Selling your home or investment property can be a stressful decision. But it does not have to be if you plan ahead of time and know what to expect during the process. In this guide, we’ll discuss how you can make selling your property a positive experience.
Before we start, I highly recommend that you read my homebuyer guide so you can understand the selling process from the point of view of a buyer.
Having this information will give you a huge advantage over what expectations the buyer has in regards to negotiating, structuring a deal, when they buy, and working with a realtor. Not to mention it will also offer a lot of assistance with understanding home inspections and appraisals.
Let’s get started.
Step #1: Why are you selling your property?
Selling your home or investment property is a big decision and not something you just want to do on a whim. The reasons that force people to sell will surprise you. Let’s review some of them below.
- You want to upgrade to your dream home.
- You were living in a property you intended to flip, and you want to cash out now!
- You are relocating to a new job, and you don’t want to rent out your home.
- You are going to downsize to something smaller, which is a popular trend these days.
- Maybe you just got married, and that bachelor or bachelorette pad just doesn’t cut it anymore!
Those are all excellent reasons to sell. But then some situations in life are very negative and create some unpleasant feelings, such as a divorce or other financial hardships occurring in your life. These feelings might make you think you want to sell your home.
I highly recommend that you take your time to sort out these feelings and keep a rational mind. You want to position yourself to sell at the right time so you can gain the most profit and pay the least amount of taxes. Seek out professional help and research all of the options available before you pull the trigger.
For example, if you buy a home as a single person or as a married couple and you decide you have to sell it before you live in it two years. You’ll lose out on a huge tax exemption on any profit you made. For most people, it could be up to $250k for a single person or up to $500k for a married couple. Wow!
In the end, you are the boss, and once you are determined that it’s time to sell, you need to figure out what your home is worth.
Step #2: What is your home or investment property worth?
It’s always a good idea to get some comps in your neighborhood for what you think your house might be worth. Luckily, with the help of the Internet, you can use sites like RedFin or Zillow to research the recent comps of properties that sold in your local area.
If you live in a development where the layout and style of your home are standard (such as condos, townhomes, or a new home division), it will be easy.
If not, you’ll have to do a bit more research like visiting an Open House for a current listing in your neighborhood. The Internet is a perfect place to research, but nothing beats seeing what your competition looks like in person.
On a Saturday or Sunday go check out some open houses in your neighborhood, then compare those properties to your own. As you compare it, make sure you consider the home’s upgrades, lot size, and overall condition.
Then research what the list price was, what it sold for, and how long it was on the market. You can do this by following up on the internet sites listed above, or by contacting the Realtor who did the listing.
That will give you a good feeling for what kind of price you’ll get and how long you’ll have to wait for your property to sell on the current market.
By the way! Open Houses are also an excellent way to find a Realtor to sell your home if you don’t have one lined up already. If the home is nearby, then that Realtor most likely specializes in your neighborhood so follow up with them by grabbing their business card!
Depending on the market conditions, you’ll want to sell your home when it’s a seller’s market. Ultimately, you’ll want to do it between April and September, in a year where the overall economy is healthy, and people are spending money.
If mortgage interest rates are low and people are having an easy time getting approved for a loan, that will help you get a higher price for your home too.
Step #3: Will it be worth it to sell?
By now you have a good idea on what kind of price you’ll get for your home. Now the question you have to ask yourself is if it’s worth it.
Will you get enough of a sales price to cover all of your repair costs, sales commissions, and escrow fees? If you were expecting to roll over some equity for a down payment on your new home purchase, is there enough left over?
To know for sure, you’re going to need to evaluate and estimate all of the repairs that are required to fix up your property so that it will sell. If your roof leaks, then fix or get an entirely new one. The same goes for the siding, drywall, flooring, doors, windows and anything else that needs to be fixed up before selling your home.
If you are going to do some remodeling in your home, you’ll want to focus on the rooms that will bring the highest rate of return. Kitchens and bathrooms are the two areas of the house that will really boost up your home’s resale value. You should consider other renovations as well.
Other typical renovations include updating the landscaping, plumbing, electrical, adding solar panels, installing energy efficient windows, and insulating empty attic and wall spaces.
Oh, and don’t forget to hire a qualified General Contractor to get the work done. You can do some research on Yelp or Angie’s List to help find someone in your local area. Also, don’t forget to ask your friends, neighbors, or a Realtor if they know any good home improvement companies.
