A step by step guide to selling a house
What's inside this article...
- A step by step guide to selling a house
Well, sometimes it may be the time to sell your house. It really doesn’t matter the reasons. Maybe you’re upgrading to a bigger and better place, or maybe you just don’t need that big old house that your children grew up in any longer and looking to scale down.
Whatever the reason, I’m here to help you sell your house as quickly as possible, and for a fair price and whether you are going to try it on your own or with the help of a real estate agent.
Part 1: How to Price Your House
Pricing your house is the most important decision you’ll make in the home selling process. Price it too low, and you’ll leave money on the table. Price it too high, and it will get stale and you could end up selling it for less money than if you had just priced it right in the first place.
You have to get your hands on comparable sales–also known as “comps” or “comparables” in real estate parlance.
“What is a comparable sale?” you ask. A comparable sale is property that sold in the same area (preferably the same neighborhood) as your house within the past six to twelve months.
You want to focus on the houses that are similar to yours, especially in terms of size (finished square footage, number of bedrooms and bathrooms, etc.).
These are the two best ways to get comparables:
- Your local government office usually keeps record of real estate sales. Sometimes you can even access the records online. First try going to your city or county (or borough, or parish…) web site and look for a link to property records.
- For the most current sales, invite a local real estate agents to price your home. Of course, it would be nice to consider using that agent if you end up deciding to list your home with a real estate broker. Many agents will price your home on that understanding.
Once you have the comparables, you’ll need to drive around and look at them (from the outside, of course… preferably from the window of your car).
Even within a highly desirable neighborhood, you’ll sometimes find a house that has a very undesirable location (e.g., fronting on a very busy road or located under enormous power lines).
If you don’t go look first-hand, the comparables could misinform you.
One way to figure out where your house falls in terms of value is to spread all the comps out on a table or floor in your home, sorted by lowest sale price to highest sale price.
Then try to figure out which two properties your house falls between in terms of value.
Ask yourself, “Would I prefer this house or my house?” Using this system you should be able to figure out where you house falls on the “ladder”–and then price your house somewhere between the two “rungs.”
A tip: Don’t try to price your house based on somebody’s idea of how much it costs to build per square foot. That doesn’t work, unless you get lucky.
Part 2: How to Market a House
- Yard sign. Make sure it is large enough to be read clearly from the road. Pay a local sign company $100 to do a custom sign that lists a few key features of your home (instead of one of those red and white “For Sale By Owner” signs that just shows your phone number). If you just said, “100 bucks! I don’t want to pay 100 bucks for a sign,” then you are not very serious about selling your home.
- Flyer box with a four-color flyer listing all the key details on your home.
- (Yard signs and flyers boxes work especially well in highly desirable neighborhoods. There are people who actually drive around looking for new signs because they want to live in that specific neighborhood.)
- Send a postcard to everyone in your neighborhood letting them know that you are selling your home. Include the price and marketable features. People love the idea of their friends living near them, so you can turn your neighbors into word-of-mouth marketers.
- Send a postcard or flyer to neighborhoods near yours that have an average price point just below the average price in your neighborhood. When you do this you are trying to tempt someone to “move up.” Including sample loan scenarios can also help.
This is kind of a low budget” video, but these are really good tips so you should have a watch. I’d list them out, but I don’t want to steal his content.
WHAT WORKS REALLY WELL:
Send one of your flyers to every real estate brokerage in town and offer a 2% to 3% commission to the agent who shows your house and writes a successful contract.
WHAT DOESN’T WORK AS WELL AS YOU THOUGHT IT WOULD:
- Print advertising. This is one of the great mysteries in real estate. Many of my friends look through the real estate ads in the newspaper every Saturday morning, but it is a rare day when I even get one call from a print ad. I don’t know why.
- Open houses. Studies show that only 1% of all homes sell to someone who first viewed the property at an open house.
Part 3: How to Choose a Real Estate Agent
So you have decided to list your home with a real estate agent. If you have reached this conclusion after trying it on your own, don’t worry: you’re not alone. A survey by the National Association of Realtors found that a whopping 80% of “For Sale By Owners” end up listing their home with an agent.
Here are some tips to help you find the right agent:
- Poll your friends and co-workers for names of good real estate agents. Give heavier weight to the opinions of those who have actually SOLD a home with an agent.
- Call the local association of Realtors in your area, and ask to speak to the Executive Director of the association. Ask for a list of the top 25 listing agents from the previous year.
- Ask two or three agents to look at your home, and make a proposal for listing it. It is important that you ask more than one! When agents know they are competing, they will offer better services in their proposal and–MOST IMPORTANTLY–they are unlikely to “low-ball” the price. (Unfortunately, there are agents out there who will give you a low estimate for your house if they are not competing, so they can sell your house quickly and thus with less expense of time and money.)
- DON’T use the agent who says your house is worth the most. Or, rather, don’t use him or her for that reason. Still use your brain in evaluating the comparables presented by each agent.
- If you have trouble deciding, look at each agent’s web site–or marketing materials they use to sell homes. Which ones make the best impression? After all, you are hiring this person for what amounts to a marketing position.
- Don’t list your home with a part-time agent. If you needed heart surgery, would you feel comfortable with a part-time surgeon performing the operation? If you were on trial for murder, would you hire a part-time lawyer? Why, then, would you even think about hiring a part-time agent to handle what may be the biggest financial transaction of your life?
- For crying out loud, don’t list your home with an agent just because they are your friend or your aunt’s boyfriend’s half-brother. Same rationale as #6.
Hopefully these tips will get you started on the right foot. And I’d love to know if I missed anything that has worked for you? If so, just leave a comment below so other Home Improvement Power readers can sell their home quicker too!