Blog with MAE Capital

Selling your home in today's market

January 29th, 2014 4:18 PM by Gregg Mower

So you have been thinking of selling of your home.  But you have no idea where to start, so you turn to the internet and “google it” and here you are.   I welcome you as you have found an article written by a 30 year seasoned veteran of the Real Estate industry and the Mortgage Industry. If you want to know more about me you can “google me” or look in the bio section of my site here.  Enough about me let’s talk about selling Real Estate.  The first thing we need to do is plan our move, yes, we need to know where we are going and what we are going to do for housing once our home is sold.  So many people make the decision to sell and have no idea of what they can afford to move into.  Most folks see that they have equity in their current home, and that’s great, but you still have to income qualify for a new loan unless you are one of the fortunate ones that can pay all cash for a house.  So the real first step in selling a home is to figure what you can buy once your home is sold.  So any good Agent/Loan Officer like me (selfless plug) can quickly get you approved for financing before listing your home for sale.  By doing this you have a road map of where you can go.  Finding this information out before you have sold your home is invaluable. 

Ok, you have a plan and know what you can afford to buy when you sell your home.  You should also have a good idea how much money you will “NET” from the sale of your home.  Your Agent should have given you a good value estimate based on sales in your neighborhood.  Now it is time to get you home ready to be shown.  The best tip I can give for this is to go with a minimalist theme in your home, meaning take everything out of the house that is clutter.  This is the hardest thing for a homeowner as their “stuff” is comforting to them.  The house must be staged to allow potential home buyers to envision your home as theirs.  This is tricky, as you still live in the house.  You should take all personal pictures, trophies, and knick knacks down and put them in a box to move to your next home.  A fresh coat of paint is always a good idea as it makes the house look fresh and smell fresh.  Rooms that are painted in a theme, or wall papered in your favorite design should be painted over, as home buyers are looking to make your house their home.  Again, this tough as your child may have painted his or her room in High School colors or mascot that they find really cool.  It has to go, as the potential home buyers may not have kids, or have younger kids, so you want your house to reflect a blank canvas when others are looking to buy it.  You have to keep your home in “show ready” condition all the time, because you never know when it is going to be shown.  This is probably the single biggest hassle with selling your home as buyers always want to see your home at un-opportune times, such as at night when you get home form work.  Put away your laundry when it is done as potential buyers are going to look in your closet and any of those usual hiding places that normal company will not usually look at, but buyers will.  If you have extra furniture that you can store in the garage or a storage unit, do it, as by removing extra furniture it makes the house look bigger.  

Ok the house is staged, and if you don’t feel comfortable doing this ask your Agent for advice they should know.  If you have not signed your listing agreement by now with your Agent now would be a good time to do so.  The listing agreement or “exclusive right to sell agreement” is the form your Agent will use (in California).  This gives your Agent the rights to market your home for sale on your behalf.  The Agent will then implement their marketing strategies that they told you about when you first met. These marketing strategies should include some basic things such as listing your home in the Multiple Listing Service or MLS, this is where other Agents go to see properties for sale to show their buyer clients.  Chances are that your Agent will not be the Agent bringing a buyer to the table it will be another Agent that sees your home from the marketing your Agent has done for you.  As for paying the other Agent, this will be spelled out in your listing agreement, usually the total commission is split 50/50 with the Agents (Listing Agent and Selling Agent).  Your Agent may take some other form of payment for his or her commission; this should be negotiated from the beginning. 

Now an “offer” to purchase your home has come in to your Agent.  It is your Agents responsibility to show you all offers that tendered.  Don’t be offended if the offer comes in lower than the listed price of your home as this whole process is a negotiation.  I would recommend to my clients that they counter offer if the terms in the offer doesn’t meet their needs.  The single most countered item in Real Estate is price, so if the original offer comes in lower than you can go then simply instruct your Agent to  give the potential byer a counter offer with different terms that are acceptable to you.  This process of going back and forth is the negotiating process.  Once you and the buyer have come to terms you have entered into a Contract.    It has taken a lot to get to this point, but you are not done as the buyer will usually be required by their lender to obtain an appraisal on your house.  The appraisal itself is basically an outside person’s opinion of value of your home based on sales of similar homes in your neighborhood.  Sometimes an appraisal will come in lower than the agreed upon price.  If this happens you have to either be willing to lower the sales price to accommodate the appraised value or see if the buyer can come up with the difference in cash above the appraised value to buy your home.  Sometimes, if both parties are not flexible a deal can fall apart by both sides holding to their original terms.  As a seller you must revert back to your contract as there might be an appraisal contingency in the contract that states; if the appraisal comes in low the buyer has the right to back out of the contract and not buy the house for the original agreed upon sale price.    You do have the right to dispute if you are the one who paid for the appraisal, but if you did not pay for the appraisal you do not have that right.  So as a seller beware if you are pricing your home on the high side of the market that this scenario can happen. 

Next, we have made it past the appraisal at this point and are steaming towards the close of escrow.  The buyer still has to go through final underwriting, even though they gave you a pre-approval letter in the beginning, anything can happen with underwriting.  If the buyer’s loan gets denied by the lender at this point we have wasted about 2 to 3 weeks unless we took backup offers.  A backup offer is an offer that was not originally accepted by the seller (you) and the potential buyer told your Agent to hold on to it in case the accepted deal does not close.  That would be bad, so let’s assume here that the loan is approved and all is good.  The next step will be for the buyer’s lender to draw the loan documents and send them to the title company.  You then will be called in to sign off the title of your home.  The buyer’s lender will review all the signed paperwork and fund the loan.  Once the Title Company receives the funds, they then record the transaction with the county and the home is no longer yours, and you get your proceeds from the sale.  If you have found your next home and are ready to close on that home you can instruct the Title Company to wire the funds to close on your next home.  As you can see this process can be a little tricky so if you are not represented by a good Agent, like me (another selfless plug) then you could be completely lost and liable for any or all legal mistakes made.  Having an Agent is just smart as there are so many disclosures that a seller has to provide to a potential buyer, not to mention that Agents do this for a living and are up to date on all the current laws and the amount of commission that is made on the sale is nothing to what the legal fees could be if you have to defend yourself in the court system. 

I am Gregg Mower and I am a licensed Real Estate Broker #00953953 and I also hold a National Mortgage Licensing Number NMLS # 246961.  I have been licensed by the former Department of Real Estate and the new California Bureau of Real Estate since 1984.  I also hold the lending license that allows me to do Mortgage Loans on Real Estate as well.     I own MAE Capital Real and Loan and look forward to helping you sell your home and plan for your next one, as well as approving you for the financing for your next home and finding it for you.  Please call me at 916-849-7170 for more questions.

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Posted by Gregg Mower on January 29th, 2014 4:18 PM

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