Selling Process

Step 1: Choosing a Real Estate Agent

Buying a home is one of the largest purchases and biggest decisions of your life. The first thing to do is to find a REALTOR® you trust.

Ask your friends and relatives who have bought homes recently for their recommendations. Or, you can use the find-a-REALTOR® search to locate one in your area.

Before working with one, you should know that the duties of the REALTOR® depend on whom they represent.

Many REALTOR® specialize as buyer's agents, representing clients who are searching for their next home. These agents can save you time and money by researching properties based on your criteria, helping you secure the best mortgage rates, counseling you on the offer amount and terms most favorable to you, and negotiating on your behalf.

For buyers, there's really no downside to hiring a REALTOR® because the seller generally pays buyer's-agent commissions. Many buyer's agents have earned the Accredited Buyer Representative (ABR®) designation from the National Association of REALTOR® Real Estate BUYER'S AGENT Council.

If you choose not to use a buyer's agent, you could negotiate directly with the listing agent representing the owner.

All brokers must treat you honestly and fairly regardless of whom they represent.

If you choose to have a REALTOR® represent you, you should enter into a written contract that clearly establishes the obligation of both parties and specifies how your REALTOR® will be compensated.

Step 2: Setting a Price                                                                                                                        

When setting a price, the important thing is to be realistic. If the price is too high, you may not find a buyer. Too low, and you cheat yourself out of money.

Appraisal
Regardless of what you originally paid for your home and the cost of improvements you have made, the only price that matters is what the market will bear at the time you decide to sell. You may consider hiring an independent real estate appraiser with specialized training and experience. Don't rely on assessed valuations made for tax purposes. Such valuations may not be reliable indicators of value, as they are usually made using mass appraisal techniques.

Comparative market analysis
Whether or not you get an appraisal, your REALTOR® can develop a comparative market analysis. This analysis will describe homes in your area that have recently withdrawn from the market and may compare specific features of your home to others--the value of a corner lot, a city view, or an extra bedroom, for example. The analysis may also point out market fluctuations caused by the opening of a new school or business, as well as long-term trends.

Net proceeds
Once you've decided on a price range, the REALTOR® can help you calculate an estimated amount you might net from the sale. If you have owned your home for several years, you may have built up sizable equity. Equity is the difference between the value of your home and the balance on your mortgage. After subtracting what you owe on your mortgage, ask your REALTOR® what costs you will incur in closing. These may include title fees, taxes, a penalty for prepaying your mortgage, brokerage commission, attorney fees, and charges for preparing and recording documents. Finally, ask your tax adviser or attorney about the tax implications of your proposed sale.

Step 3: Signing a listing agreement                                                                                              

After you choose a REALTOR®, you will most likely sign a listing agreement--a contract in which you agree to allow a REALTOR® to sell your home during a given period and pay the REALTOR® a fee when your home sells. Most REALTORS® are independent contractors who work for a company operated by a licensed real estate broker.

The amount of compensation you pay a broker is negotiable, but the REALTOR® will generally follow the company's policy regarding compensation. The amount of the fee will be spelled out in the listing agreement. Make sure you understand how the fee will be paid before signing.

Exclusive listing
Most REALTORS® will ask for an exclusive right-to-sell listing. This means that you will owe the broker a commission regardless of who finds a buyer during the listing period. In other words, if you decide to sell the house to your cousin, your broker still gets a commission. In an exclusive listing, the broker is usually motivated to work harder to sell your home.

It's possible that a REALTOR® from another company will find a buyer for your home. In that case, your broker is the listing broker, and the second agent is the cooperating broker. Many times the listing broker will agree to pay the cooperating broker a fee from the amount you pay the listing broker. Your listing broker cooperates with other brokers who procure buyers interested in your property and offers to compensate the other brokers for procuring a buyer. Cooperating and compensating other brokers is discussed in the listing agreement you sign with the listing broker.

Length of listing
The listing agreement will specify how long you agree to list your house with a company. You want a period that's long enough to motivate your REALTOR® to advertise your home and respond to buyers, yet short enough to allow you to change to a different company if you become unhappy with the REALTOR®'s service.

