1. real estate

 How to Sell Your Own Home Sell Your House Fast Table Of Contents Introduction Pricing your House Preparing your Home for Sale How to Sell your House ‐ Marketing Obtain Legal Help When Offers Start Coming In Negotiations Opening Escrow Buyer Inspections & Appraisals Closing the Deal How to Sell a House – 15 Point Transaction Checklist Problems after the Sale Introduction Selling a house can be a complicated process, no matter how much of a real estate buff you are, or how good the market is. Whether you’re a first‐time home seller or not, you’re going to have to grapple with a series of questions… Do I need a real estate agent? What is ‘closing’? How much paperwork will be involved? How do I market my property? How do I get the best price for my home? Can I sell my house and then buy a new one at the same time? To even be able to understand how the process works you must be furnished with clear answers to each of these questions. Today, the real estate residential market prices are on a zigzagging trend. As a homeowner, you will be looking to eke out as much profit from your house as you can. And with the record inventory of available property waiting to be spotted by potential clients, it just doesn’t get so easy to raise the price of your house. In fact, most of us misleadingly tend to think that our homes are worth more than the market price. And considered that you’ve probably lived in that home for a couple of years, decades even, this assumption is only understandable. As an individual who’s looking to answer the question ‘how do I sell my own house’, you need to be up to speed on all the strategies and approaches that will make it much easier for you to sell your house…. So, why would I need to sell my house? Most people today are selling because they are changing jobs or changing lifestyles. Changing a job in such a way that you need to move to another city for a prolonged period of time might be a pre‐requisite for you to sell your current home and buy a new one in the new location. Sometimes, things might just get better for you financially and you thus need to move into a bigger house! On the other hand, you might need to downscale to a smaller house and thus the need to let go your current house at a fair price. Realtors in the Home Selling Process Realtors are the professionals who help you sell your house for a fee. They act as middlemen between you (their client ) and potential buyers (anyone looking to buy your house) and can take you through the whole process, take care of the documentation and more so ensure that everything goes smoothly. About 80 percent of home sellers prefer to employ the services of full service realtors. 9 percent rely on limited service providers while the remaining percentage of home sellers usually prefer to use minimal services such as For Sale By Owner and use MLS (Multiple Listing Services). The reason as to why most people would rather go for a realtor, according to NAR’s Molony Walter, is because their home is often their greatest asset, and they thus want an experienced professional to take care of their interests. A small percentage of home owners will contract a realtor because they cannot, for some reason, be physically present at the location of the house . Lastly, a homeowner may need to go for the services of a realtor if they are not at all comfortable selling or promoting their house themselves. Cutting out the Middleman To make maximum profit from the sale of your house , you need to cut out the middleman, and in so doing , you could walk away with tens of thousands of dollars more in your pocket. In this eBook, we are going to be focusing entirely on how you can sell your own house without involving a real estate agent in any way whatsoever. Indeed, without a realtor you could lower the asking price by around 6 per cent to comparable listings within your community or area. Alternatively, you can leave the price of your property at par and pocket the commission that would normally be the realtor’s pay check! Real Estate expert Mangan maintains that selling your own house (for sale by owner ) is actually easier than most people imagine it could be. And that in fact it makes more sense especially where the home seller can afford the minimal time required to do the preparation, promotion and showing potential buyers around. What Keeps a Home from Being Sold Your house won’t get a buyer just because you woke up in the morning and decided you need to sell it. Buyers and their agents need to go through a certain experience in order to get the motivation to close the deal. Most individuals who have resorted to showcasing their property for sale in the spur of the moment can tell you that it is hard to even get an interested buyer. And when you get one, the suggested price won’t necessarily live up to your expectations. Selling your house is a process that is going to require due diligence on your part. Proper planning and a strategy on how you need to go through the legal and technical requirements is an important part of the process. In fact, the legal paperwork involved when you are selling your own home is far much greater than you might imagine. A small error in the paperwork could be enough to cost you thousands of dollars! And while you may need professional help here and there, you can still sell your own house yourself and save a lot from the costs that would be otherwise involved. Choosing FSBO – How to Sell my House When you choose for sale by owner, you are choosing to act as your own real estate agent. As thus, you will be responsible for the entire process. As long as you are willing to invest the required time and effort, you can successfully push through with everything and get an amazing offer for your home. In the following sections, we provide a step by step guide that will help you understand how the process works and how to employ special knowledge and tips to the best of your advantage! Pricing your House The first step towards selling your own home involves establishing a price for it. Determining the right price for your house requires that you be as objective as possible. As it is, do not allow personal attachments that are irrelevant in the eyes of the buyer to cloud your price‐setting process. Setting the asking price for your home is all about finding the right balance between attracting solid offers and ultimately receiving top dollar. If you have been conversing with a real estate professional recently, you will often hear them mention terms such as ‘ fair market value’ ‐ which refers to the highest value than an informed buyer will pay for the property. The point will be to set an asking price that is higher than the fair market value. Of course the asking price will be subject to negotiations, and is usually set 1‐3 per cent higher than the market value. You must assume that negotiation will be necessary before an agreement is reached with the buyer . Setting your asking price too high will get you just a few offers where the potential buyers are trying to find out how lower you’ll go. Sometimes, you find it reasonable to overprice your house. Example:  If you have recently upgraded your property. While many home improvements will help you recoup a good portion of your initial investment in the home, it won’t give you 100 per cent of what you paid. Another point worth noting is that the more personal the home improvement (e.g. a sunroom, swimming pool, purple floors, etc.) the less likely they are to be viewed in positive light by potential buyers. What might be personally fascinating in a home to you may not be the same thing that buyers value.  