Upon sell, any outstanding debts associated with the property will be paid first.
Outstanding debts include, but are not limited to:
Taxes to include tax liens
Mechanic's and other liens
If the sum total of the outstanding debts (plus any additional fees such as closing costs, commissions, etc.) is greater than the property value, the seller will be required to pay the difference.
Property taxes should be current and paid in full.
The impact of paying the buyer’s closing costs:
The buyer normally pays 4 months of property taxes as part of the closing costs.
However, if the seller chooses to pay the buyer’s closing costs, the 4-month tax may be much greater than what the seller paid as the homeowner. For example, if the seller is disabled, elderly or has a homestead, his / her property taxes may be much lower than a buyer who cannot claim either of these exemptions.
By agreeing to pay the buyer’s closing costs (a normal and often expected practice in this area), the seller may receive less money from the sell.
There could also be IRS tax considerations when it comes to selling your property. Please see your financial advisor for more details.
Neighborhood property values are the biggest factor in determining the value of the seller’s property.
A seller should also consider how long it takes to sell properties in his / her neighborhood. Your realtor can provide you more information about this.
The number of similar properties for sell in your area will also affect the amount of time it will take to sell your property. However, there are things you can do to help your property stand out. See Preparing to Sell Your House below for more details.
A seller should also consider the proportion of renters versus homeowners in their area. Some homes are more appealing to renters than buyers. If you’re not very familiar with your neighbors and your neighborhood, this might be a good time to get to know everyone to find out who's renting and who's buying.
If you are behind on your mortgage payments, you may want to consider short-selling your property.
A short-sell is a mortgage company approved property sell where the:
Property value is generally listed below the market value; and
Mortgage company is normally willing to delay the foreclosure in order for the property to be sold.
Your realtor should advise you as to how to request a short-sell from your mortgage company.
As a rule of thumb, if you have owned your property for less than 5 years and if you sell your property, after all of your outstanding debts (plus any additional fees such as closing costs, commissions, etc.) are paid, you are more likely to not have enough equity to avoid having to pay money out of your pocket to get your property sold. This is commonly known as being "upside down".
If you cannot afford to pay the difference, your realtor may advise you to keep the property longer or rent it out until you have built up enough equity.
Escrow is the portion of your monthly mortgage payment that the mortgage company puts aside in order to pay your property taxes and homeowner’s insurance once they come due.
Depending on when the property is sold and when the insurance payment is due, most sellers will have approximately 4 to 6 months of escrow built up at the time of the sell.
It normally takes 30 days after the sell for the mortgage company to issue an escrow check to the seller.
Sellers should consider the amount they have in escrow when estimating the net profit from selling their property.
Most people do not move during the holiday season (October through January). Instead, most homes are purchased during the spring and summer. However, in a military community, deployments, base closures, base housing policies and force drawdowns may have a greater impact on home buying trends. Your realtor should be aware of the property buying trends in your area.
If your move-out date is not flexible, then supply and demand is the greatest factor affecting how far in advance you will need to place your property on the market. Supply is the number of properties available for sell. Demand is the number of buyers looking for a property to purchase. Your realtor should be aware of these trends.
If your move-out date is flexible, then your house can be listed at any time.
The homeowner or tenant should be prepared to leave the property within 30 days of the house being placed under contract. “Under contract” generally means that the owner has accepted an offer to buy the house. Sellers should be sure to file a forwarding address with the local post office so that they can receive their mail at their new address.
Getting That Curb Appeal
You never get a second chance to make a first impression. A potential buyer should be excited about seeing the inside of your house based on how appealing it is from the outside. Basic things that buyers look for include:
A well-manicured lawn
Properly trimmed trees and bushes
Clean, non-flaking and non-peeling paint
Roof without excessive visible wear and tear
Driveways free from oil stains
Toys and other items stored away and not strewn across the yard
Properly dressed windows (curtains, blinds, screens and shades)
When comparing your property to your neighbors, you should have one of the best looking properties in the neighborhood.
Before a buyer is interested in seeing the inside of your home, they will be drawn in by the outside. It’s often more than worth it to invest in giving your home good curb appeal.
No matter how large the space, clutter makes the room appear smaller. On the other hand, a small space with fewer items appears larger.