Remember that the listing agreement is a contract. You should get a copy for your records. Your REALTOR® is bound to the terms just as you are. You can expect the REALTOR® to keep appropriate information confidential and effectively market your property.
 

■ Assets: current checking account balances, savings accounts, stocks and bonds, certificates of deposit, other property, insurance policies, and pension funds.
 

■ Credit: debts on cars and appliances, debts on all credit cards, and history of debt repayment. Your lender may ask for a credit report, so you may want to clear up any known negative terms in advance.
Your Texas REALTOR® can help you determine what price range and monthly payment you can afford. The monthly payment typically consists of principal, interest, taxes and insurance--PITI, for short.

Step 4: Marketing your property                                                                                                    

Preparing your home:
In preparing your home for viewing by prospective buyers, remember that people buy on emotions. Your home has to feel right, or buyers will look elsewhere. Ask your REALTOR® and some honest friends to look at your home objectively and suggest ways to make your home more inviting and sellable. Consider both the exterior and interior. Since you will be appealing to buyers' feelings, you need to pay attention to detail. An extra $50 you spend on red geraniums or new bath towels might mean a significant increase in a buyer's offer.

Clean your home thoroughly and make minor repairs such as tightening towel racks and gluing wallpaper edges. For larger repairs, consult your REALTOR® as to whether repairing the item will generate a good return on the sale. Repainting the woodwork may be worth it, but replacing the carpet may not. Hire a professional inspector to examine your house for structural and mechanical defects. Get an inspection early, and you can avoid surprises.

Honesty and candor:
If your home has a major problem you don't intend to correct, be candid about it. Don't paint over the water marks on the ceiling to hide a leaky roof. Buyers will find out about the problems anyway, especially if they are smart shoppers and hire a professional to inspect your home. In an age when lawsuits are as common as family sit-down dinners, it pays to be open about everything.
You should consider including a one-year residential service contract with the sale of your home. This buyer perk is a common practice and helps ease concerns. Typically, after the first year, the buyer has the option of renewing the coverage at his or her expense. A residential service contract is simply an agreement with a company to repair certain items on the property if such items fail to function or are in need of repair (for example, air conditioning unit, heating equipment, plumbing system, etc.).

Attracting and screening buyers:
As part of the overall marketing strategy, your REALTOR® may arrange a tour of your home for local REALTORS® and perhaps schedule an open house for the public. Your REALTOR® may also run ads in local newspapers, Web sites, and other publications tailored specifically for the type of home you are selling. As responses come in, your REALTOR® will screen out sightseers and half-hearted inquirers and make appointments with the serious prospects.

When the showings begin, keep your home clean and ready. Your REALTOR® will try to give you advance warning before showing your home but be prepared anyway. If people drop by and are not with a REALTOR®, it's best not to show them your home. Ask for their names and phone numbers and refer them to your REALTOR®.

Purposeful absence:
When a REALTOR® comes to show your home, it's best if you are not there. Many buyers feel like intruders when the owner is present; they tend to hurry away. Letting the buyers walk through your property at their own pace will help put them at ease. They will feel free to look around and ask questions. If you must be there, let the REALTOR® handle the showing. Sit quietly and be courteous, but avoid engaging the buyer in conversation. The REALTOR® needs the buyer's complete attention to show your home properly.

Fair housing:
REALTORS® are required by law to make your property available to all persons without regard to race, color, religion, national origin, sex, disability, or familial status. Your REALTOR® will not discuss any matter that may potentially discriminate against any person.
 

Step 5: The Offer

When a buyer makes an offer on your home, your REALTOR® will contact you promptly. The REALTOR® will scrutinize the document, review it with you carefully, and answer your questions. The written offer lays out all the terms of the proposed transaction--the price the buyer is willing to pay and the financing terms--and becomes a binding contract if you sign it.

The offer may be contingent on the buyer selling a home first or obtaining an inspection. Ask your REALTOR® how these terms affect you and whether the offer is in line with the market. The offer describes the property, states who pays for which closing costs, and specifies dates of closing and possession. Along with making the offer, the buyer may place some earnest money with the escrow agent as a sign of good faith. The earnest money will be kept in an escrow account and applied to the buyer's down payment or closing costs when the sale closes.

