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SELLING YOUR HOME:
 How To Do It Effectively
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.
TABLE OF CONTENTS

Finding A Good Real Estate Agent
Reviewing The Listing Agreement
Speeding Up The Selling Process
Negotiating Effectively
Planning Your Move
Getting Ready For the Move
Figuring The Tax
Notifying People Of Your Move
INFOSOURCES

 

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 TIP: Do not try to sell your home without a broker 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.)

MORE

 MORE: For a discussion of the meaning of Agents' titles, see Agents Titles and What They Mean.

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 TIP: Generally, try to use an exclusive-right-to-sell agreement limited 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 for six months.
TIP 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 about whom you have doubts.

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 all the cosmetic improvements you can to get the house looking as good as possible. For instance, repaint, re-wallpaper, do some landscaping, replace broken shingles or shutters, and do anything else, within reasonable financial limits, to make your house look good.
MORE MORE: For a discussion of those home improvements that enhance the selling process, see Improvements That Help The Most.
  • Increase the comfort of your home by repairing or replacing any part of it that is difficult to use. For instance, you and your family may have gotten used to that stubborn garage door, but it is now worth installing a new one.
  • Change any overly unconventional aspects of your home to make them more middle of the road. For instance, change bright-colored paint jobs to white or a neutral color.
  • Make your home seem cozy and inviting when potential buyers come by. Make sure the inside and outside are clean, neat, and well maintained, and have a fire burning in the fireplace, or a pot of coffee brewing. Be sure all toys, tools, and other items are put away. Keep pets out of sight, unless they are extremely well behaved, since buyers may be turned off by them. Try not to cook foods with lingering odors, such as cabbage.
  • Consider offering a warranty. Home buyers are often wary of buying a home and then discovering surprise defects one or two years down the road. Sometimes offering a warranty, though exposing you to some risk, on the roof, electrical system, appliances, or other area that is causing the buyers to balk can speed up a sale or smooth the negotiating process. It may be a worthwhile sales tool in the long run.
  • Create a home sale kit with your broker. This consists of flyers to be distributed to potential home buyers. The flyer should contain photos of your home’s exterior, interior, and surroundings. It should also list major selling points, such as a superior school district, or a swimming pool. finally, it should include information buyers need, such as utility costs, taxes, and a floor plan.
  • Do not help the broker show the home; this will only interfere in the process. Allow the broker to do his or her job, and make yourself available for questions, but do not try to help sell to potential buyers who are looking at your home.
  • If appropriate, offer to pay half of the points on closing.
  • If your house has been on the market for a long time, take it off and re-list it at a later time.


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’s situation. Knowing whether the buyer needs to buy a home quickly or is in a position to take plenty of time to negotiate will help you in deciding what type of negotiating stance to take. Knowing about the buyer’s family will help you decide which selling points to emphasize. And knowing whether the buyer needs to equip him or herself with all new appliances and furniture enables you to throw in deal-sweeteners—e.g., refrigerators, washer and dryers, and furnishings.
  • Reveal as little as possible about your own situation.

Overall, it is important to prevent the negotiations from becoming confrontational and thus killing a potential deal. The offers you receive will be 10 to 15% below your asking price. Do not be offended by this or by any low-balling techniques engaged in by buyers. Rather, show a willingness to make some concessions, and make counter-offers to try to bring the offer closer to your asking price. If you feel that an offer is unreasonable, however, there is no reason to entertain it.


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.

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 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; and
  • 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.

Related FG

 Related FG: To gain a better understanding of the tax consequences, please see the Financial Guide: SELLING YOUR HOME: How To Minimize The Tax On The Gain

 

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Infosources

Shows the due dates for filing tax returns, reporting tax information and taking certain actions to obtain a tax benefit. 

Related FGs


Financial Calculators

Personal Financing


Home Financing

 

Books and Other Publications

 

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AGENTS’ TITLES AND WHAT THEY MEAN

While looking for a real estate agent, you may come across the following titles. Here is a basic definition for each commonly used title.

  • 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 with a broker 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 Note: On a home sale, the listing agent and the selling agent split part of their commissions with their brokers.

 

 

 

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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.

  • Family room
  • Fireplace
  • Dining room
  • Linen closet
  • Garbage disposal
  • Wall-to-wall carpeting
  • Smoke detector
  • Two-sink vanity (bathroom)
  • Double-glass windows
  • Range hood and fan
  • Bathroom dressing area
  • Patio
  • New, stronger locks
  • Central air
  • Guest room
  • Bathroom exhaust fan

 

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