8 Steps to Selling Your House
Selling your home can be a confusing process if you don’t know where to start.
In the U.S., you have two options, you can either list your own home ‘For Sale by Owner’ on different platforms, or you can hire a real estate agent to list, market and be in your corner to negotiate for you.
I want to sell my house, what’s next?
Ok, you want to sell your house, what should you do next, you ask?
Hire a listing agent
Before listing your house you should decide if you want to hire a listing agent to help you sell it, or choose to list it on your own on a ‘For Sale by Owner’ listing platform.
You need to sell your house using either an agent who can list it and market it for you, or through a platform you choose and can market yourself on.
If you choose to sell it on your own, as a ‘For Sale By Owner’ FSBO sale, you can market and list it on your own. You can also sell to an online platform at a lower cost than you could likely get on a public auction if you’re looking to get your home sold quickly.
Another option is a reduced fee MLS-listing agent who will list your house for a flat fee or a fee under the standard 3% for a less hands-on experience.
A good real estate agent will be able to list your home on the Multiple Listing Service (MLS) in addition to using additional marketing strategies and their own network of buyers and agents to get your home sold more quickly for a higher price than you’d likely be able to do on your own.
Selling your house yourself, FSBO, statistically doesn’t tend to save you money, because you still have to pay the 3% commission to a buyer’s agent, so you’re only saving a 3% selling agent commission. In addition, most FSBO homes sell for significantly less than those sold by an agent.
Recent National Association of Realtors data found that the average home sold by an agent last year was for $280,000 while the average FSBO home went for $200,000.
This means homes sold by agents brought in an additional $80,000 on average than homes sold FSBO.
Here’s some quick math:
$200,000 * .97 that you get to keep = $194,000 would be your average take home on the average FSBO deal.
$280,000 * .94 = $263,200 would be the average take home on the average agent-listed deal.
As you can see, the average agent-listed dal in the recent NAR study took home $63,200 more on the seller’s side than the average FSBO seller listed deal, which points to the potential financial benefits of hiring an agent vs going FSBO.
Research home price
After deciding how you’re going to sell and list your home, and if you are going to enlist an agent or sell it FSBO, you’ll need to do some market research to determine your home value and price.
You an do a CMA, a competitive market analysis to user the value of active, pending, and sold homes around you to help determine the value of your own home.
Also note if the current market in your area is hot, cold or neutral. A hot market means listings are selling quickly, at or above list price and are in high demand, which is great for the seller.
In a cold market listings are taking longer to sell and are selling below list. And a neutral market is in-between hot and cold. Cold markets are less favorable to sellers, but you can still sell your home in any market type.
Get home ready for sale – Clean, declutter & boost curb appeal
You’ll need to get your home ready so it is clean, clutter-free and looks its best for both listing photos, and when potential buyers come to tour.
This is very important, because having a beautiful, clean, sparkling home that smells, looks and feels good makes people want to buy it and pay a higher price, whereas having a cluttered, dirty home that looks uninviting or uninhabitable will turn potential buyers away or cause people to want to offer a lower price.
Looks are everything when getting your home ready so don’t skimp on this step.
Staging a home can help with both home price and time on market. A 2013 study looked at 170 staged properties and found the staged homes were sold in 22 days versus an average on-market time of 125 days for the unstaged properties.
You can hire a professional to stage your home, and you can also stage it on your own:
How to stage your home:
- Remove clutter and as many belongings as possible.
- Hire a professional to deep clean your home or do it yourself
- Deep clean your carpets and rugsor hire a professional to do so
- Make sure your home smells good, whether that requires extra cleaning or bringing in outside scents
- Arrange your furniture, wall art, pillows and decorations so they are aesthetically pleasing. You can even paint your walls or buy new pillows or art for this purpose
- Bring in extra lighting to make rooms look bigger and brighter
If cleaning, arranging your home and staging seems like too much work for you, you can always hire a home staging company to do a good job for you.
Take professional home photos
It’s best to hire a professional to take photographs as this can make your hoem look much better in pictures.
If you want to take the photos yourself, make sure you do it during the daytime while daylight in addition to your lighting is making the home bright, and make sure your photos are clear and make your home look as good as possible, something that you would want to buy.
Do a pre-listing home inspection
Hiring an inspector to inspect your home before you price and list it is a great thing to do because without it, a buyer will have an inspection and may uncover issues you were unaware of that they ask for a price concession of that is more than the actual cost to fix.
When you do the inspection first, you can be aware of these issues in advance and tell buyers up front about them as well as factor them into the home price or repair them before selling your house so there are no surprises during the buyer’s inspection and option period.
Market your House
Now your real estate agent can help you list your house on the MLS, and reach out to their roster of buyers and agents to help your house gain visibility.
