Putting Your House on The Market
The first step toward putting your house up for sale is to meet with a real estate Sales Associate at your home. This is what we call the "listing appointment".
But beforehand, it's important to understand "who's who" and how brokers may cooperate to sell your house.
Listing Broker or Listing Agent.
An individual real estate broker whom the seller hires to represent the seller through a contract called a "listing agreement". The listing agent (Sales Associate) is associated with the listing broker (the real estate company). The listing broker is directly paid the listing commission and then splits the commission with the listing agent. (Although the broker and agent may be two different individuals, the term "broker" is used throughout the Guide for simplicity.)
Selling Broker or Selling Agent.
In a "cooperative" sale, the house is listed by one broker and a buyer is provided by another broker. The selling broker receives the selling side of the commission. If the listing broker also produces the buyer, then the listing broker receives both listing and selling sides of the commission. A selling broker may have a signed buyer representation agreement with a buyer and, therefore, represent the buyer and not the seller. If the buyer's agent is a Long & Foster Sales Associate, Long & Foster becomes a disclosed dual agent with the consent of both buyer and seller.
A Little Homework
Before the listing appointment, both the home seller and the listing broker are busy. While the home seller collects a list of documents requested by the broker, the listing broker studies recent neighborhood sales of homes comparable to yours, and also comparable homes currently for sale.
There's No Place Like Home
At the listing appointment, the listing broker will want to inspect the house and yard to become familiar with its special features.
You have probably enjoyed living in your home and have been pleased with its many unique features. Your listing broker will want to tell prospective buyers about the special features of your home and neighborhood. Be ready to be specific about schools, day-care, nearby public transportation, and other desirable community features, as well as home features not readily apparent.
Remember, prospective buyers will be "comparison shopping" and keenly aware of subtle differences in houses for sale in the area. Be sure to tell your listing broker why yours is special — from any home remodeling to afternoon winter sunshine.
Demand Sets Price
After conferring with the listing broker on market conditions and comparable nearby sales and listings, the home seller will set the listing or "asking" price for the house.
A common definition of market value is: "What a ready, willing and able buyer will pay, at a price a seller will accept." Buyers are sophisticated. They've already been shopping, and when they see your home, they'll be comparing features and financing.
There's a rule of thumb that says: "A house priced more than 5% over market value discourages offers." Buyers who can afford the price can get "more house" for their money elsewhere. Buyers who cannot afford the price simply won't look. This is why we say, "A house priced right is half sold".
A fair market value will be determined by comparing the property with similar properties which have recently sold and (in some cases) with similar properties currently on the market. Experience in the industry has proven this "market analysis" approach is more accurate than the "replacement cost" or "potential rental income" methods.
Sample "Net Sheet"
Based on this sales price, the listing broker will go through a worksheet that estimates the "net cash" from the sale. Simply, this exercise subtracts anticipated charges paid by the seller from the sales price. A copy of the "net sheet" is left with the home seller. (An itemized list of typical selling costs is presented in the "Settlement" chapter, which is the stage when these charges are paid.)
Most sales cannot be completed without financing. That is why it is generally to the home seller's advantage to appeal to the greatest number of homebuyers by accepting the greatest range of financing plans. The listing broker will explain the basic differences between VA (Veterans Administration), FHA (Federal Housing Administration) and conventional financing.
What Is A Point?
A point is one percent of the amount of the buyer's mortgage loan. For example, if a loan is $300,000, one point is $3,000. On all loans, the homebuyer and home seller may share the charges by mutual agreement.
Property Profile Folder
To enable the listing broker to prepare a folder of information on the property, the home seller needs to provide a number of documents and information specific to the location and jurisdiction. Because the list is long, you can understand why it's best to collect the papers before the listing appointment. These materials may include:
Pay Off Notice.
A letter signed by the home seller and mailed to the lender by the listing broker to notify the lender of the intention to pay off the mortgage in order to minimize prepayment of interest penalties to the seller. The home seller should provide the broker with the lender's address, loan balance, assumability, years remaining on present mortgage, P.I.T.I. and the interest rate, if possible.
Well and Septic Inspection.
If the property is on septic/ well, current inspections by local health authorities are required while home is occupied. The listing broker will usually arrange for the inspection after contract is ratified.
Order Lender Appraisal.
Lenders usually require an appraisal to ensure that the property is adequate collateral for a loan. A lender will usually order its own appraisal for this purpose through an approved vendor.
The listing broker will ask the home seller if any tax assessments or easements exist on property that must be paid or included in the purchase contract and passed with the land when sold.
Property Taxes/Condominium Fees.
The home seller provides a record of property tax or condominium fee payments which the buyer will reimburse a pro-rata share to the home seller at settlement.
VA/FHA and most lenders of new mortgages may require a termite inspection certificate that shows the house is free of infestation. If the home seller does not have a current certificate, then the listing or selling broker (depending on area) will arrange inspection at home seller's expense.
Sometimes a home inspection and radon testing will be ordered. The home seller should also provide all information as to the physical condition of the property, such as the presence of fire retardant plywood.
The home seller should provide a record of the past 12 months' utility bills, including gas, electric, sewer, water, and trash where applicable. Most buyers will want to know history of utility costs.
If possible, the home seller should provide the listing broker with the deed, house location survey, condominium bylaws or homeowners association documents, subdivision plat map, house floor plan, previous title search abstracts, legal description of property (subdivision, section and lot), home warranties on major systems, if still in effect, and a copy of homeowner's insurance policy for endorsement in the purchase contract.
In anticipation of a buyer's offer, the home seller must be ready to supply the listing broker with a specific list of the personal property that is included in the real estate property for sale. Examples of items to "convey" may include: draperies, drapery rods, remaining heating oil, firewood, washer, dryer, refrigerator, stove, microwave, disposal, swimming pool chemicals, awnings, storm doors and windows, screens, venetian blinds, shutters, window air conditioner, etc. The home seller should tag or remove items which do not convey.
When the home seller is ready to put the house on the market, a listing agreement is filled out, indicating a specific period of time the agreement is in effect ("listing period"), and signed by the seller. You've now hired a listing broker and listing agent.
What is a "Lockbox"?
A lockbox is a universal metal container for your house key that is hung on the front door and can only be opened by licensed Sales Associates. It provides access when the owner is away, thus assuring full exposure to prospective buyers.