Your need for money may also push you to raise your asking price  If you want some bargaining space. Actually, listing more than one to three per cent of the market value will actually reduce the buyers bargaining power.  As the seller, you might also overprice your property because you lack factual comparable sales to help you establish what the market price is. Keep the reasons why you are selling your home to yourself. For most FSBO home sellers, bearing in mind the reasons why you are selling your house may affect the way you set the price, and negotiate later in the home selling process. Establishing your priority list is also another key part of determining the price for your property. Are you more concerned with selling promptly, or making the most out of this property sale? As goes the popular truism, don’t sell it if you can’t buy it. Ask yourself if you can buy the same house at the same price you have come up with. Most times , your emotional attachment to the home will often cloud your judgement when trying to come up with a reasonable asking price. Your friends , relatives and neighbours will help you point out any advantages or disadvantages that you are unlikely to have thought about since you are too close to the house to actually be as objective . A third party helps you think of your house not as your home, but as a commodity! Something with both negative and positive selling points. After listening to third party opinions about your house, you may now decide on a price that you deem will be competitive enough in line with what houses in your area have been selling for. What You Need to Do Before you set the Price for your Home: a) Research Public Records and Collect Data on Comparable Homes in your Area. You will want to be interested in homes that have a similar square footage, age, condition and construction. When researching for comparable homes, you want to keep your search limited to homes that were sold within the last six months. This will help you establish the selling price of similar homes in your area at similar market and economic conditions. b) Figure out the Average Cost Per Square Foot in your Area. By so doing, you can make sure that your home’s price is in line with the square footage costing relevant to your particular neighborhood. This is how you can go about it:  Add up the square footage of around 4 homes and then divide by the number of homes so that you get the average square footage per home.  Add the selling price (sold price) of each of these homes and divide by the number of homes to obtain the average price figure.  Divide the average price obtained above by the average square footage to obtain the average price per square footage  How many square foots is your home? Multiply the average square foot price that you get in the previous step with the number of square footage that your house extends. Determining the price of your home by calculating the square footage is a great way of comparing apples with apples. However, this method falls short when one home has been renovated more than the other. The square footage approach of comparing homes and determining the average price also has a tendency to favor smaller homes and underestimate the cost of bigger homes. As an additional point, don’t establish a newly constructed home’s square footage price by comparing it with an older home’s square footage. c) Evaluate Market Trends – Housing Markets are Local This is another approach that you can employ when trying to figure out a reasonable pricing value for your home. Whether it’s a buyer’s or seller’s market, you can easily use the current trends to see how well your home may do with a certain price tag. What do you know about the trends? Are prices going up or down – ask yourself by how much? How many days are homes staying on the market before getting a buyer? If homes are staying on the market longer, how much of this could be seasonal? In the majority of areas, summer and spring are the busy seasons. Ron Phipps, a seasoned real estate professional, says ‘pay special attention to the difference between the listing price and the final sales price.’ Perhaps most homes are selling for 4% less than the listing (asking price) price? Since you do not have a real estate agent, use the internet to study home sales in your area. d) Who’s Buying and Selling in your Market Area What is your competition? Who are the buyers and what are the reasons behind their shopping? To help you better understand this, you may be living in ‘a growing market with people coming in’ or ‘an area that isn’t attracting lots of new residents – where shoppers don’t have to buy but are just looking to pick up a bargain’. You may be competing against a wave of new houses from builders who are eager to sell, or you may be selling a new home in a locality where most homes are old. Take note of all these observations. Understanding the state of affairs as far as buying and selling behaviour is concerned will not only help you set a price for your property, but will also help you answer the question ‘how do I sell my house in this neighbourhood?’ e) Ask the Professionals Sometimes, you might think about all the factors and still not get a clear point due to the uniqueness and the un‐similarity of your home from others in the same locality. In this case, it helps to get an appraisal from a certified appraiser. f) Strategic Pricing If prices in your area are dropping by 1 percentage point each month, and you intend to sell your house within the next 3 or so months, you might decide to take 3% off your price right off. The advantage of this is that you get an advantage over the seller who’s dropping his/ her price every month, and so without, you might decide to take 3% off your price right off. The advantage of this is that you get an advantage over the seller who’s dropping his/ her price every month, and so without an air of desperation. Moreover, in a market where prices are dropping, you’ll obviously make more money by selling promptly! g) Rebating the ‘Commission’ As a consideration, since you are personally selling your home, think about taking off half of the commission that would have gone to an agent from your house price. In most markets, the standard commission is 6%. You might decide to take off 3% from the asking price so that you arrive at a more attractive and competitive listing value for your house. This is a good way of harnessing the major benefit of for sale by owner to help sell your house fast! h) Do I Really Have to Sell Now? The process of price determination for you house cannot be complete before you answer this question. If your aim is to get the best possible price for your home, and the overall market price is falling, think about delaying the sale. The downside with waiting is that the price may further plummet! However, when the move to sell is optional , you may decide to rent your property until the local market improves. At this stage, you have everything you need to determine the fair market value in your area and thus a reasonable and competitive asking price to sell your house fast! In addition, here are some pricing strategies you may want to consider:  Use value range marketing – this is whereby you attract more buyers by offering a price range  Price your home above the ‘Sold’ prices and below the prices of active listing  Price low and sell high – a bidding war can fetch you a higher price Preparing your Home for Sale Now that you have determined the price at which to list your home, you need to step back and take an objective look. All prospective buyers will want a house that looks cool and is free of problems . At this stage, touch ups and fixes become absolutely necessary! Ask yourself these questions. Is everything working? While over the years you might have gotten along just fine with that leaky faucet, it can spell doom to your house selling efforts – and discourage away potential buyers! Before you even go ahead with promoting your house or getting word around in for sale by owner forums that your home is up for sale ‐ you need to take a back seat and take a keen look at everything in the home. Examine everything in the compound, from the backyard spa to the kitchen appliances. Try to point out anything that is broken. Most times, anything faulty or broken that you fail to note will almost always be observed by the buyer during the inspection, so there is nothing to gain by masking that leaky pipe! Does your House Look Ready to be moved into? This is the second major question that you will be answering satisfactorily during this stage of your home selling process. Beyond the observations that I have already pointed out in the section above, take a back seat again and consider any additional things that you could do to make sure that your home looks move‐in ready. Take a look at the paint and see whether it needs to be repainted. Is the flowerbed filled with inexpensive plants like geraniums? Make points on anything that you can do to make your home more attractive, and more valuable. Do I need a Storage Unit? This is another question that every home seller, whether using an agent or ‘for sale by owner’ – will need to deal with. Almost every home will show better with less furniture in it. This does not necessarily mean that you need to move every item that you have in your house . Just remove those pieces of furniture that block pathways and store them in the storage unit. Remove those extra leaves from the dining room table, to make the room look much larger. In each room, you ought to leave just enough furniture to showcase the room’s purpose and plenty of space to move around. After all, you don’t want the inspecting potential buyer to leave the room asking ‘What is this room used for?’ Other than answering these questions, and before actually embarking on the staging work, you need to de‐personalize the house. Those personal photographs and family heirlooms need to be packed up. Buyers will hardly see past personal artefacts, and you don’t at all want them to be distracted in any way! You want the buyer thinking, ‘I can see myself living here.’, and not ‘what kind of people live here?’ Home Staging Checklist Your house is now a product. And just like any other product on a store shelf, it has features and benefits. It has positives and negatives. You are in competition with many other products. And to make it through and emerge as the leading brand, you need to gain an edge in your marketplace, look better, and price better! Since you’ve already decided that you want to sell your house as ‘for sale by owner’, you’re going to have to move all the same. Moving requires that you pack. Well, most of the core principles of staging your home in order to make it ready for sale means that you’re just going to have to pack some of your things in advance. Although it is quite a little bit of work, it has to be done anyway. Staging your home is exactly the same thing as getting a product ready for window shop display. Below is a comprehensive staging checklist that will help you not only sell your home fast but also get the top dollar from it: Key Points – What to Bear in Mind 



Buyers only know what they can see. They don’t know how it’s going to be. If you can’t see it, you can’t sell it If you can’t smell it, you can’t sell it There’s actually a difference between the way you live in your house and the way you market your home General guidelines on staging your House  Stand in the doorway of every room and see it through the eyes of the buyer. What can you see? You need to be tough on yourself: determine what you can do without while your product (house) is on the market.  Most carpets need cleaning. Get professional carpets cleaning service to take care of that. If any carpet needs to be replaced, replace it before it stands between you and the top dollar.  Take a look at all the light fixtures. Are all of them working the right way? All burned out bulbs should be replaced. Increase the wattage of all the bulbs in dark hallways and corners.  Ensure that all lamps or bulbs in dark corners are turned on for showings.  Any cracks on the wall or ceilings? Repair and repaint them.  If there are any broken light switches and switch plates, repair or replace them. Dirty areas around light switches should also be cleaned.  Make sure that you keep all the blinds and curtains open during the day so that light and views get in. The extra cost of heating or air conditioning is necessary for selling.  Since you want to create more space, remove those furnishings you can do without while your product is on the market  Pack up all your valuables so that you protect them. If they are sensitive, and if so necessary, take them to a safe deposit box.  Take a look at those bellowed house plants. These need pruning, or alternatively you could reduce the number of such plants to create more space.  Give away any plants that don’t look healthy.  