Selling your home is one of the most important financial decisions you will make in your life.  After all, for most people, the equity they have built up in their home is their largest source of wealth.  With the amount of emotion and money that is involved in selling your home, it is easy to see how important it is to be prepared and to make good decisions. 
 

The following FAQs will hopefully answer many of the questions you may have about how homes are bought and sold in today's market.  If you have any questions that are not answered, please feel free to contact me.

The following information contains the opinions and viewpoints of Michael Rice and may or may not be the opinion of ReMax Olson or any other real estate agent or company.

How can the Internet help me sell my home?
What is a Virtual Tour?
Do I need to have "Open Houses"?
How important is it to keep my home clean during showings?
Does it help when I show the buyers around the house?
Why shouldn't I tell the buyer why I need to move?
Should I sell my home first before I buy a new home?
If it is a seller's market, shouldn't I expect my home to sell fast?
Should I select the agent who suggests the highest price?
Who pays the commission?
Is there an advantage to selling through a large company?
Is it important for buyers to know what I paid for the home or what I need it to sell for?
What should I counter offer?
Isn't selling "For Sale By Owner" a great way to save money?
Should I order an appraisal to find out what my house is worth?
What's wrong with overpricing my home?  I can always reduce the price later.
What is a "Comparative Market Analysis"?

How can the Internet help me sell my home?
The Internet has changed the way homes are bought and sold in today's market. With over 40% of buyers using the Internet at some point during the home buying process, it is no longer extra advertising, it is necessary advertising.  There are literally hundreds of websites where your home can be posted (Useful Websites).  Realtor.com is the official site of the National Association of Realtors and is by far the most popular.  Make sure your agent has a clear and effective marketing plan that includes Internet exposure and a Virtual Tour. 

What is a Virtual Tour?
A Virtual Tour is a 3-dimentional multimedia tour of your home that allows buyers to zoom in, zoom out, view the ceiling, view the floor, visit the backyard or see any other feature the seller would like to show.  Studies have shown that buyers are much more likely to view a home on the Internet that has a Virtual Tour.

Do I need to have "Open Houses"?
Approximately 1% of homes are sold through open houses.  There are basically three reasons why agents want to host open houses: 1.  To sell the house.  2.  To meet buyers.  3.  The seller requests them.  Open houses can be helpful for spreading the word about your home, but the chances of your home selling as a result of an open house are fairly slim.  It is up to you if you would like to have your agent host open houses, but don't expect it to sell your home. 

How important is it to keep my home clean during showings?
You have 15 seconds until a buyer has developed an opinion about your property.  The way your home presents itself is critical to its value.   Prospective buyers react to what they see, hear, feel, and smell even though you may have priced your home to sell.  It is vitally important to always keep your home in showcase condition.  (27 Quick and Easy Fix Ups to Sell Your Home Fast and For Top Dollar)

Does it help when I show the buyers around the house?
One of the most common mistakes sellers make is overselling their home.  If possible, try to leave the house during showings.  If you can't leave, then make yourself available to answer questions, but DON'T crowd the buyers.  Quite often, sellers talk buyers out of buying their home rather than convincing them to buy it.  Buyers are less likely to view the entire home if the seller is escorting them around and "selling" the home to them.  Plus, sellers usually reveal too much.  There are certain disclosures you are required to make, but there is some information (including why you are moving, and when you need to move) that you are not required to disclose.  An over zealous seller often makes a buyer feel uncomfortable and trapped.  It can also make the seller appear desperate.  Stay at a comfortable distance and let the buyers lead the way.

Why shouldn't I tell the buyer why I need to move?
When the buyer's agent is showing your home, they are also listening for key information to use in a negotiation.  Your reason for selling can play a large role in what they offer.  For example, if you are being transferred and your new home is closing in two weeks, they know you are probably desperate and their offer will reflect that.  Be careful what you reveal; it can literally cost you money.

Should I sell my home first before I buy a new home?
Sometimes people will want to look for a new home before putting their own home on the market.  Typically, this is not a good strategy in this market.  Sellers are reluctant to accept an offer to purchase their home when it is contingent on the buyer selling his or her home.  It's not necessarily a bad idea to take a look at some of the competition before you list your home, but what happens if you find your dream home?  Chances are it won't be available by the time you list and sell your current home.  So consider selling your current home first before you spend a lot of time searching for your new home.

If it is a seller's market, shouldn't I expect my home to sell fast?
There are 5 things that affect a home's value 1. Location 2. Market conditions 
3. Pricing 4. Condition of the home 5. Marketing.  Location and market conditions are controlled by outside factors, the seller determines the asking price and the condition of the home and the agent controls the marketing of the home.   If all of these factors are strong, then you should expect a relatively quick and easy sale.  Your agent should help you in determining the salability of your home and the strength of the current market. 

