Selling your home is never an easy decision. People sell their home for a variety of reasons; a new job, a job move, a job loss, a change in financial circumstances, an empty nest, retirement, state income taxes on retirement and social security or just plain ’ole time to go. Many people struggle with the thought of selling their homestead. For many, it takes time to break that emotional tie.
Before 2006, it was relatively easy to sell your home. A homeowner would list their home, and if priced correctly, would sell in just days or weeks. Unfortunately, those days are long gone. In fact, after 2009, many potential Sellers were prevented from placing their homes on the market for sale because the mortgages on their homes were higher than the potential net proceeds of the sale. Prices have gone up in most areas since the bottom lows and people are now re-entering the real estate market.
If you are selling a home in the current market be prepared for some work. In most parts of the country, including our own Fairfield County, it is a buyer’s market. When you hear the news about property sales, please keep in mind that the numbers you hear are national markets. Real estate is extremely regional and local in nature. New York City may be on fire but that does not mean that Darien, New Canaan, Westport or Fairfield are selling at the same rate. Entry-level homes, as well as extremely high-end properties are having success but the elusive properties in the middle are taking time to sell. As the National Board of Realtors recently reported, national averages suggest that homes are on the market for about 4 months.
So you have decided you want to sell your home. You have some homework to do. Look around at your home—there may be some repairs and other things you need to do to get the best curb appeal and to sell your home quickly. Are your bathrooms so tired they will hurt a sale? You must put pen to paper and write a list of any repairs that may be needed to decide: is it worth it for you to make certain updates to get more money back and a faster sale, or is the upgrade a waste of money? Some of these answers will depend on your area, the current market and your price point. A good realtor can advise you in this area too. Use your common sense. If your home is an entry level home, it is probably not worth the money and effort. If your home is considered a high end home, Buyers are going to have certain expectations.
The following are some suggested steps to sell a home.
1) Recognize your particular market, neighborhood, street. Location and schools play a big part in pricing. Be realistic about your expectations. Schools could have changed since you purchased with redistricting, new homes could have been built to add value to your home, a tragedy could have occurred, sewers could have been installed. You get the point.
2) If you performed any work on the home that required a permit and a Certificate of Occupancy or a Certificate of Completion, make sure you closed these items up with your Town building department. This was not an issue in years past but has become a huge issue in the current market. Bank appraisers are inspecting properties and are pointing out work that does not appear to be to building code. You can go to your Town Building Department and find out if there are any open permits and how to close them. If a permit was never taken out in the first place, this can be more problematic or honestly not noticed because there was no open permit. Most contracts have representations that the Seller obtained all necessary permits and Certificates of Occupancy during their ownership. Also, the Sellers represent to their best knowledge and belief, that they are not in violation of any federal, state or local laws that you represent.
The last thing you want is to be told two weeks before a closing that you have open permits—in many cases, this cannot be resolved within two weeks and the closing cannot take place. Penalties, moving costs, and lost deposits are some of the consequences of a delayed closing.
3) If an oil tank was removed, gather all your paperwork to give to the potential buyers. Failure to have this paperwork can break a deal.
4) Get your home inspected. Some realtors might advise against this, but I disagree. The Buyer is going to have an inspection. I would rather know what is wrong with my home before I put in on the market and make my own repairs with my own repairmen. This will also allow me time to shop around for the best price. I don’t want any surprises or delays in a closing. Many a Buyer will try to use the inspection as a means of chopping the sales price down. Their repair requests will become a part of the contract negotiations.
5) After you have done the inspection, make any necessary repairs, paint the house (if needed, spruce up the paint inside the house and the doors and trim), have the chimney cleaned, the furnace serviced, the HVAC serviced, the septic pumped, possibly the water tested. Make sure smoke detectors and carbon monoxide detectors are working. Power wash the deck and stain, clean the entryway. Decorate it with flowers or appropriate holiday decorations. Put down new mulch and some plantings. Give your home the best curb appeal you can. Ask the realtors you interview for some suggestions.
6) To sell on your own or use a realtor?
When it comes time to sell your home, you will need to make the decision to sell on your own, or to sell with a realtor. This decision will depend on many things—your lifestyle, your work situation, your attorney and your computer savvy, to name a few.
