Bob Dohn Schaumburg Real Estate

Seller FAQs 

Seller FAQs

What do I need to do to get my home ready to sell?

What determines my home’s value?

Why should I use the services a REALTOR® to sell my home?

Are there different kinds of listing agreements?

How can some real estate firms offer such low commission rates?

What is the procedure for showing my home to prospective buyers?

What should I do to prepare my home for a showing?

What happens when a buyer wants to purchase my home?

What happens when I sign a contract with a buyer?

What are my costs as a seller?

When do I get my money?

Do I have to attend the closing?

 

What do I need to do to get my home ready to sell?

The first thing to do is to step back and look at your house through the eyes of a prospective buyer. Is it warm and inviting, clean and free of clutter, or does it exude the “lived-in” look? Will buyers be able to visualize it as their potential home, or is it totally branded as your home, with family photos, trophies and personal memorabilia everywhere? Be brutally critical and painfully candid with yourself. Homes are purchased on emotion, and buyers have high expectations in today’s competitive market. They make quick decisions about a home, based on visual input.

 

Some steps that will provide an immediate return include:

  • Paint interior and exterior surfaces that need to be freshened or updated.
  • Clear all surfaces (counters, dressers, vanities, refrigerator door, etc.) of all unnecessary items.
  • Give the entire house a thorough, deep cleaning. Windows, too!
  • Clean the carpets, or replace them if they show stains or excess wear.
  • Remove excess or bulky furniture that makes a room look crowded.
  • De-clutter all closets, cabinets and other storage areas, including the basement and garage.
  • Repair and re-caulk tiled areas as needed.
  • Check all appliances and mechanical and structural systems for any needed service. Fix any leaky faucets, repair any roof leaks or replace the roof. Check all windows and doors for proper operation. Replace any broken windows. If it hasn’t been done recently, have the HVAC system cleaned and inspected by a professional.
  • Be aware of odors from smoking and pets. Minimize indoor smoking while selling your home. Clean litter boxes daily. Use fresheners sparingly to create an atmosphere, not as a cover-up.
  • Perform any needed interior and exterior cosmetic repairs or replacements. The front door and entry foyer are critical areas, as they usually give the buyer his first impression of your home.
  • Make sure the landscaping is well-groomed and presentable. Add some shrubs or flowers if needed to spruce up the yard. Keep the lawn cut and well watered for maximum greening. 

What determines my home’s value?

Your property has many ”values”—one to the tax assessor, your mortgagee, your insurance company, and yet another to you, its owner. It also has distinct values to prospective buyers, depending on their needs, desires and financial resources. Ultimately, “buyer value,” also known as “market value,” will determine what price your home will bring in the market. Market value is not predicated on what you want or need to get, or even what you paid for it, but on what buyers are willing to pay in a competitive environment. Some factors that affect the market value of your home are, location, current competition and market conditions, and the condition of the home. With over thirty-five years of experience, I can help you accurately determine the market value range for your property, at no charge or obligation to you.

 

Why should I use the services a REALTOR® to sell my home?

It all comes down to dollars and cents, as well as expertise and convenience. A good REALTOR® backed by a strong marketing program will generally enable you to capture a greater share of the equity in your home, even after the cost of commission. Year after year the median price homes sold through REALTORS® exceeds that of “for sale by owner” (fsbo) transactions by an amount more than double the commission charged. That is why consistently between 85% and 90% of all home sales involve a REALTOR®, while only 10% to 12% of sales are fsbo. And roughly 40% of all fsbo sales are to family or friends.

 

Add in the convenience and peace of mind of knowing that all the details of the sale are being handled by an expert and it’s not hard to see why hiring a REALTOR® is a wise decision.

 

Are there different kinds of listing agreements?