Clean fireplaces and glass doors. Mantels and hearths should be cleared from anything apart from the few necessary items  If you have any collections, pack them up. During the visit, you want to avoid the distractions and keep your buyer’s attention on one focal point – your home.  Be sensitive to odors, buyers are!  Reduce the number of family photos  Pack up the books early on and remove the bookshelves  If necessary to create more space, rearrange furnishings or move them from room to room as needed  Wash windows on both their interior and exterior sides to ensure that they operate freely. Inside the House The Living Room, Family Room, Den: Clear off all coffee tables and end tables. Additionally, remove ashtrays and keep all decorative items on the furniture ordered in odd numbered groups (e.g . groups of 1, 3, or 5). The Dining Room – clear off everything on the dining table apart from just one cool centrepiece. To make sure that your dining room is looking big and spacious, also remove extra leaves from tables and move chairs from the table if they crowd the table or fill up corners in the room. Bedrooms – make the beds daily, invest in a new bedspread if so necessary, and clear of bedside tables and dressers. Leave only the necessary items. If you have extra magazines in the bedrooms, keep them under the bed. Closet doors are better off closed, and posters tacked on walls are better removed plus any wall holes repaired. Kitchen – the kitchen needs to be cleared of any unnecessary objects. Now that you are selling your own home, leave only a few items on the kitchen counter tops. Remove any magnets or pictures that maybe stuck to the refrigerator. If there are tiles or loose corners on Formica counters, repair them. The stovetop and oven should also be cleaned, and burner pans replaced especially if they are badly stained. To keep your kitchen attractive to any potential buyer who’s going to be inspecting your home, you should also make sure that all the sinks are clean and empty (on a daily basis) and that soaps, sponges, and cleaning supplies are out of site under the sink. Garbage is the main reason why you may have odor in your house, empty the garbage cans regularly. Cat and dog dishes and anything else that might interfere with the buyer moving around must be removed. Bathrooms – clear off all surfaces and put toiletries in drawers or cabinets. As usual, keep only a few necessary items out in trays or baskets. Coordinate towels in one or two colors and fold in thirds on towel racks. The shower curtain should be looking good and all items on the shower stalls should be removed apart from the very necessary ones. In the same way as with any other part of the house, any cracks or peelings should be repaired. Laundry Rooms – soaps and supplies should be kept in cupboards, counters and sinks look good when clean. As an additional point, check to ensure that the light bulbs you have here are working and have adequate wattage. Closets – the closet doors should be opened freely without anything falling on the inspecting buyer! Outside the House The outside of the house is the first impression that your buyer gets the moment they drive up to your home. As they say, first impressions are critical. You will want the potential buyer to get a positive attitude the first second they take a look at your garden. In fact, this can be instrumental in shaping their decision on buy the house. Trim and House Paint – take a keen look at the front door and trim. Special attention should be given to this since this is where buyers will get their first opportunity to make an inspection. Just like you are reading here on how you should prepare your house for inspection, potential buyers will have read and researched on where and how they should look to see if a certain house is fit for their purchase. If the front door needs repainting or staining, do make sure that it is done. Actually, repainting the doors makes the house look crisp and in good condition. It is one of the least expensive things that you can do to dress up your house and be ready for inspection as a for sale by owner. Decks and Porches – make sure that all decks, porches and walkways are clean swept and there is no sign of moss. The best option for decks is pressure washing, staining or painting– if needed. Little plants and any small items should be cleared from decks and patios. Roofs – just check gutters and roof for dry rot and moss. If they are there, have them swept away. You do not want the buyer raising any issues with the roofs or gutters after you sell your home. Fence – if the fence is broken, have it repaired and repainted if so applies. The same applies for gates. Garages – keep storage in your garage neat, and make sure that the garage itself is as clean as possible . Having a cluttered garage distracting the buyer in any negative way during the home inspection is just not how to sell a house! Landscaping – plants are like children, they grow so fast. Look at all your plants and prune bushes and trees. If there are any dead plants around, remove them and weed all planting areas. Keeping your lawn neat, freshly cut, edged and fertilized during the growing season will have a profound aesthetic value on your home. To make sure that your outdoors is ready for buyer inspection, it also helps when you go around the perimeter of the house, removing garbage cans and discarded wood scraps. If there are any extra building materials, take them to the dump! Just like setting the right price, preparing your house for the inspection is so important for the home selling process. It’s just like preparing it for shopping by the buyer. The buyer will need a product that is appealing, clean and seemingly well‐organized before they can choose it. How to Sell your House ‐ Marketing Online Marketing Tips Home sellers need to make sure that their homes are getting seen by the most promising prospects. Whether you are selling a suburban ranch that is excellent for a young family or a move‐in ready condo for a single urbanite, there are scores of rich online tools that when used well can help you market your property to effective results. Nevertheless, most real estate sellers are not realizing the full potential of these online marketing tools, if not using them the wrong way! For instance, rather than create and develop relationships with potential buyers in the places where they spend time online such as the social media (Facebook and twitter being the best places) – some home sellers will just simply submit their property to a property listing and hope that the right buyer will catch the bait! Even though submitting your home to a property for sale website directory is the most commonly adopted online marketing approach, it can fall short of what it is intended for and appear as spam if neglected. When you list your house online, here are a few great tips that will make sure that buyers are not passing your listing without taking a closer look: Photograph of the Front The internet has become a powerful tool for almost anyone who’s looking to buy something. True to this, most home buyers today will begin their home search online. And more than words can stress, good photos are essential! Buyers will obviously ignore listings without a photo, or those that only have an exterior shot for that matter. As has always been, buyers are visual. And you will want to be appealing to their visual sense in order to sell your house fast! Well, here are a few tips that you can employ in order to capture a supreme front photograph for your property: 




