This is the ultimate 2020 guide to selling your house.
This is not your typical generic guide.
I have also included lots of topics that are relevant to the way homes are sold in this digital age.
So if you are looking to make the most money out of your property sale in Northern VA, you will love this guide.
- 1. Planning
- What are “Comps”?
- Local Market Conditions
- Overall Market Conditions
- Seller Concessions
- Home Sale Contingency
- Home Settlement Contingency
- Home of Choice Contingency
- Selling With an Agent
- Selling to a Developer
- Selling to a Home Flipper
- Selling to an “Ibuyer”
- What Goes Into Closing Costs
- Run Your Numbers in an Online Calculator
- 2: Preparing For Sale
- How Many Agents Should I Meet With?
- Experience: Recent and Long Term
- Real Estate Commissions
- When To Hire an Agent
- Listing Agreement
- Length Of Listing Contract
- Focusing Your Efforts
- Getting Ready for Photos
- To Update or Not Update
- Staging a Vacant Home?
- MLS Timing and Rules
- Sight Unseen Offers
- 3. On the Market
- Preparing For Showings
- How Many Showings Will Your House Get?
- Scheduling Showings
- How Long Do Showings Last?
- Should Your Agent Hold an Open House?
- When Do You Adjust the Price?
- Are There Alternatives to Lowering the Asking Price?
- How Much Should I Lower?
- 4. Under Contract
- Residential Sales Contract
- Home Inspection and Radon Contingency
- Financing and Appraisal Contingency
- Delivering Condo/HOA Documents
- Renting Back Your Home
- Short Sale
- Power Of Attorney
- Remote Closing
- Paying Off Liens
- Title Search
- Making Sure Items are Fixed
- Hiring Contractors
- Delivering Receipts and/or photos
- 5: Closing!
- Taking Care of Your Property
- Switching Utilities
- Dealing With Issues
- What to Bring
- Recording and Disbursement
- Get Started
First things first: it is time to make a game plan for your upcoming sale.
This is the time to get as much out into the open as possible with everyone involved in the decision.
Communication is key to a selling a property.
Figure Out Your Property Value
This is a crucial step. Your house’s market value will determine how much you will net at closing.
If the house you are selling is in Northern VA, I will get you an estimate right to your inbox.
Including a market report for your neighborhood. Just fill out the form below.
What are “Comps”?
This is a word that many within the real estate industry throw around; it is short for “comparables,” and refers to houses that have sold near your house that are used to determine value.
Some houses have comparables that are quite clear. Other times they are more difficult to find.
The houses being compared should be as similar as possible.
Comps have a few criteria.
First, the closer geographically, the better. Second, the more similar in size (square feet), the better. And finally, the more similar the update level, the better.
It is hard to find exact matches, but getting close will help you determine a price to offer on your home.
Local Market Conditions
The real estate market, like any market, changes all the time.
It is also hyper-local. Every state, every town, and every neighborhood has its own factors that could affect the home values.
One condo community could take 6 months to get a condo sold for a certain price.
Just 1 mile down the road, another community could have units selling in a week for a higher price per square foot.
For this reason, it is important that you know what is happening in your community.
This will help you know how long it may take to get a contract, whether to price on the higher or lower end of other nearby sales, etc.
Overall Market Conditions
It is also important to know what the economy is doing and what is happening in real estate on a national level.
Factors like low interest rates and a healthy economy will fuel overall demand.
If the big picture shows a slowing market, then you will want to keep this in mind as well.
Your home could take longer to sell and you will need to price it on the lower end of the comps if their are not many buyers in the market.
Also referred to as a “seller subsidy” on the Virginia sales contract; this is how much a seller gives to a buyer to go towards closing costs.
You can see what properties offered seller concessions via the MLS from a real estate agent.
If you see other homes giving seller concessions, you may also have to give them, so keep this in mind too as you price your home.
Where are you moving?
This seems like an obvious question — but if you are serious about selling your house, you need to have this figured out.
Are you downsizing? If so, where to? Relocating? Will you rent? Are you buying another property?
These are the questions to tackle upfront.
You may not always know 100% where you are going, but having a good grasp on it will help you make decisions as you get closer to settlement date.
When do you need to be there?
You may have a deadline to get your home sold.
For example, you are transferring jobs or trying to get kids into a certain school district in time for the school year.
Plan around this timeframe. You will want to make sure that you leave enough time to get a contract, and consider that contracts usually take 21-45 days to close.
You also may be able to negotiate terms that fit your timeline, including settlement date and/or seller rent back.
Do You Have to Sell for a Down Payment on Another Home?
This is for you if you are buying another home.
Depending on your financial situation, you may be able to buy the house and move in without selling your current property.
Other times, you may need the equity out of your current house to buy the new home.
If this is the case, it is always smart to move toward getting your home on the market. The further along you are in the selling process the easier the process will be.
Go look at a few homes, and once you know what you are looking for, take that leap of faith toward getting your home under contract.
