Selling Your Home

Selling a home is obviously a very complicated ordeal. That is why REALTORS make the money they do. I will, however, try to break it down in a fairly comprehensive manner, and maybe even debunk a few myths in the process.So you want to sell your home...Why? The first thing to determine is your motivation. Why do you want to sell? Are you trying to take advantage of market conditions, avoid a possible downturn in the market? Are you relocating? Do you need more space? These questions can help chart the course, or, let you know that it might not be the right time to sell. If you are trying to sell to take advantage of market conditions at the same time as other speculators are trying to dump properties, then you are going to be competing to sell in a saturated market. Also, if you are relocating to an out of county area than that will have a factor in how aggressively you are going to attempt to sell. If you have time to plan and prepare your house for sale, then you will likely be able to get top dollar for your home. So first things first- figure out your “why”.You will also need to know what you need or want to get out of your home, and then what you can get out of your home. Mot certainly not the same number, however much you want it to be.A general idea will work for now. You are only evaluating your options at this point. Of course, you need to know what debt will have to pay off when you sell the home and also what it will cost to sell the home. Always be conservative at this point. You will need to know if you have any hard pre-payment penalties, meaning that even if you sell your home, you still owe the bank a pre-pay. A soft pre-pay is only for a refinance situation.An estimation of capital gains tax will also be necessary. There are many expemptions or deferments of capital gains that depend on a combination of length and type of occupancy.The last factor to include in your estimation is the cost to sell your home. With a Realtor, a general estimate can be between 7% and 8% of the (estimated) sales price. Don't worry about deciding whether or not to use a Realtor at this point- I can tell you that you will probably net about the same either way. This estimate will cover expenses such as REALTOR fees, escrow fees, title fees, termite inspection fees (although repair work can vary greatly depending on the condition of your home, location and how it has been maintained), and a slew of junk fees that are in large part more or less unavoidable.So you say you have no number to subtract these from...You probably receive a number of comparable sales updates from real estate agents and most likely have (or are) a gossipy neighbor. So it is likely that you have at least a vague idea of your homes value, or at least what some homes are selling for in the neighborhood. It is very easy to get an idea of value with tract housing, but for everyone else, using a square footage estimate is also adequate. Zillow.com is a new website from the expedia.com founders that could provide a reasonable estimate of a homes value, but in areas like San Diego, they still have some bugs to work out. Appraisals are another source to look at, but beware, often can be a little off pace with real estate sales. Because appraisals rely on past sales to derive a value, they don’t always consider market conditions that are driving current sales and buyer activity.

Preparing Your Home For Market

You’ve come to the point now that you have a conservative idea as to what you will net from the sale. Now it is time to consider what you will do to prepare your house for market. There are a couple of things to consider. If your house is about to be foreclosed on- don’t worry about fixing a hole in the wall, an investor will be buying your house and he already knows what he will have to put into and what he will get out. You need to sell fast and save your credit! For just about any other circumstance, there is a minimum that you should do if you realistically want to sell your home in a reasonable amount of time. The obvious things are cleaning: washing windows, vacuuming and treating carpets, touch up paint, scrubbing down bathrooms, etc. Staging a home is also necessary, and you can consider it your first step to an organized move out. Staging, in its most modest application, can be done by simply eliminating clutter, or its most profound applications, by having a professional decorate and design the furniture layout and bring in all the furnishings. This is very common in the luxury home markets like Rancho Santa Fe and La Jolla as well is with new homes.
You may also want to consider a remodel before selling. Although it is time intensive, it may maximize your homes potential to sell fast and at top dollar. Don’t plan on getting every penny out of an improvement. Here is a list of some of the best improvements to make, and how much of the cost you can expect to come back to you.

Putting Your Home On The Market

Now your home is ready to go on the market. The fun is just beginning.
Going on the market will mean a few things. Assuming you want to sell your home in the shortest amount of time for the highest price, you will want to make your house visible and accessible to the buying community. It is also time to make the decision on your offering price. You will want to get an update on comparable sales, find out what your competition is doing. If you haven’t already hired a Realtor, now is the time to do so. If you still insist on doing it yourself, you still need good information. You can find a Realtor who does a lot of open houses, let them know your situation, and tell them you will send all the buyer leads that you get to the Realtor in exchange for the most recent sales information, including active listings. Now price your home. You must understand how buyers shop for homes. They go out and compare and contrast features and benefits on homes based on their price. Although you may assume a buyer will just offer less because you are listing high so you can be ready to negotiate down, most buyers see an uphill battle for a house that has only so “x” amount more to offer the house “a” but is priced 20% higher. Price so the offers will come. You will net more in the end.
Aside from price, the second most important thing in getting your home sold is getting it in the San Diego multiple listing service, or whatever regional mls the home your selling is in. This is the central location all Realtors go, and the feed that provides home shoppers on the internet with the data they are searching. Now that everyone sees your home on the market, you will also need to provide them access to your home. Most Realtors work when their clients do not, so aside from having a vacant home where agents can show at anytime, you should be a phone call away so that you can vacate the premises while an agent is showing your home.

