Introduction
Deciding to sell
Setting an asking price
The listing agreement
Preparing your property
Reviewing and accepting an offer
Buyer inspections
Preparing for closing
Closing

Introduction

The process of selling a piece of real estate is a complex one with a lot of moving parts. Setting a price, preparing the property, dealing with inspections and other contract issues, etc., are among the issues that sellers need to be knowledgeable about.

While selling your property as a “for sale by owner” may seem like a way to maximize return on the sale, using an agent typically pays off in the long run. The agent can help to ensure the the property is priced appropriately for the existing market, given the characteristics and conditions of the property. In addition, the value of the property in the market can usually be enhanced by simply things such as proper staging or addressing obvious maintenance issues, often at relatively low cost .  Properties listed through an agent also get maximum exposure throught the Multiple Listing Services (MLS) which services the local area as well as feeds listing information sure that you maximize your opportunities in the current real estate market. In addition, agents can develop and implement advertising approaches targeted to specific potential buying markets. Finally, agents can help through the entire process from receiving and accepting offers, evaluating contract specifics through to closing.

In summary, a licensed real estate agent can provide assistance and guidance throughout the process.

Deciding to sell

So you have decided to sell your property. Before anything else, it is a good idea to sit down and clarify your motivations and draw up a basic time frame for the selling process.

Why do you want to sell your property? Family changes can result in a need for a larger property or a smaller one as children leave the household. Income changes can also lead to a desire to sell and either upgrade or downgrade a housing choice. Other factors include a desire to move to another neighborhood, school district, or even city or state for job or other reasons. Considering the implications of each option for your lifestyle, opportunities, and finances is an important step.

You should establish your time frame for selling. A need to sell quickly will imply a different strategy with regard to pricing and promotion of the property than an alternative scenario when there is more time available. In some cases, prices may have a somewhat regular seasonal patterns imposed on the overall market trends for the area. There are factors to think about and consider.

Setting an asking price

The agent will be able to assess the market in the area for the type of property being sold. In some cases, there may be a lot of similar properties on the market and that have been sold recently. In that case, determining the “market” price is not too difficult. In other cases, the property may have unique characteristics making it more difficult to determine an appropriate asking price.

A Comparative Market Analysis (CMA) is the process the agent uses to identify an appropriate market price. A CMA uses some of the same tools as an appraisal but is less formalized and not as complete. Note that estimated “market values” from Internet sites are typically generated by computer algorithms and typically are of very limited utility. Tax appraiser values are developed using more sophisticated methods buy may not reflect the specific characteristics of the subject property or market trends from the effective date of the assessment.

If the market is relatively weak for sellers (a buyer’s market), most offers will come in below asking price. On the other hand, in a seller’s market, competing offers may come in, some even above asking price.

The listing agreement

The listing agreement is the contact between the seller and the real estate brokerage selected to sell the property. The listing contract spells out the terms of the agreement—duration, asking price, items to be included with the real property, and special considerations. The listing agreement also spells out the compensation that the real estate brokerage will be paid for successfully selling the property.

As a legal contact, the terms and provisions of the listing agreement should be explained to the sellers and clearly understood.

The listing agreement will normally spell out the closing agent that the seller desires to use. It is customary in central Florida that seller’s pay for the title insurance for the buyer and also select the closing agent, either a title company or an attorney. In some cases, the real estate brokerage working with the buyer can hold the buyer’s deposit which is then transferred to the closing agent at closing but those situations are not common.

Along with the listing agreement, the agent will typically provide a “Seller’s Net Sheet” showing the estimated net proceeds the seller will receive assuming the property sells at the asking price.

Preparing your property

Most people looking for a property appreciate one that looks good and shows well. Properties that are attractive and appealing sell more quickly and at higher prices. The relatively small number of people looking for a “handyman special” are also expected to be able to buy it at a steep discount.

The outside appearance of the property including grounds is called curb appeal. Keeping the lawn well maintained as well as doing the same for trees, shrubs and other plantings creates an immediate positive impact on potential buyers.

Making minor repairs and upgrades such as window repairs, polishing the doorknobs, and a fresh coat of paint in the most frequently used rooms will make the inside more appealing as well.