There are several different types of listing contracts:

 

"Exclusive Right to Sell" is the most commonly used by quality real estate firms with powerful marketing programs. Under this type of agreement, in exchange for the seller’s commitment to pay the listing company an agreed commission if a sale is made by any party, including the seller himself, the listing broker is able to bring the full force of its marketing to bear. As part of its marketing program, the broker will typically place the property in a local multiple listing service, making it available to the vast majority of real estate agents of other brokerage companies to show cooperatively to their buyer clients. To induce the other agents to bring their buyers to the property, the listing firm offers to share the commission in the event of a sale.

 

“Exclusive Agency” differs from exclusive right to sell in that it only provides for payment of a commission to the listing firm if they or any other realty firm effect a sale. Under this form of agreement, the seller retains the right to sell the property himself, in which case no commission is paid. This type of agency provides a disincentive for the listing firm to invest heavily in marketing of the home, because if the seller comes up with a buyer on his own there are no commission dollars to offset the marketing costs. It also gives rise to the possibility of unscrupulous buyers going around the broker, which can also lead to commission claims by cooperating real estate firms when that happens. The risk to the seller, besides the ineffectiveness of a watered-down marketing program, is that the seller might agree to a buyer’s price on the assumption that no commission will be due only to subsequently discover that the broker was, in fact, the procuring cause in the sale and a full brokerage fee is due,

 

An “Open Listing” is employed by owners trying to sell their home by owner who are also willing to work with real estate agents. Basically, it gives a real estate agent the right to bring buyers to view the home. There is nothing exclusive about an open listing and a home seller can give out such listings to every agent who comes around. This kind of listing is the lowest priority on a broker’s list of properties. It receives no broker marketing and is not listed in the multiple listing database. If the home fits the criteria for one of their clients, and it is convenient, an agent may be willing to show it. And if the showing results in an offer from the buyer, the seller is unrepresented at the negotiating table.

 

A “Single Showing Listing” is similar to an open listing in many respects, as it is most often used by real estate agents who are showing a FSBO (for sale by owner) to one of their clients. The home seller signs an agreement, which identifies the potential buyer and guarantees the agent a commission should that buyer purchase the home. This prevents the buyer and seller from negotiating directly later and trying to avoid paying the agent’s commission. As with an open listing, agents will not be spending money on marketing the home and it will not be placed in the multiple listing system.

 

How can some real estate firms offer such low commission rates?

With the advent of the web, a lot of agents are offering "cut-rate" commissions. The old adage of “you get what you pay for” applies, as lower commissions are tied to a lower level marketing and service. Generally, an agent who will actively promote your property to other agents and spend money on advertising will generate a better net dollar to the seller that will more than offset the higher commission. A seller is not likely to get that level of service with a reduced commission.

 

Another common practice when you see an ad for a reduced commission is that the compensation is lowered when you agree to buy your next home through the same agent or broker. Usually, the reduced commission is not really being offered on the sale of your existing home but on the purchase of your next one. The ads are usually unclear on this. As a result, when you see an offer for a lower commission, you should analyze what you are giving up by accepting such an offer. It probably will not be readily apparent in the advertisement. Be sure to ask lots of questions.

 

What is the procedure for showing my home to prospective buyers?

Unless there are special circumstances, showing appointments will generally be scheduled through the seller. Your house should always be available for show, even though it may occasionally be inconvenient for you. Most agents will call at least a couple of hours before showing a property. Occasionally, however, it will not be possible for an agent to give much advance notice. In either event, if the seller refuses the appointment, the agent will probably skip the house and will not come back at another time. That is why it is best to be prepared at all times and to be as flexible as possible. A seller should never allow an unescorted buyer to view his home, however.

 

To minimize the possibility of a missed showing, it’s best for the seller to authorize the listing agent to install a lock box at the home. A lock box is a secure device that contains a key to the home. It is usually attached to the front door handle or some other immovable structure near the main entry. Authorized agents can access the key to show the property when the seller is not at home. That way, the seller does not have to worry about missed showings as he goes about his day to day routine. There are two basic kinds of lock boxes offering different levels of security. The lowest level of security is offered by a combination lock box. Since most showing appointments are scheduled on the phone, it’s difficult to ensure that the person to whom the combination is being given is a legitimate, licensed agent. Also, once the combination has been given out, there is no way to monitor who it may be passed on to, who opens the lock box or when it is opened. A better system is the electronic lock box, which utilizes secure electronic key cards that are assigned only to registered agents, can only be operated with a personal identification code, and which can be tracked as to user, date and time. The cost of the electronic system is substantially higher for the broker, but reputable firms tend to utilize this system more. When showing a home with a lock box, it proper protocol for the agent to ring the bell before entering, just in case someone is home.

