Listing Your Home
Now that you’re seriously considering selling your home, the first question that may cross your mind is “How much is my house worth?” How much you’re going to get for your home depends on the housing market, condition of the home along with multiple factors that will be explained through initial consultation.
Signing the Listing Agreement
Once you’ve decided on the agent you want to work with, the next step is signing a listing agreement with them. The listing agreement commits you to an exclusive arrangement with the agent for a set period of time. The typical time period is four months, but in sluggish housing markets or in the luxury home market, six-month or one-year agreements are the norm.
During your meeting to sign the listing agreement, or shortly thereafter, your agent will assist you in fulfilling your disclosure obligations (as mandated in California) by having you answer a series of forms and questionnaires. Your agent will also order reports on your behalf:
- Property Inspection Report– A licensed property inspector will go over your home’s structure and systems to check for functionality, operability and code compliance. A written report will be issued based on the inspector’s findings, detailing basic information and recommendations for repair, replacement, or maintenance.
- Pest Inspection Report – A licensed pest inspector will check your home for termite or other pest infestation that could affect your home, as well as dry rot, wet rot, and fungus damage. If any of these are found, recommendations and estimates are then provided in a written report.
These reports are part of the buyer’s due diligence process, and the inspections could be performed by the buyers at their own costs. However, it is highly recommended that you have the inspections done before marketing your house to best anticipate problems, determine list price, and minimize buyer issues that could cause them to back out of the purchase.
Pricing Your Home
Knowing where the housing market is heading is critical when pricing your home. Market conditions vary, based on everything from supply-demand issues to buyers’ attitudes. What’s the economic outlook? Ultimately the market will dictate what your home is worth but pricing it competitively will give you a greater opportunity for greater results.
Marketing Your Home
Once the house is adequately prepared to accentuate its most attractive features, your agent puts together professionally photographed, produced and printed marketing materials. Your house is then included in the MLS and should receive additional exposure online. Showings are made during open houses and by appointment.
Negotiating the Contract
If an interested buyer is serious enough, he or she puts together a purchase offer with his or her agent. The buyer’s agent then presents the offer to the listing (your) agent. Rarely does an offer get accepted as presented. There are usually terms that need to be revised, and this is addressed through the counteroffer process.
Should there be more than one interested buyer, there could be a multiple offer situation. A deadline should be set to hear offer presentations in this scenario. Agents in the Bay Area are generally familiar with multiple offer situations and will be comfortable presenting their client’s offer at an appointed time. In some occasions, given the bidding context, one party will exceed the others in amount and terms and will immediately be accepted by the seller. In others, the seller will have the option of counter-offering the highest offers or all of the offers.
Your agent should thoroughly explain to you this process and discuss with you the best negotiation strategy.
Going through Escrow
Upon ratification of the purchase contract, the escrow process begins. Escrow generally refers to money held by a neutral third-party on behalf of the transacting parties. Parties choose escrow to give them the assurance that no funds or property will change hands until ALL of the instructions in the transaction have been followed. The escrow holder has the obligation to safeguard the funds and/or documents that are in its possession, and to disburse funds and/or convey title only when all provisions of the escrow have been complied with.
During this process, the important timelines related to contingencies in the contract are as followed:
- Buyer’s deposit is given to the escrow company
- Additional inspections, if any, are performed
- An appraisal is performed if there is a loan involved
- If there is a loan, the buyer goes through the lender’s approval and underwriting process
- If your property is a condo or townhouse, the homeowner’s association provides a package of HOA documents and transfer paperwork
Once contingencies are removed, the escrow company contacts your mortgage holder and any other lien holder to request a pay-off amount. The escrow company then prepares the settlement statement detailing your pay-off and other closing-related expenses for your review. You will then meet with the escrow officer to sign the deed transfer and other documents, while the buyer meets separately to sign their loan and closing documents.
Closing the Sale
After the buyer signs off on the loan documents, the escrow company sends them back to the lender for final review and funding. Once escrow receives all the funds from both buyer and lender, the sale is recorded with the county and your ownership has been conveyed to the buyer. That day, all keys and garage door remote controls need to be turned over, and the house should be cleaned out and ready for the buyer.