Should I select the agent who suggests the highest price?
When selecting an agent, avoid the temptation to select an agent solely based on their suggested list price.  Some agents use this technique as a way to get the listing, only to ask for a price reduction when it doesn't sell.  Does this mean to avoid the agent with the highest price?  No.  Suggested sales price is only one element of the proposal.  Marketing, advertising, and expertise should also be considered when selecting an agent.

Who pays the commission?
The seller.  When a seller lists his or her home, they sign a contract agreeing to pay an agreed upon commission to the listing office.  When the home is put in the Multiple Listing Service, the listing office agrees to split the commission with the agent who brings the buyer. The commission typically ranges between 5-7% of the sales price.  The buyer pays no commission to either of the agents unless there is a special arrangement.

Is there an advantage to selling through a large company?
Large companies can offer many additional benefits to sellers that small companies can not.  Large companies have strong networking capabilities, strong name recognition, strong marketing and Internet presence as well as other resources.  Additionally, large companies typically have vast support services that many smaller companies do not. This includes relocation services, concierge services, strong management support, transaction coordinating, plus much more.  And what happens if a problem arises years after you sell your home and the company that represented you is no longer in business?  For the most part, you are much better off with a large, well-established company than a company who may or may not be around in a few years.

Is it important for buyers to know what I paid for the home or what I need it to sell for?
Sometimes sellers believe that they, or the agent, determine the price of the home.  The truth is the market determines the price of the home.  Buyers aren't interested in what you paid for the home or what you need to net from the sale.  Buyers are only interested in paying at (or below) what a comparable home in the area would sell.  However, your agent should be able to negotiate on your behalf to get the highest possible price and the best possible terms for you.

What should I counter offer?
There are many other aspects of the deal that are negotiable in addition to price.  Find out what's important to your buyer and use it to your advantage during the negotiation.  For example, if the buyer needs a quick escrow and you would like a higher price, your agent should negotiate a shorter escrow for a higher sales price for you.  Other negotiable items include closing costs, seller financing, and personal property.  Knowing what's important to your buyer can be very helpful when negotiating the sale of your home.

Isn't selling "For Sale By Owner" a great way to save money?
Selling "FSBO" can save you money, however it can cost you money too.  Let me explain:  1.  According to the National Association of Realtors, 85% of FSBOs end up listing with an agent.  However, by the time they do list with an agent, many FSBOs have already spent a lot of time and money marketing their home that will never be recovered.  2.  Buyers typically have an agent that represents them.  Most FSBOs end up paying at least half a commission (3%) to the agent who brings them the buyer.  3.  Most buyers know that the seller is saving the commission and the buyer will often negotiate a lower price knowing that the seller is the one benefiting from the lower commission (remember, the seller pays the commission, not the buyer).  4.  The vast majority of homes are sold through agent referral (The Multiple Listing Service).  According to the National Association of Realtors, home sales break down as follows:  MLS 65%, yard signs 15%, classified ads 8%, friends 5%, knew the seller 4%, other 4%.  If a sign and classified ads are your main source of advertising, you will have about a 23% chance of being successful.  5.  The real estate transaction is very complex and has a lot of liability.  Many sellers mistakenly think that escrow will represent them and provide advice.  Escrow will not guide you through the proper disclosures and forms that need to be completed and they are forbidden to provide any advice.  Without representation, your risk for future lawsuits is substantially higher. 

Should I order an appraisal to find out what my house is worth?
An appraisal tells you what your house may be worth, not what it can sell for.  An appraisal is typically done after the home is in escrow to protect the bank form over lending on a home.  An agent's "Comparative Market Analysis" is usually a better indicator of value, and most agents will do one for free versus an appraisal that costs about $350.

What's wrong with overpricing my home?  I can always reduce the price later.
When you overprice your home, most of the time, the market won't be fooled.  Overpricing a home can actually make you less money than if you had priced it correctly to begin with.  An overpriced home will often end up on the market for months, leaving you with a few important drawbacks.  1.  Your home is likely to be labeled as a "troubled" house by potential buyers and other agents, leading to a lower than fair market price when an offer is finally made.  2.  Your overpriced home might actually make other homes for sale in your neighborhood look like a good deal.  3.  You will end up wasting a lot of time marketing and showing a home that would never sell at the above market price.  Make sure you price your home correctly.  It will save you a lot of time and frustration.

What is a "Comparative Market Analysis"?
A "Comparative Market Analysis" or CMA is a report prepared by a real estate agent that estimates the value of a property.  The report takes into consideration variables such as recent sales, currently listed homes, expired listings and more.  Adjustments are made for features like square footage, condition, lot size, upgrades, etc.  CMAs are a valuable tool to help determine your homes worth.   If you would like a free over the net CMA, click here.