HOW TO SELL A HOUSE
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Whether you are a first time seller, or just haven't sold property in a while, there are many steps between wanting to sell your property and actually getting paid, and people often underestimate the amount of work and time it takes to complete all those steps.
Below is an outline of the home selling process from start to finish and what sellers can expect at each step along the way. |
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Selling a house is a lengthy process that can be demanding but fruitful. Many sellers have an emotional attachment to their homes understandably, which can make for tough decisions. It's best to not let emotions cloud good judgement and listen to the advice of your agent. At the end of the day your home is just a house and should be dealt with objectively. As most transactions run into some kind of problem during their course, patience is paramount. |
STEP 1: CHOOSE A BROKER
Contact several brokers and get a feel for what you want. You should get along well with the agent because you’ll be going through a lot together. Choose someone who matches your personality and energy. Your broker should be tech savvy because almost all of this business is now digital and the few old school brokers who are not wired in get left in the dust. Your broker should be responsive, all inquires should be answered immediately. Speed matters in the Real Estate business so much that we Realtors have a legal term for this that shows up in contracts “Time is of the Essence”. The broker should be intimately familiar with the neighborhood and know the market trends and what is moving up to the minute. Everyone has access to comps now but the Realtor should be able to make a hard case for a value of the property that they would argue to a defiant appraiser. Successful Realtors have knowledge of numerous facets, they wear many different hats and collaborate with many different people.
Realtors have to know and interpret copious amounts of data. Some of that data is trackable, like time on market and financing records. Some of that data is not trackable like city zoning changes, new developments, building code inspection policies and on and on. Realtors have to interpret the data and advise their clients. The Realtor is the captain of the boat, tasked with navigating the sometimes stormy seas of a Real Estate transaction. There is no substitute for experience so choose a Realtor who has closed sales recently and in your area. The brand of the Brokerage matters less than the talent of the individual agent representing you. Don’t be afraid to ask lots of questions of a Realtor, their job is to assist you.
Realtors have to know and interpret copious amounts of data. Some of that data is trackable, like time on market and financing records. Some of that data is not trackable like city zoning changes, new developments, building code inspection policies and on and on. Realtors have to interpret the data and advise their clients. The Realtor is the captain of the boat, tasked with navigating the sometimes stormy seas of a Real Estate transaction. There is no substitute for experience so choose a Realtor who has closed sales recently and in your area. The brand of the Brokerage matters less than the talent of the individual agent representing you. Don’t be afraid to ask lots of questions of a Realtor, their job is to assist you.
STEP 2: CLEAN THE HOUSE LIKE ITS YOUR JOB
It actually pays more than most jobs when you consider how much higher clean homes sell for than dirty ones. Most buyers have very little vision, they cannot imagine how something could look they can only see and really comprehend what is there in front of them. Remove as much furniture as possible from every room. Remove all personal items - family pictures, clothing, trophies, etc. Try to clean out closets as much as possible ideally they should be empty. The ideal property is uncluttered and as wide open as possible. Buyers have a lot of stuff, they need to see a place to put it. Make the property as light as possible, clean the windows, remove drapes or curtains, get new hi wattage light bulbs, trim overgrown hedges to let in light. Bright and cheery houses always sell faster than dark and dreary ones. Clean the exterior, especially the front and make sure the front yard is looking as good as it possibly can. Curb Appeal is very important so invest the most time and energy in the front of the house. If you have pets remove any trace of them - no litter boxes, chew toys, pet hair or pet smells. Make your home as empty and clean as possible.
STEP 3: SMALL SCALE REPAIRS
The key is small scale - don’t spend more than a few hundred dollars. Fix cabinet doors, leaky sinks, door knobs, closet doors, towel racks, everything should be “good as new”. New coats of paint are almost always a good idea everywhere, go for neutral colors like white and grey. Don’t make any substantial upgrades now, just maximize what is already there. You’ll need a CO2 detector and an earthquake shutoff valve on your gas line for the buyer’s appraisal so get those. You’ll need a heater if the house doesn’t have one like many older ones in California. The Kitchen is the most important area of the house and the deck or outside area is second. Invest the most in these two areas for the best return. If you have limited funds and dated appliances, buy just one high end stainless steel appliance. That makes buyers think the rest are also high end and adds value to the kitchen.
STEP 4: LISTING THE PROPERTY
While seemingly counterintuitive, its best in the Greater Los Angeles area to list your property under market price. This usually results in getting multiple offers, which then can proceed to bidding wars, ultimately yielding more profit for you, the seller. It requires intestinal fortitude to list the property for less than it is worth but it is the best way to attract buyers to your listing. Pit the buyers against each other in blind bidding and watch the price escalate as buyer emotion overrides logic. It’s the same phenomenon as the last two minutes of an Ebay auction when the price jumps 15%-20%. It’s always better to sell to eager buyers who had to beat out competing offers than it is to sell to someone who knows there is no one else waiting to snatch the property away. Get under contract quickly if possible, the longer any property stays on the market the less desirable it becomes. As such, don’t hold out too long if you are getting offers. A bird in the hand is better than two in the bush.
STEP 5: MAXIMIZE SHOWING AVAILABLILTY
This is very important! Realtors with buyers are out showing properties at all hours of every day. Especially in a big city like LA with many international clients coming and going, it is vital to have open showings as much as possible. The more buyers can see the property the faster it will sell. At the very least you need to have open houses on the weekend and for the weekly Broker's caravan. Typically sellers will have an electronic Supra key lockbox which tracks date, time, license number, and employer of any Realtor that is looking inside the property. Showings are highly critical to selling a property.
STEP 6: GOING INTO ESCROW, NEGOTIATION, AND APPRAISAL
Once you have an accepted offer on a property, the buyer will put a deposit into escrow and will then inspect the property. Inevitably there will be something that inspection turns up that needs attention. Unless the property is sold “as-is” the buyer will ask for repairs or monetary credit for the repairs, and another round of negotiations will happen. Most sellers end up giving buyers a few thousand dollars instead of doing the repairs themselves because the sellers and buyers opinion of “repaired” can be different. It’s cleanest and simplest for the seller to pay the buyer and be done with it.
If the buyer is getting a mortgage, the property will need to be appraised by the lender. In rapidly appreciating markets like Los Angeles sometimes the appraised value does not match the contract price. Most often this happens when the buyer pays far more than the asking price. A wise seller will hedge against this situation by requiring the buyer to come out of pocket to pay for any difference between contract price and appraised value.
If the buyer is getting a mortgage, the property will need to be appraised by the lender. In rapidly appreciating markets like Los Angeles sometimes the appraised value does not match the contract price. Most often this happens when the buyer pays far more than the asking price. A wise seller will hedge against this situation by requiring the buyer to come out of pocket to pay for any difference between contract price and appraised value.
STEP 7: CLOSING TIME
Closing time is frantic for the escrow company, they have to ensure that taxes and interest rate is paid current to the day, that old liens are satisfied and new ones are recorded, and that everyone gets paid the proper amount. It’s quite a lot of work to do, which is why we use closing companies to ensure everything is done correctly. After the deed is recorded, the escrow company gives the money to the seller and the title to the buyer. If you are selling with a 1031 or similar tax advantaged exchange, you would have told escrow about it weeks before closing and the intermediary and escrow will work in tandem to get funds to the right place. 1031 exchanges are powerful tools to protect wealth and are recommended by this Broker.
Escrow closing concludes the selling process. Congratulations to the seller for a successful transaction!
Escrow closing concludes the selling process. Congratulations to the seller for a successful transaction!
