Advice to Sellers

Something has changed in your life and those circumstances have made you realize that you need to sell a property in order to move on. If this is your personal residence, and loved ones are involved, the stakes will be even higher. In the big scheme of things, your ultimate goal is to get from where you are now to a better place, even if you are not sure what that entails. Change can be good, but it might cause anxiety along the way.  Our advice is to stay focused on your ultimate goal and don’t sweat the small stuff.

SELECTING  A LISTING AGENT

By far the most important decision you must make is selecting the right real estate agent to guide you through the process. Obviously, not all real estate agents are the same, but neither are sellers. Pick an agent for his or her knowledge, skill and temperament, not because they are a friend or relative or because they have quoted the highest list price.

A great agent must be a clear and candid communicator, have an eye for detail in how your property can be best presented (staging, photography, advertising, etc.), be a skilled negotiator, provide wise advice when needed, anticipate what lies ahead, respond to matters quickly so the transaction stays on track, and most important of all, remain confident that you will reach your ultimate goal with regard to timing, money in your pocket and with as little stress as possible.

AGENCY

The agent you choose to list your property will always represent your best interests from start to finish. You should assume that any agent showing your property is representing the buyer as their Buyer Agent. Should you ever encounter a Buyer Agent, keep in mind that they have a fiduciary duty to tell their buyer anything that you say that might that could work to their advantage.

When a buyer and seller are represented by agents that work at the same firm, it is called “dual agency”.  In dual agency neither agent within the firm is allowed to advise their clients in a way that would give one party an advantage over the other. Dual agents are still required to reveal any known material facts that may relate to the condition or value of the property. Their role becomes one of facilitators for the transaction as opposed to an advocate for each party.

For companies willing to initiate certain practices to safeguard the confidentiality of their clients, there is a form of dual agency called “Designated Agency”. Living Seaside Realty Group practices “designated agency” which allows our agents to continue to provide 100% advocacy for both buyers and sellers who work with our firm.

In the rare instance, when your listing agent might also represent a buyer who is interested in your property, you will have a choice of whether to permit your listing agent to represent both you and the buyer in “dual agency”, or you may retain 100% advocacy from your listing agent, and the buyer will be referred to another agent within or outside the firm. Should this occur, you will be notified by your listing agent prior to a showing or an offer being made.

COMMISSION

When sellers list their property they sign a listing agreement with the listing firm that defines how long they will allow the listing agent to represent their property and how much commission they will pay the listing firm when the property is sold. The listing firm, in turn, will place the property in the Multiple Listing Service, and agree to share their commission with any participating firm of the MLS that brings a buyer into the transaction. The commission is routinely split down the middle and shared with whichever firm brings an offer that is negotiated into a contract and eventually closes.

Each company typically splits their “side” of their commission with their agent. The listing firm sets their own commission rate according to their company policy, and they also determine the amount they will share with the co-broke firm.

Unlike most business transactions, the listing firm and listing agent are not paid until the property successfully closes and the closing attorney records the transaction so that ownership is officially transferred.  

PRE-MARKETING INSPECTION

There are several important reasons why having a home inspection done on your home prior to placing it on the market can work to a sellers advantage. First, it will alert you to any major unknown conditions that are likely to be requested by the buyer after the sale price is set. The report will enable you to either fix those items up front, or get an estimate to fix them so you can allow for repair during your sale price negotiation, or you can state up front that the sale of your property is “as is”. If you are handy you can make some of the easier repairs while the house is being marketed.

What about disclosure? The seller may select “no representation” on the NC Residential Property Disclosure form, or answer the questions and remove disclosed items as they are corrected. The seller should only give the report to the listing agent if he is okay with the agent knowing the contents. Every listing agent is required to disclose any material fact about condition to the buyer agent, even if the seller chooses “no representation”. Once an item is corrected, no disclosure is required.

On major matters involving condition, it is not a matter of whether the buyer will ever discover the problem, it is when. Sellers are better off financially to make the repairs ahead of time or factor the cost of the repair into their negotiation strategy.

LISTING YOUR PROPERTY

The agent you select will have prepared a comparable marketing analysis which is very similar to a bank appraisal. It is a comparison of your property to comparable nearby properties that have recently sold. By comparable, we mean similar heated square feet, date built , sold price, sold date, same or similar neighborhood, and lot size. Other significant differences such as pool, barn, guest house, and garage are figured in by using a depreciated value for each difference.