Crop out sidewalks and streets Remove vehicles from the driveway Avoid shades Shoot up‐close and also angled photos Clear away any vegetation that may be blocking the front door or that to the door Exterior Photos If you own property (maybe a condo) that doesn’t have a yard, simply take pictures of the pool, spa or tennis courts. If you however have a yard, buyers will want to see it. Make sure that you emphasize on space and shoot long. The photos that you come up with must be of the best quality. Is there a professional photographer who just charges a few bucks to capture an amazing photograph? Well, his or her services might come in handy at this time. Interior Photographs Don’t forget to take photographs of every room. Before you capture photographs of the interior rooms, make sure that the lights are turned on and that all drapes and blinds are open so that you can allow light to get in to the house. Virtual Tours If you thought that virtual tours are only used to showcase million‐dollar homes, you are wrong. Every home should have a virtual tour. If there is a company in town that offers virtual touring services at only a small fee, you might consider this service as an online marketing add on that will help you sell your home fast. Property Description Your property description should speak a thousand words. Your house listing will be competing with tens, perhaps even hundreds, of others to get the attention of potential buyers. As part of your property listing, you should use a headline that is catchy so that you surely draw the interest of any buyers who see the listing. Make sure to include all the pertinent details: number of rooms, square footage and the other tangible features. If you have any remodeled or updated areas that adds to the value of the home, also make sure to concisely mention them in the description. Another selling point being used nowadays by real estate marketers is the neighborhood. After providing sufficient details about your house, you might want to use strong points about your neighbourhood to enhance the suitability of your offer. Target your Marketing Since your home is probably one of your most valuable assets, there is every reason, I believe, why you should think about marketing seriously at this juncture. As a home seller , you can say things on social media that will instantly attract interested eyes. Saying something like my #kids were crazy about this yard’ can get the right people wanting to know more. When marketing your home on twitter and Facebook, make sure that you are dwelling on the unique features. Most online marketing efforts by home sellers fail not because they are using the wrong message but because they are targeting the wrong audience. Of course, some of the buyers you are targeting will not miss in school‐related groups or local parenting pages. Target such groups and use relevant messages that score strongly towards selling your home fast! If you’d like to use Facebook to market your house, Facebook ads has proved to be quite a good way for a great number of home sellers. With Facebook ads you can get very specific with your target audience. Many a times, I have seen fascinating pictures of houses on Facebook ads and although I am not a house buyer right now, I just had to click on them out of interest. I believe that I am not the only one who does this . Many users will check out houses that they deem fascinating (this is where the photo comes in) and even if they are not buyers , they might know someone who’s been looking to buy such a house! Signage Signage is also a conventional approach that you do not want to miss when you are marketing your house. To start with, you will want to place a detailed ‘For Sale’ sign on your lawn. Buyers who are interested in buying property in a particular area will often make visits to see whether there’s anything up for sale. They understand that not all property is widely listed, and they might not want to miss out on a great bargain. You may also want to post directional signs at main intersections near your home so that potential buyers who may have seen your listing on some site may not get lost. A good for sale by owner sign should:  Have clearly visible text that is large enough to be read from the street  Your phone number should be included. Print a Flyer A conventional marketing strategy, flyers might be a good way to market your house locally. They can help you promote and sell your house fast. Flyers should include prices, property information, pictures as well as contact information. Providing such flyers as a take away from home visits or open house events can help prospective buyers remember about your ‘product’, and perhaps think more about your offer once they leave the site. Since you might not always be there to hand out flyers or brochures, it is always a good idea to place them in a visible place near your property. This way, anyone stopping by for a quick look can get a glimpse of what your house is like inside and thus easily determine whether it meets their bag of housing requirements. Internal Message Board Many workplaces will have internal message boards or spots for public postings. Make sure that you post your home at this space. If your house is specifically near a hospital or any other physical amenity that involves professional workers, you are at an advantage as the doctors, nurses or any other workers involved might need to live closer to their place of work. As thus, it would help to post your listing in the hospital’s message board. Spread the Word, Organically Well, this is another way to do it. Tell your friends and relatives. Make sure that your co‐workers know that you are selling your house. Tell them where they can find your home listed online so that anyone who wishes to take a fast, close look can get furnished with the relevant details. Just casually mentioning that you posted your home for sale and if your workers or friends know anyone who is interested in finding a home in the area can call you is good! You never know. Advertise in the Local Newspaper When it comes to marketing, every little bit helps. Take advantage of community