By having all of the repairs and renovations are done ahead of time, you’ll be ready to get the highest listing price for your home.
Listing the property as a FSBO or with a Realtor
Depending on your area and how much of the actual work you want to do yourself, you’ll need to decide if you want to hire a Real Estate Agent (Realtor) or list the house yourself as a “For Sale By Owner” (also called a FSBO).
You can also use a Flat Fee Broker Service similar to Help U Sell.
If you chose the Flat Fee Broker Service or you’re doing the listing as a FSBO, you’ll be the one doing the open houses and some of the promoting. The Flat Fee Broker most likely can get you listed on the “Multiple Listing Service” aka MLS as well.
But as a straight FSBO, you will not have access to the MLS. The MLS is the primary resource that all professional Realtors use to find out about new properties for sale to show their potential buyers. So, without being listed, you will be at a huge disadvantage.
The good news is that in a seller’s market you will most likely be able to sell your house with a simple Craigslist ad. In fact, because I live in the hot Bay Area real estate market, I have been able to sell all of my previous homes successfully with just a Craigslist listing.
Every property listed for sale should have the following:
- A high-quality For Sale sign in front of the home, with an online listing that can be seen on various real estate websites, for example, Realtor.com, Redfin, Zillow, Movoto, etc.
- A high-quality flyer that can easily be picked up by people who view the home.
- Any pictures used to market the property should be high-resolution photos that give a natural look of your property.
If you decide to hire a Realtor, you will need to make sure they provide your home the best presentation possible by following those three basic requirements.
Hopefully, they have even more great ideas to sell your property.
If you decide to do the listing as a full FSBO, then you can buy “Home For Sale By Owner” signs and just print out your own flyers with the help of a website like Vista Print or another online printing service.
In the description for your online listing and sales flyers, make sure you convey all the benefits of your property. If it’s close to the freeway or public transportation, describe that. If you just got a new roof installed, say it. If your house is at the end of a cul de sac or close to the best public schools in the area, don’t forget to mention that too.
Your agent should also be using a high-quality business card with their contact information clearly written out. They should also have a photo on their card. These are all good signs that they are a true professional and will serve you well to earn that commission.
Make sure that your home photos are not stretched out. A lot of times the photographers who work for the Realtor will lose the ball on this one. It makes your house look weird and not very appealing to buyers.
I’ve noticed that when home sellers do this, it’s like they’re trying to make the place look bigger than it really is. Then you as the buyer show up, and you go, wow, looks kind of small. It creates a false perception, so I’m not sure why so many sellers think they can fool a buyer.
Most of the time photos taken with an iPhone or Droid phone with lots of natural light is the way to go! Take at least 5 – 10 photos, maybe more depending on the size of your home.
If you follow these tips for listing your property, your buyer will appreciate it, and it will really stand out for helping people to view your property.
Step# 4: The Power of Craigslist Real Estate Ads
If you decided to do a FSBO or work with a Flat Fee Broker, why not put up an ad on Craigslist to show it off? You’re going to be the one indicating the house to potential buyers after all. And it will help since you might have limited exposure or NO exposure on the MLS.
I remember when I used to do my open houses. The market was so good in the Bay Area at the time that I sold my first place to the very first purchaser. My second place took a bit longer, but after one weekend of hosting an open house, I had an offer in hand. The offer was over the asking price too.
The key to this was that I priced the house properly and ran a listing on Craigslist about a week in advance to build up anticipation. The ad I wrote was so good, and so were the pictures. The key to a good sales ad on Craigslist is to be exciting and honest. It was easy for me because I had an emotional attachment to each property I owned. So I wanted to see it go to a good family.
Here’s an example of a perfect “Home for Sale” Ad on Craigslist:
[Beginning of Sample ad]
3 Bedroom 2 Full Bath Open Floor Plan Beauty For Sale!
1800 Sqft. | 3 Bedrooms | 2 Full Baths | 10,000sqft. Lot | Alamo, Ca.
This dream home is priced to sell! It’s close to all the best elementary, middle, and high schools in the area. Your kids will be able to walk or easily take the bus to school in this safe neighborhood.
Not to mention it’s a very family-friendly community with lots of outdoor activities frequently happening, especially in the summer. Last summer was full of outdoor concerts, farmer’s markets, and family nights in the nearby park.
