Once a contract has been agreed upon, the buyer and seller enter a period of open escrow, where the details of the contract must be satisfied before the sale can be closed. During open escrow, the buyer makes a good-faith deposit, which will be returned to the buyer at the end of the sale, or will be applied to the closing costs. During this time, there are several complications that can come up.
All buyers will have inspections done, and inspections always turn up something. Hopefully, it is something that either you the seller, or the buyer, can fix at a reasonable cost. But what if the inspection reveals something more serious, such as problems with the roof, the foundation, or even termites? There are some problems with the home that will cause the buyer to walk away from the deal entirely. If something causes you to drop the sale price lower than even makes the sale reasonable to complete, consider calling off the sale yourself.
Making Repairs vs. Dropping the Sale Price
If the inspection reveals serious problems that come as a surprise, the buyer is going to want to negotiate on the sale price. When choosing between fixing the problems yourself or dropping the sale price, consider what percentage of the sale the fix ultimately costs.
If a fix is less than 5% of the sale price, then offer to fix it yourself. If the fix is more serious (let’s say, more than 10% of the sale price), then you might want to lower your offer. This is not only because of the expense of the fix but also because of the time that may be involved. Keep in mind, the higher the price tag on a repair, the longer it will be before you can move out.
Defects in the Title
Properties that have changed titles in the last twenty years should have no problem, and for the most part, title companies do a good job of clearing the title promptly. But occasionally there are problems with the title, especially if the home is older, and you’ll have to go to court. This process in itself can take a couple months and will require you to spend a lot of time with your real estate attorney. This is why bringing in a dependable attorney who you trust early on in the process is invaluable.
- Are there liens against the current title that could impact the sale of the home?
- Will the new buyer be purchasing Title Insurance?
A title report should be issued before escrow is closed. In most cases, the buyer’s lender will order a title report. The title report will show the chain of ownership for the property. Most title reports have nothing out of the ordinary in them and simply include tax assessments. Every once in a while, there will be a problem with the title, and problems with the title can often end up in court. Title problems can cause delays in the sale of the home, or they may cause the whole sale to fall through. Common title problems include; Unpaid property taxes, Contractor liens, or Identity issues. Title problems happen more often with older homes. If your home has been built in the last 30 years, there is likely no problems with the title.
How to make sure the title is in order
For most home sales, requesting a title report is a perfunctory step in the home-selling journey, either triggered by the buyer when they take out a loan, or otherwise obtained by the homeowner during escrow. Sometimes, though, there are problems with the title, and these issues can be both costly and time-consuming. If you have questions about your title, you can request a report from the title officer before you ever put your home on the market. Here is a breakdown of some common title problems, if problems do come up.
- IRS Lien/Unpaid Property Taxes: While they can be costly, this is one of the easier title problems to fix. This one can often be paid to the escrow company at closing. If the amount of the back taxes is enough to jeopardize the sale, it’s possible that paying off these back taxes could become part of the negotiation with the buyer.
- Contractor Lien: Contractor can file a lien against a property for any unpaid work they have done. To get the lien removed, the contractor in question has to be contacted.
- Judgement: Sometimes an unpaid debt can trigger a lien on your property. This means that the creditor went to court to obtain the judgment. This is another case of a lien not being removed until a debt is paid off.
- Identity Issue: This happens when someone with the same name as you has judgments against them. In this case, you will have to fill out a court-approved affidavit that states you are a different person.
One similar issue as a title problem is a problem with the survey. This pertains more to rural homes than suburban or urban homes, but if your buyer’s loan company requests a survey, make sure to double check things. Surveys can reveal problems with encroachment, where other properties have encroached on your home’s land.
Back to: Closing on your home sale
What is the home selling process?
There are few times in life more stressful than the home selling process with many unknowns, potential pitfalls, and opportunities to consider.
Let our friendly ‘how tos’ guide you through the process to ensure your home sells as fast as possible at a price you can live with (and hopefully buy another home to live in!)
How Long Does It Take to Sell a Home?
