Guide for First Time Home Sellers

Guide for First Time Home Sellers

 

If you are a first time home seller you probably don’t know much about the process, buying a home doesn’t teach you everything you need to know about selling one. While there are countless classes, videos, and online articles with helpful tips for first time home buyers, the same can’t be said about selling your first home.

With a cursory search online, I found a handful of articles, but one you get into the meat of the post, you realize it’s just a generic article about selling a home—nothing specific about first-time sellers. Seriously, there are tens, if not hundreds of posts that show up on Google, but literally, none of the ones I read targeted first-time sellers specifically.

Are the wants and needs of a first-time seller different than someone that is selling their home for a second or third time? Probably not. But their knowledge base is.

First time sellers don’t know where to start, how soon do they need to list if they want the sale to close by a specific date, how much will it cost, what they should do before selling or while under contract, what’s an HOA resale disclosure.

Are you confused yet? If so, I’m here to guide you through.

Where should you start?

Honestly, you should start by talking to a real estate agent for several reasons. They can help you come up with a gameplan and timeline. Some questions need to be answered before committing to selling your home. A few you can answer yourself, and some require the guidance of an expert.

Things to Consider Before Selling

  1. Where will you go next?
  2. When do you want to be there?
  3. How much will it cost?
  4. How much is your home worth?
  5. What do you need to do before selling?
  6. How does the process work?

Meeting with an agent is a part of the decision making process. This is just a meeting and you don’t have to commit at that time. But this meeting can help you decide if now is the right time for you to sell or if it may be better to hold off.

Whether you want to sell now or a year from now, an agent can help you come up with a gameplan and timeline.

Choosing and Hiring the Right Real Estate Agent

One of the most important things you’ll do when selling your home is hiring the right agent. Your agent will guide you through answering the above questions. They’ll give you expert advice along the way and help you avoid pitfalls they’ve witnessed other sellers experience in their years of selling real estate.

You and your agent will discuss your minimum needs, timeframe, and hash out details regarding your goals for the transaction.

When interviewing agents, you want someone that is knowledgeable about the market, communicates in a way that works for you and has a plan to market your property.

You can surely sell your home without the assistance of a professional real estate agent, but it isn’t recommended. Selling you home is a big responsibility and there’s too much at risk to go at it alone.

Not to mention the high failure rate of For Sale by Owner listings.

Only 7% of homes in the nation are successfully sold without listing with a real estate agent. Even still, many sellers end up paying a buyers’ agent’s commission because the vast majority of buyers work with real estate agents.

Another reason to speak with an agent is to develop an accurate timeline. Depending on the time of year, it may take more or less time to sell than you anticipate. An experienced agent will be able to advise you on when you should come on the market to achieve your goal within your desired timeframe.

The right agent will earn their pay and then some. They’ll handle the details and guide you from pre-listing to the closing table.

Preparing Your Home to Sell

First-time sellers often mistakenly begin doing repairs and making updates before meeting with a real estate agent. For some reason, maybe human nature, we think that someone else desires better than we deserve. For example, a buyer will only be interested if I replace my already updated counters with even better ones. Before spending money on upgrading your kitchen, replacing the flooring, or even painting your home, CALL AN AGENT!

Storytime

A few months back, I had a home seller call me to discuss selling her home. When I got there, I noticed the house had recently been painted. WHITE, yes, white. She got a quote from an area painter. The painter made no suggestions about paint colors, and she didn’t know to ask any questions. She didn’t have the money to have an almost 3,000 square foot townhouse painted a second time, and that paint may have cost her thousands of dollars as it didn’t photograph or show particularly well.

You must understand the importance of making a great first impression on buyers. Who better to advise you than someone who works with homebuyers daily.

A few low-cost home improvements you may want to consider may include:

  • Professionally cleaning your home and carpet
  • Freshly painting the house
  • Replacing outdated bathroom vanities
  • Professionally cleaning the windows
  • Decluttering (it’s a good idea to rent a small storage unit)
  • Have your HVAC serviced and cleaned

When you meet with your agent, they can help you break down any required work into manageable steps.

Destination TBD

Another thing to take into consideration before selling your home is where you plan to move. If you are PCSing or relocating to another part of the country, you may already have a definitive moving date in mind. However, if you are moving to another location here in Northern Virginia, you may not have a deadline.

Either way, you need to figure when you want to be in your next location and count backward to determine when would be the best time to list your house.

If you are planning to buy another home, you’ll need to get pre-approved. Before you start looking at homes in your dream neighborhood, you need to make sure you can get approved for a loan in that price range.

Storytime

I had clients a few years ago that were set on moving up into a more affluent area. They had owned their townhome for ten years and were ready to buy a larger home with more room for their growing family. When we initially met, they told me what areas they were most interested in and how much they wanted to spend.