If you are considering selling on your own, the first question you need ask yourself is: “Are you comfortable bringing total strangers into your home and negotiating with them, without a realtor?” If you do feel comfortable selling on your own, set a time limit. Determine a length of time in which you will sell your home on your own, and if after that time period you do not have an offer, you will seek the aid of a realtor.
When you sell on your own, you will want to look at homes that are similar in size, condition and neighborhood to your own to determine a selling price. You may want to hire an independent appraiser to give you an appraised value for your home.
By selling on your own, you avoid the brutal 5-6% realtor’s commission. Without a realtor, however, you are on 24/7 until you sell. Some people are well equipped to handle all this and have a great and or easy home to sell. Only you will know that.
Without a realtor, however, buyers will often want to offer you less than what you are asking. And while it might be easier for you as the Seller to sell on your own, it is extremely difficult for a buyer to navigate the purchasing and mortgage process without Realtor. I have represented both buyers and sellers without a realtor – they typically do not move at the same speed as when a Realtor is involved.
A good realtor can make a huge difference. In a buyer’s market, a realtor has the professional expertise to price, market and sell your home. The realtor also has a captive audience of people coming to their agency looking for homes. In addition to helping you set the price, they can advise on what needs to be fixed and what doesn’t, have lists of repair people and other resources you might not have. A Realtor shows your home, does the scheduling, open houses, walks the dog and keeps the deal moving.
When using a realtor, it is smart to pay them a Selling Agent’s commission (2.5%).
I have sold properties with and without a realtor. When I sold one of my investment properties without a realtor, it was in a HOT MARKET and my home was sold in a day.
7) Shop around and interview several realtors. As difficult as it may sound, a friend might not be the best realtor for you. You may be doing them a favor but are they doing you a favor?
Don’t let someone buy your listing. Some realtors will tell you that your home is worth more than what it is to get your listing. Be realistic. Don’t sign a listing agreement for a year. If you and the Realtor do not work out, you are stuck with that person. This does not make for a good situation. I suggest 6 months in this market, and many realtors will not agree to less.
A good way to select an agent is to ask them for their advice. Ask them what they would change about your home and/or where you should spend money on your home. Ask what they would highlight about your home, where they will advertise, about their on-line presence, and about what they currently have listed. See what they have listed and sold in the last year, in what area of town and at what price points. You want a realtor who knows your neighborhood. You want a realtor who sells in your price range. In this current market, you want a realtor with experience.
Ask each realtor you are interviewing for a price opinion and how they came to that price. I would recommend you ask for the comparable sales on which they are relying.
For more expensive homes, the realtor will look for a longer commitment from you because of a couple factors. To start, The realtor investment is more considerable with a more expensive home because they spend more time and money to advertise and market the home (in the form of brochures and big open house events), and the realtor will need the lead-time to accomplish this. The lead-time for the Quarterly real estate magazines can be 4 months. The other factor: There are fewer Buyers at the higher end price points.
Negotiate your commission. 5% is the norm. If the home is below a certain price (depending on the area) or is an extremely difficult property to sell, the realtor will request 6% or 7%. I think that that is a fair proposition. In the Westport, Weston, Fairfield, Wilton, Easton areas when the home is listed over $1,000,000.00, the Realtor will consider a commission on sliding. 5% up to $1,000,000 and 4.5% or 4% over $1,000,000. If you go further south in Fairfield County, in areas such as Greenwich and New Canaan, Realtors will not negotiate on a sliding scale. You have to investigate what is the standard and practice in your local market. If you are going to sell and buy with a Realtor, you should be able to negotiate a 4 ½ listing commission on the sale.
Remember to pick someone you like. You will be spending a lot of time with this person and will be speaking with them everyday for several weeks or months. At the end of the day, if you have a good realtor and a good relationship, you will make a lifelong friend and will miss the daily contacts once the deal is over!
8) Set your price.
9) List your home. Make sure it is multiple listed. It does not good for your property to only be on a local listing service. You want multiple listing services too.
10) Talk to an attorney before putting your house on the market. Some area the contracts are prepared by the realtors- these are standard forms that might not be in your best interest.