees 50/50 in Humboldt County. These numbers should be factored in when preparing to sell so that the expectations of your profits are realistic. I would love for you to sell your property with me! In the off chance you want to go a different route, the best way to find a great agent is to do some online research and ask your family and friends if they have any bulletproof recommendations. Once you have a list of a few agents, give them a call and feel them out. If their personality meshes well with yours, ask them to come by for a listing presentation. During the presentation you will receive a Comparative Market Analysis, also know as a CMA. The CMA would show the list and sales prices for similar sized home within your approximate neighborhood. These figures are then adjusted to reflect the specifications of your home resulting in a purposed list price. You'd then discuss the value and care you would receive if you did in fact list with that agent, do not hesitate to ask questions, getting prospected agents away from their script will help you see how they adapt in the face of change. Once you've seen all the presentations and have decided which agent you want to use, its time to make a phone call that will be the highlight of someones (mine) week!
Now that you've chosen an agent, its time for me (or them, I guess) to get to work. First thing is to iron out the listing agreement which would include: list price, length of listing, broker compensation, and more. Once you have signed off on that, you are technically ready to list your property, but there are a few things to do first to guarantee your listing starts on the right foot. First I would take photos, then schedule the listing to hit the market on a Thursday so that we can build momentum through the weekend leading to our open house that Sunday. After finalizing the schedule I would create all the marketing materials for both the listing and the the open house, building up our exposure which will hopefully peak at the end of the weekend, resulting in multiple offers. During this process there are a number of cost minimal things you can do around the house to prepare for your sale: de-clutter every room, detail clean entire house, mow lawn and trim landscaping, have carpets cleaned, fresh coat of paint, etc. There's also a bit of paperwork to be filled out regarding your property. This paperwork consists of several disclosure, some of which gives the buyer(s) detailed information about the house, while others disclose information pertaining to the transaction.
The day the listing goes live I would put up a 'For Sale' in the yard and one or two other directional signs around the neighborhood. I would also hang a lockbox at the property so that other licensed Realtors are able to show the property to their clients. After the listing hits the market, I would ensure that it correctly populates over to all public real estate sites such as: Realtor, Zillow, Trulia, Redfin and Homes. The listing would also be promoted on Craigslist, Facebook and Instagram as well as locally targeted internet ads. That weekend we would have a handful of showings culminating in our open house that Sunday afternoon. This sequence of events is an example of your average residential listing, I would adjust our plan to fit around your preferences and more importantly your comfort zone. If you prefer to have showings during certain hours or have specific instructions regarding pets, or if you simply don't want to have an open house, all of these modifications can be made. Additionally, if you know that your house has some deferred maintenance that you don't want to negotiate around, we can just disclose that the house is for sale 'As-Is'. This designation means that you are not willing to negotiate for repairs after the original purchase price has been agreed upon. The buyers would still have the right to cancel the sale or even ask for a price reduction during the inspection period, but at the very least it would help to deflate the buyers expectations. In the end, my goal is make sure your real estate journey is enjoyable while successfully closing our transaction. When we receive an offer that we like, I would first verify that the buyers pre-approval (or proof of funds) was legitimate. We would then begin negotiations until we reached an agreement with the buyer(s). Next the executed contract would be sent to our escrow officer so they can open up our file and officially start our escrow.
Getting your property onto the market is a great first step, while getting it into escrow is another accomplishment all together, but all of that effort means nothing if your unable to close your escrow. There are a few pinch points during an escrow where things tend to come loose at the seams, if you can prepare for those, you'll be one step closer to the finish line.
Once our escrow has been opened, the buyers agent would schedule any and all inspections and would then report back to us with the inspection schedule so that we can prepare accordingly. After the inspections have been completed, we would receive a copy of the reports from the buyers agent so all parties are on the same page. We would then prepare for our first pinch point; a buyers Request for Repair, which occurs in 90% of escrows. Once that has been received we would have a meeting of the minds to decide the best course of action. We could accept the terms of the request, counter them, or reject them all together. If we reject them, the buyers could either cancel the escrow, re-submit a request, or continue forward with the escrow. We would need to factor in our initial offer when formulating our response, we wouldn't want to traverse any burned bridges left in the wake of our prior negotiations. Request for Repairs can be carried out using three different methods: Reduction of Purchase Price, Close of Escrow Credit, or Repairs During Escrow. Most commonly used (and self explanatory) is a Reduction of Purchase Price, followed by Close of Escrow Credit, which is similar to a price reduction, but it affects the amount of cash due at the close of escrow. Last, and in my opinion least, is Repair During Escrow. This particular method takes significantly more time to complete resulting in an extended escrow, not to mention all the new moving parts like scheduling, billing and verification of work, all of which presents new opportunities for pitfalls and delays. Once we have landed upon an agreement, we would notify our escrow officer of any changes and game plan for our next pinch point, the appraisal.
For the buyers lender to fund their loan, they must first ensure that the property is worth the amount being paid for it. To do this, an impartial third party (appraiser) is brought in to evaluate the property, and then compare it to recently sold homes in the surrounding neighborhoods, resulting in an appraised value. If this value is equal to, or greater then the purchase price, the escrow rolls on. If the appraisers value is lower then the purchase price, we would have two options, cancel the sale and relist the property, or we agree to sell at the reduced appraised value. The icing on the escrow-cancelling-cake, is that, in theory, any subsequent appraisals would all come in at the original appraised value. Meaning, if you cancel your escrow because of a low appraisal, your only hope is to receive a cash offer next time around. In my short experience the majority of my escrows, when lending was involved, had appraisals that matched our agreed purchase price. In most cases the appraisal will come in on target, as long as there aren't any glaring irregularities or significant needed repairs. After we clear that hurdle only one remains, closing our escrow!
Before our transaction can be finalized and recorded, there are a few crucial steps that must be taken first. The most troublesome usually being the final loan verification and the close of escrow time frame. I've witnessed a few different escrows where the selling agent never verified the buyers pre-approval letter, resulting in a cancelled sale 30-45 days later. More commonly, a buyers agent might request an escrow extension so that the lender has more time to gather and review the buyers financial documents. The transactions' initial contracted closing date can waiver if you let it, but if you need it to remain concrete, it will. The lion's share of buyers and sellers are all trying to line up concurring close dates, along with moving truck rentals and utility activation, so its usually in everyone's best interest to close on time. Once all parties are on the same closing page, the buyer and seller would be contacted by our escrow officer to sign the closing documents. If the buyer or seller is out of the area then the documents can be sent overnight to them, signed where necessary, then sent back. Once the close of escrow signing session has been scheduled, we would finalize any and all cleaning and moving of personal property to ensure that the property is ready for the buyers final verification walk through. Once the walk through is complete and both the buyer and seller execute their closing documents, notice will be given to the lender to fund the loan. After the loan has been funded, the sale will be recorded and the keys can be given to the buyer. The following business day the proceeds from the sale would deposit into your chosen account culminating in the successful closing of our transaction. A congratulations would be in order, along with answering any remaining questions and ensuring you were satisfied with our experience.
Every transaction is different, so the generic examples used above may not translate, but that is what makes the job so interesting for me. Every escrow I go through presents a unique situation that I can learn from, and then in turn, I am able to apply it in practice. I would love the opportunity to show you my passion for what I do; if you have questions about the market or would like a free CMA, I'm always available!