After speaking with their lender, they discovered that they could get pre-approved for a mortgage but not enough to cover a move to the area they originally planned. By obtaining lender pre-approval, we were able to take the same criteria they were looking for in one area and find them a similar home in another subdivision that was within their budget. Thankfully it all worked out; however, you should determine your next destination and how much you can afford to spend BEFORE listing your home. You may decide you’re better off where you are.

Finances

When was the last time you checked out your mortgage balance? If you don’t know what you owe your lender, now is an excellent time to find out. Once you’ve decided to sell and your agent has helped you figure out a realistic idea of what your home is worth, you can calculate how much you stand to walk away with or your net gains.

Many first time home sellers are shocked when they find out the expenses that come with selling their home. For starters, you’ll have brokerage fees, which outside of your mortgage payment will likely be your most significant expense. Just remember that real estate commissions are negotiable, so don’t hesitate to seek a middle ground between what an agent offers and what you think is fair to pay.

There are many agents out there offering varying degrees of service. You can find a full-service agent that will work out a deal for you that is a win-win.

A few things come into play when figuring out your net gains, you need to take into account the amount owed on your home, the brokerages’ commission, any taxes owed, settlement agency fees, and HOA fees if applicable. We add up all those items and subtract them from the sales prices.

Depending on if it’s a buyer’s or seller’s market, you may also be asked to contribute to the buyer’s closing costs in the form of what’s called a seller subsidy.

What’s left after any expense and fees is what you, the seller, stand to walk away.

Price Your Home Accurately

The best way to determine the value of your home is to speak with an agent. The agent you hire should be a local market expert. They can advise you on when to sell and how much you can expect to sell for based upon the price, location, and condition of your home.

Real estate is location-driven. Identical homes built by the same builder in the same year will sell for significantly different prices in Kingstowne and Reston. Just because you see that houses in one area have increased in value doesn’t mean the same is true in your part of town.

This can be especially true in Northern Virginia, where home values can differ significantly within the same subdivision.

Always look at similar closed sales as a basis for establishing the right asking price. Your neighbors’ house that is currently on the market may or may not be priced correctly. We won’t know until that house closes.

You can do a quick search online and find out what some real estate websites say your home is worth based on algorithms. However, in many cases, this can put you in the ballpark of what your home may be worth, but “Zestimates” have a median error rate of about 8%, according to Zillow’s CEO, Spencer Rascoff.

Be mindful of choosing an agent based solely on the price they say they can get for the house. They should have the numbers to back up any claims of what they say your home is worth. Some agents will list your house above its market value just to get your listing. If the market doesn’t support the list price, it’s only a matter of time before they will ask you to reduce the price.

Pricing your home correctly from the start is a KEY FACTOR in getting your home sold quickly. Two things you need to get right the first time are hiring the right agent and listing at the right price.

Showings

Sings “Be PREPARED”!!!!!!!!!!!! Insert Lion King GIF

But seriously, be prepared. The best defense is a good offense. If you stay ready, you don’t have to get ready, and any other cliches you can think of regarding preparedness apply here.

Keep your house showing ready day-to-day. As mentioned above, have your home professionally cleaned before coming on the market. This should take care of anything you miss when you usually clean your house. Pros will get the baseboards, the ceiling fans, lamp heads, you know things we mere mortals regularly forget.

Deep cleaning on the front end will put you in the best position to clean as you go from that point forward. My best piece of advice is to give the house a once over before going to bed each night. You’ll want to do the same thing before heading out the next day.

5 Things to Check Before Walking Out the Door

  • Put dirty dishes in the dishwasher
  • Hide laundry baskets in the closets
  • Toilet seats down
  • Turn on all the lights
  • Open the blinds

Another thing to consider is when you want to show the home. Ideally, you want to make your house as easy to show as possible. That means being flexible and declining as few showings as you can. If you have young kids that have a nap routine, you absolutely cannot disrupt let your agent know on the front end so they can restrict showings during those hours.

Otherwise, determine how much advanced notice you need and stick to that. If you need one hour’s notice to vacate and get out, then be prepared to receive a showing request at 5 PM for a 6:00 showing.
If you need more time, whether its two hours or six, let your agent know before you receive that showing request. If you decline a showing many times, that buyer will not circle back to your property and will move on to the homes that are available when they are free.

Usually, agents will look at the showing instructions for the properties their buyer is interested in and schedule tours around those parameters. If an agent sees they only need to give an hour’s notice, they’ll tell their client we can see it at X time, and they’ll go about scheduling multiple appointments for that tour. If they see that one of the four properties their buyer is interested in requires 24 hour lead time, they’ll let that buyer know that the best time to see all the homes would be tomorrow rather than today.

