Selling a house is time-consuming and hard work, especially in today's market. If you are thinking about selling your house, you might feel a little overwhelmed by it all. That's why it is helpful to have a professional by your side--one who can guide you every step of the way. In this blog entry, I am going to give you a brief overview of how a realtor will help you sell your house. This is just an overview, so if you would like to discuss it in more detail, feel free to contact me.
Pre-listing: This is the first meeting between sellers and agent. This will be an interactive interview in which both sides get to discuss what they want and need from the relationship.
- Discuss and explain what are agency relationships.
- Obtain a signed Agency Relationships in Real Estate Transactions form.
- Find out what the seller's experctations are, as well as his/her wants, desires, motivation for moving, price, marketing plan, etc.
- Find out what the sellers are looking for in an agent. What is most important to the sellers?
- Discuss compensation in a real estate transaction, including the listing company's policy for paying co-op agents. This includes a discussion of the Code of Ethics Standard of Practice 1-12, Variable Commissions, etc.
- What is the sellers' position? Are they first-time buyers? Are they relocating, moving-up, or retiring?
Marketing Plan Presented
- Present a Comparative Market Analysis (CMA)
- Discuss the venues in which the sellers want to market. Discuss the pros and cons of said marketing. For the real estate agent, present a comprehensive marketing plan--including on-line marketing.
Listing the Property: This is what will occur at a meeting after the house is listed. This step is essential.
- Present Seller Disclosure and related forms. These include:
- Truth-in-housing disclosure requirements (if applicable)
- Sellers Property Disclosure Statement
- Resale Disclosure Certificate (if applicable)
- Environmental Disclosures (if applicable. Wells, septic systems, Methamphetamine labs, lead pant, underground storage tanks, wetlands, etc.)
- Property Tax preference disclosures
- Seller inspections
- Abstract or owners' title insurance policy and location.
- Address issues of the house (repairs and/or replacement--get quotes for repairs/replacements).
- Verify data such as selling price, mortgage amount, pre-payment penalties, taxes, assessments, and other issues with the house.
- Tax implications (1031 exchange, valuation exclusions, etc.).
- Net Proceeds.
- Marketing Plan:
- Services that the agent brings to the sellers
- Valuation issues--properly pricing the property
- Marketing time neighborhood sales and types of financing
- Currents statistics/inventory
- Market expectations (i.e., first-time home buyers may use FHA financing requiring sellers to pay for some repairs)
- Open houses
- Virtual tours
- Promotional flyers/brochures
- Closing time
- MLS exposure
- How showings are arranged through listing agents and who will be the contact person if the listing agent is sick, out of town, or otherwise unavilable.
- Electronic lockbox key security system
- Seller availability for potential time-sensitive issues regarding purchase agreement negotiations, removal of contingencies, inspections, etc.
- Industry trends, interest rates, marketplace issues
- Housing supply in immediate area
- Number of showings for their house vs. number of showings for other homes in the immediate area
- How will offers be handles? (Faxed, buyer or buyer's agent present, etc.).
- Will an attorney be reviewing offers?
- Explain company policy on multiple offers and obtain seller's approval.
- Counter offers vs. 'sleeping on it'. Explain pros/cons of waiting to make a decision on offers received. Discuss the risk of losing the buyer if there are long delays in acceptance or counter offers.
- Contingencies and inspections: Discuss the pros/cons of accepting/rejecting offers that include contingencies.
- Determine buyer's ability to purchase and consummate the transaction.
- Discuss the difference between pre-approved vs. pre-qualified qualification.
- Proffer an estimate net proceed sheet.
- Discuss capital gains and tax implications.
- Explain about binding purchase agreements, execution, and acceptance. Oral agreements are not binding.
Presenting/Countering and Offer Acceptance
Analyzing the offer
- What is flexible and what is not.
- Assist sellers in understanding the risks and rewards of countering/accepting a particular offer.
- Walk through the contract with them to analyze and understand the proposal.
- Talk about earnest money, purchase price, and personal property (i.e., refrigerators).
- Discuss financing issues and fraudulent arrangements.
- Talk about contingencies.
- Talk about inspections and what happens during them. Discuss the consequences and what can happen as a result of the inspection.
- Closing date.
- Possession/Move-In Agreements.
- Risk vs rewards of multiple offers.
- Review the integrity of the other agent involved.
- Verify the mortgage pre-approval strength of the buyer.
- Anticipate any potential problems.
- Secure appraisal and full-underwriting approval.
- Explain the net proceeds: bottom line for the seller.
- Final walk-thru review.
Negotiate the offer
- Due diligence/time is of the essence
- Obtain proper signatures
- Provide copies to the seller
- Follow through and stay on top of all aspects
- Inspection time frames
- Work orders: negotiated, completed, and re-inspected
- Buyer's mortgage lender follow up
- Verify that an appraisal has been ordered
- Title: locate and provide to title company
- Schedule closing date. time, and location, and provide necessary documents to the closing agent
- Provide necessary documents for closing to the lender
- If a Common Interest Community sale (condo), make sure the Disclosule Statement or Resale Disclosure Certificate and other required documentation are delivered to the buyer. Track the purchaser's right of rescission period
- Remind seller that the buyer has the right to a walk-through prior to closing (generally the day of or the day before closing)
- Negotiate any last minute complications/problems
- Obtain and verify mortgage information and pay-off requirements
- Review and summarize the purchase agreement for the seller
- Counsel seller on what to expect at closing
- What to bring to closing
- What to be prepared for
- Review net proceeds, financials, etc.
- Driver's license (photo ID)
- Social Security Numbers
- Previous addresses
- Preview closing documents
Closing the Sale
- Attend the closing
- Go through the HUD with the seller and match with estimate proceeds
- Credit for anything (money transfers for bad carpet, etc.)
- Watch for fraudulent financing proposals that could bring liability to the seller
- Handle any last minute issues--all known conflicts to be resolved by a written agreement, including escrow agreements to avoid adverse consequences
- Exchange keys, garage door openers, and final information about the property
- Verify possession date and time
Post Closing Follow-Up
- Any questions/problems/concerns
- Send thank-you note and/or gift
During the transaction and after the closing, the real estate agents can perform a significant role in resolving disputes and moving the transaction forward. The real estate agent can also solve the problems before they escalate. However, there comes a point in time when an agent will have to back off and suggest that the parties consult their attorneys. A dual agent is in a particularly awkward position when problems arise because s/he represents both parties. The dual agent can be an information disseminator, but must not be a negotiator. Thus, when a dual agent is involved and a problem starts to develop, the dual agent may have to refer the parties to an attorney earlier than s/he might have if serving as an exclusive agent.