Home Sale Contingency
This is a contingency that you can add to the contract of the home you are buying.
Basically, it says that you will buy that home if you are able to sell your current property.
It also gives more information about your property you are selling, such as list price, address, how long they will give you to sell the house, etc.
This can be a good option, but in a hot market with multiple offers it is very difficult to get an offer accepted with this contingency.
Home Settlement Contingency
This is similar to a home sale contingency, but it informs the seller of your new home that your current home is already under contract (accepted an offer).
This contingency is stronger than the home sale, because you are further along in the selling process.
In both contingencies the seller of your new home will be asking for updates on your progress as you go.
Home of Choice Contingency
This contingency is the reverse of the above. On the house you are selling, there is an option to make a contingency with the buyer.
Basically, it gives you as the seller a number of days (however many you negotiate) to find a home.
Before that number of days is up, you can void the contract.
This contingency can be a good option in a market where there is a lot of competition, and you want to make sure you can find a property.
Moving Out Before Listing Vs Moving Out After Listing
You may be wondering when you should move — it depends on your situation.
Moving out before listing, if you can afford to do so, makes the showing and selling of your home much simpler.
The more showings that you can have in a short period of time, the better.
It also allows the new buyer to be able to visualize their things in the space. Your home will seem more ready for them to move in.
There are some studies that show that vacant homes sell for less than occupied homes.
This could be because many times, vacant homes are either formerly rental properties that are not as well maintained, estate sales, or foreclosures.
If your home is in good condition however, I have found that vacant homes are comparable to occupied homes — sometimes even better due to the ease of showing.
But it is case by case.
You may not be able to move first. Whether for financial or logistical reasons, you may need to stay in the home while it is on the market.
Many homes sell while they are occupied in Northern VA.
The key to a successful sale on a house in which you are still living is proper preparation and flexibility.
If it is attractive and well maintained, and you allow buyers to come see it around their schedule, you will do great.
As mentioned above, some studies would suggest that that occupied is better.
This may be true if your home shows very well and you keep it very clean and uncluttered.
Conversely, a home that is cluttered or dirty will not get you as much money.
Selling Your House in “As Is” Condition
Some owners need to sell quickly, cannot or do not want to make repairs, or would rather not deal with showing the property.
If you have inherited a house, your house is in poor condition, you need to sell quickly, or you are facing a foreclosure process, the “as is” sale is a good option.
Selling “as is” means that you are offering your house exactly how it stands and will not be doing anything else to it.
There are many different options to selling if you need to sell quickly, some of which are better than others. Here are some.
Selling With an Agent
Selling on the open market with an agent will almost always net you the most money.
Why sell to one investor when you can have multiple investors bid on it?
To get the most money, you may not be able to sell extremely quickly.
But, a good agent will attract a buyer ready for a quick close if that is what is needed.
Selling to a Developer
If you are in a neighborhood where you see a lot of new construction, you could sell an older single family home to a builder.
If you are in a very hot market, they can give you a decent price and favorable terms, such as letting you stay in the home for a little after closing as they pull permits.
Developers have some pretty rigid numbers that they are working with, so they may not offer you the best possible price.
Selling to a Home Flipper
If the lawn and exterior has not been attended to for awhile, you have probably heard from some “we buy houses fast any condition” investors.
They will send you mail, call, and even knock on the door if they think your home is in poor condition.
These buyers may fix up and “flip” your property by selling it immediately after.
Sometimes they may buy the home and immediately sell it, or even give the contract to another buyer without doing any work.
This type of buyer sets the bottom of the real estate market.
They target homes that are in very bad condition, such as homes that need foundational repairs or other serious issues.
If you can avoid this kind of sale, you will make more money another way. Remember, selling on the open market with an agent will almost always net you more.
If you need to sell fast, you can price it low on the market and attract cash buyers so that investors can compete.
Selling to an “Ibuyer”
The Ibuyer is the newest breed of homebuyer. They close fast, and offer convenience and certainty of selling on a certain date.
Unlike traditional home flippers, they do not target homes in very poor condition.
They target homes that are roughly the same that a buyer would look for. These large companies buy homes at a small discount from the market.
This discount will come either in the form of a reduced sales price or a service fee.
They then resell the home for a profit — a much smaller profit than a “buy homes for cash” investor house flipper.
Ibuyer companies are not in every market yet, but it is expected that they will be soon. Northern VA does not yet have a large Ibuying market.
You generally will make less in this scenario than you would selling with a brokerage.
So why consider an Ibuyer? Convenience of not having to show the home and the certainty of a large corporation giving you cash is attractive to some people.
If you are interested in talking with an Ibuyer, let me know. 2020 may be the year that I can connect you.
Many brokerages are beginning to team up with Ibuying companies to offer this as an option to sellers.
Remember to get a quote from an Ibuyer as well as a quote from selling on the open market. I can do this for you, just let me know.
