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Sellers guide Should I Sell it Myself? Selling Your House Takes More Than a "For Sale" Sign in the Yard and an Ad in the Paper One of the most common question sellers ask is "Why should I use an agent to sell my house when I can sell it myself?" The answer is that selling your house takes more than just putting a "For Sale" sign on the lawn and an ad in the paper. It takes experience and training to learn how to correctly price a house to sell, effectively market a house to bring top dollar and to anticipate and solve the many problems that can arise during the house selling process. In addition, since it doesn't cost anything for a buyer to work with an agent, the buyers coming directly to you may be looking to buy your house at a lower price because you are saving the brokerage fee. If your goal is to sell your house for the best price in the least amount of time without a lot of stress, then you need a real estate agent. Before you select a sales agent to sell your house it's important to understand the role of your agent. Why an Agent? A real estate agent, also called a sales associate, is an individual who has studied real estate, passed a state licensing examination and has been granted a license by the state. He or she is retained by you for a single purpose: to find a buyer for your property. The agent works for and represents a specific licensed real estate brokerage company owned and managed by a real estate broker. The company is paid a brokerage fee (commission) by you for assistance in the house selling process. The listing broker and the agent are the people you hire to represent you through the sale, from pricing your home to closing. The selling broker is the individual who produces a buyer for the property. The brokerage fee is divided between the brokerage that lists the property and the brokerage that sells the property. The agents receive their portion of the brokerage fee from their brokers. However, in some cases, the selling agent may have a contractual relationship with and be paid by the buyer. Your REALTY WORLD®Trinity River Realty agent can explain the different relationships. A broker is a real estate agent who has completed advanced level real estate training and passed state broker licensing tests. Only a broker can represent the public in real estate transactions. However, the agent will be your day-to-day contact while the broker is in the background helping the agent and double-checking the paperwork. Agent Services When you select an agent to sell your house you are selecting someone to work on your behalf, not the buyer's. Your real estate agent will protect your rights as well as handle matters that you either can't do or would find difficult. Your REALTY WORLD® Trinity River Realty agent will:
In addition to using the expertise of your real estate agent, you may want to consult a qualified real estate attorney to handle the final details of the selling process. The use of an attorney depends on
The REALTY WORLD® System - Experience You Can Count On! The first thing you should consider when selecting an agent is the quality of the real estate company that agent works for. The REALTY WORLD® System has the experience you can count on. Founded in 1974, the REALTY WORLD® System has helped and guided literally millions of buyers and sellers. Our professional team consists of thousands of agents in companies located throughout the United States. Our agents are award-winning professionals who are required to pass stiff state licensing requirements as well as attend ongoing training seminars to help them keep abreast of the ever-changing real estate market. Our agents belong to the National Association of REALTORS® which means that they subscribe to a strict Code of Ethics that goes beyond state regulations. In addition, the REALTY WORLD® System has a variety of special services unparalleled in the real estate industry that are designed to make selling your house easier. They include:
These services, combined with our experience, mean you are getting the quality service you deserve from a member of one of the nation's largest real estate networks. Selling Your House -- What to Expect It's Important to Understand the House Selling Process and the Factors that Can Influence It While no two house sales are alike, there are some basic steps that you may follow through the house selling process depending on local or state customs. They are as follows:
Pricing Your Property There is more to selling your house than just listing the house for sale and hoping for results. You need professional guidance on pricing your house and marketing it for the quickest and most profitable sale. When your REALTY WORLD® Trinity River Realty agent meets with you to discuss the sale of your house, he or she will tour your house and work with you to complete our Marketing Plan. The Marketing Plan includes tips on pricing of your house and a complete market analysis of your property. In addition, your agent will show you the cost and net proceeds you can expect from your sale as well as the marketing plan he or she will use to sell your house quickly and what to expect at settlement. It's our commitment to you in writing that we will be there with you every step of the way. The Bottom Line After establishing a sales price for your house, your agent will estimate for you the 'net cash' or final profit you can expect to receive from the sale of your house. Your agent determines the net by subtracting anticipated charges paid by the seller from the sales price paid by the buyer. You will be given a copy of this for your records. The Listing Agreement When you make the decision to sell your house with a REALTY WORLD® Trinity River Realty agent, you will be asked to sign a listing agreement. This is a contract between you and the agent's broker to market your house and to find a qualified buyer for the price and terms you have specified. A typical listing agreement will include:
When you sign a listing agreement you are also agreeing to allow your agent to put a 'For Sale' sign on your lawn, to run ads in newspapers and magazines, to send out direct mail brochures and to make the property readily accessible to be shown. There are several kinds of listing arrangements and you should ask your agent to explain them to you. The most common agreement is an 'exclusive right-to-sell' agreement. This agreement is a promise that a brokerage fee (commission) will be paid if the property is sold during the listing period which is typically several months. Even if you sell your house by yourself, you still owe the brokerage fee. You employ one real estate brokerage agent to market your house when you sign an exclusive right-to-sell agreement. That company will be responsible for entering your house in the Multiple Listing Service, if available, and for advertising, holding open houses, or any other marketing tool they determine is best. Agents from any other real estate company are able to show the property and find the buyer, there is no additional expense to you. Marketing Your House Providing the Right Information to Prospective Buyers Can Help Sell Your House More Quickly As a general rule of thumb, the quickest way to sell your house is to show it to the greatest number of eligible buyers in a reasonably short period of time. Your house will need to be in a first-rate condition because a lot of prospects will be going through your house. Having prospects tour your house is part of selling your house, and by working closely with your agent, it shouldn't be inconvenient. Facts Your Agent Will Need To begin the marketing of your house, you may be asked to provide essential information that prospective buyers commonly ask. These pertinent facts will help your agent sell your house as quickly and profitably as possible and with the least inconvenience to you. The information includes:
These facts will be compiled and put into the Multiple Listing Service (MLS) which is a listing network which disseminates information about your house to all MLS members. Under an MLS arrangement, member brokers work together on the sale of each other's listed houses with shared brokerage fees. The benefit to you is that information regarding your house's features, pricing and availability reaches the largest number of real estate professionals possible. In addition, your agent may ask you to provide the following information:
Installing a Lockbox If you are going to sell your house quickly, you are going to have to make it available for showing at times when you are not home. The easiest way to do this is to allow your REALTY WORLD® Trinity River Realty agent to install a lockbox, which is a small box temporarily affixed to your door that contains house keys. The keys to the box are held only by the authorized real estate agents and allow access to show your house when you are not home. Lockboxes are not available in all areas, so check with your agent. Advertising Your Home Another method for increasing the visibility of your house is advertising. Your REALTY WORLD® Trinity River Realty broker offers a host of advertising options for getting the word out on your house, including ads, doorknob hangers, newsletters and direct marketing campaigns. In addition, your agent will have one of our colorful REALTY WORLD® "For Sale" signs installed on your lawn. When you market your house with the REALTY WORLD® System, you also tap into the most important resource we have--your agent's personal contacts and referrals. Many of our buyers come from the network of contacts that your agent has cultivated. The REALTY WORLD® System also has a national advertising program promoting their REALTY WORLD® System. A lot of buyers come to REALTY WORLD® brokers because they know that as a full service real estate firm, their REALTY WORLD® broker can handle their transaction smoothly from start to finish. Internet Presence Your REALTY WORLD® Trinity River Realty agent will also post your home for sale on realtyworldnc.com, a data-rich web site that contains community data and other information for consumers planning to relocate. The Home Warranty Plan An added marketing benefit when selling your home is a home warranty plan. This plan is a limited warranty protecting certain major mechanical elements, systems and appliances in a resale house for the period of one year after closing for a buyer. In many areas; coverage is available for the seller during the list period. A home warranty plan is a valuable marketing tool. It gives your buyer peace of mind about possible repairs down the road as well as offering some protection from major expenditures. Home protection plans are available in most states, but ask your REALTY WORLD® Trinity River Realty agent for details. Showing Your House Once you've gotten your house in sparkling condition, you're ready to show it. If your home is shown while you are away, it is customary for the agent(s) to leave behind a business card to inform you that your house was shown. Your agent will keep you informed on a regular basis about who toured your house and what their response was. Create an Inviting Atmosphere Your goal is to make your house as appealing as possible to potential buyers. Here are a few tips for creating an atmosphere that lets the true value of your house shine through.
