The Home Selling Process
Selling a home does not need to be a torturous event. However, since selling property is not, for most of us, a regular event, it is natural to be cautious. The tips below are designed to give you guidance, and at the same time, offer you reassurance.
1. Determine If It Is Wise To Sell Now
It used to be taken for granted that a property owner could sell a home after a year or two of ownership and expect to make a profit. Unfortunately, today, a fluctuating economy and real estate market have caused home values to fluctuate, and selling a home is not always advisable. It is, therefore, wise to estimate your costs of sale before putting your home on the market. Start by contacting your lender(s) to determine your mortgage (and equity line) principal balances, and remember that a per diem interest adjustment will be added to that amount as of the date you sell your home. Most sales agreements used in Georgia require the Seller to transfer title to the Buyer free from title defects and liens of any sort, so your mortgages will have to be paid in full at closing. If there is a possibility that the sales price of your home would not be sufficient to satisfy your loan balances, perhaps you should postpone the sale until the value of your property improves. Or, if you are forced to sell your home due to a hardship, perhaps a “short-sale” is a possibility. Talk openly with your real estate agent. Your agent is equipped to discuss all of your options with you and will advise you of other costs of sale you can expect.
2. Have Reasonable Expectations on Your Asking/Selling Price
This is where working with a real estate professional is essential! Even though the internet provides many ways in which a seller can investigate the selling prices of neighboring properties, no computer generated estimate can accurately determine your property’s value. Think about it – can a computer algorithm factor in the view, the location, the condition of other sold properties in the area, etc., compared to your own? Your real estate professional’s experience and opinion are invaluable. A real estate professional knows and understands what buyers are looking for and how to best “position” your property to maximize the offers for purchase on your home.
3. Recognize Your Disclosure Requirements
Although Georgia is a caveat emptor state (Latin phrase for “let the buyer beware”), if asked, sellers must disclose known defects of the property honestly and can incur liability if they have attempted to conceal known defects. A professional real estate agent will be able to supply you with standard disclosure forms which should be completed prior to placing the property on the market for sale. If, for example, ANY PART of your property was built prior to 1978, you will be asked to provide the Buyer, PRIOR TO CONTRACT SIGNING, the federally mandated Lead-Based Paint Disclosure/Exhibit disclosing any known information on lead-based paint or lead- based paint hazards.
You cannot avoid disclosure liability by declaring that you are selling the property “as is.” Always give your disclosures in writing, but make sure those disclosures are limited to what you actually know about the property, and be honest about what you do not know. Sometimes it is best to over-disclose, rather than under-disclose, in order to avoid an accusation of concealment of a defect. Should there be any change in the condition of your property between the time you provided the disclosure and the closing date, you should disclose, once again in writing, to the Buyer whatever has occurred.
4. Understand Fair Housing Law
Neither you, nor your agent, should discriminate on the basis of race, color, religion, national origin, sex, disability, sexual orientation, or familial status.
5. Positioning Your Property to Maximize Results
Buyers do not want to see your runner-up trophy from your 6th grade three-legged-race, nor your collection of ticket stubs stapled to the walls in your study. Too many personal touches may make it difficult for a buyer to imagine themselves living in your home. Your agent will provide guidance on how to stage your property to entice today’s buyer to pay the highest price possible. In addition, your agent will have available for referral a list of professionals equipped to assist you in handling the details of getting your house ready to be placed on the market, from painters, to handymen, to window washers. While it may seem like a lot to do, perhaps a few thousand dollars wisely invested will return not only the invested amount, but more! Your professional real estate agent knows what buyers are looking for, so trust his or her advice.
6. Strangers Coming Into Your Home, Part One
Remember when you were in the buying mode for a home? When you saw something from the curb that enticed you, you wanted immediate access! As then, today, there may be occasions when your doorbell will ring, you answer the door and smiling faces will greet you asking if they can take a look around. First, never let anyone in unless an agent is with them. Second, know that you can refuse entry to anyone. But third, know that being gracious usually brings a reward. Fourth, always keep your home ready for potential buyers and their agents, as you would for other valuable guests. Always keep your home neat, clean, with beds made up and pets secured. Additionally, secure jewelry, money, account numbers and passwords, prescription drugs, keys, etc. Talk to your professional agent about the use of a lockbox, and whether or not setting certain time limitations on its ability to operate is appropriate.
7. Strangers Coming Into Your Home, Part Two
Since you may often have potential buyers enter your property while you are not there, you should consider leaving, in a conspicuous place (confer with your real estate agent), information about your surrounding neighborhood, your utility costs, any survey of the property (especially important if there are fences or close neighboring structures), warranty information, etc. The more information you can provide, the more comfortable a buyer will be when making an offer.