Some of the time, the added work of getting the home to the market is well worth the higher price you will net.
But if absolutely must must get the equity out of the house by a certain date, this is an option to explore.
Calculating Your Net Profit
The price at which you sell your home is very important.
But for you, even more important is the amount that you will have going into your account after closing.
This is your net profit from selling. Here is how you can calculate it.
What Goes Into Closing Costs
• Seller Subsidy If you negotiated to provide the buyer with some help with closing costs, this amount will get deducted at settlement.
• Brokerage Fees These fees vary based on what you are paying your real estate broker/agent. This is usually split into the listing agent (your agent) and the selling agent (buyer’s agent).
• Property Taxes You either pay property tax through your current mortgage holder or you pay the bill directly. If a portion of the property taxes have not yet been paid for that year, it will be added to your closing costs.
• Loan Payoff Loans that you have taken out against the property will be paid off. This includes the mortgage and any lines of credit or home equity lines of credit.
• Additional Liens If you used your house as collateral for any type of loan, it will get pulled and paid off at settlement. A “lien” is a claim against the house that must be paid off to give the new buyer clear title. Other liens could include unpaid contractor bills, federal income tax owed, hospital bills, etc.
•HOA/Condo Fees If any money is owed to the association that you are part of, it will get collected at settlement. This can also include the cost of a resale disclosure package, which is required to be given to the buyer.
• Title Fees These fees vary in what they are called, but you can expect to pay some amount of title fees. They may include a settlement fee, document preparation fee to the lawyer, archive fee, and lien release fee. They vary with what title company the buyer selects.
• Deed and Transfer Taxes These are additional taxes that are paid to the local and state governing bodies. They are calculated as a portion of the sales price of the property.
Run Your Numbers in an Online Calculator
There are calculators online that will allow you to plug in numbers to get your final net.
These are helpful to figure out an estimate of what to expect from selling.
When you do use the calculator, just double check that the correct numbers and percentages are going into the calculator.
Many times the tax rates are outdated and real estate commissions are assumed to be a certain percent.
Here is a good calculator I have used from Stewart Title in Fairfax VA.
Now that you have an estimate of what you can net with a sale, it is time to get ready to get your house on the market.
2: Preparing For Sale
Now it is time to go from researching to action. This section will help you get ready to get your house ready to be put up for sale.
Interview Listing Agents
A “listing agent” will act as your agent and will represent you in selling your home. Here are some tips for finding the right agent.
How Many Agents Should I Meet With?
You should meet with as many as it takes.
Find one that your trust will do a good job, shares your goals, is experienced and knowledgeable with your type of property and the market.
97% of homeowners meet with between 1-3 agents, according to an annual NAR survey.
The top things that most sellers look for is reputation, honesty and trustworthiness. Closely followed by market knowledge.
Marketing in real estate has changed rapidly over the last decade. And it continues to change every year.
NAR surveyed home buyers in their Generational Trends report to see the types of marketing that helped buyers find their home.
Every year, the internet becomes more relevant in getting properties sold.
If the agent you choose does not have a good grasp of these trends, you will be missing out. Period.
Internet marketing knowledge is a must for a good listing agent.
Only 1% of buyers, or less, find their home from print marketing. Money and time on these materials are much better spent with internet marketing.
Experience: Recent and Long Term
“I have been in the business for 25 years,” might be a comforting thing for you to hear. But that statement is relative.
An experienced real estate agent is definitely important, but so is recent experience.
The process of selling homes is changing, as I mentioned above.
An agent with a large number of sales in the recent years is meaningful.
Combine that with an agent with some years in the business and that is a winning formula.
Responsiveness and quality of communication is important in a good listing agent.
How quickly did an agent get back to you when you first contacted them? Do they follow through with what they say they are going to do? Are they on time? Do any team members have the same standards?
These are good indicators of an agent that will stay on top of prospective buyers and buyer’s agents who are interested in your home.
A transaction can take a lot of coordinating in a short amount of time. So organization is important.
If you feel like you are only being told what you want to hear, or just have a weird feeling, it is a good idea to interview another agent.
A listing agent will need to help you with their guidance and experience.
If you do not think you could take seriously what they are telling you, that will be a problem down the line.
Real Estate Commissions
Real estate commissions are paid at settlement. Commissions vary from agent to agent.
No matter what you may have heard there is no “standard” commission.
Most listings offer a portion of the commission to the agent that brings a buyer to purchase the home. This is spelled out in the listing agreement.
Can I Sell My Home Without an Agent?
“For Sale By Owner” does make up a portion of the market.
There have been a few studies on whether or not selling your home yourself is worth it.
The results have been mixed. Realtor associations have said that for sale by owners net as much as 30% less than homes listed by an agent.
This is a humongus number, and many have stated it is inaccurate.
Often, owners sell to someone that they know at a discounted price which would skew this number.
Another study referenced here says there is no difference at all.