Handling Offers and Negotiating Your Contract When You Receive an "Offer to Purchase" You Have Three Options: Accept the Offer as it Stands, Make a Counter-Offer or Reject the Offer Presentation of the offer. When you have an interested buyer, they will submit a written and signed offer to purchase which will become the sales contract when ratified by everyone's signature. Once you and Content of Presentation When you receive an offer, it will contain a number of concerns which you must consider. Remember, once the contract is signed, it becomes a binding contract. The offer will include:
Your Contract Options When you receive an 'offer to purchase' you have three options: you can accept the offer as it stands, make a counter-offer or reject the offer. There are pros and cons to each which are discussed briefly here. Your REALTY WORLD® Trinity River Realty agent can help you evaluate the offer(s) and decide which option(s) to take. Accepting an Offer One option is to say yes to the offer and accept it as it stands without any changes. You may want to consult an attorney to review the contract before accepting the offer. Refusing an Offer Another option is to refuse an offer. Many times it seems that the seller may reject the first offer believing many more will follow for much more money only to find out the first offer was the best. Once an offer is refused, it is gone forever. Making a Counter Offer A third option is to make a counter offer to a proposed contract. In a counter offer, you accept some of the terms of the contract but change some of the terms to those that you are willing to accept. Your counters are written in the margin of the contract or in an addendum, and initiated by you, the seller. A purchase offer with counters is not a ratified contract until the buyer accepts and initials the counters. The buyer can withdraw, accept or counter the counter offer There is always the risk that the buyer will reject the counter offer. However, a counter offer is often a very good move and, in most circumstances, is usually better than rejecting a contract. A contract exists when initials of both the buyer and seller ratify all terms including the changes and notice is given to both parties involved. A Backup Contract If there is a prospective buyer who is willing to wait to see if your first contract falls through, then that buyer may offer what is called a backup contract. The backup contract is contingent on the nonperformance of the first contract. It is rare that the first contract does not go through, but in those circumstances, you may accept a backup contract.
Presettlement Activities After you have signed a contact, there is still a lot to be done. Your agent will keep you informed of how your buyer's financing arrangements are proceeding, discuss arrangements for the various inspections that need to be done and coordinate the other details that are required at settlement time. Also during the presettlement stage, all contingencies will be satisfied and removed. For example, if the sale of your house is contingent upon your house passing a radon test, you must arrange for the test as well as make any necessary improvement to guarantee the passage of the test. In addition, if the earnest money was deposited through a promissory note, the selling agent must see that it is collected. The buyer must also select a settlement and/or title company, and the selling agent will provide the vital information to these firms. Appraisals and Inspection When your buyer is obtaining financing for your house in most cases an appraisal is required by the lender to ensure that the value of the property is adequate for the proposed mortgage. You can expect the appraiser to call for an inspection appointment. If the buyer is applying for a new VA or FHA loan, the buyer pays for the appraisal and home inspections. In addition, there are a number of inspections that your home may have to undergo in order to ensure a successful transaction. They are:
Loan Processing/Approval A common question we hear is "How long will I wait between sales contract and settlement?" Depending on the type of financing your buyer is applying for, a typical waiting period can be any time between 30 and 90 days. The difference in waiting time depends on whether it is conventional, government backed FHA/VA or owner financing. Don't forget, if you will be paying off your loan, you must notify your lender. Your lender will prepare a 'payoff notice' with the exact amount of your mortgage balance payable on the day of settlement. Walk-Through Inspection Several days prior to settlement, your buyer may have a 'walk-through' inspection of your house. The purpose of the walk-though inspection is to make sure that all of the conditions in the sales contract have been satisfied. During the walk-through, the buyer will make sure the house is in the same condition it was when he/she agreed to purchase it.
Settlement What to expect. When all of the necessary conditions for financing have been completed and your buyer's loan is nearing approval, your settlement date will be set. It is not uncommon for your settlement date to be changed a day or so, but your contract is still binding. Although settlement practices vary from area to area, in general the seller, the buyer, the agent and the professionals handling the settlement or an attorney gather together to transfer the property In some areas buyers and sellers commit to the settlement or attorney's office separately for the transaction. There will be a lot of paperwork going back and forth, and your agent, the settlement professional or attorney can explain it to you. In general, you sign the settlement papers and the deed. Your buyer signs the settlement papers and the mortgage note. All payments by you and your buyer will be detailed on standard federal statement forms. You pay for closing costs and your buyer pays whatever is owed on the down payment plus the buyer's closing costs. You will receive, shortly after the settlement, any money kept in escrow for taxes and insurance and unused prepaid items such as mortgage insurance. typically you can expect the following refunds on items not used:
After all the papers have been signed and checks have changed hands, you turn over your keys and the house is sold. The transaction is considered officially settled when the sale is officially recorded. What to Bring There are a few basic items you will need to bring with you to settlement. Settlement customs vary from area to area so you will want to check with your agent about who is expected to bring what to the settlement. Here's a brief list of the most common items:
Seller's Settlement Costs On settlement day, you and your buyer will have a number of financial details to settle. As a general rule you can expect to incur the following expenses:
Glossary Agent: A person who acts for, or in place of, another with authority (either written or implied) to do so from that other person. Appraisal: An expert judgment or estimate of the quality or value of real estate as of a given date. Usually used for qualification for the loan amount. Assessed Value: The value placed on property for tax purposes. Does not usually reflect fair market value. Assumable Mortgage: A mortgage that may be taken over or assumed by the buyer of a property if they qualify. Brokerage Fee (Commission): Fee paid to a real estate broker for transacting the purchase or sale of piece of property. Certificate of Title: A document signed by a title examiner or attorney, stating that the seller has clear and insurable title to the property. Closing (Settlement): Conclusion of a real estate sale, at which time title transfers and necessary funds change hands. Commission (Brokerage Fee): Same as above. Competitive Market Analysis: A method of valuing property using a study of recently sold similar properties that failed to sell and other properties currently on the market. Contract: A legally enforceable agreement to do (or not do) a particular thing. Convey: To deed or transfer title of property from one person to another. Deed: A written instrument that, when executed, delivered and recorded, authorizes the conveyance of title of real property (as opposed to personal property) from one person to another. Personal property is transferred with a bill of sale. Deed of Trust (Mortgage): Puts up the title to real property as security for a mortgage loan and therefore protects the lender in case of a default. Earnest Money: The money placed in escrow for the seller by the potential buyer, upon the signing of the agreement of sale, to show that the buyer is serious about buying the house. Also known as a deposit. Equity: The increased value of the property increases and the mortgage balance decreases. Escrow: Funds left in a trust to a third party to be released upon fulfillment of preset conditions. Fair Market Value (Market Value): The price a ready, willing and able buyer will pay for a home that a seller will accept. FHA: FHA stands for Federal Housing Administration, a federal agency set up to insure mortgages made to first time home buyers by a lending institution in order to protect the lender from default. Hazard Insurance: Insurance that pays for damages from fire, storms, etc. Also know as "Homeowner's Insurance." Home Warranty Plan: A limited home warranty program available through REALTY WORLD® offices for home buyers and sellers. It protects against major repair bills on major appliances and certain mechanical elements and systems. Lien: A security interest in real or personal property to satisfy a debt. Listing Agreement: Contract between a property owner and a real estate broker, authorizing the broker to find a buyer for the property. Market Price: The actual amount for which property is sold. Also called sales price or purchase price. Market Value (Fair Market Value): The highest price which a buyer would pay and the lowest price a seller would accept. Mortgage (Deed of Trust): Puts up the title to real property as security for a mortgage loan and therefore protects the lender in case of a default. Mortgagee: A person or company who loans money for the purchase of real property. Mortgagor: A person or company who loans money for the purchase of real property Multiple Listing Service: A system by which brokers of real property can share information on properties that are for sale. P.l.T.I.: Stands for principal, interest, taxes and insurance. Most mortgage payments includes these four elements. PMI (Private Mortgage Insurance): Insurance written by a private company protecting the mortgage lender against loss occasioned by a mortgage default. Point: One percent of the loan amount paid to the lender. Also referred to as a 'discount point.' Prepayment Penalty: A charge levied by the lender to the borrower for paying off a mortgage before its maturity date. Prorate: To allocate between the seller and the buyer their proportionate share of an obligation paid or due. Examples include property taxes, fire insurance or a condominium fee. RealAction Marketing Plan: An exclusive REALTY WORLD® program that keeps home sellers informed in writing about the progress being made on the sale of their house. RealFax®: Home Buyer Plan: A program used by REALTY WORLD® agents to assist buyers throughout the entire home purchase process. REALTORS: The registered trade name for a sales associate or broker who is a member of the National Association of REALTORS®. Real Scope® Photo Display Board: A REALTY WORLD® home selling program that allows buyers and other agents to preview the home, both inside and out, in the comfort of a REALTY WORLD® office. It includes a photo display of the home featuring interior and exterior shots in full color. Title: The document that indicates rights of ownership, control and possession of property. Title Abstract: A summary of the public records relating to a title on a piece of land. Title Insurance: A policy protecting the insured against loss or damage due to defects in title; the owner's policy protects the buyer; the mortgagee's policy protects the lender; paid with a one-time premium. Title Search: A check of the title records, generally at the local courthouse, to make sure the buyer is purchasing a house from the legal owner and there are no liens, overdue special assessments or other claims. Transfer Tax: State tax, local tax (where applicable) and tax stamps (where applicable) required by law when title passes from one owner to another. www.realtyworld.com: The exclusive web address for REALTY WORLD®, featuring properties and community data from all over the USA, as well as company and agent profiles. |