Millions of existing homes are sold each year and, while each transaction is different, every owner wants the same thing: the best possible deal with the least amount of hassle and aggravation and the highest potential return.
Home selling has become more complex than it used to be. New seller disclosure statements, longer and more mysterious forms, pre-inspection or no pre-inspection, marketing online in addition to traditional methods, offers with a wide variety of terms and clauses all add up to make it difficult to be a seller.
Just as importantly, the home selling process has changed. Buyer brokerage, the process in which brokers represent home buyers, is the norm nationwide and good buyer-brokers want the best for their clients and will work hard to achieve that goal for their client.
The result is that, while hundreds of thousands of existing homes may be sold each week, the process is not as easy for sellers as it was even five or 10 years ago. Success in today’s real estate market requires experience and training in real estate appraisal and valuation, marketing, financing, negotiating and closing, the very expertise available from a quality real estate broker like those of the Seattle Area Real Estate Team.
Should I buy first or sell first?
The nature of the current real estate market typically determines whether it is best to buy or sell first. In a buyer’s market, sellers are less likely to have issues with contingencies and may be willing to take more risks to sign a contract. A seller’s market favors buyers who have already sold their homes and can make a non-contingent or cash offer. Some people prefer to know that they can sell before they look to buy a new home and others like to know where they are going to live before they sell their current home. There are benefits to each however its essential to determine what would have potential to work based upon the current market.
Before making the decision to move forward on purchasing a home without selling your current one, the first question to ask is “what can I qualify for if I have my existing payments plus a new mortgage”. Also, you’ll want to evaluate the mortgage for which you’ll qualify and whether that new monthly payment in addition to your current mortgage would be acceptable to have to make until the current home sold. While the Seattle market is currently a hot one, it’s important that you and your Seattle Area Real Estate Team broker discuss the timing of the purchase and sale and the impact it could have on your overall financial situation. We recommend at least exploring the current purchase market before making a decision as well. If you see properties available that you are interested in and would qualify for with both payments, then you know before making a decision what to expect when you enter the market as a buyer.
If you have very specific needs for your new home, which could lead to a lengthy home search you might want to consider finding the new home first before selling. Buying before selling offers the security of knowing where you are going before you sell your current home, but it also comes with risks. One risk is that it is much harder to get a mortgage for a second home. You have to have both the capability and access to funds for the down payment on the new home before the sale of the current one. In addition to that you have to qualify based upon both payments being included in your Debt To Income ratio. Plus you will need reserves left over in your asset accounts after the down payment is made. Another element to consider is whether you may feel pressured to take a lower offer on your current home to avoid being burdened with having two mortgage payments.
Selling your current home first offers the most control to many of the elements. If the buyer is agreeable, it might be possible to rent back your home for up to 60 days. In the current Seattle market, seller rent backs have become more commonplace due to the competitive nature and the ability of sellers to request unique terms of the buyers interested in purchasing their property. Another possibility would be to move into a short-term rental, although that adds the stress of moving twice and storing your belongings plus the rental costs. If you do choose to sell first, you will not need a sale contingency which means you will have more power when negotiating your purchase.
What are the costs associated with selling a home?
Your Mortgage Payoff – The amount due to be paid off at closing will be both your principal balance in addition to interest due and any fees charged by your mortgage company. The payoff amount is never simply the current principal balance on your loan.
Real Estate Sales Commission - The commission is shared between your broker and a broker representing the buyer. Commissions are typically split equally between both brokers although can be variable. The Seattle Area Real Estate Team does not set commissions at a particular amount and will vary them upon the services and marketing package requested for the listing. Additionally, those clients utilizing our brokers to purchase a new home at the same time they sell are granted a discount on the commission. In the rare case that dual agency comes out of the listing, where our broker represents both buyer and seller in the transaction, we also discount the commission cost.
Prorated Property Taxes -You are responsible for the property taxes until you turn over the deed. These will be pro-rated per day and will be calculated based upon the next tax due date and how many days you and the buyer will be responsible for paying.
Title insurance premium - It varies by area and the title company selected although costs don’t differ significantly. The seller of a property is responsible for a sellers form of title insurance to insure that the property you are selling has no defects or clouds on title that would affect its marketability.