8. Strangers Coming Into Your Home, Part Three
It is best to excuse yourself during showings and allow your “guests” free access to the property. Turn on music at a low level, take the dog out for a walk, and relax.
9. An Offer Comes – Now What
Number One – Keep your emotions in check! Most offers that you and your agent will receive are not going to be at full price, all cash, with a closing date left blank so you can fill in whatever date suits you best. Rely on the objectivity of your real estate agent and remember that this is a business transaction. While selling a home can make you feel like you are on an emotional roller-coaster, try not to get so swept up in the transaction that you lose reasonable thought.
Number Two – Read the offer and understand that if it is not in writing, there is no guarantee a promise will be fulfilled! All terms should be in writing and clearly understood.
Number Three – Even after you negotiate a sales price and terms that you can live with, know that “Round Two” in negotiations may arise as a result of the buyer’s inspection or another revelation that hits the buyer during their inspection, or due diligence, period. Again, your professional agent should be able to guide you through this.
Number Four – If, in order to satisfy a buyer’s demand, you agree to repair or replace a component of the property, work only with licensed contractors and get receipts for their work (which you will subsequently give to the buyer after making copies for your file). It is best to complete any obligated work as soon as possible after being aware of the need.
10. Review the Settlement, Or Closing Statement Prior To Closing
If your buyer is working with a lender, the buyer’s lender is required to provide the buyer with a Closing Statement at least 24 hours prior to the closing of your home. Remind the closing attorney that you expect the same courtesy. By obtaining the settlement statement in advance, you will be able to review it with your agent and challenge any charges that appear to be out of place prior to the actual closing, which will save time and uncomfortable dialog in front of your buyers!
Protect Yourself When Selling a House
This brochure was prepared courtesy of the Georgia Association of REALTORS® to help sellers with the house selling process. The recommendations herein are general in nature and are not intended to be exhaustive. Some of the recommendations may not apply to specific properties. Sellers are encouraged to consult with experts and professionals of their own choosing to ensure that they are protected in selling a house.
Sellers should take reasonable steps to protect themselves in the house selling process. This brochure contains some general suggestions on how sellers can do this.
Be realistic in setting a sales price. All sellers want to get the highest possible sales price for their houses; however, if you set the sales price too high, your house may sit on the market unsold. One way to determine if the sales price reflects current market conditions is to study the listing and sales prices of other comparable houses in your neighborhood. Your REALTOR® can normally help you obtain this information. Setting a sales price for your house consistent with market conditions will help ensure that your house is sold within a realistic timeframe.
Understand your disclosure obligations. Sellers have a duty to disclose latent or hidden defects in their properties that are not readily apparent from a reasonable inspection of the property. In addition, if any dwelling on the property was constructed prior to 1978, the Seller must provide the Buyer with a written Lead-Based Paint Disclosure prior to the contract being signed. Your REALTOR® can provide you with a copy of this federally mandated disclosure. Disclosures should be in writing and whenever possible, incorporated into the purchase and sale contract to avoid any question regarding whether or not they were received. The Georgia Association of REALTORS® has prepared the form Seller’s Property Disclosure Statement as an exhibit to the purchase and sale contract to help sellers make proper disclosure. In the event there are changes to the condition of your house, you are also required to update the Seller’s Property Disclosure Statement through the date of closing. You cannot avoid disclosure obligations by selling a house in “as is” condition. Known hidden defects must be disclosed.
Prepare the property for showing. To be viewed in its best light by prospective buyers, your house should be clean, clutter-free, inviting and accessible. A REALTOR® can help make recommendations on how best to prepare your house. A major element of any marketing program to sell a house is motivating the real estate brokerage community to show your house to potential buyers. To maximize the likelihood of a sale, the house must be available for showing on short notice at the convenience of a prospective buyer. However, you should never allow your house to be shown to a buyer without the REALTOR® present. Prior to making the house available for showings, you should remove from the property fixtures that you plan to take with you. Since strangers will have access to the house, you should put prescription drugs, keys, checkbooks, jewelry, and other valuables in a safe place. For added safety, when you are in your house, keep the door locked. In this way, no one can inadvertently enter your house at an inopportune time. Your REALTOR® can provide a lockbox for your property which securely tracks who has accessed your property.
Have important information ready for buyers. Buyers are growing increasingly sophisticated in making house-buying decisions. They routinely ask sellers for information about the property to aid them in their decision-making process including surveys, a Seller’s Property Disclosure Statement, termite reports and/ or termite bonds, information about utility costs and homeowner association fees and dues. To the extent you can have this information readily available for buyers, it will make the buyer’s decision-making process easier and quicker and thus increase the likelihood of a sale. Being transparent in sharing information can also help create a positive impression that you have nothing to hide. Depending on the nature of your property, your REALTOR® can also help you identify other specialized information that buyers may request.