Like most things, the truth likely lies somewhere in between.
I have helped many for sale by owners eventually sell. A large amount of people who start out selling themselves will hire an agent.
Selling a home in a timely manner for a good price is not as easy as it seems on reality shows.
Choose a good agent with a strong web presence, a marketing plan and a track record of selling homes at the top of the market.
A strong agent will limit your liability, get you maximum market exposure and maximize your profit.
In my experience, the value of having a talented professional help you will often pay for itself. And is worth the added closing cost.
Hiring an Agent
After you have spoken with an agent you would like to hire, it is time to put them to work.
When To Hire an Agent
Generally, when start to get the home ready for sale is a good time to hire an agent.
If you have extensive renovations to do, I have helped oversee this process and so have been hired before these renovations start. And some projects lasted for a few months.
About a month before you go on the market I have found is common to get an agreement in place with an agent, if there is no renovation to be done.
This means your home is in good condition and only needs a few updates/ maintenance items.
The listing agreement is signed by you and then signed by the agent’s broker or them if they have a broker license.
It describes the list price, the length of the agreement, your information, commission to be paid, property conveyances, showing information, and more.
Your real estate professional should be willing to walk you through one paragraph at a time if needed, or you can review yourself.
E-signatures have become a standard in Northern VA home selling via email. It is easy and saves paper.
Length Of Listing Contract
This depends on the market. If homes in your area sell fairly quickly, then 60-90 days is what I usually see.
If it is a unique property that requires a special buyer it may be longer. Whatever you and the broker are comfortable with.
It can always be extended or amended if all parties agree.
Pricing is extremely important when selling a property.
There is a window when you first list a house when you have an excitement factor. It is new to the market, and buyers will come to see your property.
However, they are also going to see all the other listings on the market.
They will write an offer on a home that they perceive as a good value. Hopefully, yours.
If you overprice your house buyers will know. They may not study the neighborhood data. But they will know that it is not as big or updated as the other listings they are seeing.
In a strong market, if you get lots of showings and no offers you likely are a little high on price. If you get no showings, you are much too high.
Underpricing creates a bidding war.
This is not always the best strategy either in my experience because you run the risk of leaving money on the table.
When your agent reviews the comparable sales with you, they should also discuss the overall market conditions.
In a escalating market where there are few homes for sale, you can go on the high end of the comparables.
Go for the neighborhood record if your house is newly remodeled in a very strong market.
In a slow market where sellers are having trouble selling, you want to price on the low end of the comparables, or even slightly below them.
Getting caught being overpriced in a real estate market that is going down can cost you.
The price can always be adjusted once on the market or before.
Home Preparation and Staging
Another important topic. Someone should write another guide just about this process.
Good news, I did here.
I will go over some of the main points here as well.
Focusing Your Efforts
Not all updates are created equal. Some owners have time and a budget to do extensive renovations.
If you do not, focusing on certain areas can bring you a great return on your time and/or money.
The front exterior of the home should look great. “Curb appeal” refers to what your home looks like to the new buyers as they are standing on the street.
Staging is also extremely important. A cluttered home gives the impression that the home was not taken care of and also does not have enough space.
Staging can be any level of presenting a room in the best possible way.
It does not have to be done by a professional with a lot of additional items. But, you can hire a staging pro if you have the budget and you do not have the time to do it yourself.
Paint, flooring, kitchen and master bathrooms also are important to home buyers.
Getting Ready for Photos
Your agent should absolutely get a professional photographer to take photos of the home.
I include this as part of my marketing package. This will help the home show well online and get you the most possible showings.
To Update or Not Update
This depends on a few things. First, do you plan to sell “as-is” to an investor or a developer? If so, no need to update.
Secondly, what do the rest of the homes in the neighborhood look like? If many of them are updated then it shows that buyers are hoping for that in your market.
And finally, it depends on if you can afford to make updates and wait for them to get done.
There are more and more options these days for owners to hire contractors who are willing to get paid at settlement.
If you are in Northern VA and looking to get an estimate from a contractor who will get paid when you close, reach out to me. I have several.
Staging a Vacant Home?
There are times when staging may be necessary. For a very unique home it can be a good idea to show buyers how they can arrange furniture to live in it.
However, if you have a house that is fairly typical of the Northern VA area, I have not seen staged listings sell faster than vacant listings.
Particularly in a fast paced market where homes are in high demand. In a slower market, staging can help you stand out.
Many studies will say that vacant homes sell for less.
But many vacant homes are not in good condition because of the type of sale that is happening. Staged homes tend to be more well maintained.
With that said, the final verdict will be a look at the neighborhood comparable sales.
Are vacant homes selling for just as much as occupied homes? If so, you can skip the staging on a vacant home.
If occupied and well staged homes sell for more, you will be looking at hiring a professional for staging since the home is vacant.
In Virginia, you as the seller of the house will provide a form to the buyer that directs them to this website.
