The prospect of selling your home can be incredibly daunting. Whether you are new to real estate or a seasoned pro, you want to get started by writing out your specific plan on your specific timeline.
Whether you decide to sell on the Aalto Direct Marketplace, or choose to work with a traditional brokerage the following information will serve as an overview of the sales process so that you plan accordingly.
Many sellers begin the process thinking that they need to call an agent to get started. Before you make that call, let’s take a quick review of what differentiates an agent from a Realtor™ or an advisor from a broker.
Real estate salespersons (agents) are licensed only after passing a state written exam, and they must work under the supervision of a broker. Real estate salespersons are independent contractors paid on a commission split (typically a percentage of the traditional 2.5%-3% of the sales price) which can lead to some misaligned and questionable decisions. Something to note is the most common training for real estate agents revolves around expanding business or becoming a “top-producer.” It’s great to work with someone who is motivated, but ultimately you want to work with someone who knows what they are doing. Working with a newer agent is great if they have a team or a mentor who is guiding them, but experience is an important factor.
A Realtor™ is a licensed real estate salesperson or broker who belongs to the National Association of Realtors. Not all salespeople or brokers are Realtors™, but all Realtors™ are salespeople or brokers. As a member of the NAR, a Realtor™ has access to resources and training to help them advance in their role as a real estate professional. Again, be sure to do your due diligence and choose someone with experience that aligns with your plans and goals.
A broker has obtained a higher level of licensure and can operate independently or as a brokerage. A brokerages real estate salespeople working under its supervision.
If you choose to work with licensed advisors acting as employees (like the ones at Aalto) it can improve the overall dynamic of the sale. By taking the focus off of a commission and prioritizing the seller's experience, advisors can focus on the interests of the client and work towards an overall positive sales experience.
Working with someone experienced in the industry can save you time, money and more than a few headaches. The real estate industry is very money-driven. That's not a bad thing, but it’s something to keep in mind when considering partnering with any real estate professional. When choosing an agent or advisor, look for someone with a demonstrated track record of success. Look for someone with a stellar reputation. Ask them if they’ve ever been involved in any kind of dispute, mediation, or lawsuit. We recommend that you always ask for personal references, and especially ask them for references of similar homes they’ve sold. You are the priority, so work with someone who listens and has your best interests in mind.
If you decide to list with a traditional real estate brokerage/salesperson, the first step is to sign a listing contract. After the home is prepped and media is ready, the listing is input to the MLS (Multiple Listing Service). The number of days on market begins and the clock starts ticking! Your address will also be made public. Typically when a seller contacts a real estate agent, the agent is going to prepare a CMA - Comparative Market Analysis - of similar properties that sold within the last 6 months. It’s important to remember that a CMA is an estimate based on past sales. It’s not a complete picture as it doesn’t show realtime information. This analysis will help them price your home prior to launching your listing on MLS
If you choose to work with Aalto on the direct marketplace you can obtain valuable knowledge before ever signing a contract. One of the benefits is not having to subject your home to a metric like days on the market. Remember a home with too many days on market can be perceived as stale, and prospective buyers might think there is something wrong with the listing. Sellers on Aalto can list their homes, share photos, and gauge interest from their specific buyer pool. A contract is signed once you open your home up for tours with serious buyers. In addition to looking at recent past sales, Aalto lets you see interest and offers in real time.
A lot of the upfront work can be set in motion before contacting an agent. One of the common oversights of sellers are all the little issues in the home like a squeaky door, a window that doesn’t lock, or maybe that occasional scratching in the walls. We recommend taking a good look around your home and revisiting that “to-do’s” list. In addition to some of the smaller issues, you will want to hire a professional inspector to come out and look at the property.
We recommend a home and a pest inspection. Typical costs for inspections range from $1,000 - $3,000 depending on the size, condition, and other outside factors or issues with the home. When looking for an inspector chose reputable service providers with experience in the industry. It’s important to note that some cities have resale inspection requirements where a city building inspector will look for health and safety issues as well as unpermitted work, sewer lateral conditions, or vegetation management requirements.
A general home inspection will look at the major systems in the home like the plumbing, electrical, HVAC, and structural elements. A pest inspection report will show Section 1 items, and Section 2 items. Section 1 items detail any active infestation issues as well as structural issues like rot. Section 2 items are recommended actions to take.