Keep your property uncluttered, sweet-smelling and well-lit from top-to-bottom. Pay attention to details: put away the kitty litter, place a vase of fresh flowers near the entryway, pop a batch of cinnamon rolls in the oven, have your carpets cleaned. For higher end properties, “staging” to make the property as appealing to a buyer as possible is a common tactic. Use similar techniques to improve the saleability of your own property. Even if the property is vacant, simply things like keeping the power on and air circulating as well as adding attractive scents, can go a long way towards adding appeal.

It is the job of the agent not the owner to actually show the property. Buyers feel more comfortable discussing the property with the agent, if the owner is not there. In addition, the agent will know what information will be most useful in representing your interests when speaking with prospective buyers. If necessary, run a short errand during the time a property is being shown. It is fine to be present from introductions but getting out of the way is the best strategy to help sell the property.

Florida law requires that sellers disclose any aspects of the property that may have a significant effect on the market value. The Florida Realtors Asssociation has developed a form to provide the appropriate disclosures. Prompt completion of the seller’s disclosures is “homework” associated with listing a property.

Reviewing and accepting an offer

Although all real estate contracts must be in writing to be enforceable, sometime a negotiation will start with a verbal offer. Or, a full written contract may be submitted.

If a verbal offer is received that is of some interest, one option is the request that it be submitted in writing.

There are basically three responses to any offer; accept, reject, or counter. In most cases, even if an offer is appealing in some respects, it may not be satisfactory for others. In those cases, a counteroffer is prepared that addresses the deficiencies of the contract that has been proposed by the buyers. Rejection of an offer is really a last resort, only done if the offer is so deficient that the seller believes that it is impossible to reach agreement.

Once an agreement that is acceptable to all parties is reached, it is signed and/or initialed by buyers and sellers and then becomes a ratified contract or agreement. If the agreed-upon.

The ratified agreement is a legal arrangement between a potential purchaser and the property’s seller. The contract will include a financial consideration (initial and, in some cases, additional deposit) which is to be held in the closing agent’s escrow account pending the fulfillment of conditions or contingencies in the agreement.

Some important tips to keep in mind:

Make sure that the written documents that you sign are consistent with your understanding of the contract arrangement and any oral agreements. Keep copies of all of the executed documents including the purchase contract itself and any addenums.

Deadlines in contracts are important and must be adhered to. For example, extension of the closing date requires agreement of both parties. If the seller needs or wants a couple more weeks and the buyer does not agree, the contract will be become null and void and the buyer’s deposit returned.

Most of the important deadlines such as the deadline for inspection contingencies, applying for financing, etc. are buyer deadlines but the seller needs to monitor these as well.

Buyer Inspections

Most buyers will have the property inspected by a licensed property inspector within the time frame that was agreed upon in the effective contract to purchase. Some buyers will have several different inspectors inspect the property, if they wish to obtain professional opinions from inspectors who specialize in a specific area (eg.roof, HVAC, structure).

If the agreement is conditional upon financing, then the property will be appraised by a licensed appraiser to determine the value for the lending institution via third party. This is done so that the lending institution can confirm their investment in your property is accurate. A buyer of a commercial property may also have a complete environmental audit performed and/or soil test, if required by the lending institution.

Issues raised by buyer inspections may result in a need to make changes in the purchase contract. For example, the home inspection may identify a list of issues that the buyer would like to have addressed. The seller needs to review these to decide what action, if any, to take.

Preparing for closing

After any contingencies have been addressed, a final closing date will be set. The closing agent will produce a settlement statement for the sellers which indicates the funds from the sale, closing costs and net proceeds. This should be close to the estimates provided by the agent when the contract was accepted.

Utility services and insurance should be canceled effective as the closing date. As a courtesy, make sure that the buyers are aware of the utilities so that there can be a smooth transition of service.

Closing

The buyer is entitled to a final walk-though inspection the day before or the day of the closing. The purpose is to ensure that the property is in the same condition as it was when the contract was made.

If the seller is out of the area, a “mail-away” closing is conducted. In such a case, the documents that the sellers need to execute along with instructions is sent by overnight express to the sellers. Typically, some of the documents will need to be notarized and the entire package will need to be returned to the closing agent on a title company.

At closing, keys and other information for the buyers are turned over. The agent can handle that if the seller is not present.