newspapers as well as the big dailies in your city or township. Keep the message short and to the point. Obtain Legal Help When Offers Start Coming In While selling your house as ‘for sale by owner’ is mostly do‐it‐yourself real estate, you might need to leave some things to an attorney, or consult one for that matter. A lawyer who specializes in real estate may add a small cost to the process on your part, but it could be necessary if you don’t wish to be involved in any way with the legal complexities of the process. Most likely your house is your most essential commodity. And if not, it is a highly valued asset. This process may be too complicated without legal assistance. The help of an attorney comes in handy especially when you are receiving offers and negotiating the terms of the contract. Generally, the following steps are involved during the sale and legal transfer of one’s home: 1. To start with, a written real estate purchase and sale agreement is needed. In addition, a lead hazard form and real property disclosure forms (and other documents as may be required by specific state laws) should be prepared by you – the seller. These documents will then be signed by both parties; a down payment or deposit is paid to the seller by the buyer at this point. 2. The buyer now starts the process of getting financing to pay the purchase price. This might require that the buyer obtains a survey or title search being done (depends on the lender). The purchase or the lender might require that title insurance policy be purchased and issued on the property. 3. As the seller, you then have to prepare a deed (quite claim, warranty or any other form of deed) and sign it. This part has to be witnessed and notarized so that the property can be transferred to the buyer. 4. At this stage, the closing takes place whereby the purchaser tenders the remaining purchase payment to the seller. This done, the seller pays off any mortgage or lien on the property and the deed is tendered to the buyer. The buyer will then file the deed with the governmental recording office in the county or parish in which the property is located so that the house might be transferred to the buyer’s name. While some additional steps may be required especially when a bank loan is involved, these are the steps usually followed in a ‘for sale by owner’ transaction. Additionally, a closing agent (most times the title company) assists the parties to transfer funds, file the ‘deed’ and ‘close’ the sale. Despite these general legal steps, please note that every home sale process and transaction is unique and issues may arise in the transaction thus requiring additional or different steps to be taken. Negotiations Getting an Offer Now that you are marketing your home, you would expect to get an offer within the first 4‐6 weeks. After listing your house as a for sale by owner, there’s actually nothing more exciting than receiving that first offer! Every offer that you receive on your house should be approached as an opportunity to negotiate. Anytime you get an offer, you have three options:  Accept the offer  Make a counter‐offer  Reject the offer out rightly Regardless of what option you choose, the next option should take place within a legal framework. Well selling your house isn’t nearly the same thing as selling your old motorbike on an eBay listing. Something home sellers should know during the negotiations process, you mustn’t sign a deal on your next home until you sell your current home. This might put you in a situation where you are eager (or desperate) for the first offer that comes around . Moving out before you actually sell your house is the other thing you shouldn’t do. It has been proven time and again that it is harder to sell a vacant home since it becomes forlorn looking , not‐appealing and forgotten. Buyers also start to think that you own another home and are probably very motivated to sell, an assumption that could cost you thousands of dollars. During negotiations, it will be better if you get the chance to deal with more prospects, so the more offers you are getting, the better your chances of landing the top dollar and selling your home fast are going to be. Be a smart seller. Disclose everything. If you have anything else, be it a defect or a needed repair that the buyer might not know about, be wise and disclose everything. You do not want to be followed by a series of legal challenges once you sell your house. Now that you are receiving offers, it is important that you be detached. Let go of the emotions attatched to why you are selling your own home. This is simply a business process. The first offer from the buyer, if you take a close look , will most times tell you why the buyer is motivated. The better you understand the buyer the better placed you will be to negotiate . And the better placed you are to negotiate the better you will be able to control the pace and duration of the process. As a rule of the thumb, buyers are looking to purchase the best property for the least amount of money. Know what motivates each particular buyer; for instance, does he or she need to move in fast? Verbal Negotiations As a FSBO seller, avoid becoming involved in an oral negotiation with the potential buyer. It is in your best interest that you only deal with written offers and always issue written counter‐offers in return. If a potential buyer verbally offers you ten grand less than your asking price, whatever you say (even if you agree) the buyer is not obligated in any way to make the actual purchase. If you say ‘Fine with me,’ to the buyers’ suggestion, he or she will think, ‘wow, how much lower can I get this seller to go?’ As much as it is ‘negotiation’ in the real sense of the word, do not put yourself in this situation. Make a point of only responding to written offers. In fact, fact, any written offer also tells you that the buyer is damn serious. Counter Offers and Changes Once you receive an offer and decide that you want to either accept it or make a counteroffer, you must do so quickly. In essence, within a couple of days at most should be your timeframe! Bear in mind that between the time the buyer makes an offer and the time when you accept this offer in writing (or make a counteroffer for that matter), the buyer can withdraw it. If you choose to accept the offer, changes to the contract must get written approval from all the parties involved in order to be binding. Be aware that even a nit‐picky change can give the buyer an ‘out.’ For instance, suppose that you deem it necessary to change the time of the day when the buyer takes possession of the house. If the buyer for some reason gets cold feet before actually signing off on that change, they can opt out of the contract because they simply had not agreed to that change! Here are a number of cool counter‐offer tips that can help you close the deal, and so to your maximum profits: 1. Contingencies – price is rarely the only consideration when you are making an offer or counteroffer. Additional terms and conditions, often referred to as contingencies, will sometimes be included by buyers. The most common and often the most dangerous contingency is one that links your escrow closing date to the sale of the buyer’s home. This means that the buyer does not have to pay for your home if they haven’t already sold their old one. Although this will provide the buyer with some excellent cover, it puts you in a situation where you are uncertain about the transaction –and may lead to a delayed or cancelled sale for you. When such a contingency is involved, it is important that you include a ‘kick‐out’ clause in your counter offer that states that you have the right to entertain other offers if the buyer’s current home is not sold within a specified period of time. 2. If you won’t budge on the price, here are some other financial incentives that you may consider: a. Pay points to lower the buyer’s interest rate b. Pay for part or the entire buyer’s closing costs c. Prepay taxes or insurance for about a year d. Offer to include furniture, window treatments, appliances or lighting fixtures e. Pay for some or all the repairs found needed during the home inspection 3. If at all you are not sure that you will be able to buy a home immediately after you sell yours, include a ‘rent back’ clause which lets you rent back your home from the buyer after escrow closes 4. If your comparisons can back a full‐price counteroffer, make it 5. Make the sale contingent on your buying a home 6. Don’t forget to: a. Set a closing date b. Set a move‐in date c. Make a decision on whether or not repairs should be done before or after the close of escrow 7. If you have a situation where a serious buyer is having trouble qualifying for a mortgage, consider other financing alternatives a. Seller Financing – this is where you finance all or part of the buyer’s mortgage b. Mortgage Assumption – this is a financing option where the buyer takes over your mortgage payments c. Lease‐to‐own deal – the buyer is your tenant for a set period (usually 1 to three years) while part of the rent is applied toward a down payment 8. Get a receipt for the buyer’s earnest money deposit Dealing with Lowball Offers Be prepared for lowball offers. Even when you’ve properly researched the market, made the necessary repairs and done anything else you could to offer the house at a fair price, you may still get one or more such offers. Just don’t take it personally. Some buyers will make a low offer hoping that you will be desperate enough to accept it. They might also have some serious reasons too, such as limits on what they could borrow. Some lowball offers may also come from real estate agents. You might never get to know the reasons behind them. Most times, the lowball buyer will engage in more sensible negotiations if you go ahead and make a counteroffer. Nevertheless, if you don’t see any way you could come into an agreement with a particular buyer towards selling your house, ignore his or her offer and move on! Can I do Without the Attorney? State real estate laws vary. Most likely, your buyer will be represented by an agent when buying a home, even when buying for sale by owner properties. It is prudent that you have an attorney who can review all documents before you actually sign. As a rule, make sure that you and your attorney understand all the terms outlined in the offer so that you make sure you are being treated fairly. Opening Escrow Opening escrow simply involves visiting the office of the escrow or title company which you have selected and handing over the deposit monies and giving instructions for the transaction. Whether supplied by the seller or the buyer, the escrow company will represent both parties equally. The escrow company will be acting as a third party who will hold all legal documents and funds on behalf of both yourself and the buyer , and so making sure that the final sale is satisfactorily to everyone involved. To open escrow, you will need to provide the escrow or closing agent with the following information:  Property purchase price, plus the address and description of this property  The name of the seller and the seller’s address  The name of the buyer and his or her address  Parties to whom the preliminary title report or the abstract of title are to be sent  Amount of deposit to be held in escrow  Any financing information Any personal property involved in the sale  Rent details, if necessary  Projected closing dates  The insurance agent of the buyer The escrow office or title attorney will need to have this information in order to provide clear instructions for you to follow. If you don’t just have all this information available at once, you can provide it later as soon as possible. The services offered by the escrow company are very important especially at this stage when you are actually processing things to sell your house. Buyer Inspections & Appraisals As dictated in majority of real estate sales agreements, the buyer has the right to thoroughly inspect the property. In most cases, the person coming to inspect the property will be a licensed professional who takes his or her job seriously. Their job will be to find anything wrong with your home and accordingly advise the buyer. The inspector will carefully inspect the roofs and check for termites. Some buyers also hire several inspectors so that they get different professional opinions. As part of this inspection, it is your responsibility as the seller that you make all major repairs needed to appliances and electrical , heating, septic and plumbing systems. If such repairs are needed and you fail to make them, the buyer has a right to back out of the contract. Another consideration that is made before you actually close is the buyer’s appraisal. This is usually an appraisal ordered by the buyer’s lender to ensure that the value of the home isn’t less than the loaned amount. The lender, during this process, also checks the property title to ascertain that it is free of any liens. Some lending institutions will also require that an environmental audit and/ or soil test be carried out. Well, while both the inspection and the appraisal rest as the responsibilities of the buyer, they are very important to you as the person looking to sell your home because either of them could potentially result in the cancellation of the sale. Closing the Deal Once the inspections and appraisals are complete, the buyer’s lender issues a commitment document specifying what must be done by the buyer in order to complete the sale. At this point you should take the time to notify your own mortgage company that you will be selling your home and paying off your mortgage. Most closings do occur between 30 to 40 