Inspection reports over 6 months old tend to be a little stale, and some of the city mandated reports expire after 6 months. As a homeowner, it is good practice to keep those reports current.
Here’s a tip for buying your next home: Color code your inspection reports with a 12-month, 1-3 year, and 3+ year schedule of items and issues to address. You also want to keep record of any major repairs or updates made to the house or property over the years.
Sellers should disclose any and all pertinent information about the property. Most legal issues arise from non-disclosure. Being upfront, prepared, and informed can save you in the long run. Sometimes buyers will want to conduct their own inspections which is totally acceptable, and all the more reason to have your inspections up to date so there aren’t any surprises..
During these preliminary preparations you will want your agent or advisor to open up a presale title report which will provide an opportunity to address any title issues with the property. A title search is an examination of public records to confirm a property’s legal ownership, identify if any claims exist on the property, and anything that has been recorded on the property (like easements or CC&Rs). If there are claims, or liens on the property they may need to be resolved before a transfer of ownership can occur. Title insurance is also necessary to protect against any issues that can arise after a sale such as back taxes, or liens on the property. Take the steps to ensure a clean title, and obtain title insurance when you buy.
At this point in the process you’ve planned, prepared, and completed most of the upfront work. You are ready to sell your house. You either chose to work with an agent or chose the direct real estate market. You have an estimate for the sale price based on current market metrics. The title report comes back clean and you are ready for next steps. Tours have been conducted in the home, and now you’re receiving offers you love. It’s time to choose the best offer and prepare for closing.
When reviewing offers look for any contingencies listed. The most common contingencies are loan, appraisal, and inspection contingencies. The intent of these contingencies is to protect all parties involved (lenders, sellers, buyers) on the sale. For example when a buyer makes an offer with a deposit, that money is not at risk until all contingencies have been removed. Likewise, if a buyer doesn’t in good faith secure financing from a lender within the timeframe of the contingency, then the offer can be cancelled.
Also don’t forget about any exclusions that should be written into the contract - that crystal chandelier you purchased on your honeymoon might not be included in the sale of the home. Again, this is where it is imperative to disclose these details and be transparent. You don’t want a dispute to arise because of an oversight or poor communication.
It’s time to move forward with an offer that you absolutely love! The day that all parties agree to that offer is known as the day of ratification, or day 0 of the escrow period. Home stretch! Now is the time when all that upfront work really pays off.
In a hot market (like what we’re seeing right now) you’ll potentially see very short timeframes from ratification to the close of escrow.
The escrow period is when the buyer performs their due diligence (if there are contingencies), the appraisal is performed (if buyer is obtaining a loan), final loan and closing paperwork is prepared, funds are wired into the escrow account, and title & home insurance is set up in preparation of the transfer to the new buyer.
For example, a prepared seller and a serious buyer will agree to a 30-day escrow. During this time, the escrow officer (in Northern California title and escrow services are typically with the same company, Southern California they tend to be separate) manages the escrow process as an employee of the escrow/title company, which serves as the neutral third party to help execute the transaction. Time is of the essence here. If a buyer isn’t meeting the timeline you can send them a notice to perform and work towards removing contingencies or cancelling the contract.
Now you’re getting closer to the end of escrow. The buyer is signing their loan documents and closing papers. They are in line for funding. Their lender wires that money into the escrow account (the loan is funded!). The buyer will finalize the down payment and wire it into the escrow account. Standard practice is to have a final walk through to make sure that everything is as it was when the offer was made. This is known as the “walk through”.
When everything looks good, and all conditions are met, the escrow company records the new grant deed with the county (the “close of escrow”) and the keys are handed over to the buyer!
We hope this overview makes the notion of how to sell your house much less daunting. You know what to think about regarding preparations to make, who to work with, when to begin, and a general overview of the process. These factors will serve as a solid foundation for your sale. We’ll expand on more key components and other industry insights in upcoming posts. If you have any questions please share them with us: email@example.com. We’d love to hear from you!
Aalto is a real estate broker licensed by the State of California, License #02062727 and abides by Equal Housing Opportunity laws. This article has been prepared solely for information purposes only. The information herein is based on information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy of the information. Aalto disclaims any and all liability relating to this article.