It may be necessary to use temporary offsite storage (not your garage or shed) to store extra items and / or large pieces of furniture that don’t fit the space.
Closets, cabinets and pantries require special attention when it comes to decluttering. It may be inconvenient, but this is very important to buyers who are looking for a property with a good amount of storage space.
Backyards are also very important. Toys, animal waste, worn down grass and excessive patio furniture can ruin a buyer’s dreams of having great backyard barbecues.
Buyers picture their vehicles pulling into the garage. Homeowners should remove as many items as possible from their garages and should definitely get everything off of the floors such as loose paint cans, buckets, toys and car parts.
Sellers should seriously consider leasing a month-to-month offsite storage if they have a lot of items.
The primary goal of decluttering is to assure that the buyer can easily move around the room. A rule of thumb is to allow at least 36 inches of space for movement in any direction, and in major traffic areas to allow even more space.
Although each homeowner has his / her own standards of cleanliness, a spotless home always has a way of appearing newer and more welcoming.
Here’s a list of the areas where dirt is most obvious:
Carpet and Tile Grout: spots, color variations, pet stains, hair and food
Ceiling Fans: missing light bulbs, dirt and dust
Vents and Ceiling: dirt around vents and spider webs in corners
Door and Light Switches: grease smears and fingerprints
Windows and Mirrors: splashes, spots and smears
Bathrooms: mold, dirt, lime, soap scum, hair, rust, etc. on walls, floors, fixtures, toilet and tub
Outside Walls: mold, dirt or algae build-up on concrete, siding or brick
Sellers may wish to consider having a professional cleaning service assist them with the initial cleaning and even subsequent maintenance of the property until it is sold.
Repairs: What Should I Fix?
Sellers may be held financially responsible for any injuries to a potential buyer resulting from neglected and / or overlooked repairs to their home.
As a part of the buying process, the buyer receives a Seller’s Disclosure Notice which will indicate the property’s major defects or malfunctions, if any. Sellers may wish to repair certain items in advance which may discourage potential buyers from completing the purchase.
Most often sellers will be concerned with cosmetic damage which may discourage buyers from making an initial offer. Here’s a list of the most frequent cosmetic repairs:
Walls: holes, paint fading, water stains, non-neutral color
Floors: outdated, damaged, lumps, worn down areas
Windows: broken glass, stuck windows, torn or no screen, fading glass
Doors: doors stuck, paint on knobs, damaged hinges and / or doors
Staging is only a concern for properties which are currently occupied.
As mentioned previously, decluttering is the most important part of staging a house.
Over the years, homeowners may gather many items from different places and persons which don’t necessarily complement each other. Homeowners should try to put items together that complement and relate to each other. For example, family pictures should be grouped together.
If a room has a lot of furniture, when decluttering, remove the items which don’t have complementary wood staining and colors.
Clear counter space as much as possible by storing appliances and dishes in cabinets.
Try not to have an empty room. It’s better to put something in the room such as a chair, bed, futon, table or something which can be dressed to look nice.
Also, try not to over-decorate a wall by limiting pictures and home interior décor.
Homeowners should remove any décor, art or media (books, movies, magazines, music covers/cases, posters) which could be considered offensive to potential buyers.
As the homeowner, you are inconveniencing the tenant by selling your home. For example, you are wanting the tenant to keep the house clean and prepared to be shown at a moment’s notice. Because of this, most sellers tend to compensate the tenant in some way for complying with this process, or they tend to wait for the tenant to move-out before showing the house.
A lockbox is a tamper-proof box which is opened using a digital key. The lockbox is used to store the property key(s).
Often buyers will house-hunt in the same neighborhood that your property is located. If the buyer and / or the realtor sees the “for sale” sign in your front yard, they may wish to stop in without necessarily giving you advanced notice. This is why it’s important to always have your home ready to show.
When buyers visit your home, they picture in their minds how their belongings will fit into your space. Maintaining your staging helps the buyer to better envision the roominess, free-flow and adequacy of your space.
Not everyone loves pets and some people are afraid of and / or allergic to them.
Because buyers will want to see your entire property to include washrooms and the backyard, if you have pets, it would be a good idea to invest in a pen or cage in which they can be safely and temporarily placed while buyers are visiting your property.
