Selling

Should I get an agent? May I sell by owner?

You may sell a home by yourself, without an agent, in FL.  If you have the time, some experience, are a quick self-learner, or are doing a transaction among trusted family and friends, this may be a good option for you, especially in a seller's market.  Bear in mind that this is a very involved process: You will need to get the pricing right, comply with mandatory disclosures, list the sale in the MLS, take professional-grade pictures, schedule and coordinate showings, talk to other agents, review offers and prepare counter-offers, follow up constantly and manage paperwork, the most critical of which being the Offer, prepared by the buyer, which is the actual Sale and Purchase agreement for the home sale, and a binding document.  In FL, there is no "standard" contract, but there are forms prepared and endorsed by the Realtors Association and the FL BAR.  We strongly suggest that, if you are flying solo, you should consider hiring a real estate attorney to assist you in reviewing the documentation. 

There are also several companies that can assist you with the sell-by-owner process, or offer limited real estate services for a small commission, or fixed fee.  Some of those companies are:   homelister, byowner, listwithfreedom, help-u-sell, Assist-2-Sell, houwzer, and many more.  

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If I sell by owner, do I need to pay the buyer's agent commission?

It is not mandatory, but in a competitive market, it will be very difficult for you to sell a home, by owner or with a Realtor, without offering compensation to the buyer's agent.  In a very hot seller's market, it is possible that you might be able to sell a home without offering a buyer's commission.  The major implication of not offering such commission is that the vast majority of buyers are represented by an agent, partly because they do not expect to pay their agent's commission, they expect that the seller will.  If the agent does show your house to their client, they will need to have an uncomfortable conversation about collecting their commission directly from the buyer.  Buyer's agents are also reluctant to deal directly with homeowners because they believe they will be doing double work, having to instruct the seller on what to do, and having to follow up more closely.  That is to say that, you will likely be offering your house to a smaller pool of buyers if you do not offer a commission to the buyer's agent.  

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How about those sites and phone calls that guarantee a no-hassle offer on my home?

Almost always you hear the term hassle-free, it's a euphemism for saying it will not be your best bargain.  Those are investors who either want to flip houses, manage a rental portfolio, or use real estate to hedge their diverse portfolio of assets.  So, should you sell to an investor?  Maybe. You can be assured that, in nominal value, it won't be your best offer.  Investors offer as much as 30% less than market value, so, you need to calculate a value for other factors, like the cost of repairs you would need to do for the house to be sellable (investors often will buy as-is, no repairs needed), add the sales commissions (if you would, otherwise, use an agent to sell), and put a value to expediency and being paid in cash.  Yet, in conclusion, in most cases, from a purely financial point of view, selling to an investor is not likely to be a good deal.

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Do I need to make repairs, improvements?

Yes, you do.  Unless it's a very unique seller's market, repairs and improvements will determine how fast and well-priced you will sell your home.  As a rule, everything should be working, nothing should be leaking or dripping, and there are cosmetic improvements that pay off.

- Be proportional: a $150,000 home will need different improvements than those of a $1,000,000 home.

- Do the big ones early, while you still live in the house, so you get to enjoy them too, instead of leaving all the joy to the new owners: new kitchen countertop and refaced cabinets, a nice closet organizer system, new luxury vinyl floors, and replacing 20-year-old appliances, bathroom counters and toilet bowls. Replacing the shower curtain for sliding doors, and updating lighting fixtures, door hardware, electric outlets, and switches may pay off too.  See, some small details make the house look fresher, and buyers get excited with new features they don't currently have, or disappointed with the lack of features they expect to find.

- You can do more if you do it yourself. Painting, installing vinyl plank floors, replacing door hardware, cleaning and power washing are among the projects that require you to be a just bit handy and to have the time and energy. 

- Cosmetics last: You will need to patch holes and put a fresh coat of paint, everywhere.  If you have a fluorescent pink wall in the living room, you may want to consider a neutral color.  Wash the carpets, clean your house like you never did before, everywhere.  Powerwash the siding, and stain the deck.  Paint the garage floor and walls. Trim the plants.  Find the source of weird odors.   Send the cats to live with your niece for a while.  Replace damaged screen doors, oil the doors' hinges.  Anything cracked or broken has to be repaired.

