This Financial Guide gives you suggestions that can increase the sales
price and reduce the frustrations involved in selling a home. It discusses
how to find a good agent, how to make your home more attractive to buyers,
how to negotiate effectively, and how to handle the moving process.
Here are some tips for getting the best possible price for your home and
making the process as smooth as possible. By putting some time into choosing
a real estate agent, for instance, you can avoid wasting unnecessary time on
the market due to an ineffective or haphazard sales strategy. Further, there
are actions you can take to make your home more saleable.
Finding A Good Real Estate Agent
To find a good real estate agent, gather a list of names of candidates you
will interview. You may want to consider recommendations from colleagues,
friends, and professionals, as well as names listed on posted "for sale"
signs, especially for houses that have been sold. Once you have at least
three names, schedule a telephone or in-person interview with the agent. You
may encounter some resistance; if you run into a broker who refuses to take
the time to answer your questions, just move to the next one.
Tip: Although a popular practice in recent times
(due to the savings on commissions paid to a broker), selling your own
home without a broker is often more difficult unless you have a buyer in
mind.
Be sure to ask potential agents the following:
What problems do you see in marketing our home? (The broker
should be honest about potential problems in selling the home and able to
think creatively about solutions.)
What would your plan be for marketing our home? What can we do to
help you implement your plan? (Listen to the answer to find out
whether the agent exhibits a willingness to think creatively in
approaching whatever problems might exist with the selling process and
whether he or she has a cooperative attitude.)
Will you include any ideas you have for selling the home in a
listing agreement if we decide to sign with you?
Where do you live? (You want a broker who lives nearby, who
knows the good and bad points about your area.)
How much is your commission? (The average commission is 6% or
7%. Although brokers sometimes take a cut in their commissions during the
negotiation process-in order to move a sale along-there is no point in
trying to bargain down a broker's commission at this point.)
Do you have a list of comparable homes? (Such a list is
essential in helping you arrive at an asking price for your home.)
Reviewing The Listing Agreement
The listing agreement is a contract between the homeowners and the agent.
It states how much the agent will be paid and what services will be
provided.
The exclusive right to sell type of agreement gives the broker the
exclusive right to sell your house for a limited period of time. Other types
of listing agreements vary either the exclusivity or time period of the
listing. No matter which of these agreements are signed, the listing agent
gets 100% of the commission if he or she sells the house and part of the
commission if another broker sells the house.
Tip: Generally, try to limit an
exclusive-right-to-sell agreement to a period of three months. This
agreement will give the broker an incentive to sell the home, and it will
still give you an out if you feel the broker is not doing enough for you.
If you have substantial confidence in the broker, and you have seen and
approved his or her plans for marketing the home, you may wish to sign a
six month contract.
Tip: If, at any time during the marketing
process, you feel that your broker is not as effective as he or she could
be, switch brokers. Do not waste time with a broker you have doubts
about.
Speeding
Up The Selling Process
There are various things you can do before and during the selling process
to move it along-and make it less onerous. A good real estate agent may
suggest the following:
Make cosmetic improvements to get the house looking as good as
possible. For instance, patch damaged plaster and drywall, repaint,
and re-wallpaper. Spruce up the exterior by replacing broken shingles or
shutters or doing some minor landscaping to give your home more "curb
appeal".
Increase your home's appeal to a wider range of potential
buyers. Repair or replace any part of your home that's been modified
that might not appeal to the general population.
Make your home cozy and inviting when potentials buyers come
by. Make sure the interior and exterior are clean, neat, and well
maintained. Have a fire burning in the fireplace, bake some cookies or an
apple pie, or have a pot of coffee brewing. Put away toys and tools. Keep
pets out of sight. Not everyone is as enamored of Fido as your family is.
Try not to cook foods like fish with lingering odors.
Here are some ideas for working with your broker to speed up the sale
of your home.
Offer a warranty. Sometimes offering a warranty on the roof,
electrical system, or appliances can speed up a sale or smooth the
negotiating process, particularly if it's causing buyers to balk at the
asking price.
