With interest rates still low and a lean inventory of homes available, it’s a good time to sell your home. Still, selling is a big decision that sets a number of actions in motion, from repairing your property to selecting an agent, and finally signing the contract.
The first thing to consider is if you’re selling for the right reasons. The market is softening in certain areas, but if you’re tempted to sell because you think it’s the top of the market, think again.
“People who cashed out three or four years ago intending to buy back in at a lower price are still waiting,” says James Hamilton, president of the California Association of Realtors and manager of real-estate brokerage Re/Max Execs in Redondo Beach, California. He adds that California housing prices are expected to increase 10 percent in 2006. “If you aren’t moving somewhere where the cost of living is lower, big mistake.”
If you still want to sell, you literally need to get your house in order. Make a critical assessment of any needed maintenance or repairs, or hire a home inspector to do them. An inspection will probably cost a few hundred dollars, but it's well worth it to not get a shock when a buyer has his own inspection done. At least if you find your roof is shot, you can decide if it's worth it to fix it or to sell the house as-is and set your price accordingly.
If your house needs some renovations beforehand, ensure you’re making the right changes. According to the National Association of Realtors, prospective buyers look most closely at bathrooms and kitchens. Adding a high-tech home theater probably won’t move your house any faster, but installing or refinishing hardwood floors in common spaces can only help. Inexpensive changes, such as painting walls in neutral colors and adding softer lighting, also work wonders.
Next, decide if you're going to sell the house yourself or hire an agent. If you want to save the typical broker commission of five percent, “For Sale By Owner” can be a good option if your home is in a hot location and is at an affordable price for lots of potential buyers, or where homes like yours are in short supply. You'll need an attorney or a title company to handle the paperwork, while you will be in charge of marketing the house, showing it, pre-qualifying buyers, negotiating offers, and working with the appraisers, title agents and mortgage companies. Since the market is constantly changing, you’ll need to have a good feel and information for the market in order to set the right selling price. One way to ease the burden is using a flat-fee broker, such as Help-U-Sell or Assist-2-Sell, franchises that connect you with local licensed real-estate agents that subscribe to their low-cost business model.
Interviewing agents
If you prefer the full-service route, meet with at least three prospective agents. Ask people you know who sold their homes for referrals, or check your local real estate association and Chamber of Commerce for agent listings. Make sure you talk to experienced full-time agents who’ve worked at least three years and have an active selling record, says Mark Nash, author of “1001 Tips for Buying and Selling a Home”. “You want to see where the houses were, how long they were on the market, and the listing price versus the sales price to determine if that fits the criteria for your home.”
Also ask about their marketing plan for your house – realtors should offer you a variety of options such as a brochure, Web site listing, virtual tours and open houses.
Even with an agent, you can still save on the commission. If your home is priced above average and in a hot market where homes are in short supply, use this point for negotiation with any prospective broker.
Don't automatically go with the agent who suggests the highest price. "Some sellers do want to hear the price first as opposed to the whole package, but that’s shortsighted," says Caroline Murphy, a broker-associate for Coldwell Banker in Atlanta. “What you really want is a professional agent who does a thorough job reviewing market conditions.”
Bidding the value beyond what the market will support may make a homeowner feel good, but that often backfires, Murphy says. "If it's overpriced and you take it for three months, chances are the agent won't have sold it, and it goes on to a second agent for a lower price."
If you're selling on your own, consider hiring an appraiser, who will give you recent sales of what buyers have paid for similar houses in the past month. If you price yourself within 2 percent of fair market value, you'll have pretty good traffic, says Murphy. “You'll know there's a problem if you show the house to ten people and no one makes an offer.”
Make sure your sales strategy is flexible. Determine your initial asking price, but also know how long you’ll insist on it before making a reduction, and then consider how much of a cut will you accept. Having a plan in place will help you react quickly.
Nash advises sellers to keep in mind that if they plan to sell immediately, the last quarter of the year typically has the weakest demand. “Your house might sit on the market longer than normal and possibly receive less than if you listed it in the spring, when a largest number of buyers create stronger demand,” he says. Sellers in seasonal markets such as Palm Springs and South Florida should place their properties during high season, when “snowbirds” are in their market.
Mimic a model home
Before you list the house, make sure it’s de-cluttered, says Hamilton. "A spare, open and fresh feeling makes your home more inviting to buyers. Make it look as much of a model home as possible.”
Cleanliness is also important, advises Nash, who says it shouldn’t be mixed up with clutter. “Many homes with bells and whistles linger on the market because they haven’t had received a top-to-bottom scrubbing.”
Hire a professional cleaning service to clean cobwebs, dingy drapes, musty smells, moldy tile and stained carpet. This applies to the front of the house too, Nash adds. Paint the front door, polish hardware, make the address number visible, and place a seasonal wreath.
“Stand across the street and look at your house as if you're a prospective buyer seeing it for the first time,” he says.“The front walk to the door will be the buyer’s first impression, so a $15 flat of flowers out front makes a big difference.”