Completing a home sale can require a lot of time, planning, paperwork and even money. Here’s a step-by-step guide to getting it done.
If buying a house wins the crown for “Most Difficult Adult Thing You’ve Ever Done,” then selling a house must be runner-up. Completing a home sale can require a lot of time, planning, paperwork and even money. Here’s a step-by-step guide to getting it done.
Let’s start with a checklist and then dig deeper:
Prepare your home for sale: Real estate pros call this “staging,” but it simply means decluttering, or perhaps giving your walls a fresh coat of paint. We’re not talking a full remodel.
Analyze your market: Do you live in a buyer’s or seller’s market? What are comparable homes in your area selling for?
Determine whether you need a real estate agent or will list for sale by owner: Some sellers start out listing their home for sale by owner and then use an agent if they’re unsuccessful. This can cost you time and money, especially if you have to discount your price.
Set a competitive price: You want to determine what you’ll net from the sale, accounting for marketing, closing costs and possible broker commissions. But don’t overprice your property. Generally, the longer your house stays on the market, the less you’ll get.
Market your property: From magazine-quality photos to compelling listing descriptions, you want your home to make a great impression from day one.
Get ready to negotiate: This is where some real estate agents can really add value: negotiating with prospective buyers. A tough negotiator can make a thousands-of-dollars difference.
Prepare for the loan closing: You may have contingencies to deal with, as well as repairs identified by the home inspection.
Plan your move: There may not be much time to celebrate your sale as you box up your belongings and relocate.
Teeing up your home for sale might be the most important part of the process. From curb appeal to decluttering, make a commitment to set aside sentimentality and focus on maximizing your home’s marketability. A lot of family photos have to be boxed up, walls may need a fresh coat of paint, and that cushy but worn recliner might have to be retired.
Professional stagers help prepare a home for sale for a fee, and the results can be dramatic. Pros often will remove half the furniture in a home to make it appear larger. The International Association of Home Staging Professionals says such services reduce a home’s time on the market from an average of 90 days, to 11 days — and staged homes sell for 17% more than nonstaged homes.
In the meantime, taking an objective view of your local real estate market will help you manage your expectations, as well as price and market your home properly. In a seller’s market, you might expect multiple bids above your opening listing price. But in a buyer’s market, you might have to discount your asking price.
One way to get an initial analysis of your market is to use a convenient Zillow tool: Enter a city, state, ZIP code or neighborhood you’re interested in, and you’ll find Zillow’s insight into your local real estate market.
While the temptation to do it yourself may be strong, sometimes an objective voice can make all the difference. Whether you hire an agent or go the for-sale-by-owner route, you’ll want honest feedback along the way regarding your proposed price, how well the house will show, and other matters involving the sale.
Just showing the house yourself can be awkward, especially hearing honest — and sometimes painful — comments about your home.
A real estate agent will provide you with a market analysis, detailing homes similar to yours and what they’ve recently sold for. These “comps” are critical in helping you set a fair and competitive sale price for your home. Without an agent, you’ll need to do this research on your own.
In addition, local market knowledge is a major advantage. An experienced real estate agent can guide you away from making rookie mistakes.
If you have the time, marketing savvy and people skills, a for-sale-by-owner transaction may be for you. But if you decide to hire a real estate agent, interview at least three contenders to find the right fit.
When determining the list price of your home, you’ll want to give yourself a little cushion for negotiation, unless you live in a hot seller’s market. There also will be some expenses, including a broker’s commission of 3% to 6%, to deduct from the proceeds of the sale.
Pricing your home is as much art as science; it’s a delicate process. Redfin researchers studied information on more than 12 million home sales in the past five years and found that homes for sale get five times more visits on the very first day they’re listed than they do a week later. That means if buyers believe your home is overpriced from the start, they may not take a second look.
And Redfin says cutting the price later may not be helpful, since just-discounted homes get half as many views as newly listed properties.
Even if you go it alone without an agent, you’ll have marketing expenses (signs, fliers, listing costs, photography, etc.) and any closing costs that you are willing to offer in order to motivate potential buyers.
You’ve probably noticed homes that have a little extra sizzle in their online listings, with photography that really pops and descriptions that are easy to read and packed with info.
The value of professional photography cannot be overstated.
The value of professional photography cannot be overstated. Redfin’s survey reveals that high-quality images, shot by a professional with the right lenses and lighting, can sell for an average of $3,400 more — and up to three weeks faster — than home listings featuring lower-quality photography.
You might consider holding an open house to bring traffic to your home. While pros often debate the usefulness of such events, Redfin found homes with an open house in the first week of their listing sell for about 2% more and are more likely to sell within 90 days than homes offering open houses after the week of their listing debut. However, the report says it’s likely that the relationship between sales success and an open house during the first week of a listing has more to do with pricing and local market demand.
One final, and intriguing, nugget from the Redfin research: Homes listed for sale on Thursday perform better. They’re more likely to sell for bigger money — even above list price — and sell days faster than homes listed on any other day of the week. But just 18% are actually listed on Thursday.
With or without an agent, you’ll need to make your home available for an appraisal and an inspection — and, of course, showings. Contingencies — those “if-then” propositions — can be tedious: “If you fix this, then we’ll buy your home.” Contingencies are market-driven factors. Generally, the higher the housing demand, the fewer conditions are placed on a sale.
In fact, all of the finer points of negotiating with prospective buyers can be time-consuming and patience-testing — and this is where good real estate agents really earn their keep.
Some of the last-minute details you may need to deal with can include deciding whether you want to trigger a “rent-back” agreement from the new owners in order to allow you time to complete the purchase of your new home and prepare for the move.
After all the effort it takes to sell your house, perhaps the most frantic period could be when it finally comes time to relocate. Coordinating movers, packing and handling a change of address — it all requires a lot of attention to detail.
But after it all, there is some good news: the payoff. Once you sell your home, the IRS generally allows you to take up to a $250,000 gain on the sale, tax-free. If you’re married and file jointly, double that to $500,000. The bad news? Selling your house for a loss is not deductible.
Hal Bundrick is a staff writer at NerdWallet, a personal finance website.
This article originally appeared on NerdWallet.
Subscribe to the Real Insight Newsletter to stay ahead of the market with our valuable articles, local market statistics and analysis, and insightful information.