After renting the house I owned in Maine for 4.5 years, I finally was able to sell it. Here are my experiences.
Here are the highlights of what I think you should do when selling a home:
First off, no you don't have to use an agent. If you know something about real estate, then you probably wouldn't be reading this page! You can save a bundle of money (6-7% of the sale price) by not using one.
Finding a competent real estate agent is very difficult. In my three real estate transactions, only once did I feel I was properly represented. The other two times, I was extremely uneasy before, during and after the sale. It took me a while to figure out why, but it was my lack of confidence in the agent.
How do you choose one? Talk to people. It was only after I had signed the listing agreement that I found out from friends regarding problems with my agent. Ask, ask, ask! While recommendations sometimes don't work out, they are definitely a good place to start!
The listing agreement is a binding contract between you and the agent. Basically the agent doesn't want to go through the work of finding a buyer, only to have you not give him his portion of the sale. In most parts of the country, you will be giving up 6% of the sales price, but in some areas it can be lower (usually metropolitan areas where prices are high) and higher (in rural areas where prices are lower). Normally, half goes to your representative, and the other half goes to the buyers agent.
The selling price is important for a number of reasons. First off, the selling price will directly affect how much the agents and you (the seller) clear. The Listing price is what you are asking for it, which is usually higher than the selling price (what you actually sell the property for).
Of course, the listing price needs to be a reasonable number. You don't want the deal to get killed when the bank has an appraisal done and it is for less than the sale price. On the flip side, you don't want to sell it for less than the market will bear.
Part of this process is deciding on a bottom line price you will clear in the sale. In my case, it was the mortgage on the property. Don't let the agent try to talk you out of the bottom line price. For me, it was not paying money at closing as the seller (in other words, clearing the mortgage).
Negotiating is a fine art. There are books written on the subject. The bottom line of negotiating is the ability to walk away from the deal. Don't let the agent pressure into something you don't want to do!
One suggestion about the agreement. Banks often leave the amount the seller is going to net to the absolute last possible minute. Don't let them do this! Specify in the sales agreement wording to the effect that "the buyer or agent shall provide a copy of the closing documents at least 24 hours prior to closing." Otherwise, you will learn how much you will be making at the closing! I'm not sure about you, but I like to "sleep" on these sorts of big financial deals, and I can't if I'm being told the financial figures literally minutes prior to signing documents.
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