A Seller's Guide to Selling a Home
UPDATED: February 5, 2020
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There are many reasons for selling your home. You might want to advance your career in a new location, move to a bigger place, downsize, retire, or go see the world. Whatever the reason, you want to get the best price with the least hassle. This article will give you tips on avoiding legal pitfalls while selling your house.
Using a Real Estate Agent
You always have the option of representing yourself in the sale of your own home. This is called FSBO (For Sale By Owner). There are special websites that can help you get listed so that buyers can find your property. If you want to be listed on the Multiple Listing Service (MLS), the listing service used by real estate agents, you might be able to pay a real estate agent to list your property there. You can also hire an agent to perform certain services for you instead of being your agent. A major disadvantage of this approach is that many agents won't direct their clients toward a property where no agent fee is offered.
There's no doubt that a good agent can save you time, trouble, and money. He or she may be able to get more for you, even after the agent fee (usually about 5-7%) is deducted from the purchase price. If you do use an agent, make sure you choose the right one. The agent should have experience, be familiar with the kind of property you are selling, and be familiar with the area where your home is located. He or she should also be someone you feel comfortable with. You can get recommendations for agents from people you trust who know or have used good agents. The agent fee may also be negotiable in a cold market (a buyers market). Make sure you are ready to sell. If the agent finds a buyer at a price you said was acceptable, you may owe the agent the commission, even if you change your mind and decide not to sell.
Using an Attorney
You do not have to use a lawyer to handle the transaction, but it is customary in some states to do so. You will want to consult an experienced real estate attorney if there are any legal questions connected to the sale of your property that you are unclear about. For example, what are you required to disclose about the property under your state's laws? What should you do if there are problems with illegal construction, permit and zoning issues, or with the deed? Consulting with a knowledgeable real estate lawyer before problems arise can save you a lot of money and trouble in the long run.
Getting Ready to Sell
You can get more for your property, and sell it faster, if you take a little trouble to present it in the best possible way. This can include cleaning, painting, landscaping, and getting rid of rubbish. Some sellers go so far as to move all their things out and rent furniture to redecorate the house. People who do this for you are called stagers. They "stage" your house in preparation for the first open house. Real estate agents usually can recommend someone for this if it's something you want to do. If you don't want to go that far, things like flowering plants on the porch can add to the emotional appeal of the property.
It's very important that you repair any potential safety hazards, like holes in the walkway or loose steps. This will improve the house's value, but more importantly, it will protect you from lawsuits by preventing injury to visitors.
Your Asking Price
Though your agent can help you set an asking price, you should still always try to participate actively in the process. Your agent has an interest in getting the highest price, because she or he gets a percentage, but you may have an equal need to sell quickly. Make sure you protect yourself.
You can find out what other people are asking by attending open houses near your home, looking at the selling prices for comparable property in your area (properties with the same numbers of bedrooms and baths, similar square footage of both house and property, and amenities like fireplaces or swimming pools), and checking ads online and in the local classifieds. You also need to consider whether the market is a seller's market (hot) or a buyer's market (cold).
All sellers have to disclose some defects to a buyer, but the details of disclosure vary from state to state. California, for example, has broad requirements. Most states just require the seller to disclose a major physical defect that might affect the value, livability, or desirability of the property. If you don't follow your state's laws on disclosure, you might be guilty of fraud, so be careful. You don't have to go out and hire an inspector to find out everything that's wrong with the property, but you do need to tell what you know. If in doubt, disclose. In most states you have to use a specific form or put the disclosure in writing.
There are also federal laws requiring disclosure of information about lead paint in buildings built before 1978. See [link: http://portal.hud.gov/hudportal/HUD?src=/program_offices/healthy_homes/enforcement/disclosure] for details.
Dealing With Offers and Making Counteroffers
Once you receive an offer or more than one offer, your next step is to evaluate them for quality and select the best offer. In choosing the best offer, the highest purchase price offer isn't the only thing to consider. You should also factor in the strength of the buyer's financing and the contingencies the buyer wants. You can either accept or reject an offer or make a counteroffer. In your counteroffer you can revise the offer, the purchase price, contingencies (dependent on satisfactory inspections, on selling the buyer's house, etc.), or the time for completing the purchase.
Accepting an offer in writing binds both you and the buyer to a legal contract on the terms of the offer. The buyer can do the same by accepting a counteroffer in writing. So make sure you are careful about what you put in writing.
Most buyers will require at least one inspection before the sales contract is finalized. If the inspection(s) shows serious problems, the buyer will most likely want to renegotiate the purchase price or ask you to pay for some or all repairs. See Buying a House: Why a Home Inspection Can Save You Money for more information about home inspections.
The final transfer of the property will take place once you've worked out all the details. The buyer has the right to take possession of the property on the closing date, so make sure you either vacate the property by that date or make arrangements with the buyer to stay longer.