State and local taxes and fees – All real estate transactions that involve conveyance of property require payment of excise tax. These vary by county but the excise tax in King, Snohomish and Pierce County is currently 1.78% of the sale price
Homeowner’s association fees - Many homeowners associations will charge a fee for a property transfer to the seller and you will also have to pay pro-rated amounts for monthly dues as determined upon the closing date.
Any buyer’s incentives - If you’ve agreed to pay any of the closing costs for the buyer or purchase a home warranty this is part of the sales costs
Home inspection - It’s an option to have a home inspection before you list the home to know what potential issue may arise be before being presented with them by a buyer. In a sellers market it is also a beneficial element to provide to all buyers to alleviate the need for multiple pre-inspections. A negative of a home being pre-inspected before listing is that if you are made aware of any deficiencies then those will need to be disclosed in the Seller Disclosure Form that is provided to a buyer. The inspection is typically paid at the time of it being completed.
Moving - Whether you do this yourself or hire professional movers, there are costs associated with relocation that you’ll need to be thinking about
How Do You Improve Your Home’s Value?
The general rule in real estate is that buyers seek the least expensive home in the best neighborhood they can afford. This means you want to put on the market a home that fits with the neighborhood but is not over-improved. For example, if most homes in your neighborhood have three bedrooms, two baths and 2,500 square feet of finished space, a property with five bedrooms, more baths and far more square footage would likely be priced much higher and could be more difficult to sell.
Due to the variation of property types, sizes and ages we see in many neighborhoods throughout Seattle this is not always simple to evaluate. When meeting with your Seattle Area Real Estate Team broker we will evaluate your home in comparison to similar properties that have sold recently or are currently listed for sale. These “comparables” will help to give us a guide as to where your property in its current state would fall in the market and will also determine if it would be helpful to complete any improvements before listing the property for sale.
Improvements should be made so that the property shows well, reflects market preferences and does not involve major investments, the cost of which could not be recovered from the sale. It makes no sense to spend $10,000 on updates for only a $10,000 higher return!
Cosmetic improvements, paint, landscaping, etc., help a home show better and often are good basic investments. Mechanical repairs that ensure all systems are in good working condition are required to get a top price but also can be the most costly particularly if it requires updating large elements such as wiring, plumbing or roofing.
Ideally, you want to be sure your property is comparable and competitive with other homes available in the community and market. Seattle Area Real Estate Team brokers, who see numerous homes and know the market well, will be able to provide suggestions that are consistent with what is supported in the area of your home.
When Should You Sell?
Historically, the real estate market tends to be more active in the late spring and early summer because parents want to enroll children in classes before the beginning of the school year. That is also typically when most homes are likely to be available. The slowest part of the year for real estate transactions is typically between Thanksgiving and New Years when we see the least number of homes being listed as many sellers don’t want to move during the holidays.
In the current Seattle real estate market we are experiencing less seasonality than we typically have historically. With a severe lack of inventory buyers are looking to purchase year round and sellers can list their home at any time and expect to have a significant amount of activity. There is actually more potential for multiple offers from buyers during the slower season as there is even less inventory for them to choose from. The best time to sell is always going to be what’s best for you, your goals and when the property is ready.
Are you and your home ready?
The home selling process typically starts a couple months before a property is made available for sale. As a seller, it is important to look at a home through the eyes of a prospective buyer and determine what needs to be cleaned, painted, repaired, thrown out or otherwise made ready to be presented to others.
Ask yourself: If I were buying this home, what would I want to see? The goal is to show a home that presents itself well and is able to attract as many buyers as possible. While part of the “getting ready” phase relates to repairs, painting and other basic home improvements, it is also important to evaluate if there are things that can be done which can help improve your home’s value before it is listed for sale (see our paragraph on improving value).
A clean, neat home in need of few or no repairs will sell faster, and at a higher price, than one that is showing wear and tear. To give your home its best possible presentation, perform a mini-makeover or have your home professionally staged before it's shown to potential buyers.