Your options:
In reviewing the offer, you have three options: accept, reject, or make a counteroffer. A counteroffer is a rejection of a buyer's offer with a simultaneous offer from you to the buyer. Carefully review the figures compiled earlier to determine your net proceeds--closing costs may be quite different from earlier calculations. Discuss the possibilities with your REALTOR®, your attorney, and a tax adviser.

Loan approval process
From the lender's viewpoint, approving the loan, based on your financial standing, is only part of the risk; the other part is the property itself. The lender may require an appraisal to verify that the home is worth the loan as well as a physical survey to discover any encroachments on the property. Repairs may be required. Insurance must be purchased. Verifications of employment, deposits, and other matters must be obtained. Loan documentation and conveyance instruments must be drawn and approved. In addition, the title company must research the title and arrange for paying off any liens, taxes, and other costs. All these conditions and others must be satisfied before a transaction can close.

Hazard insurance
As another protection, the lender may require insurance to protect against fire and storms. (Flood insurance could be required if the house is in a flood plain.) Even if not required by a lender, it's probably a good idea for you to consider all types of insurance.
 

Consult your real estate professional for further details.

 Step 6: Closing the deal                                  

The closing is the end of weeks or even months of research and decision making. The closing could last less than an hour but may take longer, depending on the complexity of the transaction. It often occurs at the title company's office. The title company officer will explain each document before you sign. You may want your attorney present as well.

Two basic kinds of documents
If buying a home were strictly a cash transaction, you would simply hand over the money and receive the deed. More than likely, however, you are borrowing money for the home, which means that you are actually making two transactions--acquiring the loan and buying the home.

As a borrower, you will sign a note promising to repay the loan and a deed of trust (also known as the mortgage) pledging the house (or other collateral) as security for the note. You will also sign numerous other papers including acknowledgments, disclosures, surveys, certificates, etc. Be sure to read each document carefully. Ask questions if you do not understand anything. There are no dumb questions. Seriously consider having your attorney present at closing.

As a homebuyer, you will present a cashier's check (or other good funds) to the seller, sign a document that itemizes closing costs (the lender will have given you an estimate in advance), and pay your share of the closing costs. In return, you will receive a deed, transferring ownership rights to you.

The home is yours
At the end of the meeting, you will likely receive keys to the property. At that moment, the home will be yours. Occasionally, possession of the property will occur after closing. For example, the seller may have negotiated with you for a few extra days after closing, or the loan will not immediately fund, or other concerns. But, in most transactions, you will be the new owner at the end of closing.

Some other points to keep in mind:

■ Buyer/seller agency. It's important to understand who your REALTOR® represents--buyer or seller. The REALTOR® will provide you with information about representation. As a buyer you may sign a buyer representation agreement with a REALTOR®. It will discuss the scope of the REALTOR®'s representation.

■ Pre-paids. You should be aware that your closing costs will include prepayment of an

escrow account to cover insurance and taxes.

■ REALTORS® are required to make properties available without regard to race, color, religion, national origin, sex, disability, or familial status.

 
■ Be sure to have a property inspected by licensed inspectors to determine: a) the condition of the property (structural, mechanical, electrical items, etc.); b) any environmental conditions (asbestos, lead-based paint, toxic materials, etc.); c) wood-destroying insects; and d) other matters. Brokers are not qualified to perform such inspections.

 
■ Residential service contracts can offer repair to appliances, electrical, plumbing, heating, cooling, or other systems in the property.

■ Be sure to obtain a policy of title insurance or have an abstract of title reviewed by an attorney of your choice before buying a property.

■ Seek professional advice before entering into a binding agreement.

Top Reasons to hire a listing agent:                                                                               top ▲

With the increasing popularity of the Internet in the real estate industry, some consumers wonder why they should hire a listing agent when it seems relatively simple to sell their home on their own. According to a survey by the National Association of REALTORS®, the median selling price for homes sold without an agent was $132,800 compared to $160,000 for agent-assisted home sales. There are many reasons why hiring a listing agent is in your best interest. Below are the top three.