- Not the time to over-improve.  If you are preparing for a sale, this is not the time to dig and build a new swimming pool or install solar panels; those are things you do for your own enjoyment and you will not recover those investments. Unless you are in the luxury home market, your new flooring, solid counter top and appliances do not need to be the very top-of-the-line.  The new refrigerator does not need a built-in tv connected to the internet.  Don't go too cheap either, be proportional. 

- Declutter. Rent a storage unit; many places will give you the first month free.  Everything you haven't used for the past year has to go.  Extra sofas, tables, and chairs have to go.  China cabinets and buffets have to go.  2/3s of your books have to go.  Most of your clothes, linen, and towels have to go.  Serving dishes, spice racks and all those appliances on your kitchen counter have to go.  Dresser, coat rack and extra bedroom furniture have to go.  Your DVD collection has to go, and so on.   You want your house to feel spacious, storage to look plentiful.
- Remove your personality.  You want prospective buyers to feel like they are in their home, not yours.  Make it as neutral as possible.  Remove 70% of the ornaments,  all the family pictures, and nude paintings and sculptures.  If you collect porcelain dolls, miniature cars, beer cans etc, store them somewhere else, safe.  If you keep major equipment for a hobby in the garage, or in the basement, that has to go too; the garage has to be clean, empty, and able to park a car, or cars.  Let the prospective buyer imagine the possibilities.  Consider removing all political and religious symbols. 

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Do I have to stage the house?

Yes. But, again, keep it proportional.  If you are selling a $1,000,000 house, you may want to bring a professional to look around and see if your furnishings make the cut.  For a more mundane home, you can declutter, clean up and make it look nice.  Ask your agent for ideas, or look up home staging tips online. If all your furniture is gone, try to borrow, rent or buy cheap or used stuff for the minimum, just enough to give the home life and give the rooms perspective: a bed, sofa or chairs, a couple of pieces of decor, and a vase with flowers, or, get a quote from a home stage professional.

An alternative that is fast-growing in popularity is virtual home staging, in which you style digitally the pictures of your vacant home. This is done for a fraction of the cost of actual staging, often around $500 to 1,000 for a set of 8-10 pictures, compared to a cost of $2,000 to $10,000 to hire a home stager and rent the furnishings. There have been discussions on its ethics, and the industry has settled in favor of the practicality and cost-effectiveness of the practice.  There are, however, important considerations:  The goal of digital home-staging is not to make your house look like a sheik's palace, with unrealistic furnishings and decor, nor to deceive that that it is much bigger and nicer than what the buyer will see in person.  The goal is to give perspective on how the space would look with furniture of real dimensions or when it's brought to life with some decor. Do not overdo it, or the prospective buyer may feel cheated.  Make sure to add a footnote to every digitally staged picture you post, disclosing that the space has been staged using virtual staging tools.  The company you hire for the virtual staging will know what wording to use.  If you are going to do it, do it well.  You may be able to do it yourself if you are a wizard with illustrator or photoshop, but getting virtual furnishings in the right angle, dimension and proportions is very difficult.

Make sure to clarify on the listing what stays and what goes.  If you are planning to take appliances, lighting fixtures, shelves, ceiling fans etc, you should disclose it.  Better yet, if you plan to take your grandma's heirloom chandelier with you, uninstall it and replace it before you show the house.  Unless otherwise stated, It is the common expectation that all appliances and everything that is attached to the floor, walls and ceilings will stay.

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Can I be in the house during the showing?

You may, but, it's not a good idea.  Unless the buyer is coming solo, without an agent, and you are selling by owner, we suggest that take your valuables and go get a cup of coffee or take the dog for a long walk.  You want to give the prospective buyer time and privacy to look around.  If possible, leave the cats with your neighbor during the showings period.

Make sure that the bed is made, the bathroom is not wet, the counters are neat, and the dirty laundry is put away.  Don't choose to fry fish before a showing, and don't use too much air freshener, as some people may be allergic.  Put away all food, and don't overfill your fridge or pantry.  Open all window coverings and turn on all lights.  Play some classic light jazz at low volume. Take the cars away, that the garage looks spacious. 