Remember that real estate sales contracts must be in writing to be enforceable. In Georgia, with limited exception, purchase and sale agreements must be in writing to be enforceable. Verbal offers and acceptances will not create an enforceable contract. You should also avoid trying to come to a verbal agreement with a buyer on the thought that it can be later reduced to writing. In many instances, the process of trying to reduce a verbal agreement to writing leads to disputes over the nature of the agreement between the parties. The best rule of thumb is that if a buyer is not willing to take the time to put an offer in writing, the buyer is either not interested in the house or does not think the offer will be accepted.
Read and keep a copy of contracts. A purchase and sale agreement is a legally binding contract. You should read it in its entirety before signing in order to ensure that it reflects the entire business agreement of the parties. Verbal promises not included in the contract are generally unenforceable. You should comply with all timeframes in a contract since missing a deadline can leave you in breach of contract. Get an early start on making agreed-upon repairs to avoid missing time deadlines. You should also keep a complete copy of any contract you signed in the event a dispute arises regarding the authenticity of the contract.
A contract is not a guarantee. Just because a buyer has contracted to purchase a property does not necessarily mean that the contract will ultimately close. Many contracts contain a due diligence period during which the buyer can inspect and evaluate the property and terminate the contract without penalty. Other contracts are subject to contingencies that if not fulfilled will cause a contract to fail. If the buyer terminates the contract, either during the due diligence period or because of a failed contingency, the holder of the earnest money will normally return it to the buyer. On occasion, buyers also breach the contracts they sign. Unless you can afford to own two homes, you should avoid making a permanent commitment to buy a new house until after the closing of your existing house has occurred.
Be proactive with issues of concern to buyers. Many houses contain some defect or condition that will cause a buyer to think twice about buying the house. Some houses are in flood plains or have basements or garages that leak. Many houses have termite damage or are in need of repair. Other houses have settlement damage or contain building products that may be dangerous or that have been the subject of litigation such as aluminum wiring, polybutylene in plumbing service lines, and certain kinds of siding. Being forthright in disclosing and/or fixing problems is the best way to get buyers comfortable that you are not hiding a serious problem with the house. Buyers tend to fear the unknown far more than the known. Knowing about a problem with a house may cause a buyer to factor in the cost of fixing it into their offer price. Fearing that the seller is hiding something will cause many buyers to terminate a contract during the due diligence period and look for another property.
Understand obligations to convey title to the property.
Most contracts require the seller to convey good and marketable legal title to the property at closing free and clear of mortgages, liens, and title defects. Therefore, you should know how much money you will need to pay off mortgages and other liens on the property, fund any agreed upon seller contributions at closing and pay real estate commissions. If you anticipate having insufficient proceeds from the sale to meet your obligations, discuss that probability with your REALTOR® as soon as possible. In such an event, you may be eligible for a short sale or a federal mortgage loan modification program. If you know of a potential title problem with the property, you should also discuss it with your REALTOR®. The sooner professionals can address title problems, the easier it will be to close the sales transaction later.
Comply with fair housing laws. In selling your house you cannot discriminate on the basis of race, color, religion, national origin, sex, disability, or familial status. In addition, REALTORS® cannot discriminate on the basis of sexual orientation or gender identity. Since REALTORS® have a commitment and obligation to provide equal housing opportunities to all and to comply with our state and federal fair housing laws, you should not ask the REALTOR® to do anything contrary to these laws. Violating our fair housing laws can result in significant financial penalties to the violator.
Have a plan for pets. Sellers should have a plan to keep visitors safe from pets and pets safe from visitors. Boarding pets or keeping them in locked crates during showings, prevent pets from escaping and visitors from becoming scared or injured. Sellers should leave a note in a conspicuous place explaining whether there are pets on the property, where they are located, the type and number of pets and any special warnings regarding the pets. Sellers should not assume that a gentle, loving pet will remain so in the presence of strangers. Sellers should also be aware that many buyers with allergies will not enter a house with a pet.
Choose a REALTOR®. Not all licensed real estate salespersons (or brokers) are REALTORS®. REALTORS® agree to abide by a Code of Ethics in their dealings with buyers and sellers. REALTORS® are members of the National Association of REALTORS® and participate in a local Board of REALTORS®. REALTORS® have valuable knowledge and industry training regarding how to negotiate various terms in a purchase and sale agreement in the best interest of the seller client. REALTORS® can also provide sellers with, and help them fill out a pre-printed purchase and sale agreement form. REALTORS® routinely work with and, upon request, can provide sellers with the names of attorneys, home inspectors, termite companies and persons providing other services relating to real estate transactions. Therefore, when you need help in selling a property, you should always choose a REALTOR® first!