Advertising Your Home For Sale

So now you are on. You have prepared your home (and yourself), you have priced your home competitively, you have the home in the San Diego MLS, and the lockbox is on and you’re ready to go. Now what?
Being perfectly honest, you have already done the most important things you can do to sell your home. If your home won’t sell with what has been done, than everything you do from here on out won’t help. Gotta have the fundamentals.
You do have the opportunity to enhance everything you have done. To speed up the process, and in the best cases when done right, you can create the feeding frenzy. Marketing and advertising your home.
Homes usually have a story to tell. Let them tell it. If not, create the story your house wants to tell. Whether you are “The Butterfly House” where colorful butterflies come every spring to pollinate (or whatever they do) or maybe your house is “The Farmers House” simply because it is the color of a barn, your house has a story or a potential story waiting to be told. What? What is the nonsense about butterflies you ask? Well, it will help it stand out in the memories of the buyers.
There are 1, 238, 486 ways and counting to advertise a home for sale. It seems like every day there is a new company jumping into the mix with the next great revolution in real estate advertising. Open Houses, print advertising, opt-in email ad campaigns, websites, blogs, broker caravans, FSBO sites, brochure flyers, call capture 800 numbers, alternative marketing, television, radio, direct mail, canvassing. Virtual Tours, Talking Houses, Dream Homes, audio-blogging, online classifieds…this list could go on forever.
Consider a few, do them well, and do them consistently.
Up to this point, you have done quite a bit to get people to the house. So don’t waste it now that they are showing up.
It is very important that you don’t end up locked into a contract with a buyer who will not qualify for the financing necessary to close on the purchase of the home. Your Realtor will handle this part for you. Again, if you are not working with a Realtor, I strongly suggest you find a mortgage broker or a Realtor who will work with you to pre-qualify prospects in exchange for the leads you collect while your home is on the market. Pre-qualifying is taking a quick assessment (usually verbal) of the buyer’s financial, employment, and credit situation to make sure they are playing in their league. This information will later be verified by asset statements,, w-2’s, tax returns and credit reports when the lender goes for formal loan approval. But that, we will worry about later. In addition to the buyer’s ability to obtain financing, you will also want to be assured that your buyer is properly motivated to purchase the home. What is the reason for purchasing? Are they starting to work in the area and have no other place to go? Great! Are they planning on buying contingent upon the sale of their home? Make sure your buyers are effectively pre-qualified for financing and motivation.

Receiving Offers and Negotiating The Terms

It is about this time the offers start pouring (or trickling) in. If another agent has brought the offer, you or your agent must pre-qualify! …Now start negotiating. Real estate is one of the most litigious industries that exist. California is one of the most litigious states that exist. Real estate negotiating should have a win-win outcome. If there is a loser, there’ll be a lawsuit. When purchasing and selling real estate, aside from purchase price, terms that can be of great importance to either side are usually the length of escrow, earnest money deposit, contingency removal dates, who is buying the home, and seller assisted financing or closing costs. Being flexible on any of these could turn a stalemate into a mutually beneficial agreement.

The Escrow Process, Closing the Sale

Once the two sides have come to an agreement that is sufficient to open escrow, the real fun begins.
Many different parties go to work during escrow to fulfill their respective duty to the transaction. Home inspectors, title companies, pest inspectors, lenders, Realtors, mortgage brokers and more all have a part in making the transaction go smoothly and working together to solve any unforeseen problems that may arise. And trust me, as long as you’re in real estate, you’ll see new problems every day. It is important to have a strong supporting cast in the sale of your home. Some of the things that take place during escrow:

Escrow drafts instructions to govern the transaction based on the executed purchase agreement
Buyer sends earnest money deposit to be held cashed in escrow trust account
Buyer has property appraised for Lender
Seller hires a pest inspector, pays for necessary repairs
Buyer hires a physical inspector to look at the property
Buyer and seller negotiate repairs
Title company researches title, resolves any title issues, issues title insurance policy (separate policies for both the buyer and the lender)
Seller sends packet of disclosures to buyers
Buyer obtains financing, satisfies lender conditions for full loan approval
Buyer signs loan documents
Escrow coordinates funding with lender
Title Company records sale with county records

When selling, you can expect to pay for the following as part of your closing costs:

New owners title policy
½ of escrow fee
recording charges to clear liens
unpaid/prorated taxes
Interest accrued to Lender being paid off
Repairs as agreed upon by buyer and seller
existing (if any) loans, judgments, tax liens
Broker fees
Unpaid HOA dues
City and County assessments for improvements
Courier fees
(section 1) Termite Repairs

When title finishes recording, a call is generally made to the agents involved by the escrow officer stating that funding and recording have taken place. It is now time to make sure that all the keys are handed over to the buyer (usually through agents) and it is always good to leave any special instructions to the buyer (garage codes, how to reset any appliances or electrical devices, etc..).
For more information on getting your home sold, you can contact me, Cleve Shirley at 858.866.7035, or simply email me at cleveshirley@gmail.com. I’m more than happy to help with any questions you may have.