It says essentially, you are making no warranties to the condition of the property or other possible scenarios that might affect the condition.
Virginia is a “buyer beware” state so it is the buyer’s responsibility to uncover more information about the property via inspections.
There are a couple of situations that require additional disclosures. These situations are rare, such as if there was once a meth lab in the house, no kidding.
There is another disclosure required that is more common. It is the lead paint disclosure.
If your house was built before 1978, federal law mandates that you will need to provide this disclosure to the new buyer advising whether you have any knowledge of lead paint in the home.
As far as disclosing goes, you cannot actively hide defects and must disclose any “latent defects”.
A latent defect would be a defect that the buyer could not possibly uncover with a home inspection.
For example, if you are aware that you have a plumbing leak in the wall it is best to fix it before going on the market. Covering it up by painting could cause you a problem later.
“Coming Soon” Marketing
In 2019, the Bright MLS (multiple listing service) used by agents and brokers throughout the VA region made some changes to this type of marketing.
Here is how your agent should run a successful 2020 coming soon campaign.
MLS Timing and Rules
The MLS permits your house to be in the “coming soon” status for up to 3 weeks before it is on the market and taking showings.
At this point, you should have a final date in your head for when your home will be ready. Up to 3 weeks from that date the coming soon marketing can begin.
I usually recommend coming soon marketing for around a week before going live on the market.
Once the home is publicly marketed IN ANY WAY as coming soon, (sign, emails, website, etc.) it will need to be also in the MLS within 24 hours.
During this time, no showings are allowed. If anyone approaches your home just tell them to call your agent. Do not let them in, for security reasons as well as MLS regulations.
So why do coming soon marketing if you cannot show the home?
I always suggest it because it allows me to line up potential interest in the property. So when it is listed, the showings will start to happen quickly.
Neighbors are your friend when it comes to selling your house.
Putting a sign outside of your property will have them calling their friends and family to come move next to them.
The sign will say “coming soon” until it is live on the market.
Between neighbors and signs themselves, 14% of buyers found their home this way according to the NAR homebuyer survey. So do not skip the sign.
This one goes without saying. But let’s talk about it anyway.
Coming soon marketing on the web is a bit more tricky than when it is active.
Agents have to manually add your listing to websites as coming soon.
There are a couple of very large websites that allow coming soon listings. Your house should be on them, 100%.
I have all my coming soon listings listed on some very high national sites and this website.
Getting them on these sites has taken work. If you are thinking of selling and want to know more, let me know.
Sight Unseen Offers
The new MLS rules are geared toward allowing the most amount of buyers chance to bid on homes for sale.
It prevents someone from contacting the listing agent and seeing the home and buying it before it hits the market.
Perhaps this buyer just drove by a for sale sign and got lucky, to the detriment of the open market.
However, if a buyer presents an offer on your home without seeing it, agents are required to present that offer.
You can accept or negotiate that offer. This is a rare case but does happen.
Almost always, it is best for you as the seller to expose it to the maximum amount of buyers.
Photos and Final Touches
Right before your home goes on the market, it should look the best it has ever looked since you moved in.
This is the time for professional photos. This is the most important part of marketing, are high quality photos by a photographer who specializes in real estate.
Here is a great checklist when you are getting ready for photos.
How Long Does Preparing Your House Take?
On average, I would say preparing takes 1 month. But it can be quicker or take longer. It depends on what needs to be done.
If you are moving, then remodeling and then getting it on the market, that will take longer, sometimes 2-3 months.
Lets say you are going to sell while you are living in the house and just need to clean, make minor repairs and do some rearranging. This can get done is as little as a few days to a week.
3. On the Market
Preparing your home can be the most difficult part of selling. Now is time to reap your rewards from making your house shine for the potential buyers.
This phase involves actively showing your home, receiving an offer and agreeing to terms.
When your home is on the market, potential buyers will come either with their agent or with your listing agent.
I use a program that will text you with showing requests. Then you can approve the showing via text message or an app.
Preparing For Showings
If you are living in your home, make sure that you leave it clean. It is a good idea to leave all the lights on to give the home a bright welcoming appearance.
Make sure the home is clean, any kids toys put away and play some nice soft music on your smart speaker if you have that ability.
The #1 rule of preparing for a showing: BE OUT OF THE HOUSE! It is inconvenient, but the buyer needs freedom to explore and discuss their thoughts.
Having you in the house while a buyer is looking at it to buy is so distracting and awkward. It will cost you money in your final price.
How Many Showings Will Your House Get?
The market will dictate this, along with your chosen sales price. I have had houses that get 15+ showings a day.
More typical is 1-2 showing per day, and a few showings per day on the weekend.
You will see that the most traffic you get will be the first couple of weekends that it is newly listed.
If you do a price adjustment, you can also revive the showing traffic this way.
Be as flexible as possible when scheduling showings. Although it is a pain to be leaving your house all the time, it pays off in the end.