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Should I do an Open House?

It won't hurt.  Do it early, on the first or second weekend after the house was put on the market, but do it with enough days' notice.  Open houses can be a plus where there are multiple homes for sale, and the buyers is "in the neighborhood", looking at other houses.  Don't be dismissive of neighbors coming to your open house, for they can be an excellent source of referrals to friends and family.

Serious buyers would likely schedule a private showing, but an open house may have the convenience of helping you consolidate the showings and will help you gauge the level of interest in your home.​  If you didn't schedule your open house at the same time as the championship game, and only one actual prospective buyer came; everybody else being neighbors and other agents, you may want to be more accommodating when accepting offers. 

Open houses are also good opportunities for agents to network and generate leads, so your agent is likely to want to do one.

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Do I accept the first offer?

That's one of the most difficult questions, one which has caused many nights of insomnia.  Let's say that on the first Saturday you get the first offer, just a bit short of the asking price; you counter it right away saying you will not accept anything less than the asking price, and the buyer revises it, still $5,000 short of asking.  You ask until Monday to respond and see if anything else will come on Sunday, but nothing comes.  Do you take it?

If you are working with an agent, ask about the inventory of homes for sale, the average home's sale cycle, or do such research by yourself, if you are fsbo.  If there are over six months worth of inventory (it would take six months to sell all the houses), it's a buyer's market, less than three months, a seller's market.   Then think back on your rationale for the pricing.  Are you confident you priced it right? Do you believe you underpriced?  Note that the fact that you got a first offer quickly doesn't necessarily mean that you underpriced or that there are many more coming.  It could be a coincidence, or that that one particular buyer is looking for a home exactly like yours, in that location, and called an agent as soon as they saw the for sale sign.  It's possible that they also did plenty of research and know exactly home much they want to pay. So, don't be dismissive.  Stall if you can, to see if any other offers are on the way, then assess the risks of leaving money on the table vs. the risk of missing on this one and then taking a long time to sell.  Also ponder the scenario of accepting a buyer that is financially shaky and could have their mortgage application denied one month later, when you already took out all the staging and stopped the showings.

It's nearly impossible not to second-guess yourself or to avoid the regret of missing what could have possibly happened.  What is true here, is true in life: You ought to make decisions based on the facts you know, rationalize your decision, and move on.

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Note: pre-qualification is not the same as pre-approval.  Pre-qualification is a quick assessment based on the information provided, with little or no verification.  Pre-approval has a greater degree of scrutiny, and the bank is assuring that as long as they don't find anything new or undisclosed, and if your financial conditions don't change, they will give you the loan.

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Do I have to accept an offer that is at asking price?

You are not legally obligated to accept an offer just because it is at the asking price, but there could be contractual implications with your real estate agent.  You should have a reason to refuse an offer at asking price: maybe you are concerned about the buyers' finances: they are borrowing 95% of the home value, can only afford a $2,000 deposit, and gave you a pre-qualification* letter from a bank you never heard of.  What to do?  Maybe you had a very busy open house and you want to wait for more offers.  These are valid concerns, which you should discuss with your agent, if you have one.  Concerns about the buyers' race, origin, religion, gender, sex orientation, disability and familial status are not valid reasons, and your agent will not go along with that. It's illegal.  Your agent will support your decisions to a certain point, but on the seler's representation contract, your agent is committing to finding an able, ready, and willing buyer for the agreed price, and if you keep refusing them, and for no good reason, the agent may be able to claim that they earned their commission.  Deciding the asking price is an important decision; be involved, make sure you understand and agree with the basis and strategy for the decision.

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*Note: pre-qualification is not the same as pre-approval.  Pre-qualification is a quick assessment based on the information provided, with little or no verification.  Pre-approval has a greater degree of scrutiny, and the bank is assuring that as long as they don't find anything new or undisclosed, and if your financial conditions don't change, they will give you the loan.

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Should I offer incentives?