Your timeline may vary, but the following is a good guideline
- Building a Team: 5-7 days
- Listing: 3-5 days
- Obtain an Offer: 6-10 weeks
- Clear to Close: 2-8 weeks
- Turn Over Possession: 0+ days
So, on average a home seller will spend 8-12 days preparing, 45-70 days waiting on and sifting through offers, and 14-60 days from clear to close. For some folks, the process can be extremely quick taking as little as 30 days total, while for others, the time to a first offer can be several months.
The home selling journey is an emotional one, but does it have to be a long one? Some home sellers will be surprised by how quickly the process can go by, and for others, it will be just the opposite. The length of time varies from situation to situation, but here is some additional explanation of the estimates in the home-selling timeline that will help you prepare emotionally, and plan financially.
Listing: 3-5 days
The length of this depends mostly on how quickly your agent gathers all the information on the home, and how quickly you can stage and photograph the property.
Obtain an Offer: 60-70 days
Of these steps, this is the one that will vary the most wildly, as well as being is one of the hardest steps because it depends on many external factors. Here, the home seller is at the whims of the home buying market. In a seller’s market, this could take a week while in a buyer’s market, it could take months and months. Make sure you are keeping in touch with your agent to offer your home at a price that is competitive, without giving anything away.
Clear to Close: 14-60 days
Once you have snagged a potential buyer who you feel is a good fit for your home, many sellers try to rush to close. But in this step, you are going to have to work against your instincts. A successful close means taking every part of your due diligence with negotiating and finalizing a contract very seriously.
Turn Over Possession: 0+ days!
The homebuyer will want to take possession of their new home as soon as possible, so it’s smart to have a move-out plan already in place. If circumstances require it, part of the closing contract can involve renting the home back for a few weeks from the new buyer. But optimally, you’ll be ready to move from the moment of the close.
The Important Steps in Your Home Selling Journey
While some of the details of the home selling process can vary from state to state (and even county to county), there are some important steps in home selling that will be found pretty much anywhere. If you are thinking of selling your home soon, then review these steps first before beginning your journey.
Learning the Market & Determining Your Home’s Value
Some people recommend contacting a real estate agent first, but knowing a bit about the market on your own can go a long way before you attend that first meeting. Do some homework and find out how the homebuying market is performing in general, and how things are shaping up locally.
Are market conditions leaning to sellers? To buyers? Are they neutral? These questions should come into play when pricing your home. In addition, every home seller should look at Comparables – these are homes listed or recently sold with similar features to your home – which may include the total number of bedrooms, square footage, and approximate age. This will give you a baseline against which you can establish a sale price.
Assembling Your Team
Many people will be involved in the sale of your home: the appraiser, the inspector, the selling agent, the buyer’s agent – and in some cases, at least one real estate lawyer. For the seller, assembling this team begins with finding a good agent.
From the time you begin working with them, your agent will be the point person for drawing all the other professionals involved to your team together. A good agent will know the top real estate professionals in the area, but that doesn’t mean you shouldn’t also do your own homework. Look up the best appraisers in your area and see if the two lists match.
As for the agent themselves, you should meet with at least 3 agents before deciding on who you want to work with. When looking for an agent, hire one that is not only knowledgeable, but also one that listens to you, and really sees what you see in your home.
Thinking of going the “For-Sale-By-Owner” route? Even if you don’t hire an agent, you will still need a team to help you along the way. Selling a home even with an agent can be a full-time job, so selling the property yourself can be doubly so. But if you love doing things yourself, you’re detail-oriented, and you aren’t afraid of legal documents, then by all means – list the home yourself.
Prepping Your Home for Sale
Increase your home’s curb appeal on the outside, and get it ready to be shown on the inside. Paint and trim, de-clutter and clean, host a garage sale and get ready for staging. Some people attempt the self-staging route, while others hire a professional. Most seller’s agents know a few staging professionals or know something about the process of staging themselves. Many find that paying for a good staging expert is well worth the cost.
Listing Your Home
Work with your agent to list your property. Creating a good listing means marketing your home properly, so talk to your agent about how to best bring out the personality of your home. Consider all the different styles of photography out there, and don’t be afraid to explore new technology that may further increase your home’s visibility.