Many times, if you deny a showing, that buyer will never come back to see your house. They will find another similar and buy it.
There are probably a lot of homes for sale in your area. So remember you are competing. Welcome showings with open arms.
How Long Do Showings Last?
A showing will last anywhere from 10 minutes to 45 minutes or more for a large home.
I recommend that you allow buyers to schedule an hour to see your home. Traffic in Northern VA as you know is unpredictable.
Buyers may be seeing multiple properties. You want to have them feel comfortable and not rushed.
Remember, you are competing. For example, let’s say you are selling a townhome in Fairfax.
If you use a home search, you will see all the other townhomes in that price range. Your prospective buyer will likely see yours and many of the others in that list.
To get an offer and sell your property you will have to be near the top of this competition.
The price, condition, location and update level of your townhome has to show enough value that a buyer sees it as something they want to own.
Keep this in mind if you are not getting offers. If needed, tour some nearby homes with your agent.
I always keep my sellers updated on what is going under contract in your price range. Compare them to your home and if needed, adjust the price.
Open houses can be effective.
Yes, there will be a lot of people just snooping around. Others are just starting their search so they will not be ready to write an offer.
However, there are also many qualified buyers whose agents are unavailable to show the property.
There will also be neighbors. Remember, neighbors are friends. They will root for you to sell the property and go tell their friends about it.
Should Your Agent Hold an Open House?
If you have a vacant home, I strongly recommend holding open houses.
If your home is occupied I am less enthusiastic.
I have had upward of 20 people in an open house at one time. So security of your belongings can be a concern.
If you have valuables, personal items or medications in the home it is a good idea to get them out. Or, just skip the open houses.
Regular showings are by a licensed real estate professional. Open houses anyone can walk in to see.
Market Feedback and Adjusting
When you are on the market, you should try to gather as much feedback from showings and open houses as possible.
What did the buyers think of the home? Could anything be improved? What did they like? Did the agent agree with the price?
This can help you as you navigate what is next.
Remember, complaints about layout, size, condition, location are also indirect complaints about price.
When Do You Adjust the Price?
Take a look at the comparable sales. How long are homes selling in your neighborhood? What is the market like in Northern VA as a whole?
If homes take 30 days to get a contract, you can expect to wait about that long.
If you start to go well over the average, it is time to look at your pricing strategy.
For example, if homes are getting contracts in an average of 14 days, and you have been on the market for 30 days with no offers and decreasing showings, it is time for a meeting with your agent.
Are There Alternatives to Lowering the Asking Price?
Put your house on a truck and move it to a more expensive neighborhood. Just kidding.
If feedback consistently tells you a specific issue about the house, you can address that with a contractor.
Let’s say you get a ton of showings, but everyone is getting scared away by the condition of the wood floors and broken kitchen cabinets and old counter.
You could refinish the floors and install new kitchen materials.
Just make sure this is truly your only problem by re-checking your price compared to sold properties and what is selling.
If you have the money to do obvious repairs, ideally you do them before listing the property in the first place.
But if you missed them, your agent should provide you with reports like this so you can make good decisions.
How Much Should I Lower?
Every situation is unique. So it really depends on your neighborhood.
But, here are 3 scenarios where you can consider how much you overshot the mark.
This is assuming you leave it on the market at least the neighborhood average number of days for a contract.
#1. If you get a lot of showings, some interested buyers but no firm offers or a lowball offer, you missed the price by a little. You likely will just need a small decrease (see the comparables for exact numbers).
#2. If you get a good amount of showings for your property type, but no offers or real interest in the timeframe expected for your neighborhood, you missed they mark. You will need to adjust your expectations and make your price more competitive.
#3. If you get very few showings, or no showings you are way off on the price. You will need a complete rethinking of your pricing strategy.
The only exception here is if you are in a market where this is expected, such as the very top of the luxury market.
Receiving an Offer
Your agent will call or email and let you know that you got an offer! Congrats.
Hopefully, it will be an all cash offer, at your ask price with no contingencies (hopeful thinking).
But most likely, you will do some negotiating and have a few more hurdles to get to the closing table.
When you do receive an offer always be appreciative even if it is lower than you want. See if there is a way you get to an agreement with the buyer.
Many in the real estate industry say “your first offer is your best offer”.
This can be true, but depends on the timing of the offer.
Let’s say an offer comes in from a serious buyer, with a sincere price, and after all the buyers have gotten a chance to see it (weekend or 2).
Passing on that offer with hopes of a higher one coming could cost you later.
Dealing With Multiple Offers
A house for sale in Northern VA is prone to bidding wars. Especially in tight markets with not many properties available.
It can be a good situation to have, just make sure you do not underprice the house in the first place and sell for less than you could.
I deal with multiple offers by sending all of them to you via email, and then sending a spreadsheet with a summary of each offer.
This will allow you to see the price, contingencies and terms easily. Then you can review the top offers and choose which one to respond to.