Pricing is not a precise science, but rather settling on a strategic starting point that the owner and listing agent think will appeal to interested buyers. Remember, the buyer needs to see the value in your property via pictures and written descriptions so that they will request a showing.  The second test is whether he or she finds your place the #1 property in terms of meeting the needs they find most important, and yet falling within their price range so it becomes their #1 choice for making an offer.

If the price is not strategically set, no amount of marketing can cause a buyer to make an offer.  Still, the condition and the appeal of the house can affect the list price some. This is why a pre-marketing inspection, staging the house, grooming the landscape and using professional photography can expand exposure and generate more appeal in the eyes and mind of buyers.

Once you decide to list your property with an agent and company at a specified list price, period of time and commission percentage it is time to put it in writing on the listing agreement. You will notice that the entire commission is paid to listing company, but that company will share it with whichever company brings the buyer.  This arrangement is a requirement of all member companies of the Multiple Listing Service (MLS).

In addition to the listing agreement, you will be asked to complete a number of disclosures. The first one asks questions about the condition of your property and your home owners association, if applicable. We recommend that you write in the answers but your listing agent stands by to clarify any of the questions. The “no representation” boxes are there for situations that do not apply or that you cannot answer. Keep in mind that when you repair an item you can complete a new disclosure form without that item listed.

The Minerals, Gas and Oil Disclosure was required to see whether the current or a former owner had severed mining rights to someone other party. The final disclosure is titled ‘Working with a Real Estate Agent”. Its purpose is to make sure your agent explained who represent who in a real estate transaction.

Your listing agent will need to complete an MLS input sheet with all of the details, measurements, and text that is used by agents showing your property, plus it is the main source of data fields  and photographs for all company websites and national portals such as Realtor.com, Trulia, Zillow, HGTV, etc. You should review your listing in Realtor.com or listing company’s website and let your agent know of any errors in information. The most important criteria to have right are the price, number of bedrooms, heated square feet, lot size, and garage/parking since these are basic search information.

MARKETING

Buyers will request a showing of your property if they like what they see online. Some may drive by your property and like the curb appeal or want to be in that school district, BUT they are more than likely going to see the interior photos online before deciding to request a showing.

That is why homes that are staged first, exteriors refreshed, and then photographed by a professional photographer will have a distinct advantage of selling early and at a higher percentage of sale price to list price, than those homes that are listed without such detailing.

SHOWINGS

If you are still living at the property, you will be notified when an agent would like to show (agent shows to client) or preview (agent views to determine whether to show to client at another time) your home. If you keep your place in showing condition, you might agree to “leave message and show”. Those who need time to prepare the home for showing can request a confirmation to show.

Depending on the size of your home, most agents will request a showing appointment of 1 hour. It is not that they will be in your home the entire hour, but they are accounting for travel time from their office or an earlier appointment.

Wise owners will leave their home spotless, organized and full of natural light and with all electrical lighting turned on. If you have dogs, either secured them in a carrier or take them with you. Inside cats can stay if your agent has asked the showing service to remind showing agents to keep the doors closed.

Plan to leave you home a few minutes before the appointment and do not return until the full appointment has lapsed. If the agent and client are still in your house when you return, standby, the longer they stay there generally means they like your house.

Some sellers ask whether they have to leave the house during showings. There are two major reasons why you should give them space. 1) Buyers want the flexibility to say what comes to mind and to explore the house as if it might become theirs. If you remain, some buyers feel as though they are inconveniencing you, and cut the tour short. 2) Many sellers reveal information that costs them money during negotiation, or they might relate information about the neighborhood that the buyer receives in a negative light. You would be surprised what owners have said that unknowingly cost them the sale.

Showing agents will usually leave a business card at the time of showing to let you know that they have completed their tour. Your agent will provide you with feedback as soon as the showing agent has had time to provide it. Be patient, your listing agent does not have any control over when the showing agent will respond. They might have another full day of showings, or perhaps they are writing up an offer … maybe on your property.

OFFERS

Any Offers will be submitted to your listing agent either in a paper or in an electronic format, which your agent will present to you. If you agree with all of the terms and conditions in the offer and make no changes, you can sign in the appropriate places and have a pending contract. If you make any changes whatsoever, you will be re-starting the process by making a counter offer that cannot become a contract until the other party agrees to “all” of the changes you made, sign and date it, and their agent conveys back to your agent that they have done so. There is no such thing as a “verbal contract” in real estate… at least one that is enforceable.