The home was recently remodeled and has a whole new kitchen, bathrooms, and a fresh paint job inside and out. Not to mention brand new solid oak floors throughout! There are no window coverings or bright colors however.. It’s a blank canvas ready for you to decorate to your specific tastes. See the pictures!
The open floor plan flows, and the closets are spacious. The backyard has a new deck covering and a built-in brick BBQ. It’s a BBQers paradise for 4th of July parties or any family celebration.
All the bedrooms are on the backside of the house so you can have your windows opened safely and without traffic noise.
Seeing is believing! Call or e-mail Scotty at the number below to check it out!
[end of sample ad]
Now, this ad is pretty generic because it’s an example. But you’d want to put the specific names of schools, parks, neighborhoods, etc. in there as well. It’s all about showing off the house in its best presentation.
If you have an open house, Craigslist is another great option for announcing that. You could use the same type of ad as above, but just add an announcement for the date of the open house. It’s not easy! If your Realtor is hosting it, they’ll announce it through other channels, but should also use Craigslist too. Below we’ll talk about how to make sure the open house is not a disaster.
Tips for a successful open house
I’m not sure why I even have to write this, but absolutely make sure you or the Realtor is present at the open house. I’ve been to countless open houses where no one could find the Realtor or the seller; the people viewing the home thought I was the Realtor!
The Realtor not being present at an Open House is something only a half-ass Realtor will do. They’ll do just fine in a booming real estate market. But they will be a disservice to you. And that Realtor will not be making a living when the market goes sideways or slows down.
They’ll be onto the next job!
In addition to having your Realtor present, you will want to make sure your house is in the best possible condition for the open house. After all, this is where people are going to have the opportunity to “kick the tires” and get a one-on-one view of the property.
Here are my tips to make sure your open house goes well and that you come away with a few interested potential buyers:
- Free the house of any and all clutter, stage beautiful furniture, and, if needed, get help from a home decorator. If the house is vacant, stage it with rental furniture to make it feel warm and inviting.
- Make sure that the windows and shades are open to allow for natural light.
- Bake cookies. It may sound a little silly, but the smell from the oven will create a lovely home feel experience for people looking to live there. Not to mention, it gives prospects a tasty snack!
- Your home should be dust-free, and the floors kept clean. Especially if it’s been on the market for a while and lots of people have been walking through it.
- If you have pets, try to keep them confined to a particular area, so they don’t interfere or cause any disruptions.
- Be careful about leaving any expensive items, jewelry, or valuables out as it may be too difficult for you or your Realtor to keep tabs on everything. Designate a place where these types of items can be locked up or secured away from roving eyes.
- Consider temporarily removing any personal items like family photos throughout the house. The more prospective buyers can envision the house as theirs and not yours makes them more likely to buy.
- Keep the curb appeal up. Curb appeal is very important. Maintain the lawn and plants trimmed weekly. Also, talk to your neighbor about maybe parking their junky cars somewhere else that day. Junky cars by your house make curb appeal awful!
- Make sure your open house signs are clearly displayed on all main streets directing them how to find your property easily. There is nothing worse than when signs are pointing in weird directions, or there is not enough of them.
- Don’t forget to use technology to help you get the word out. Lots of apps and sites like Zillow and com have portals to help you advertise your open house.
Step #5: Real Estate Agents & Listing Agreements
If you decide to get the assistance of a Realtor during the sales process of your property, they are going to get a commission for their services. Usually, a 4 – 6% commission seems to be the norm for full service. If you’re lucky and found a buyer on your own using the tips in this guide, you can negotiate a commission rate of only 1 – 2% (from helping you with the sales contract and for using their broker’s license.)
Flat Fee Brokers will most likely just do it for a discounted flat fee, for example, $8,000 whether the sale price is $500k or $700k.
A “Listing Agreement” is going to help clarify the terms on which this commission is made. It’s going to document exactly how the realtor will handle the sale of your home and how it will be advertised. Depending on full service or partial service, all the expectations of what your agent is required to do will be in this agreement.
Make sure you understand everything in the agreement because they’ll also obligate you to work with this Realtor for a minimum amount of time. So, if they are doing a bad job, it will be hard to get out of the deal.
In other words, don’t just sign it unless you understand 100% of all the terms and conditions. At the same time, it will list what they are actually going to do for you to earn that commission, so it protects you too.