You and your agent can get creative when marketing your house, so think out of the box for best results here.
Show your House to Potential Buyers
Now that people are aware your house is on the market, you will need to give them a way to view it in person.
The best way is often to vacate your house for a period of time and let agents access the house with a lockbox or keypad so they can show it at any time that works for them as opposed to having to work with you to schedule an appointment each time.
You’ll want to let people see it at all times of the day so you can get as many intersted buyers to see your house as possible which may increase the number and price of offers you get.
You can also choose to have an open house if you’d like to have a set time people can come and view the property.
You’ll get more showings if you let agents use a lockbox or keypad to show your home rather than force them to make appointments. If you are opting for appointments, try to be flexible. Some buyers will want to see the home on weeknights (after work) and all across the weekend. Be as accommodating as possible.
Get Home Offers & Negotiate
Now is the time to look at all your offers and choose the best ones. You can choose to make a counter-offer at this point if you want to change any terms or make an offer a higher price.
Then once you and the buyer agree, you can accept an offer and sign the contract.
Open Escrow and Order Title
The real estate agent will now help you open escrow and order a title policy for you.
Now is the time to ask for receipt proof of the buyer’s earnest money deposit and option fee, if it is something they have paid.
Schedule an Appraisal
Next it is time to get an appraisal of the house. If the buyer wants to cancel the contract because the appraisal is low, they only can if there is an appraisal contingency in the contract, if not, they will still need to follow through with the transaction.
Cooperate With the Home Inspection
Next the buyer will send a home inspector so they can look at the house during the option period and see what on the house needs to be fixed.
You will need to clear out extra stuff so the inspector can clearly see all parts of the house, especially near the walls and doors, so the inspector can do a thorough inspection.
The buyer will also come back for a final walk-through inspection of the house a few days at some point before closing.
Deliver Seller Disclosures
You’ll need to make sure the buyer has copies of any seller disclosures that are required by law or if you’re aware of any problems with the property or material facts then you’ll need to disclose them to the buyer using a Disclosure form.
Your title company will also give the buyer with the Covenants, Conditions & Restrictions (CC&Rs) for your community or the homeowner’s association, if necessary.
All US houses, even those built after 1978, are subject to lead-based paint disclosures.
Texas Specific Disclosures to be aware of:
Forms and Documents for Selling a House in Texas
The following documents are required for all real estate sales in Texas
- 2 Forms of ID
- Copy of Purchase Agreement and Any Addendums
- Closing Statement
- Signed Deed
- Bill of Sale
- Affidavit of Title
- Possible Additional Documents
- Loan Payoff Information
- HOA Forms and Guidelines
- Survey Results or Survey Affidavits
- Home Inspection Results
- Proof of Repairs or Renovations
- Home Warranty Information
- Copies of Relevant Wills, Trusts, or Power of Attorney Letters
- Relevant Affidavits (Name Affidavits, Non-Foreign Affidavit Under IRC 1445, etc.)
- Closing Disclosure (for certain seller concessions)
- Correction Statement and Agreement
- Texas Disclosure Forms
- Seller’s Disclosure Notice
- Flood Zone Statement
- Lead-Based Paint Disclosure
Negotiate Requests for Repair
During the option period, as long as the buyer has an inspection contingency, the buyer can back out of the contract still if you as the seller doesn’t acquiesce to their repairs.
You don’t have to accept a buyer’s request to make repairs, but they may back out of the deal if you don’t (as long as they have an inspection contingency in place.
This is the time to negotiate with the buyer to either make the necessary repairs or to give them a closing cost credit instead of making the repair for them.
You have the right to look at the buyer’s home inspection report if the buyer asks for repairs or repair credits so you can carefully look to make sure what they are asking is reasonable.
Finally, attend your closing appointment, sign the final paperwork, and hand over your keys.
Make sure to bring a valid photo ID.
Your property deed, reconveyance, and deed of trust all go into public record.
Now the proceeds from the home sale will be placed into your bank account, not including agent commissions, repair credits and any other fees laid out in the contract and closing documents.
Consider the tax implications
As a seller selling your primary residence that you’ve lived in at least two out of the previous five years before selling it, you don’t owe taxes on any profit up to $250,000 or up to $500,000 for married couples. Profit above that will be taxed as a capital gain.
However, if your profit from the home sale is greater than $250,000 ($500,000 for married couples), then you need to report it to the IRS on your tax return as a capital gain.
If you are selling an investment property then you can use the 1031 exchange law to use your sale money to purchase another same price or more expensive property to defer all taxes.
If you decide to list the home for sale on your own, you will have to handle some of the more complex steps, however if you choose to have a listing agent help you, then they will guide you through the process which can be easier, especially if you are a first time home-seller or not a licensed real estate agent yourself.