You can either accept an offer, or even choose to counter an offer.
The best offer may not be the offer with the highest price. Take the appraisal contingency for example. Here is a hypothetical (but realistic) situation.
You have an offer from a buyer who is getting a loan, and they are getting an appraisal done as a lender requirement.
The market is very good at this time. The sale price will be above anything else in the neighborhood.
So let’s say you get another offer. Both are similar.
In a market where prices are rising, this appraisal may come in below the contract price. If this happens, it can disrupt the sale.
You may need to lower your price or go back to the market.
One buyer is offering $2,000 less, but is willing to waive the appraisal contingency.
Basically, if the appraisal comes in low they guarantee they will make up the difference.
The other offer has an appraisal contingency. So if the appraiser says it is worth less than the contract price, you will have another hurdle to jump through and possibly lose money.
Which offer do you take? Do you risk the appraisal for the more money and hope a third party will justify the value? Or take the offer that avoids the contingency?
Ultimately it is up to you. But the point is there are many terms in the contract that could have real consequences down the line, in all kinds of market conditions.
A good real estate professional will guide you through the strengths and weaknesses of each offer.
A winning offer is not always just based strictly on price. Contingencies often cannot be avoided.
But if a buyer is willing to waive some of them, that will give you peace of mind that there is a good chance of that offer going to settlement without issues.
Accepting an Offer
Many times, the offer will go back and forth with “counter offers” until you and the buyer figure out price and terms that you can agree on.
After that, the contract is initialed by the last party and the date filled in at the bottom. This is known as the “Date of Ratification”.
After you accept a contract, you can breathe a sigh of relief. The preparing and showings have paid off. Now it is time to get to the closing table.
4. Under Contract
After you accept a contract, here in Northern VA we say the house is “under contract” before it is sold. Other parts of the world call it various other terms. Pending, sale agreed, etc.
Your contract will have a settlement date that will tell you how long you will get from under contract to sold.
The average is 30 days. Some buyers are able to close more quickly. Or you may have arranged some more time.
Contract and Contingencies
Here is a brief rundown of the most common contract we use in Northern VA, provided the the Northern Virginia Association of Realtors.
Many real estate contracts have similarities, but each can be very different with just a few paragraphs. So read well before signing.
Residential Sales Contract
This is the bulk of the agreement between you and your homebuyer.
It contains the price, financing and subsidy, the buyer and seller info, info on your house, what is being left with the house, settlement (closing) date, how much of a deposit the buyer is giving, and many more exciting terms.
The earnest money deposit will be held in escrow.
If the buyers defaults on the contract and does not close without a contingency to legally void the contract you may be able to make a claim to it.
But of course, the best scenario is that the buyer will perform and buy the house.
Home Inspection and Radon Contingency
The buyer will usually add this contingency to the contract. Typically there is a 7-10 day window but can vary. It has one of two options.
Option 1, inspection with option to void or negotiate repairs. This option allows the buyer to either void the contract in their inspection timeframe, or negotiate with you for you to make repairs of deficient items.
Option 2, inspection with option to void only. This is the more ideal for you. It means that the buyer may void the contract after inspection or remove the contingency. No repairs here.
Buyers may choose one or the other depending on the offer situation. Handy buyers may use option 2 and try to get a little more off the contract price.
Radon gas testing is done on the lowest level. Northern VA is known to have some areas of radon concentration.
The EPA has set the “action level” at 4.0. Above this level, and they recommend remediation.
So if the buyer does radon test and it comes in above they will likely request for you to install a remediation system.
Financing and Appraisal Contingency
The financing contingency states that if the buyer does not get their loan, they can void the contract. In 2019, the contingency changed to two options.
One option is after a set timeframe, the contingency automatically is removed.
The second option, it continues after the set timeframe without being removed. You as the seller could request to remove it then the buyer has 3 days to remove it or void the contract.
The contingency is a bit different depending on the loan type. The most common are FHA, Conventional and VA.
Delivering Condo/HOA Documents
This is an important part of the selling process if your house is part of a Condo or Property Owners Association. You will need to get what is called a resale disclosure.
This disclosure contains rules, finances and other information about the community.
The buyer will have a 3 day window after receiving the documents to review them. During this period, they can void the contract if they wish.
It is best to order these before you are under contract, so you can deliver them to the new buyer and get this timeframe out of the way.
Here are a couple of situations that you might end up dealing with.
Renting Back Your Home
If you need extra time to move out, you can negotiate a rent back. Best to do this during the negotiation of your contract. Changing any terms later requires the buyer to agree.
A “rent back” agreement spells out the daily rent, security deposit and length of the time you can stay.
The nice part of a rent back agreement opposed to just going for a longer settlement is you are able to get your home sold and the proceeds in the bank.
If you owe more on your mortgage than you the home is worth, it is called a short sale.
You will need to get the bank to approve to settle for the price that you have signed off on with the buyer.