It depends on the market.  In a hot seller's market, you can take them away and perhaps even only accept offers without any contingencies.  In a hot buyers market, incentives may be necessary.  The purpose of incentives is to offer something of perceived value greater than the actual monetary cost of it.  In other words, you may offer a one-year home warranty if you believe the perceived value is greater than the $600 it will cost you. Otherwise, you'd just cut the price.  

Incentives to the buyer's agent occasionally motivate the agent to bring their buyer to have a second look at your house, but it's unlikely to cause an agent to, somehow, produce a new buyer or to change a buyer's decision when they are leaning toward picking another house.  

Some sellers believe they can offer a cashback incentive to the buyer, where the buyer would receive, e.g. $20,000 cash back at the closing, to do whatever they want with it.  In most cases, however, it is illegal to offer significant cash back and it is considered to be lending fraud, in which you inflated the value of the asset to get cash for the buyer.  The best practice, if you need to give further discounts as you negotiate, or compensate for repairs found at the home Inspection, is for the seller to pay for the fixes or apply a discount to the final sale price.

Other possible incentives include the seller paying for some of the buyer's closing costs, like title insurance, or even mortgage origination fees and interest rate discount points. 

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What Happens if my house fails to appraise for the value in the sales agreement?

First of all, the most likely reason the house is being appraised is that the bank originating the mortgage has required it, so to be certain that it's worth the amount the loan is based on.  When a home "fails" the appraisal it means the appraised value was less than the value on the agreement. 

Homes may "fail" the appraisal for many reasons:  it may be a volatile market or a very competitive seller's market where buyers are bidding over the asking price, and the sales history appraisers use hasn't yet caught up with very recent data.  It may be that houses are wildly different within the area, and comparisons are difficult.  It may be that the home is indeed overpriced, but that's the one you want anyway.

Appraisals are an assessment of value, by a certified and qualified appraising professional.  There are clear methodologies that will be described in the appraisal report, but there's always an element of judgment, and it's not entirely free of the possibility of errors and misjudgment.

When the appraised value is lower than the sales price, the bank will likely recalculate the amount they are willing to lend to you.  At that point, you may have a few options to choose from.

a) If the Sale Agreement does not include a Mortgage or Appraisal Contingency*, you may:​

- if your priority is to expedite the closing, you may accept to change the sale price to match the appraisal, or accept an offer from the buyer somewhere between the agreement and appraised values,  You are in a strong position to negotiate, unless you can't afford the time it would take to re-list the home and go through the sales process again.

- stand your ground and refuse to adjust the sale price to the appraised price.  If the buyer wants to exit the agreement, you may be entitled to keep the deposit.

b) If the Sale Agreement includes a Mortgage or Appraisal Contingency**, you may:

- stand your ground at the agreement value or try to re-negotiate the price with the buyer, from a weak position: the buyer is likely allowed to exit the contract at no fault and receive their deposit back.  They may also be on a schedule to move out of their current home, giving you some room to negotiate.

- Allow the buyer to exit the contract, at no fault and without penalties, and refund their deposit, and put the house back on the market, hoping for a better later appraisal outcome or only accepting offers without a mortgage and appraisal contingency.

 

**  A mortgage contingency clause typically includes 2 factors:  that you will try in good faith to secure a mortgage within a certain period, and that the appraisal will be satisfactory to the bank.  If either fails, you may exit the contract without fault and have the deposit refunded.  You may include an appraisal contingency addendum, which would allow you to exit the contract at no fault, and have your deposit refunded, if the house does not appraise by a certain value, by a certain date.  Read your agreement carefully before signing and consider these clauses carefully.

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What is a typical timeline?

1)  As soon as you decide that you will sell, start decluttering, and start packing.  Do a yard sale, donate.  Everything you didn't use or wear in the past year, you are not likely to need now.  Start fixing, start cleaning.  

2)  It won't take long to find an agent, then, within a couple of days, they will prepare a listing agreement, run a comparative market analysis, discuss listing details with you, prepare the disclosures, take pictures, and they will get your listing posted in the Multiple Listing Services - MLS.  If you are planning to sell by owner, start researching if you'd hire any company to assist you.  Start working on your pictures, with the best possible lighting and good staging. Research pricing, and ask real estate agents for a free Comparative Market Analysis; they have automated tools to prepare one very quickly, hoping that eventually you will change your mind and hire them.