It is important to inform your realtor in advance if for any reason your property will not be available to show. Some common reasons that a property might not be available to show include:
The property owner does not have a lockbox and will be out of town.
The property is being repaired or is undergoing other maintenance such as pest control or carpet cleaning.
The property owner is having some sort of event at their home.
Usually a realtor will call your agent before showing your home. Your agent would normally be the one to inform you of an upcoming showing.
If a potential buyer wants to see your home, you should contact your agent directly to coordinate a showing. A seller should never show his / her home to a potential buyer without the seller’s agent being present.
It is a common courtesy for the homeowner to leave the home when a potential buyer is being shown the property. It is also customary for homeowners leave the lights on in all the rooms and to play soft music to create a warm, inviting atmosphere.
Buyers should always feel free to openly comment as to what they like or don’t like about the home without worrying that they could offend the homeowner.
Additionally, because the process of buying a home involves both parties (buyer and seller) making and receiving offers and counteroffers, the homeowner should remain impartial and encourage such negotiations to go through their agents. A homeowner may lose their anonymity advantage by chit-chatting with the potential buyer.
Debt vs. Offer Comparison
The value of an offer is determined by the net amount (equity) that the seller will receive once all outstanding debts (plus any additional fees such as closing costs, commissions, etc.) are paid.
To help the seller determine the value of the offer, the agent completes a Seller Net Sheet which estimates the outstanding debts and net amount the seller will receive. This does not include any escrow reimbursement that the seller may receive.
If the property has been on the market for longer than average, then the seller should consider accepting offers that are lower than the maximum potential for the property.
Typically your agent will advise you in advance if the property may not be competing as well as others due to its price. In this case, the agent may recommend a lower target price in order to sell the property more quickly.
If a property is not receiving many showings but the price is competitive, the homeowner may need to consider giving the property a facelift to enhance curb appeal. Some common techniques to enhance curb appeal include:
Changing color of paint
Adding flowers or plants
Updating the landscaping (wood chips, rocks, stones, etc.)
Watering and fertilizing the grass to make it greener
Removing burglar bars
Painting the front door
A seller has to consider the state of the local economy when receiving an offer. As mentioned earlier, supply and demand will usually dictate the number and quality of offers that a seller receives.
A seller also has to consider what homes have sold in their area recently. This information can be obtained from their agent.
The more motivated the seller is to dispose of the property, the more willing he / she should be to consider a lower price.
To avoid having to accept a lower price due to time constraints, sellers should begin preparations to sell their home well in advance:
An agent can come out and look at the property advising the seller as to what repairs and improvements are necessary to sell the house;
The agent can also advise the seller as to the current market conditions such as:
How long properties stay on the market in his / her area
The median price for properties sold in his / her area
When the seller should place the property on the market
Sellers should give themselves enough time to pay for the necessary repairs and improvements without negatively affecting their monthly living expenses. For example, if the repairs necessary to place the house for sell will total $1200, the seller may want to put $200 aside for 6 months (or $150 aside for 8 months), and then pay for the repairs with the money they’ve saved.
Additionally, sellers may want to have a garage sale or place items in storage which also takes time. See Decluttering above.
Who Has to Be Present?
All property owners as listed on the deed have to be present.
If one of the property owners cannot be present, he / she must provide a valid power of attorney to his / her representative prior to closing. The representative could be anyone, but typically it would be the other property owner, a family member, a friend or his / her legal representative. In this case, the representative must be present at the closing.
For the seller, the closing process takes about 30 minutes.
If the seller wishes the read the closing documents prior to completing the actual closing, his / her agent can request a courtesy copy in advance.
The seller must present a valid state or federal photo ID at the closing such as a state identification card, state driver’s license, a passport or a military identification card.
Warranties for any appliances and keys to the property are to be turned over to the closing officer.
Once the closing is completed and funded, the seller should contact their former mortgage company and request that their escrow check be sent to them at the appropriate forwarding address.
The information listed above is only a guide and is subject to change. State/Federal law and standard industry practices are the ultimate authority with regard to buying/selling property.
Soldiers of Real Estate was founded in 2003 by Steve Darden.