| Putting
Your House On The Market
The first step toward putting your
house up for sale is to meet with a real estate agent at
your home. What I call the "job interview" or more commonly
called the "Listing Appointment." But beforehand,
it's important to understand "who's who" and how brokers
may cooperate to sell your house.
Listing Broker or Listing Agent
An individual real estate broker whom the seller hires to
represent the seller through a contract called a "listing
agreement". The listing agent is associated with the listing
broker. The listing broker is directly paid the listing
commission and then splits the commission with the listing
agent. (Although the broker and agent may be two different
individuals, the term "broker" is used throughout the site
for simplicity.)
Selling Broker or Selling Agent
In a "cooperative" sale, the house is listed by one broker
and a buyer is provided by another broker. The selling broker
receives the selling side of the commission. If the listing
broker also produces the buyer, then the listing broker
receives both listing and selling sides of the commission.
A selling broker may have a signed buyer representation
agreement with a buyer and, therefore, represent the buyer
and not the seller.
A Little
Homework
Before the listing appointment both
the home seller and the listing broker are busy While the
home seller collects a list of documents requested by the
broker, the listing broker studies recent neighborhood sales
of homes comparable to yours, and also comparable homes
currently for sale.
There's
No Place Like Home
At the listing appointment, the listing
broker will want to inspect the house and yard to become
familiar with its special features.
You have probably enjoyed living
in your home and have been pleased with its many unique
features. Your listing broker will want to tell prospective
buyers about the special features of your home and neighborhood.
Be ready to be specific about schools, day-care, nearby
Metro, and other desirable community features, as well as
home features not readily apparent.
Remember, prospective buyers will
be "comparison shopping" and keenly aware of subtle differences
in houses for sale in the area. Be sure to tell your listing
broker why yours is special--from any home remodeling to
afternoon winter sunshine.
Demand Set
Price
After conferring with
the listing broker on market conditions, comparable nearby
sales and listings, and available financing, the home seller
will set the listing or "asking" price for the house.
A common definition of market value
is: "What a ready, willing and able buyer will pay, at a
price a seller will accept." Metropolitan area buyers are
sophisticated. They've already been shopping, and when they
see your home they'll be comparing features and financing.
There's a rule of thumb that says:
"A house priced more than 5% over market value discourages
offers." Buyers who can afford the price can get "more house"
for their money elsewhere. Buyers who cannot afford the
price simply won't look. This is why we say, "A house priced
right is half sold."
A fair market value will be determined
by comparing the property with similar properties which
have recently sold and (in some cases) with similar properties
currently on the market. Experience in the industry has
proven this "market analysis" approach is more accurate
than the "replacement cost" or "potential rental income"
methods.
Sample
NET SHEET
Based on this sales price, the listing
broker will go through a worksheet that estimates the "net
cash" from the sale. Simply, this exercise subtracts anticipated
charges paid by the seller from the sales price. A copy
of the "net sheet" is left with the home seller. (An itemized
list of typical selling costs is presented in the "Settlement"
chapter, which is the stage when these charges are paid.)
Financing
Strategy
No sale can be completed without
financing. That is why it is generally to the home seller's
advantage to appeal to the greatest number of home buyers
by accepting the greatest range of financing plans. The
listing broker will explain the basic differences between
VA (Veterans Administration), FHA (Federal Housing Administration)
and conventional financing, as well as explain "discount
points."
What is
a Point?
A point is one percent of the amount
of the buyer's mortgage loan. For example, if a loan is
$100,000, one point is $1,000. Lenders charge points to
increase the yield on their loans. On all loans, home buyer
and home seller may share the charges by mutual agreement.
Property
Profile Folder
To enable the listing broker to prepare
a folder of information on the property, the home seller
needs to provide a number of documents and information specific
to the location and jurisdiction. (This Property Profile
is often left in the home for the convenience of prospective
selling brokers.) Because the list is long, you can understand
why it's best to collect the papers before the listing appointment.
These materials may include:
Pay-Off Notice
A letter signed by the home
seller and mailed to the lender by the listing broker to
notify the lender of the intention to pay off the
mortgage in order to minimize prepayment of interest
penalties by the seller (Home seller should provide the
broker with the lender's address, loan balance,
assumability, years remaining on present mortgage,
P.I.T.I. and the interest rate, if possible.)
Well and Septic Inspection
If property is on septic/well,
current inspections by local health authorities are
required while the home is occupied. The listing broker
will usually arrange for inspections after a contract is
ratified.
Order Lender Appraisal
Lenders usually require an appraisal
to assure that the property is adequate collateral for
a loan. An appraisal may be ordered before (paid by seller),
but is more often done after an "offer to purchase" is
accepted (paid by buyer).
Assessments/Easements
The listing broker will ask the
home seller if any tax assessments or easements exist on
the property that must be paid or included in the
purchase contract and passed with the land to the buyer
when sold.
Property Taxes/Condominium Fees
The home seller provides records
of property tax or condominium fee payments. Buyer will
reimburse a pro-rata share to the home seller at
settlement.
Inspections
VA/FHA and most lenders of new
mortgages require a termite inspection certificate that
shows the house is free of infestation. If the home
seller does not have a current certificate, then the
selling broker will arrange for an inspection at the
home buyer’s expense. (Seller’s expense if VA loan)
Sometimes a home inspection and radon test will be
ordered. The home seller is required to provide all
information as to the physical condition of the
property, such as the presence of fire retardant
plywood.
Utilities
The home seller should provide
records of the past 12 months utility bills, including
gas, electric, sewer, water, and trash where applicable.
Most buyers will want to know the history of utility
costs.
Helpful Documents
If possible, the home seller
should provide the listing broker with the deed, house
location survey, condominium bylaws or home owners
association documents, subdivision plat map, house floor
plan, previous title search abstracts, legal description
of property (subdivision, section and lot), home
warranties on major systems, if still in effect.
What Conveys?
In anticipation of a buyer's offer,
the home seller must be ready to supply the listing broker with
a specific list of the personal property that is included
in the real estate property for sale. Examples of items
to "convey" may include: draperies, drapery rods, remaining
heating oil, firewood, washer, dryer, refrigerator, stove,
microwave, disposal, swimming pool chemicals, awnings, storm
doors and windows, screens, venetian blinds, shutters, window
air conditioner, etc. Home seller should tag or remove items
which do not convey.
Listing
Agreement
When the home seller is ready to
put the house on the market, the listing agreement is filled
out indicating a specific period of time the agreement is
in effect ("listing period"), and signed by the seller. You've
now hired a listing broker and listing agent.
Questions
and Answers
What is a "Lockbox"?
A lockbox is a universal metal
container for your house key that is hung on the front
door and can only be opened by a special key carried by
licensed sales agents. It provides access when the owner
is away, thus assuring full exposure to prospective buyers.
Do certain geographical areas have
unique home selling requirements?
Yes. Home selling requirements
vary from county to county. Investigate special taxes
or other requirements applicable to the area in which
you live.
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