This process can be long, but worth it in the right circumstance.
Reach out if you have more questions about this process.
Power Of Attorney
A property specific power of attorney is what most title companies recommend.
This will allow someone else to sign for you at closing. For example, if you are married and you cannot make closing your partner could sign for both of you.
You can also arrange with the title company to close remotely as the seller. They will overnight documents to you a couple of days before the closing date.
After that, you have them signed in front of a local notary. The title company usually will provide you with a return label to send them back.
This is good if you are selling a home from out of state.
I have sold homes for clients whom I never met in person, in 2020 this is simple, as contracts can be e-signed (aside from closing documents, which will be mailed).
Title and Title Company
The title company consists of a team of one or more attorneys and team members as processors.
They get all of the paperwork done so that you will be able to transfer title of the property to the new buyer.
Paying Off Liens
Any liens and judgements against the property will be collected and paid off at settlement.
If you have a judgement or lien that you do not recognize, ask the title processor for more information about where it came from.
You will need to give clear title to the buyer. To do this, give the title company the information needed to do a title search on the property.
This will help them come up with anything that needs to be addressed.
Making Inspection or Lender Required Repairs
If you had repairs negotiated as part of the home inspection items, you will need to complete those prior to settlement.
Also, in some cases the lender may require some repairs that an appraiser pointed out as a condition of the loan.
For repairs, make sure you use a contractor that has a Virginia License, to do the work that they are being hired for.
It is a good idea to tell the contractor that you will need receipts and need the work done on a specific schedule.
Making Sure Items are Fixed
You will get a copy of the inspection report. To avoid later issues, read the report and the addendum signed by you and the buyer.
Verify that the contractor did the work that was specified. They should be able to explain what they did if asked.
For work that will be hidden behind walls or in hard to see areas such as attic, have the contractor take photos.
You want someone licensed and who has the capacity to get the work done correctly and quickly.
For many items, a “handyman” can do the work.
A handyman usually does small jobs and work on their own or with a small group of contractors. A handyman should still have a VA contractor license.
Asking your real estate agent helps. They usually have contractors whom they work with.
Delivering Receipts and/or photos
Before closing, you will have to give the receipts to the buyer. You can also share photos if they ask, but receipt is all that is required.
If it was a lender required repair, you will want to get the receipts to the lender as soon as possible. Get the work done immediately after you get notice that the lender is requiring.
Usually the appraiser is who will recommend the repair.
The appraiser will thus have to come back out to inspect that the repairs were complete as a condition of the buyer’s loan.
After all the hard work, you will get to the closing day. Sometimes, there can be some last minute drama.
For example, it is common the buyer’s loan is not fully approved until the days leading up to closing.
This is common, and occasionally delays closing but most of the time the lender will come through on time.
Scheduling Your Move
If you have not moved yet, you will want to move out before the closing day.
The day of settlement the house will become the buyer’s property. So you want to be out by that day.
It is a good idea to move out the day before at the latest, to avoid any issues.
This also will give the buyer peace of mind to do their walkthrough when the property is empty.
Taking Care of Your Property
If you use a mover, make sure they are insured. Any damage to the property caused by the move will need to be fixed immediately.
If you move yourself keep that in mind. Be ready to repair and drywall or other damage should something get banged up.
Moving carefully is the best method.
You can switch utilities out of your name as of the day of settlement. The buyer will pick them up where you left off.
The buyer will do a final inspection of the property, known as the “walkthrough”.
The walkthrough is usually done the day before closing or the morning of. The buyer may do a walkthrough anytime within a week of closing.
Some buyers may do 2 walkthroughs. This gives you as the seller time to fix any issues. But most commonly there will be 1 walkthrough.
Dealing With Issues
If issues arise, keep calm and work towards a solution. There are several options to take care of problems and still close on time.
It depends on the situation, so keep communication open with your agent and the new buyer.
You can close with the buyer, you can close before and can even close on a different day as the seller.
Either way, the final closing will be when the buyer signs the documents.
When selling in Northern VA, the buyer will almost always sign last.
Once you get notification the buyer signed, you are done.
Signing documents for you as the seller will usually take 30 minutes or less depending on how quickly you review the paperwork.
You will schedule a time with the title company.
What to Bring
Bring a valid photo ID, and also any account information if you would like your funds wired to you.
Recording and Disbursement
Once the funds are received by the title company, they will record the sale with the local government body.
More importantly, they will send you the proceeds to your account or write you a check.
They also take care of paying the existing liens on the property, including your mortgage balance.
If you have escrow accounts with your lender, they will also be returned to you directly from the lender.
This will be the time you can breathe easy and get on to the next chapter of life. Selling a house is one of the major life changes that can cause stress.
But being prepared and having the right partnerships will get you to where you want to be as smoothly as possible.
How can I help you? Comment with any questions you have.
Begin by getting your home value. Fill out the form below and I will send you a market analysis of your property and of the Northern VA market overall.