Create a home sale kit with your broker. A home sale kit
consists of flyers that are distributed to potential home buyers and
contain photos of your home's exterior, interior, and surroundings. The
flyer should also list major selling points and include information about
utility costs, taxes, and a floor plan.
Do not help the broker show the home. Allow the broker to do
his or her job. Make yourself available for questions, but do not try to
help sell to potential buyers who are looking at your home.
Offer a bonus to your broker. A bonus shouldn't be obvious to
the buyer because the buyer will wonder if the house price has been
bumped up to accommodate the real estate broker's bonus. Instead, offer
the bonus in the form of an increased commission, say 3.5 percent
instead of 3 percent.
Take it off the market and re-list it later. If your house has
been on the market for a long time, it may be perceived as undesirable.
Taking it off the market and re-listing it at a later time sometimes
helps.
Negotiating Effectively
Although it is the broker's job to do the actual negotiating, the home
owners should stay involved in the process. Here are some tips for
negotiating with buyers, once they have made their first offer.
Find out as much as possible about the potential buyer. Try to find
out, for example, whether the buyer needs to buy a home quickly or is in a
position to take plenty of time to negotiate. This will help you to decide
what type of negotiating stance to take. Knowing details about the buyer's
family will help you point out how your home accommodates their needs. And,
if you know that a buyer lives in an apartment and will need to buy
appliances for their new home, then you can throw in deal-sweeteners such
as refrigerators, washer and dryers, and furnishings.
On the flip side, try to reveal as little as possible about your own
situation.
One final piece of advice is to avoid being confrontational, which can
kill a potential deal during the negotiation process. The offers you receive
will likely be 10 to 15% below your asking price. Do not be offended by this
or by any "low-balling" techniques engaged in by buyers. Be willing to make
some concessions. Make counter-offers to try to bring the offer closer to
your asking price. If you feel that an offer is unreasonable, however, you
can always reject it outright and wait for another buyer.
Planning
Your Move
Once you have signed the contracts, it is time to start planning the move.
The closing date, which is generally your moving date, will fall about two
months after the contracts are signed.
Hiring A Moving Company
One thing you should do immediately after the contracts are signed-even
though your moving date may be months away-is to begin calling moving
companies. Try to get recommendations from friends or colleagues. Call a
number of movers for estimates. You will have to provide them with the number
of miles involved in the move and the approximate weight of your belongings.
The mover will help you in making this estimate. Do not use a mover whose
estimate seems too low. The services provided may be second rate. You get
what you pay for!
Ask in advance about extra charges for heavy items, stairways, or pianos.
Be aware that having the movers pack for you will increase your moving bill
by about 30%. Also, you may pay a premium if you schedule your move during
busy moving times, generally after the 25th of the month or before the
2nd.
Getting
Ready For the Move
Right after you have scheduled your move, start taking care of the
following items:
Start throwing away things you don't want to bring with you.
Decide which items you are leaving behind for the new owners, and tag
them appropriately.
If your move is job-related, ask whether your employer will reimburse
you for part of the cost. Save any receipts relating to the move, since
part of the cost will be deductible.
Start shopping for a new bank in your new neighborhood. Open a checking
account once you have found one with competitive fees and convenient
branches.
Get a change of address kit from the post office, and start notifying
everyone of your impending change. Note that you will need to follow the
directions given by credit card companies, banks, and others to affect a
change of address; sending them a change-of-address card will generally not
be effective.
Call the schools in the new area to enroll your children.
Obtain enough packing supplies from your mover, and begin packing,
unless the mover will be doing the packing for you.
Get copies of your medical and dental records (and veterinary records),
so you can hand these to your new doctors after you move.
Be sure your move is covered by insurance: either the moving company's
insurance, or your homeowner's insurance. Call your insurance company to
determine whether the move is covered. Also, take care of transferring your
homeowner's insurance to the new home.
