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The home selling process differs from area to area, but there are some
important steps that all home sellers should take before they put their
homes on the market.
1. Get Pre-Approved for a Home Loan
I've known sellers who signed a contract to sell their house before they
knew if they were qualified to buy another. Either their financial
circumstances had changed since their last purchase, and they could no
longer qualify for a loan, or they weren't able to sell at a price that
allowed them to buy the type of replacement house they wanted. They ended up
renting or buying something that was far from ideal.
Before you decide to sell the house, get pre-approved by a lender you trust
and research the housing market in the area where you wish to live so that
you have a good idea how much it will take to buy a replacement.
2. How To Start Researching
Start looking for two types of real estate: houses that seem to match
the one you'd like to buy and houses that seem similar to your current home.
How do the two categories compare in price? Can you handle the difference if
you're planning a step up?
A. Search the Internet for
homes for sale in your area and read real estate ads in your local
newspapers. You won't find house locations without making phone
calls, but browsing the general market is a good start.
B. Pick up free For Sale publications outside the grocery store,
or wherever you find them in your town.
3. Check Your Mortgage
Payoff
Make a call to your lender to check the payoff for your current home
mortgage. You'll need the figure to calculate your estimated sales
proceeds. Use my suite of Mortgage
Calculators to make sure you can afford the next step.
4. How Much Is the House Worth?
Determine your home's fair market value. Real estate agents will usually
help you determine value as a courtesy, but you might prefer to order an
appraisal. Do both of the above if you want to be sure the price is
right. What have single-family homes in your neighborhood sold for
recently? This fast, free Home Sales Report will
help you find out. Will your closing proceeds cover your costs to
acquire a new home? If not, do you have cash or other funding to make up
the difference?
5. Estimate Your Costs to Sell
A. Real estate commission.
B. Advertising costs, signs, other fees if you plan to sell by
owner.
C. Attorney, closing agent or other professional fees.
D. Prorated costs for your share of annual expenses, such as
property taxes, home owner association fees, etc.
E. Any other fees typically paid by the seller in your area
(surveys, inspections, etc.).
F. If you are unsure of costs, ask a real estate agent. Kathy &
Rick deal with transactions every day and can give you a very
close estimate of seller closing costs.
6. Determine Your Costs to Acquire a New Home
Total your costs to acquire a new home: moving expenses, loan costs,
down payment, home inspections, title work and policy, paying for a new
hazard insurance policy--all expenses related to buying a home. Your
lender should give you a disclosure of estimated costs when you apply
for pre-approval.
7. Calculate Your Estimated Proceeds
A. Deduct your mortgage payoff from your home's fair market value.
B. Deduct your costs to sell from the remainder to get an estimate
of the proceeds you will be paid at closing.
C. Will your closing proceeds cover your costs to acquire a new
home? If not, do you have cash or other funding to make up the
difference?
8. Make Necessary Repairs
Make all needed repairs unless you want the house to be regarded as a
fixer-upper. We are not referring to cosmetic updates, but to items in
need of repair. Anything that's obviously broken gives potential buyers
a reason to submit a lower offer. Consider having a pre-selling home
inspection.
9. 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 the
house to appeal to buyers.
10. Get Psyched Up to Let People In
It is best if you to leave when the house is shown. Why? Because lurking
sellers make buyers nervous--they don't feel comfortable inspecting the
house when they feel they are intruding. Unless there's a real reason
for it, don't ask that your agent to be present for all showings. That's
the kiss of death for the best showing rates. Other agents want privacy
with their buyers and they don't usually have time to work around your
agent's schedule. Make the house accessible. That means it's always
ready to show. Many agents won't bother showing a house that takes 24
hours to get into.
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