Your property listing will now go from Active to Pending in the Multiple Listing Service. If you like, agents may continue to show your property and might present a “back-up” offer which is negotiated just like the contract in place. A back-up contract only takes effect if the current contract is terminated.

If your property is in a desirable neighborhood, in good condition and priced close to market value, you might be lucky enough to attract multiple offers. If so, follow the advice of your agent to handle all parties appropriately.  

DUE DILIGENCE

North Carolina is still considered a “caveat emptor” state meaning “buyers beware” of the ultimate condition of the property prior to closing. The North Carolina Offer to Purchase and Contract provides buyers with a due diligence period in which buyers may have inspections performed to determine the current condition of any structures as well as any other issues that might affect use of the property. The due diligence fee is usually paid by the buyer with a personal check made out directly to the sellers to compensate for the time the property is “under review” by the buyer. The due diligence check is for the seller to keep unless he breaches the contract.

In addition to the pest and home inspections, buyers will also be getting their financial arrangements worked out during this time period, especially if a loan and appraisal are involved. Unless you are selling a condo, expect a survey to be performed. Whenever one of these services is scheduled for the buyer, you and your agent will be notified ahead of time through the local showing service to make sure the appointment is convenient. Give the buyer and their contractor space to carry out their work.

Shortly before the due diligence period expires, interested buyers will usually submit a repair request form to the sellers through the agents.  If agreement can be reached before 5:00 PM on the due diligence date, the likelihood of the contract closing increases greatly. Up until that time buyers are allowed to terminate the contract for any reason whatsoever leaving their due diligence fee, loan fees and any legal fees and inspection costs on the table. That can still be a significant sacrifice for the buyer.

The property owner should discuss with their listing agent a strategy for setting the due diligence fee. A basic guideline is the shorter the due diligence period the lower the due diligence fee. A higher fee should be considered for longer periods of time and for buyer contingencies that allow termination near or at closing.

PENDING TO CLOSING

Remember that the contract is based on the “as is” condition on the day the buyers and sellers signed the Offer to Purchase. If the due diligence period passes without some sort of signed repair request agreement, the property can transfer in “as is” condition to the Buyers.  Sellers should be aware that if the Buyer Agent does not hear back from the listing agent as to whether the seller will make any of the requested repairs, the buyers may exercise their right to terminate the contract by notifying the listing agent in writing anytime just prior to the Due Diligence date and time. If this occurs, everything stops dead and the buyers are free of all obligations. The due diligence date and time are considered Time Is of the Essence, which gives one or either party the legal right to walk away from any obligations.  

Once the due diligence repair request is signed and the due diligence period has passed, the seller must focus on finding reputable vendors to estimate and compete the agreed to repair items in a workmanlike manor. Your listing agent and company have lists of people who can do this type of work on time and at a reasonable price. Be sure to get invoices for the work since most buyers want them to show that the work was performed and in case problems arise with the work at a later date.

The buyers along with their agent will usually arrange to do a walk-through of the property shortly before closing. They are looking to see if the agreed repairs were made in a workmanlike manner; whether any damage occurred during the move; whether any fixtures were removed; and whether you left any personal items behind that were not requested in the contract. Wise sellers will have the place professionally cleaned, but “broom clean” and all trash at the curb for pick up is considered acceptable. Do not leave household hazardous waste items behind for the buyers to handle. Keys, remotes, etc. are usually left in a prominent kitchen drawer for the buyers to discover.

Closing is simple for sellers. You need to have your attorney or the closing attorney prepare the deed that transfers the property to the buyers at closing and you also must provide information about any outstanding lien on the property to the closing attorney for payoff. Your mortgage, a home equity loan, IRS liens, credit card loans for specific home improvements like an HVAC system, alarm system, etc. will need to be settled at closing. You will be given a seller’s closing disclosure statement that will outline each debit or credit that determines your balance from the sale.

Once the closing attorney records the deed in the name of the buyer at the register of deeds office, the disbursement checks are made available to those owed a balance. That is also the moment the ownership officially transfers from the seller to the buyer.

You made it … no more lawn to cut, water bills to pay, trash to take out. You have reached your goal … so now what’s on your list?