There is some other common Listing Agreement “gotchas” that I want to cover! I’ve listed them below. REMEMBER! Always seek out professional legal help. I’m not a lawyer.
- Exclusive right to sell – Your agent has first priority for any rights relating to the sale of your home during the duration of time that is agreed upon.
- Duration of time – Typically, this can be 3 months, but I would do the shortest amount of time you can. It will be better for you overall. That way if everything is going well and they end up being the best agent in town, you can just renew with them. If they are not, you can always fire them.
- Commission Amount – The commission or fee they’ll get once the home or property is sold. If you are getting partial service, 1-2% is fine. But if you have them list on the MLS, do an open house, run the sale, etc., expect to pay a full 4 – 6%.
- Safety / Protection Clause – This prevents you from directly doing a sell to a buyer that the Realtor helped you find after the expiration of the listing agreement. This can be a very complicated matter so make sure you seek out the proper professional legal help if you are unsure of what it means in your particular case.
- Representations – This will require you to show proof that you are a legal authority to sell the property. Again, pretty complex legal matters, so just make sure you have no conflicts with ownership.
- Duties – This part of the agreement will make sure certain things are done like listing it on the MLS, internet sites, and putting a sign out on your property. Also, if any open houses are to be done, this should also be detailed in there.
- Dispute Resolution – This area just describes how you handle disagreements that you cannot handle by just talking it out. It might even describe the town or what type of exact arbitration you’ll go through.
- Changes to the agreement – There should also be an area that describes how changes will be handled. Most of the time you just add amendments to the existing agreement.
Who thought selling a real estate property could be so complicated? It is, as you can see, which is why no matter what you do, you’ll want to use a broker to complete the transaction for you. It’s worth the 1 – 2 % even if you do a FSBO.
If you are sure you want to go at it by yourself, make sure you visit Nolo.com to get one of their For Sale By Owner legal books.
Step #6: Accepting all the offers that roll in
In a hot market, you could have a bit of a problem. You could have multiple offers, and then you may not be quite sure of which one to accept! Always consider picking the all-cash deal if the price is right and the buyer is ready to close fast. You can also choose an offer with the bigger deposit and an approval letter from a mortgage company for financing from the buyer.
In an offer, pay close attention to the other little details too. They may seem like little things, but they are actually quite big. For example, does the contract have a lot of scribbles or sloppy mistakes on it? That would indicate someone who is unsure of the deal or someone who cannot make up their mind.
It could also say something about the buyer’s Realtor. I was buying a house one time, and I found out I lost a deal because my Realtor used white out on the contract. They were reusing the same contract and just changing out the property addresses and purchase amounts. So yes, it does happen. I got a new Realtor to assist me after I found out about that!
Look out for contingencies and the expiration date of the offer. If you review my home buying guide, you can find out more about what other things buyers do on an offer. As you read it, put yourself in the position of the seller, so you know if you need to counter offer on something to protect your best interests.
If you decide to have full service provided by a real estate agent, they will help you with the best ways to strategize a counter offer.
Step #7: Drawing up a sales contract and escrow
Once the offer is all setup, you’ll be dealing with the buyer’s expectations at this point. In other words, you’ll be getting all the inspections, appraisals, repairs, and title paperwork completed.
This can be an extremely difficult time if you just recently completed repairs and renovations before you did the listing. You’ll need a lot of patience as people will knit-pick your property and tell you all the things that are wrong with it.
Keep an open mind and realize that there is no perfect home. Put yourself in the buyer’s shoes to have a better understanding of their mindset.
People will be coming into your home a lot during this time! If your property is vacant, that is awesome. It will make the process so much easier.
After you get through the first few weeks, you should be heading to a close and ready to put this whole thing behind you. The deal will be closed within 30 to 40 days, and you’ll walk away with a big fat check hopefully.
Cash buyers are cool because they’ll usually have fewer inspections as well as a quick turnaround for closing. It could end up being as little as 14 days!
The entire process of selling a property is sometimes more stressful than when you bought it. Regardless of the reasons for selling it just remember to think it through. If you’re more hands-on and business savvy, you save a bit of money from high commissions by finding the buyer and doing some of the marketing yourself.
If not, hiring an agent to sell your home for you is worth the entire 4 – 6% commission! Trust me on that. You just want to make sure you hire the right one to earn the commission. I hope the tips in this guide helped you out. Until next time, happy selling!