days after signing of the sales agreement by both parties. At closing, funds are collected, loans are paid, the ownership is transferred to the buyer and insurance of a clear title is issued. As the seller, you will receive the proceeds of the sale within two business days of the closing (which is overseen by an attorney or title company) depending on your state. On the closing day, the buyer will do a final walk through to assess the condition of the home and ascertain that all agreed repairs have been made. As I always point out, this walk ‐through is very important especially as it can help make sure that buyer does not raise any issues or make complaints after the process to sell your house is already complete and the deal closed! All the documents involved in the sale should be kept well for reporting of the sale to the relevant tax authorities. How to Sell a House – 15 Point Transaction Checklist Here is a summarized checklist of items and issues that you may wish to consider during the process of selling your own home as for sale by owner. Although this checklist is not meant to be exhaustive list that covers all issues or matters to be addressed in the purchase and sale of a home, it is a general guide that will give you a close idea of how the process goes and how all the processes related to the transaction should go – with special bias on your responsibility as the seller: 1. Evaluate prospective buyers – has the buyer been pre‐qualified for financing if so necessary? Has the prospective buyer provided you with a copy of the pre‐qualification letter from the bank or any other lending institution? 2. Offers on the Property – has the buyer presented an offer to purchase the property? As the seller, do you agree with the buyer’s terms for purchase of the property? 3. Purchase and Sale Agreement – has the buyer, and yourself, obtained the correct legal description of the property to be included in the purchase and sale agreement? 4. Have all the agreed upon terms between yourself and the buyer been included into this purchase and sale agreement? 5. Escrow with Title Company/ Escrow Agent – have you agreed with the buyer on a title company for this transaction? Have you or the buyer contacted this company and provided the requested information? 6. Financing – if necessary, has the buyer submitted all the necessary applications and supportive documents to the lender 7. Complete Seller Disclosure Statements – have you delivered to the buyer all the required disclosures and notices related to the property? Certain states require that specific information be disclosed to potential real estate property buyers. 8. Preliminary Title Report from Title Company – have you ordered the preliminary title report from your Title Company? The agreement sets out deadlines for doing this. 9. Receipt and Review of Title Report – have you send to the buyer the preliminary title report and the legible copies of all corresponding exception documents from the seller? 10.Has the buyer contacted their property insurance company and acquired a new policy insuring the property? If obtained, has the buyer provided the property insurance information to the title company or escrow agent? 11.Arrange Issuance of Title Insurance Policy – has the buyer or yourself coordinated the issuance of the title insurance policy with the title insurance company. 12.Perform Physical Inspection of Property – has the buyer scheduled the inspection of the property by his or her professionals of choice? The agreement should have a deadline for this. 13.Has the buyer, after reviewing the inspection report, provided you with issues and repairs that need to be made? If not satisfied with the results of the inspection, has the buyer decided to terminate the purchase and sale agreement? 14.Final Financing of Property – has the buyer finalized the loan application process with his or her lender and confirmed that the lender is ready to close 15.Closing of Transaction – have the buyer and yourself submitted all the documentation and other info requested by the title company so as to close the transaction? If so, has the buyer scheduled a time with the title company to close the transaction? As a final step, has the buyer received the deed and title insurance policy? Problems after the Sale One of the biggest concerns that most ‘for sale by owner’ home sellers have is the potential for problems after the sale. What if the buyer all of a sudden comes back and demands that you do some expensive corrective work? What if the sellers demands damages for something you did and they didn’t like? What if the buyer wants you to take back your house? While all these sound like unnecessarily nagging scenarios, they are possible circumstances. In fact , they are all after‐sale consequences that some FSBO sellers have had to experience. Although it is unlikely you will be getting problems later if you made the repairs as requested by the buyer, you just might! Here are some few after‐sale issues you could experience and how to prevent them. After Sale Issues  The buyer claims that the roof leaks and needs you to put a new one. Well, did you disclose to the buyer that the roof leaks? You should have, so as to get the issue out in the open to be dealt with before the deal is closed. Did the roof start leaking for the first time after the buyer acquired the home? If this is the case, you may still need to pay for some repair work, but putting on a new roof is open for negotiation.  The buyer says that there are no grounded electrical outlets in the kitchen and baths and claims that you ought to pay for their installation. It might be that you don’t know much about things electrical and so you didn’t realize this fault before selling your house. All the same, did you insist that the buyer contracts a professional inspector? Could it be that the inspector pointed out the issue but the buyer just did not point it out before closing the deal? If the inspector failed to note that the fault was there, perhaps the buyer should raise an issue with him or her.  A buyer might say that you left the house a mess and that you should repaint it. Did you offer the buyer a final walk‐through just before the deal was closed? Did the buyer approve that the home was in good condition during this walk through? If the condition of the house hasn’t changed since then, why is the buyer complaining? Precautions While these examples just emphasize the reasons for having full disclosures, a professional inspection and a final walk ‐through; you should understand that they will not prevent a buyer from complaining after a sale. Some buyers might even decide to take you to court! The precaution is to make sure that before the deal is sealed, you do everything possible to ensure that the house is in order, and that the buyer is fully aware of any fixture that is not in order!