The selling process

The following is an outline of the selling process.  It covers from the time that you are estimating the value of your home to the closing.

This outline is very simple.  Each step is much more complicated than the brief description implies.  Your real estate agent will cover many of the details for you and especially those that are of the most interest to your case.

Market determination

• History - Research the real estate market in your community in the last couple of years.  

• Comparables - This is a comparison of your property to other similar properties that have sold in the last 3-6 months.  The profile of the comparables should be as close to your home in every way possible.

• Unique differences - It is important to understand what is different about your home, for better or worse.

• Other markets - Take a quick look at other areas of town to see what is going on in those communities and the price your house may bring if you lived there.

• Current listings - Never price your home based on current listings in your market.  But, to examine a list of other houses that will be on the market at the same time will give you some idea of what the potential buyer is looking at before and after they see your home.

• Showings - Take a tour of houses that are similar to your house before you list.  When you do a walk through yourself you have a better understanding of staging, pricing and the competition.

• Estimated cost and proceeds - Make sure your agent develops a good faith estimate of what the costs are to sell your house and what the proceeds will be.

Listing agreement - Here is a list of documents that you may be required to sign:

• Agency Disclosure - This is a document that is required by regulation.  It explains the responsibilities of the agent and the agency.

• Tax exempt - Rarely is this true, but you may be exempt from transfer taxes if your home is worth a percentage less than when you purchased the home.  It is worth the consideration.

• Top ten questions - What has happen in your life financially and legally will affect the outcome of the sale of your house.  It is good to examine the questions to make sure you understand the impact the issues may have.

• Showing instructions - a form that outlines when you will allow your house to be shown.  

• Exclusive Right to sell - Simply states that the agent is to work in your behalf but only with your approval throughout the entire process.

• Realcomp profile form - This form details the features of your house.  

• Seller’s disclosure - This form details the problems your house may have.

• Lead based paint - If your house was built before 1978 you need to inform the potential buyer that there may be lead based paint used and that you may or may not know about it.  This form is required by regulation.

• Title order form - This allows the title company of your choice to order the title work when the house is sold.

• IRS form - It informs the IRS that you have sold your home.   

• Pay off authorization - This allows the title company to work with your mortgage provider to pay off the mortgage when the house is sold.

• Homeowner’s safety letter - This states that you will keep your home safe for people to walk through.  

• Home warranty form - This informs the potential buyer that you are or are not providing a home warranty after the sale.

• Winterization form - If the house is vacant, or will be during the winter, and you decide not to keep it heated, you will need to winterize the house.  (It is advised you don’t winterize because a cold house doesn’t show well.)

• Certificate of non foreign status - States that you are a citizen of the United States.      

• Photo authorization - Allows the agent to take pictures and use them to market your home.

• Extra Keys - Documents that you are sharing keys with the agent.    

• Association request form - If you have an association, this will allow the agent and agency to request fees that may need to be paid at closing.

• Other - Depending on all the other things about your house and property, there may be other forms that need to be completed and signed.

Showings

• Showing instructions - You specify when your home will be shown to potential buyers through a licensed agent.  

• Agent request - When an agent wants to show your house, he or she will notify your agent’s office.  The office will make sure they are a qualified agent in good standing and note the date and time.

• Seller notification - The agency will call, email or text you about the date and time that the house will be shown.  There is a two hour window in most cases, allowing you enough time to clean up and leave the house.

• Showing the home - After the home is shown, a request is sent to the agent for feedback.

Offer

• Purchase agreement - This is a form submitted to the seller from a potential buyer detailing the price and conditions for purchasing the house.

• Lead based paint disclosure - The form must be submitted with an offer and signed by the potential buyer.

• Seller’s disclosure - The form must be submitted with an offer and signed by the potential buyer.

• Agency disclosure - This form must be signed by the potential buyer that indicates that the buyer’s agent has the right to work on the buyer’s behalf.  

• Inspection contingency in purchase agreement - This contingency allows the buyer to arrange for an inspection of the property by a home inspector of his or her choice.  When the report is issued, the buyer can accept the condition of the property, ask the seller to repair issues, ask for a reduction in price, ask for money back at the closing or allow the buyer to walk away from the transaction.  There are strict time lines attached to this contingency that both seller and buyer agree to.

• Mortgage contingency in purchase agreement - This allows a safety net for the buyer so that if he or she can’t find a mortgage, they can walk away.  It is is a cash deal there usually will not have a mortgage contingency.

• Addendums - There may be many other addendums or contingencies built in to any purchase agreement.  It all depends on how it is being financed, what the use of the property may be after the buyer takes possession, when the buyer takes possession and other things.  All of the them are to be read and understood how they impact the final deal.

Counter offer

• Price - You can counter offer on the price if you think the house is worth more than what the buyer is offering.

• Contingencies and addendums - Changes can be made to any or all the contingencies and addendums.  Most of the changes should be considered based on the activity of showings and other offers.

Offer acceptance

• Final sign - once all the issues have been worked out, the seller is expected to final sign the purchase agreement and move on to closing.

Inspection

• Report - it is wise to request a copy of the inspection report to document what ever response the buyer has to the report.  As is above, the seller can respond to any changes the buyer submits.

Appraisal

• Comps - the seller’s agent will provide comps to the appraiser and will meet the appraiser at the home to answer any questions he or she may have.  The law outlines the relationship between the seller, their agent, the buyer’s mortgage provider and the appraiser.

• Report - A detailed report will be issued by the appraiser.  If the appraised value is at a level that is consistent with the buyer’s plans, there is no problem.  If lower, the buyer needs to come up with a larger down payment, the seller may be asked to give on the price or there may be some combination of both.

Closing

• HUD statement - at the heart of the entire closing process is the HUD statement.  It details all the financial issues from the purchase agreement, the addendums and the mortgage company, is using one.  All other documents in the closing flow from the statement, requirements from the mortgage company, legal requirements and other addendums in the agreement.

Morris Hagerman is a local real estate agent with Real Estate One in Royal Oak, Michigan.  He serves Berkley and the other Woodward 5 communities, including Ferndale, Pleasant Ridge, Royal Oak and Huntington Woods.  Hagerman is also a member of the Berkley/Huntington Woods Area Chamber of Commerce.  You can contact him by phone at 248-854-8440, email at morrishagermanproperties@gmail.com or visit his web page.