 

Often, homebuyers will feel like intruders if seller is home when they visit, and they might not be as receptive toward viewing the property. The seller should always try to be away during the showing. If that isn’t possible, the seller should try to remain in an out of the way area of the house during the showing. Also, the seller should not volunteer any information, but should honestly answer any material questions the agent may ask.

 

What should I do to prepare my home for a showing?

All the indoor and outdoor lights should be turned on when someone is coming to view the home – even during the day. At night, a lit house gives a "homey" impression when viewed from the street. During the daytime, turning on the lights prevents harsh shadows from sunlight and it brightens up any dim areas. All houses look more homey and cheerful with the lights on.

 

Scented sprays should not be used to prepare for visitors. It is too obvious and many people find the smells of those sprays offensive, not to mention that some may be allergic. If you want to have a pleasant aroma in your house, have a potpourri pot or something natural. Or turn on a stove burner for a moment and put a drop of vanilla extract on it. It will smell like you have been cooking.

 

If there are pets in the house, the listing agent should advise other agents in advance. The last thing anyone wants is to have a pet running out the front door and getting lost. If possible, it would be best for the seller to take the pets with them while the homebuyers tour the home. If it is not possible to do that, it is best to keep dogs in a penned area in the back yard, garage or basement and cats in a specific room when visitors are expected, and put a sign on the door. Most of the time, an indoor cat will hide when buyers come to view the property, but they may panic and try to escape.

 

A seller should always be sure to empty the kitchen trash every time someone comes to look at the home – even if the trash can is kept under the kitchen sink. It is important to send a positive image about every aspect of the home. Also, while not everyone makes his or her bed every day, it is definitely a good habit to develop when attempting to sell a home. Pick up papers, do not leave empty glasses in the family room, keep everything freshly dusted and vacuumed. The objective is to make the property look like a model home – a home with furniture but nobody really lives there.

 

What happens when a buyer wants to purchase my home?

When a buyer decides he likes a home enough to make an offer, his agent will draw up a purchase contract outlining the terms he is willing to offer, including price, closing date, financing requirements, etc. The buyer then signs the agreement and his agent transmits it to the listing agent, who, in turn, reviews it with the seller. The listing agent should thoroughly explain all the terms and review the strengths and weaknesses of the contract with the seller, including the buyer’s financing terms and credentials. It the contract is acceptable to the seller, he signs it and the home is considered to be “sold,” except in the case of certain kinds of contingencies that allow the seller to continue to market the property, such as a contingency for the buyer to sell his current home.

 

As it happens, however, most initial offers are not acceptable to the seller. The seller should expect that the buyer will first attempt to “test the water” before getting down to his final terms, and knowing this should not be put off by the buyer’s terms. The listing agent should counsel the seller as to the current state of the market, calculate the seller’s net equity after expenses and assist the seller in developing a negotiating strategy. More often than not, several offers and counter offers will be passed back and forth before a deal is struck. Once a meeting of the minds has been achieved, the buyer’s and seller’s agents will coordinate an execution of the contract documenting the final terms.

 

It should be noted that occasionally a buyer or buyer’s agent will attempt to conduct a verbal negotiation, either directly with the seller or with the seller’s agent. While there are rare circumstances that might necessitate a preliminary verbal negotiation, it is never appropriate for the buyer or his agent to circumvent the listing agent. Most of the time, a verbal negotiation is inadvisable. If such a situation should arise, the seller should promptly refer the matter to his listing agent.