REALTORS® have the know-how: Selling a home takes a lot of time, experience, and know how – three qualities many consumers do not have when it comes to real estate. But you don’t have to know everything about the home selling process if you hire someone who does. Your Texas REALTOR® can help you in so many ways – from setting your asking price to preparing your home for market to facilitating the process all the way to a successful finish.

REALTORS® know how to set an appropriate asking price: Setting your sales price too high or too low can have serious financial repercussions. Texas REALTORS® are experts at analyzing sales-price data and conducting market research in your area. Many REALTORS® will prepare a comparative market analysis at no charge. A CMA provides you with information on comparable homes in your neighborhood that sold, are still on the market, or failed to sell, helping you better understand the state of the current housing market and set the price that will entice buyers and put money in your pocket.

REALTORS® will manage the volumes of paperwork: If you are selling your home, it means you have undergone the home buying process. If so, then you are likely to remember the stacks of legal contracts and documents involved. The same holds true for selling property. Most purchase agreements run a minimum often pages, not including the federal and state-mandated disclosures and other related documents. A single mistake could cost you a lot of money, or worse, land you in court. Your Texas REALTOR® can handle the necessary paperwork for you – protecting you from financial or legal problems and giving you peace of mind.

Staging your home:                                                                                                        top ▲

Tips for selling:

Staging your home to sell.
A few changes may decrease time on the market and increase sales price.

You know you should clean everything and get rid of clutter. But aside from that, how do you broaden the appeal of your house?

Here are a few tips:
■ Walk through the house and prioritize things that if changed would increase the value of your home. For example, repainting a child’s bubble-gum pink bedroom may attract more buyers than something not as apparent, such as replacing an old dishwasher.

■ You can direct a potential buyer’s eye away from something negative or toward something positive. Use artwork or a room’s own features, such as a fireplace, to capture a buyer’s attention. However, there’s a fine line. You want buyers to be able to appreciate the room and not just focus on the items in the room.

■ Remove any furniture that tightens spaces. If a couch or chair makes you turn your body as you walk by or just makes a passage look small, get rig of it. Everybody wants more space.

■ Rid the house of personal effects, and don’t forget simple things like magnets on the refrigerator. Small distractions to the buyer’s eyes will disturb their thinking, preventing them from picturing the house as theirs. And while you want the rooms to look well-decorated and spacious, avoid turning the house into a perfect home. Try to balance the brand-new look with some of its lived-in warmth.
■ Potential buyers often feel uncomfortable in bedrooms and bathrooms because they are, by definition, personal and private places. To counter this reaction, make bedrooms and bathrooms look like model home [toss the lived-in feel out the bathroom window]. Clear off all surfaces of the bathroom—remove even simple things like toothpaste and soap. Put our nice, fresh towels instead. The goal is to make these rooms comfortable for buyers. When they’re comfortable, they’ll linger and picture themselves in the house.
■ Consider hiring a professional to improve your home’s visual appeal. The fee charged by a “stager” can be worth it if the changes bring a quicker offer or a higher sales price.

Landscaping:                                                                                                                top ▲

Little touches make the difference:

The right landscape design can make all the difference to a prospective buyer, especially when it’s beautifully and carefully executed. In fact, REALTORS® and landscape professionals estimate that a well-landscaped yard can add 5% to 15% to the selling value of a house. Houses that look good from the road carry higher price tags—a fact that turns landscape investments into money in the bank when selling a house. Here are a few ideas on how to improve your landscape:

Trees:
■ One of the best investments you can make is a glorious stand of healthy trees as part of a well-landscaped yard. REALTORS® across Texas and the rest of the country know that healthy tress can increase the property value of a home, as well as provide years of aesthetic benefits to owners. Trees also cut down on energy costs. When Kiplinger published the 25 best ways to invest $1,000, buying a big tree was at the top of the list. If your selling timetable doesn’t allow for planting and nurturing a tree to maturity, remember this advice for your next home.
■ Since a tree is a long-term investment, it’s important to start with a high-quality plant. In the case of trees, money definitely buys quality. Trees that are 8 to 10 feet tall—either balled and wrapped in burlap or established and growing in containers—are usually the best buy. Homeowners can expect to pay anywhere from $200 to $1,000 for a quality tree.

