By Wayne Zuhl - March 2021
You've been in your home for several years, maybe your family has grown and you need more space. Or maybe you're now empty nesters and you are ready to downsize. The reasons for moving can be varied, but your motivation for moving should be at the center of the decisions you make during the process. Whether it's choosing the right real estate agent, attorney, contractor or other professionals, your motivation should be factored in by those parties as well. So you've decided to sell. What do you do first? Right now we are in a very strong Seller's Market, meaning that sellers have the upper hand. The inventory of homes for sale is at a record low and the demand by buyers is at an all-time high. When you combine those factors with record low-interest rates on mortgages, selling now is a good thing.
Before you even think about putting your home on the market you'll want to do whatever you can to get it ready for a quick sale. You may want to hire a Home Inspector to do a pre-inspection to let you know issues that may come up later in the process, fix them now if you can. Here are several things to consider doing to make your home more attractive to buyers.
Do a deep cleaning. Wash the windows, dust everything, clean the appliances, and shampoo the carpets. You can do an impeccable job yourself, or you can hire a professional cleaning company.Consider painting. If you're going to paint, again, hiring a professional may actually save you time and help you net more money. Make sure that you paint the walls neutral colors. Stick with off-white, light grey and beige. Don't paint an accent wall, remember that buyers want to be able to imagine their things in the home, so keep it simple.
Floors. Is there hardwood flooring under the carpets? If so, consider taking up the carpet and having the hardwood refinished. Hardwood floors are one of the most sought-after things by buyers.
Should you renovate? That depends. Does your kitchen have the original knotty pine cabinets from the 1950's? Does your bathroom have that ugly pink tile that was all the rage in 1962? You can do renovations, but consider that you'll only recoup about 70% of what you spend on the renovations when you sell. Additionally, your taste in cabinetry or countertops may be very different than a potential buyer's taste. Usually, we tell our seller's NOT to do renovations unless the areas are in such a bad state that a buyer would be totally turned off. In many cases, buyers are prepared to do some renovations to reflect their taste and style.
Remember the quote from Real Estate Shark Barbara Corcoran: "Buyers decide in the first eight seconds of seeing a home if they're interested in buying it. Get out of your car, walk in their shoes and see what they see in the first eight seconds."
Step two: Hiring the right agent to get your home sold.
You'll notice I didn't mention the idea of selling as a FSBO, or For Sale By Owner. Here's a recent post about why that is NOT a good idea. You'll actually NET MORE MONEY when working with an agent, so I strongly suggest going that route. When you do hire an agent, there are many things to consider. Meet with the agents you're considering and let them know your motivation and why you want to sell. Make sure your agent is on board with your goals. Here are several questions you should ask before agreeing to sign a listing contract:
These are just some of the questions you want to ask.
Regarding the listing price, it's better to underprice the house and create excitement than overprice and let your house sit unsold. Underpricing will likely result in you getting even more than you're asking for the house. The old logic of pricing it high and having room to negotiate is a strategy that does NOT work.
Buying another home. If you're planning on buying another home (downsizing or upsizing), you should have a discussion with the agent who's listing your home for you. Since you already have a relationship, you'll likely work well with them in the purchase of your new home, if it's in NJ. If you're moving out of the area, ask the agent if they can refer to you an agent where you're planning to move. If they have a good relationship with that agent, they can even oversee the transaction for you. Either way, you'll need to start looking for your "new" home right away, as homes are moving very quickly right now due to the low inventory.
Step 3: You're on the market! Your home is now on the market. Photos have been taken, your listing is on the MLS and all the important Real Estate websites. In this market, you can expect showings right away and you need to be prepared. Here are some considerations for you to think about when it comes time to show your home:
Do things to make the home feel inviting, but don't leave doors unlocked. Your agent should put a lockbox with a key outside the house that the showing agent will have access to.
If after a week to 10 days, you haven't had any showings, chances are that you've overpriced the home. Consider a price reduction if this is the case. This is a hot market and homes that are priced to sell will sell quickly.
Step 4: Here come the offers!
Your home has been on the market for several days. If you've priced the home right and your agent has done their job in marketing your home, you should have offers coming in. You may get one great offer, or there may be multiple offers coming in. If there's only one, and it's reasonable, you may consider the old real estate adage: The first offer is the best offer. Your agent will be able to help you determine if there's any room for negotiation.
Multiple Offers. When selling in this market, the situation that you're really hoping for is multiple offers coming in on your home. The best way to encourage multiple offers is to price your home to sell! Overpriced listings do not get multiple offers, if they get any offers at all!
Bidding Wars. Bidding wars drive up your selling price, but there are risks involved in signing a contract for more than your house is worth. A buyer who is applying for a mortgage will need to obtain an appraisal. If the sale price you agreed upon is more than the home is worth, the house will will not appraise out. This could mean that you lower the sales price anyway.
The strategy that we encourage our sellers to follow is to establish a date and time for buyers to submit their highest and best offers. Doing this allows you and your agent to go over all the offers and consider the different factors that will result in you accepting an offer.
Things to consider when accepting an offer:
Once you agree on an offer and you're happy with the price and the terms, your agent will present the contract for you to sign. In NJ the Standard Form of a Real Estate Contract is 14 pages long. You'll need to sign the first and last page as well as initialing all the pages except the first one. You may need to sign some other documents as well, this is normal.
Once the documents are signed you'll want to have an attorney review the contract. Your agent can usually refer you to a Real Estate Attorney. I suggest using an attorney who specializes in Real Estate. A Real Estate transaction can have many nuances and having an attorney who's well versed in them will work to your benefit. Remember, the buyer is the "other side" but is not the enemy. You want the attorneys to work together to achieve the goal that you and your buyer both want which is to get to the closing table and close the sale.
Attorney Review can take as little as a day to several weeks, but the norm is about 3 business days. During the Attorney Review period, you can still show the house, and you can still accept offers. However, if you had multiple offers and asked for highest and best offers, you may want to stop showing the house so that you don't upset your buyer.
Step 5: Contract to Closing Once the Attorney Review is completed you are now in what is called Under Contract or Pending status. Ideally, all showings will stop, unless you're looking for backup offers. During the Under Contract phase, several things will take place.
T-minus 3 days and counting. You're scheduled to close in 3 days, you should have gotten the preliminary closing disclosure from your attorney. Go over it with a fine-tooth comb and make sure that everything is in order. At this point you should be living out of boxes, it's difficult but worth it. It's very likely that your attorney will have you sign the selling documents a few days before the closing. This can usually be done through e-signatures.
The day before the closing, you want to have as much out of the house as possible. If movers are coming early in the morning, get the kids and pets out and let the movers do their thing. On that note, if you have a pet, now would be a great time to clean up any droppings that might be in the yard.
After the movers have gotten everything out, you need to make sure that the house is in broom clean condition. Sweep up any dirt or dust and make sure to leave your buyers a note with spare keys, warranties, etc. Many years ago, my parents bought the house I grew up in. The sellers left my mother a tea pot with a few tea bags and a tea cup which my mother used for fifty years and spoke fondly of the seller ever since.
If you're considering selling your home, feel free to give me a call and I will do a FREE, no-obligation market analysis to let you know the value of your home as well as provide a snapshot of what the local market is like in your town.