 

What happens when I sign a contract with a buyer?

Once the signatures of all parties are obtained on a contract, the first major step to selling a home is completed. But it’s only a first step. Usually, there are a number of contingencies that have to be satisfied and actions that have to be taken before a sale can close. These involve different parties who have different roles in the transaction. A conscientious listing agent will act as a facilitator and overseer during the course of these events to ensure things move along smoothly and in a timely manner. He will also endeavor to keep the seller informed along the way. Some of the most common contingencies and actions in a sale are as follows:

 

Attorney Review Contingency Most contracts provide that both parties have a designated period of time (typically 5 business days in the Chicagoland area) for their attorneys to review and approve the contract. While they are precluded by law from changing the business terms of the transaction (i.e price, closing date, etc.), very often, attorneys on either side will endeavor to improve some of the legal aspects of the contract in favor of their clients. This usually triggers some brief negotiation between the attorneys until a happy medium is struck.

 

Home Inspection Contingency The days of “buyer beware” being a thing of the past, home sales agreements routinely give the buyer the right at his own expense and within a designated period of time (also typically 5 business days in the Chicagoland area) to conduct various professional inspections of the property. If deficiencies are found that are significant, the buyer may negotiate for mitigation or, in extreme instances, terminate the sale.

 

Purchase Mortgage Contingency Fewer than 10% of home purchases are cash deals. Usually, the buyer has to obtain financing in order to complete the transaction. In these cases, the contract should spell out the financing terms the buyer is seeking and a allow reasonable period of time for the buyer to obtain a firm loan commitment. While a pre-approval is helpful in gauging a buyer’s ability to obtain a loan in advance of entering into a binding contract, it is almost never a final loan commitment. Before the lender can issue a final commitment it will have to physically verify the buyer’s representations made in the pre-approval process and also conduct an independent appraisal of the property. Only once the “clear to close” commitment has been given by the lender will funds be available to close the sale.

 

Title Report A summary of the condition of the title to the property and a commitment obtained outlining the terms of a title insurance policy to be issued in the buyer’s name will be obtained by the seller’s attorney in advance of the closing for review by the buyer’s attorney.

 

Home to Sell Contingency When the buyer already owns a home and he needs to sell it in order to buy another house, he will include this kind of contingency, stipulating that the transaction will be terminated if the buyer cannot sell his current home within an agreed period of time. It will usually allow the seller to continue to offer his property to other buyers, but if he is successful, the original buyer as a right of first refusal.

 

Home to Close Contingency This is similar to the home to sell contingency, but in this case the buyers existing home is already under contract and is waiting to close.

 

What are my costs as a seller?

There are two main categories of expense that are common for most sellers at closing: Encumbrances and Closing Costs. There are different items in each category, and the amounts of will vary, depending upon specific circumstances. The most common items of expense are as follows:

                Encumbrances

  • Payoff of 1st mortgage loan balance, including accrued interest and pre-payment fee (if any)
  • Payoff of secondary or other mortgage loans (such as equity lines of credit), including accrued interest and pre-payment fee (if any)
  • Prorata real estate taxes
  • Prorata homeowner association fees
  • Payoff or prorata of any special assessments

Closing costs

  • Real estate brokerage fee
  • Attorney’s fees
  • Title insurance
  • Survey
  • Illinois transfer tax
  • County transfer tax
  • Municipal transfer tax 

When do I get my money?

Typically, a check will be issued to the seller at the closing for the seller’s proceeds, net of all expenses.

 

Do I have to attend the closing?

It is usually not necessary for the seller to be present at the closing if he is represented by an attorney. The seller can pre-sign the documents necessary for the sale, including a limited power of attorney for his lawyer to execute documents on the seller’s behalf that are produced at the closing table. It is advisable, however, for the seller to be available by phone during the closing, in case a last minute issue arises that requires his input.

Coldwell Banker Schaumburg Coldwell Banker Residential Brokerage
20 South Roselle Road , Schaumburg, IL 60193

 

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