Negotiations: Receiving and Accepting Offers

When you receive an offer, there are more things to consider than just the offer price. You may receive a full price offer only to discover that the buyer is asking for 3% in closing cost assistance.

On a $500,000 that’s $15,000.

Would you consider that a full-priced offer?

Buyers sometimes ask for other things from the sellers that can add to a few hundred or even thousands of dollars. Covering the termite inspection could cost $50, and adding a home warranty could be at least another $500 and up to $1000. And this is all before the home inspection negotiates where the buyer will more than likely request repairs be completed by a licensed repairman prior to settlement. That or they may ask for additional credit instead of repairs.

Don’t be alarmed; this is all a part of the negotiation process. If its a buyers’ market, it is not unusual for the buyer to make these requests. In a sellers’ market, we see fewer credit requests and more buyers that are willing to make offers above list price and even without the option to negotiate repairs after the home inspection.

When you list your home, your agent will identify what options you are likely to see when offers start coming in.

There are many things to consider when you receive an offer.

  • How much are they offering?
  • When do they want to close?
  • What type of financing are they using?
  • Are they asking for closing cost assistance?
  • How long is the home inspection period?
  • How long do they need to remove the appraisal and financing contingencies?
  • Do they want me to pay for anything extra, like the termite inspection or a home warranty?
  • How much will I net if the offer is below the sale price?

Your agent should answer all these questions when they present the offer. A good agent will provide you with a seller net sheet, which will give you an estimate of what you should walk away with after taking all this information into account.

This is a negotiation. That means you have an opportunity to change some or all of the conditions in the sales contract. Put yourself in the buyer’s position and work with your agent to find a middle ground if you can’t work with the offer as written.

A good offer is where both sides WIN. We call this WIN-WIN or no deal.

Countdown to Closing

Is this the end?

Almost.

After you’ve accepted an offer, the buyer has a few contingencies to remove before you can head to the closing table. The two biggest items are the home inspection (arranged by the buyer) and the appraisal (ordered by their lender).

The buyer’s agent will schedule the home inspection within the timeframe indicated in the sales contract. There are a couple of small items you can take care of between contract ratification and the home inspection.

Change the smoke detectors batteries
Replace the furnace filter
Clean your gutters
Replace any missing or burnt-out light bulbs

The buyers will present you with a list of items they’d like remedied before closing. Your agent will be able to guide you through which items you may or may not want to address. Remember, this is also a negotiation. Try to negotiate a WIN-WIN deal here too.

Ideally, the buyer will only focus on significant defects and safety concerns. We always tell our buyers that in a home inspection, we’ll find elephants and ants. We advise them to concern themselves with the elephants. The ants can be taken care of in the future.

An appraisal is an estimate of the fair market value of a home. A licensed appraiser will evaluate your home’s value based on the size, location, age, condition, upgrades, and the local housing market. We always attend the appraisal to grant the appraiser access and also answer any questions they may have in real-time rather than in an email or phone call. Ask your agent what their policy is for home appraisals is before hiring them.

The lender determines the proper loan amount based upon the results of the appraisal. If an appraisal comes in below the sale price, you and the buyers may need to renegotiate the sales price. Otherwise, your home may end up back on the market.

While the contingencies are being removed the settlement agency is busy getting everything ready for closing. They’ll take care of the title work and order your loan payoff.

Be sure to complete any request from them in a timely manner.

It’s Closing Time

Bring these items to the closing:

  • Keys ( house and mailbox)
  • Garage Door Openers
  • Government-issued ID
  • Your checkbox if you haven’t already sent the title company wire instructions

After closing you’ll want to:

  • Change of address with the post office
  • Disconnect the utilities
  • Cancel homeowner insurance

Selling a home for the first time can be full of uncertainty and surprises but it doesn’t have to be can be extremely stressful and exhausting. I hope this guide answered some of your questions and that you now feel better equipped to embark on your next chapter. Remember hiring the right agent will go a long way in making the transition from first-time homeowner to first-time seller seamless. If you’re thinking about selling your home and would like more information about anything we covered here give me a call at 703-539-2053 or email me.

Are you thinking about selling your home soon? Check out our Steps to Selling Guide. Feel free to give me a call at 703-539-2053 or email info@AskAWalker.com to schedule a private showing of this or any other property.

About the Author

The above article was written by Abraham Walker, Your Northern Virginia Real Estate Agent, helping clients market their homes to achieve high sales with a quick closing time is my main priority. He’s the co-founder of Ask A Walker and can be found on YouTube, Facebook, and HERE on this blog.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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