Plants:
■ Add a few plants around the foundation of the house and in ”curb appeal” areas such as near the front door. Or, consider using more permanent bushes, especially those that flower in the summer and have colorful buds in the winter.
■ Gardeners on a budget can buy a few plants, then add more as your budget allows.
■ For an especially inexpensive jolt for your yard, flowers are a homeowner’s best friend. Bright splashes of color add visual appeal, though they’re usually temporary. For this reason, they’re great if you suddenly need to put your house on the market and need a quick landscaping fix. At that point, it’s best to stick to the basics, leaving more costly and permanent landscaping to the new owners.

My house won't sell?                                                                                                      top ▲

There are a variety of factors that contribute to a home languishing on the market, including price, condition, and location. Pricing the house too high is one of the top reasons homes fail to sell. When setting an asking price, it’s important to do your homework. Conduct market research and ask your REALTOR® for a comparative market analysis (CMA). As a homeowner, try to stay on top of market conditions. Is real estate in your neighborhood relatively hot? Visit some open houses and see what others are doing. What terms and conditions are other sellers offering buyers?

Most buyers want to walk into a home that is in model condition. Although it may be difficult, you should walk through your house as if you are a potential buyer, being very critical and asking whether you would purchase a home in this condition. It may be as simple as getting that stove to shine, or you may need to do a little more like adding a fresh coat of paint to your home’s exterior. Whatever the case, talk to your Texas REALTOR® about staging your home to sell.

The third big reason a house won’t sell in a good market is location. Such things as undesirable schools, a higher crime rate, a busy road, or noise pollution can mark a bad location. If your house is located poorly, you may have to compensate with a lower listing price. Favorable terms, such as owner financing or a lease with options, could also help sell your house. Your Texas REALTOR® can recommend a strategy for selling that will overcome a poor location.

17 ways to prepare your home:                                                                                   top ▲

1. Make your entranceway say, "Hey, look at me!"

2. Prune dead limbs from trees.

3. Paint (or touch up) exterior, and repair screens and windows.

4. Clean your windows.

5. Check A/C and heating systems.

6. Fix leaky faucets, toilets, and faulty lights.

7. Vacuum drapes and carpets.

8. Repair wall cracks, re-caulk bathrooms and kitchen.

9. Clear out closets.

10. Remove excess furniture.

11. Keep cats and dogs out of visitors' way.

12. Mow lawn, edge driveway and walkways

13. Ensure windows, doors, and locks work smoothly.

14. Weed flowerbeds and trim shrubs.

15. Throw out junk from garage and storage areas.

16. Clean lawn furniture.

17. If you have a pool, make it crystal clear.

Check out the competition:                                                                                              top ▲

When you put your home on the market, your property is competing against other homes. Consider the way buyers approach the task of finding the house they eventually buy. After setting initial parameters for price, neighborhood, size, and amenities, buyers will view several properties online and in person. Not only will they determine if a property meets their goals—typically, they will directly compare one property to another.

If two or more properties are virtually the same but one has a lower asking price, guess which one will attract more offers? Or if several properties are priced similarly but one clearly outshines the others in quality, size, condition, or location, that home will likely be the first to sell—perhaps for full price or even more.

Before your agent starts marketing your home, discuss properties similar to yours that are currently for sale as well as those that recently sold. Look at those homes online or at open houses to get a handle on what buyers will be viewing while they also consider your home. And take what steps you can to make your home stand out from the competition.

Speed up the inspection:                                                                                                  top ▲

Here are 10 things you can do to speed up your inspection:

■ Make sure gas, water, and electricity are turned on and gas pilot lights are burning.
■ Ensure that pets won't hinder the inspection. Tell your REALTOR® about cats or other animals that should be kept inside.
■ Replace any burned-out light bulbs.
■ Test all smoke and carbon-monoxide detectors and replace batteries if needed.
■ Clean or replace dirty HVAC air filters.
■ Move any wood, stored items, or debris away from the foundation.
■ Unlock or remove locks from any items the inspector must access: gates in fences, electric service panels, crawl space hatches for pier-and-beam construction, attic access hatches or doors, and special closets.
■ Remove any items or debris blocking these areas: electric service panels, water heaters, attic access ladders or hatches (some debris may fall when hatch is opened), crawl-space access hatches for pier-and-beam construction, heating and air-conditioning equipment.
■ Trim back tree limbs from the roof and shrubs from the house to allow access.
■ Repair or replace broken, damaged or missing items; door knobs, locks, and latches, window screens, rain gutters and downspouts, window locks, broken glass, anti-siphon devices on exterior faucets, and chimney flue caps.
■ Following these 10 steps can make your home inspection go faster and result in a cleaner inspection report.