Then, as you get closer to the date of your move, take care of the
following:
Call the utility companies and tell them to turn on service in the new
place. Schedule a date when they will terminate service in the old
place.
Pack your belongings in boxes. Mark each box with its intended location
in the new home, and with a summary of its contents. When you are close to
moving day, pack a separate bag with items you will need right away, such
as medications, toiletries and clothing.
Switch your direct payroll deposit, and any automatic payments, to your
new checking account. You will have to fill out a form to accomplish this.
Two or three days before you move, take the money out of your old account
and transfer it to your new account.
Tip: Leave the old account open until all
outstanding checks have cleared. To avoid fees, you may need to leave in
any minimum balance required. Be sure to leave your new address with the
old bank.
If you are moving into an apartment building, discuss your moving plans
with the landlord and make any necessary arrangements.
Shop for auto insurance in the new area (if moving out of state).
Confirm with the moving company. Write down directions to your new
home.
Transfer your brokerage account to your new area.
Take valuables out of a safe deposit box and return the keys to the
bank.
Obtain travelers' checks to cover the expenses of your move, and a
cashier's check to pay the mover (unless they will accept a personal
check).
Defrost your refrigerator.
Leave a mail-forwarding order with the Post Office.
On moving day, check your contract with the mover. Be sure the total
cost of the move is clearly detailed. Make sure the moving date, location,
and insurance information is correct.
Notifying People Of Your Move
Here is a list of people you should notify when you change your address
and phone number. Although the list is not all-inclusive, it can be used as a
starting point. You may need to notify these parties at both your old and new
locations. Bear in mind that you may need to follow the instructions provided
by banks, utilities, and credit card companies in order to make your address
change effective. For instance, a phoned-in address change may not become
effective with a lender if the lender's policy is to require written address
changes.
The IRS (use Form 8822) and state and local taxing authorities
The U.S. Post Office
Home, auto, and life Insurance agents
Debtors and creditors, such as mortgage holders, car lien holders,
other lenders, and people who owe you money
Credit card companies
Publications
Clubs and services to which you subscribe such as auto clubs, lawn
mowing services, cleaning services, and book clubs
The Social Security Administration
Any organization that periodically mails you a check, such as a pension
check or veterans' benefits
Banks
Employers
Doctors, dentists, veterinarians
Motor vehicle departments
Places of worship and non-profit agencies you are involved with
The registrar of voters
Utilities, telephone service, answering service, and trash
collectors
Your professional advisors
Figuring
The Tax
Your responsibilities do not end with the sale of the old home and the
move to the new one. There are tax consequences, often complex, that need to
be considered. How much is the gain? How much of it is taxable? How can you
minimize the tax impact? Here, professional guidance is important.
When looking for a real estate agent, you may come across the following
commonly used titles. Here is a basic definition of each:
Principal broker: This is a person who is licensed to operate a
real estate office. He or she may either work alone or employ other
agents. Several years of experience are required to obtain this
licensure. Anyone selling realty must work under the supervision of a
principal broker.
Realtor: A realtor is a member of the National Association of
Realtors, along with a state realtors' association and a local board of
realtors. Realtors are bound by a code of ethics. They are able to access
a local computerized database of homes for sale known as the multiple
listing service.
Agent: This is the general term for any licensed professional
in the real estate sales business.
Listing agent: A type of agent who signs up the home seller and
lists the home with the multiple listing service.
Selling agent: An agent who finds a home for sale (through the
multiple listing service) and finds a buyer for it.
Buyer's agent: The buyer's agent is employed by the broker
selected by the buyer.
Note: On a home sale, the listing agent and the
selling agent split the commission with each other and with their
principal brokers.
Improvements That Help The Most
The following improvements and additions may increase the re-sale value of
your home. Of course, bear in mind that the value home buyers place on
various improvements will vary regionally, and even from neighborhood to
neighborhood. But the list might serve to give you some ideas.
Tax Saving Strategies: Frequently Asked Questions
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