The Open House
With more and more of the home buying process being done online these days, chances are that those who are coming to your house in person have already done some homework on your listing. For these people, the open house serves to confirm that your home looks as good in person as the professional photographs made it look online.
But the open house is about more than just confirmation. A well-staged and well-presented house can create word of mouth or a positive and noteworthy impression in an agent’s mind. Remember that when a buyer’s agent brings around a potential buyer, even if that buyer isn’t right for your home, they may know someone else who is.
Offers on Your Home
When offers begin coming in on your home, you will have several important decisions to make. Are the offers coming in lower than you expected? How do you deal with multiple offers? How much and when do you counter?
Hopefully, you have professionals in your corner to help you through this process, or you have some experience doing it yourself. As the seller, you’re going to have to find an offer that stands out, and be prepared to negotiate the right deal for your home, navigating any possible twists in the journey that the buyer’s appraiser or the home inspector might send your way.
The Closing (Sale)
From here, it will mostly be your agent dealing with the buyer’s agent on the final details of the contract. This could include a few more repairs to the home, or at the very least, the transfer of utilities. Then, you will need to ensure that all of the paperwork for the real estate attorney is signed, initialized, and notarized. Once the contract is clear to close, you’ll be planning your move!
The Best Advice for Home Sellers
Homeowners naturally love their homes and want to get the best price for them. But many homeowners make simple mistakes when it comes to selling their property. So what are the most important things to keep in mind as you begin you home-selling journey? We’ve broken it down into the top three pieces of advice.
Find a Good Agent
While some homeowners decide to go the “for-sale-by-owner” route, having a good agent can transform your home-selling experience. Interview at least three agents before you settle on one, and make sure you ask them a lot of questions.
Ask them about their track record selling homes, what makes them different from other agents, and how they would market your home. You’re going to want to find an agent that not only is knowledgeable but also listens to you – someone with whom you feel you have good communication. Most agents are specialists in either a neighborhood or a type of property, so find one that has a specialty that covers your home.
Selling a home is like a business, and every business needs good marketing. Clean and de-clutter your home, tidy up the lawn, and spring for a new coat of paint. Hire a professional photographer so your home sparkles online. A professional stager knows how to make your home look good in photos and in person. You’ll want to strike the right balance of making your home neutral enough to appeal to anyone, while highlighting the home’s personality so that it stands out. Finally, make sure the pets have somewhere else to stay before and after the open house.
Set a Reasonable Price
Real estate agents say that time and again, homeowners, whether they are first-time sellers or not, overprice their home. Set a reasonable price from the beginning, based on Comparables – homes in the same market with same features as yours. An overpriced home may languish for a long time on the market, and you’ll have to drop the sale price lower than you would have if you had set a more moderate price to begin with. Pay attention to those Comparables and be competitive, remembering that they say the most expensive home in the neighborhood sells last.
Home Selling Checklist
Homes.com has prepared this checklist to help you keep track of the major process-points in your home selling journey.
Do Your Homework
- Look at your finances and budget out home repairs and other home sale closing costs
- Seek advice from real estate professionals, including legal and tax specialists for your specific situation
- Address any already-known need for repairs on your house
- Do some research to better understand where the real estate market is, and what your sale price might look like
- Seek out a real estate agent, interviewing 3 of them before hiring one
Make Sure Your Home Is in Top Condition
- Windows, Doors
- Heating and Cooling
Price the House
- Have your home appraised
- Take another look at the market and set a comparable price
Marketing/Prepare for the Open House
- Clean and De-Clutter
- Make a plan for the Kids and Pets
- Hire a Professional Stager
- Hire a Professional Photographer
Negotiate the Offer
- Draw up purchase contract, have attorney review
- Determine contingencies
- Negotiate with buyer through your agent
- Additional home repairs, if necessary
- Make a move-out plan, communicate possession with buyer
- Sign purchase contract
- Close the contract through escrow
- Meet final inspections/contingencies
- Arrange transfer of utilities
- Deliver title and other documents to buyer/local government
- Received loan commitment letter from buyer
- Pay closing fees