The Home Selling Process Can Be Overwhelming, Especially for First-Time Buyers.
Handling the following important tasks early will help you protect your interests and increase your chances of getting the largest return on your property investment.
The home selling process can be overwhelming, especially for first-time buyers. As you move through the steps, you may be tempted to put on blinders and let your agent shoulder the bulk of the load so you can avoid the stress of watching your family home transfer to strangers.
Mostly, that’s OK. But there are some important first steps you need to take to protect yourself before putting your home on the market. Handling these tasks up front will help you protect your interests and increase your chances of getting the biggest return on your property investment.
1. Get Pre-Approved for Your Next Home Loan
Never sign a contract to sell your home before you know you’re pre-approved to replace it. You may think you’re OK, but a lot can change between one purchase and the next: modified lending laws may inhibit your buying power, and shifting financial circumstances or market timing could prohibit you from buying in your target neighborhood.
Don’t put the cart before the horse and get yourself stuck renting—or buying something you don’t really like—because you didn’t have your financial picture clear before letting go of your current home. Get pre-approved by a lender you trust, and research the housing market in the area where you’d like to live (a great agent like Julie can help you put all the pieces together and minimize unpleasant surprises along the way).
Go into your sale knowing exactly how much you’ll need to get into a replacement home that works for you.
2. Check Your Mortgage Payoff
Call your lender and ask for the payoff amount for your current home mortgage. You’ll need that figure to calculate your estimated proceeds (see step 6 below).
3. Research Your Home’s Fair Market Value
Your agent can help you estimate your home’s value and show you related comps (comparable homes that recently sold, or are on the market, in your area)—but to know the hard number, you’ll want to order an appraisal. Property values fluctuate with ever-changing market variables, so never rely on an old appraisal or outdated sales data (from that house that sold six months ago down the street). By doing so, you could be selling yourself, and your property value, short.
4. Estimate Your Total Cost to Sell
You will incur expenses when selling your home—that’s an unavoidable fact. But knowing in advance how much you’ll pay can eliminate bitter disappointments at closing. Ask your agent for an estimate of closing costs before you commit to listing your home.
Here’s a short list of the most common expenses sellers incur:
- Real estate commissions
- Advertising costs (signage, brochures, listing fees, etc.)
- Attorney, title, and other professional fees
- Excise tax
- Capital gains tax (for gains over a certain threshold)
- Prorated costs for property taxes, HOA fees, fuel tank rentals, etc.
- Any other fees typically paid by the seller in your area (surveys, inspections, etc.)
Ask your agent for a full disclosure.
5. Determine the Total Cost to Acquire a New Home
A few expenses to consider as a buyer: moving expenses, loan fees, down payment, home inspections, title fees, hazard insurance, professional cleaning, repairs and cosmetic upgrades not made by the seller, and utility deposits, to name a few. Your lender will give you a disclosure of estimated base costs when you apply for your loan, but make sure to add in costs for any upgrades or customizations you want to make when you take possession of your new home.
6. Calculate Your Estimated Proceeds
So what do you do with all the data you’ve put together? Well, from here the math is pretty simple:
- Deduct your mortgage payoff from your home’s fair market value.
- Deduct your “cost to sell” from what’s left. This is your estimate of the proceeds you’ll be paid at closing.
- Determine whether your closing proceeds cover the total cost to acquire a new home. If not, do you have cash or other funding to make up the difference?
An experienced agent like Julie can provide you with a Seller’s Net Sheet from a title company. The Net Sheet serves two purposes: it’s an accurate estimate of the itemized costs you’ll incur to sell your home, plus your estimated pre-tax payout. Provide your agent with your current mortgage payoff and your home’s selling price: he or she will take it from there. If you’re not sure what the selling price is on your home, ask for a current market analysis.
7. Make Necessary Repairs
Unless you’re selling your home as a fixer-upper (which will attract reduced-price offers), take the time to make sure everything is functional. If you’re on a budget, you can usually skip most cosmetic updates and still get a decent price for your home in the Bay Area—but anything that’s obviously broken gives potential buyers a reason to submit offers well below the asking price.
8. Get the House Ready to Show
Most houses need at least a little spiffing up before they are shown to potential buyers. Great curb appeal, fresh paint indoors (and sometimes out), organized closets and cabinets, sparkling clean windows and appliances, and a clutter-free atmosphere are essential if you want your home to appeal to buyers.
And don’t forget to deodorize!
Neutral linen scents, citrus, and a good scrub with natural products like baking soda and vinegar can mask or remove household odors before a showing. (Be sure to test vinegar in an inconspicuous spot to ensure your surface is colorfast—and never, ever use vinegar on granite!)
9. Be Open to Letting People In…and Getting Yourself Out
If you’re listing with an agent, she’ll no doubt ask you to leave when she shows your house. As much as you like to have privacy when discussing a purchase with your agent, the buyer’s agent wants the same level of privacy with his or her client. Why? Because lurking sellers make buyers nervous, and they don’t feel comfortable inspecting the house. Instead, they feel like they’re intruding.
Potential buyers want to envision themselves living in your home but when you’re standing in their future space, you make it impossible to see the property as anything but your house. So do yourself and your prospective buyers a favor and let them fantasize about their future in peace—because the more jazzed they are about your home, the more serious they’ll be about writing an attractive offer you can’t refuse.
If you’re ready to sell your Silicon Valley house, it’s time to call in the pros. Julie and her team of elite specialists can get your house in tip-top shape and sell it quickly for top dollar.