Taking down the FSBO sign:                                                                                           top ▲

You’ve tried to sell your home by yourself and gotten nothing but the periodic low-ball offer and an occasional case of heartburn. It’s time to turn to a professional—someone with experience and a plan—so you decide to hire a REALTOR® to list and market your home. But are you getting the service you expect? Be sure that your REALTOR® is a good match for you by conducting an informal interview.

The first question you may want to ask a REALTOR® is, “Why hasn’t my house sold?” Not only will you get professional insight, but you also can use the answer to gauge the Realtor’s personality, expertise, and knowledge of the local market.

After that question, start with the following list and build on it.

■ How long have you been selling real estate? Find out how much experience this REALTOR® has, not just how long she has been in the business. Also, ask if your REALTOR® has any designations, certifications, or other areas of expertise, as this may be indicative of a higher level of knowledge, dedication, and professionalism.
 

■ Do you have references? Beware of someone with no references or references only from family members.
 

■ What services will you provide? Make sure you understand the nature of your business relationship. Review the listing agreement. Know for sure what you’re paying for and how you will pay for it.

■ How will you communicate with me? In today’s connected world, instant communications are becoming increasingly important and can be the difference between an offer and a near miss. Whether you expect to be contacted by phone, text message, e-mail, or instant message, make sure you and your prospective Realtor are in sync on how—and how often—you will be in contact.

■ What is your marketing plan for my property? What is your online presence? Where do you advertise? How quickly do you follow up on leads?

 
■ What are some current market statistics? What is the average time on the market for this area? For your listings? What is your ratio for sales price to listing price?
 

Finally, ask that agent if she is a REALTOR®? You may be surprised to learn that not all real estate agents are. Only those who subscribe to a strict code of ethics may call themselves REALTORS®.

When you enter into any business agreement, all parties benefit by going through a simple Q&A process. Don’t be shy about asking—this is a huge transaction, so get your questions answered and find the best person for the job.

What's your home worth:                                                                                                 top ▲

When putting your home on the market, there are two ways to go about estimating what your property is worth. The first is a professional appraisal, and the second is a comparative market analysis (CMA). If you are thinking about listing your home, talk to your Texas REALTOR® about hiring a professional appraiser, conducting a CMA, or doing both.

A professional property appraisal is done by a certified appraiser and estimates your home’s value based on a variety of things, including square footage, design and floor plan, the neighborhood, schools, landscaping, any additions or updates, and more. The cost of an appraisal varies and usually can be done in an hour or so. If you get an appraisal and then decide you are not quite ready to sell, don’t assume that appraisal will be very helpful in the future. Markets can change quite rapidly. If you determine that a professional appraisal is right for you, ask your Texas REALTOR® for a reputable appraiser in your area.

In addition to finding a professional appraiser, your Texas REALTOR® can also conduct a CMA for you. A CMA is a market analysis that compares similar properties in the area that have recently sold. This is an informal assessment that can go a long way in establishing a benchmark of where your asking price should be.

Free Home Valuation and Comparable sales analysis, click here.

Tax-free capital gains :                                                                                                      top ▲

According to the Internal Revenue Service, you may be able to make up to a $250,000 gain on the sale of your home and not have to pay capital-gains taxes. That figure increases to $500,000 for married taxpayers filing jointly.

To be eligible, your home must have been owned by you and used as your main residence for a period of at least two out of the five years prior to its sale. You are eligible for this exemption every time you sell your home, but typically no more than once every two years. Talk to your REALTOR® about additional tax benefits associated with selling your home.