3)  There are often one or two showings booked very quickly.  Agents have tools that alert them of new listings and they send them over to their clients, some of whom may be looking in that very specific area, and may be very excited to see it immediately. You may get one or two offers quickly, and then there may be a gap, as other more cautious buyers are still at an earlier stage of research.  This is why, as we mentioned, it is a tough decision whether to accept the first offer if it's less than the asking price or if it presents other concerns.  

4)  A good reference for the average time for a house to be on the market is about 60 days.  Depending on the market, things may move significantly faster or slower.  In a buyers' market, you may need to keep your house impeccably clean and organized for longer. 

5)  Once you receive an offer, a chain of events with several timelines will come into play:

• Remember that an offer is a binding contract prepared by the buyer and that there is no "standard" contract promulgated by the State of Florida.  Read it carefully, all of it. It determines contingencies in which the buyer can exit the contract, such as the mortgage and home inspection contingencies. It determines who pays for which closing costs, and it contains all deadlines for buyer and seller to complete their obligations. 

• Often, the closing, i.e. actual transfer of the title will occur 30 to 60 days from the acceptance of the offer, 30 days, being a very tight schedule for the buyer to work with the Mortgage and title companies to complete all their tasks.

• It is typical for the seller to have 48 hours to accept or refuse the offer.  In that timeframe, you may continue to show your house and receive offers.  The buyer may withdraw (revoke) their offer at any time before you sign and communicate acceptance of their offer, if, for example, they decide to make an offer for another property.​

• If you received an offer under the asking price, or if you have multiple offers, you may decide to respond with a counteroffer.  You may also counter-offer based on conditions, like moving the closing date or not being conditional on home inspection.  Once a counter-offer is issued, the original offer is void and the buyer is no longer bound. It is their time now to accept or reject the counter-offer.  If they accept your counteroffer you are bound to it.  If they reject by making a new offer or re-offering the original offer, the process starts over.  This back-and-forth process often happens within one or two days.​

• Once a (counter)offer is accepted by both parties, it is typical for the buyer to have 3 days to deliver the earnest deposit, and  10 days to complete the home inspection.  With the inspection report, the buyer may require you to repair or compensate them for the costs of needed repairs.  You may agree, partially agree, or refuse, at which point the buyer may be able to exit the contract and receive their deposit back.  Not all home inspectors are alike. Some are precise, some are sloppy and some are overzealous.  It isn't unusual for sellers to be angry at suggested repairs they might find unnecessary. We advise being reasonable, it becomes a negotiation and the market will determine each party's chance of success.  It is not typical for buyers to back out from contracts due to minor repair issues.  

• Buyers will typically have 30 days to secure financing for their purchase.  If they notify you within that deadline that they couldn't secure a mortgage, you may agree to extend, or the contract may become void and you will need to return their deposit.  If you can demonstrate that the buyer didn't put their best efforts to secure financing, you might be able to retain their deposit.  If the buyer does not notify you within the deadline, that they couldn't secure a mortgage, they are "on the hook" for either somehow finding the money to pay for the house, or lose the security deposit.

• You also have the obligation to promptly provide the buyer with property disclosures and homeowner association documentation, without which the buyer may be able to void the contract.  

• On the day before the closing, or on closing day, the buyers will perform a walk-through at the house, to check if everything is at the same conditions it was when they first saw it, or when it was inspected.

• On closing day, you and the buyer will attend a meeting at the Title Company's office, where the title company's agent and the real estate agents will walk you through the closing documents, and you will be asked to sign them.  As of recently, buyers and sellers typically attend separate appointments.  Don't allow yourself to be rushed.  Take your time to understand everything you are signing.   

• Once the documents are signed, the title is effectively transferred and the title company will proceed to register the deed.

• The event is complete with the handing of the keys to the buyer.  For many sellers, it is an emotional and bitter-sweet moment to hand over a home where you spent so many years and built so many memories.  Perhaps you may take solace in hoping the new owners will build their own memories and enjoy much happiness there.