The day your home goes on the market it should be in prime condition and priced right to attract the most potential buyers. While your Seattle Area Real Estate Team Broker will help you determine an appropriate price and will offer suggestions to make your home more appealing, your job is to put in the work to get your home clean, dialed in for maximum showing impression and to remove clutter and personalization.
Buyers want to see a home where they can visualize themselves living. If buyers see an overstuffed closet, they’ll assume the home lacks storage space; and if your kitchen counters are cluttered, they’ll think the space is too small.
Your Seattle Area Real Estate Team broker will do a final walk-through with you to make sure no details have been overlooked. Here's a generic list of tips that will help you make your home more attractive.
REPAIR AND CLEANING CHECKLIST TO PREPARE FOR LISTING
• Remove peeling and chipped paint; replace with a fresh coat.
• Clear gutters and downspouts.
• Make sure there is good exterior lighting and all walkway lights and front-door lanterns work.
• Remove any moss from the roof.
• Mow and trim grass; re-seed and fertilize where necessary.
• Prune all overgrown trees and shrubs.
• Remove or replace dead or diseased plants, shrubs and trees.
• Clean grease and oil stains from driveway.
• Weed flower beds.
• Paint or stain worn areas in wood decks.
• Remove grass growing in concrete cracks; sweep off debris from shrubs and trees.
• Clean all deck rails and make sure they're secure; replace missing slats or posts.
• Polish the hardware on the door until it shines.
• Add a fresh coat of paint to get rid of nicks.
• Clean the glass on the storm door; make certain the screen is secure.
• Make sure the doorbell operates properly and there are no squeaks when the door opens and closes.
• Clean all windows-inside and out.
• If needed, add a fresh coat of paint to the window trims and sills.
• Make sure all windows open and close easily.
• Replace cracked windowpanes and those with broken seals.
Make sure window screens are secure; replace any screens with holes or tears.
• Clean entryway floors and area rugs.
• Downsize clutter in entry closet to give the appearance of spaciousness.
• Double-check entry lighting to make sure it works.
LIVING ROOM/DINING ROOM/FAMILY ROOM:
• Give the room a fresh coat of paint if necessary.
• Repair cracks and holes in ceiling and walls.
• Make sure all wallpaper is secure.
• Repaint any woodwork that is worn or chipped.
• Clean draperies and blinds; open them to maximize light.
• Make sure draperies and blinds open and close.
• Wash windows.
• Steam-clean carpets. Clean rugs and wood flooring, and remove any stains or odors.
• Position the furniture to showcase the size and space of the room.
• Put away toys and hobby supplies; remove extra magazines and books from tables.
• Make sure countertops and sinks are clean and stain-free.
• Fix dripping faucets.
• Organize pantry and cupboards so they appear clean, neat and spacious.
• Make sure the refrigerator and freezer are defrosted and free of odors.
• Clean the oven and cook-top thoroughly.
• Make sure sinks, tubs, showers and countertops are clean and free of stains.
• Repair any leaky faucets.
• Remove grout and soap stains from tile.
• Replace any missing or cracked tiles or grout.
• Make sure all joints are caulked.
• Make sure all fixtures, including heat lamps and exhaust fans, are operating.
• Install a new shower curtain.
• Store all supplies, such as toilet paper, shampoo bottles and cleansers.
• Repair cracks in ceiling and walls.
• Apply a fresh coat of paint if necessary.
• Make sure wallpaper is secure.
• Clean draperies and blinds; open them to maximize light
• Put away toys, clothes.
• Neatly make up the beds.
• Check for water penetration or dampness; call for professional repairs if necessary.
• Get rid of musty odors.
• Clean furnace and drains.
• Make sure light fixtures work.
• Arrange storage area in a neat and organized manner.
• Sweep floor.
• Make sure stairway handrail is secure.
• Plant flowers to brighten a walkway and enrich the entry.
• Remove any indoor plants that are brown or losing their leaves.
• Remove any "fixer" cars, campers and boats from the property.
• Discard the clutter of magazines on the coffee and end tables.
• Hide or get rid of worn-out throw pillows.
• Replace shower curtains and invest in a matching set of towels in the bathroom.
• At night, turn on porch light and outdoor lighting. Buyers often drive by homes they are considering at various times of day.