The focus of this document is on the things that you as the homeowner can do to increase the chance of your home selling. This document is intended to be a guide that provides useful advice and familiarizes you with the steps involved in a real estate sale. This document is not a comprehensive manual that covers all aspects of real estate transactions. It is strongly recommended that you retain the services of a real estate lawyer or notary to assist you in selling your home.
When planning to sell your home "For Sale by Owner" you must approach the task from a business perspective. That means you need to make rational decisions based on a plan. Think of the selling of your property as a project where you have certain goals, timeframes and a budget. You need to be organized, realistic and practical. Fortunately, there are many professionals that can help you along the way.
A) PREPARING YOUR HOME AND PROPERTY:
The focus here is on minor repairs, eliminating clutter and cleaning. "Curb Appeal" counts! Some buyers can look past minor things and see potential, but many can't. Don't eliminate those that can't by not doing some of the minor repairs and clean up that will help your home appeal to as many buyers as possible. You are not always the best person to spot things that could be fixed, changed or cleaned, enlist the help of a friend or relative to make suggestions.
Grab a clipboard or notepad and walk around your home and make a list of the items that could easily be replaced or repaired quickly and inexpensively. Divide the list into indoor and outdoor sections and for each section have three columns; repair/paint, replace and clean. A word of warning - depending on how keen you are (and the level of detail you record) there is a danger that the list may become too long and daunting. If this happens go back thru the list and identify the must-dos that are quick, easy and inexpensive.
Minor Repairs and Improvements:
- Make sure your front and back doors are in good working order
- Little things like doors, door handles, light switches make a big difference
- Replace all nonworking and low wattage light bulbs
- Pick neutral colors if applying a new coat of paint
- Nailing down a few fence boards can make a fence look 100% better
- Loose shingles, sagging gutters can easily be fixed
- Faded trim around the windows, entrance or deck stand out
- Minor landscaping such as trimming back trees and bushes
Renovations and Major Repairs:
- For bigger problems and possible major repairs it is useful to hire a home inspector to detail the problem, remedies and costs
- For major problems - you can make the repair or disclose it in the PCDS (Property Disclosure Statement - See Part E)
- If a renovation is in order the best return on your money is with kitchens and bathrooms
There are a number of reasons to minimize clutter. Most importantly a clutter-free home looks more spacious. Do you want some one to think that your kitchen doesn't have enough counter space because you have too many appliances and things on the counter? As well a clean clutter free home is seen as an indication of a well maintained home. Less clutter and less "stuff" makes it easier for buyers to envision the home as theirs.
What is clutter?
- A few kitchen appliances is fine but don't fill the counters with extra kitchen utensils, appliances and stuff that takes up counter space
- Also watch out for too much stuff inside the kitchen cabinets and cupboards
- Make the closets look bigger by getting rid of (or storing elsewhere) extra clothes, shoes, tennis raquets, umbrellas, etc
- Too many personal photographs in the main living areas
- That extra chair that doesn't match the rest of your furniture and is kind of in the way… get it out.
- Focus on the kitchens, entrance ways, closets and lastly the garage
- Minimize - box up and store things you won't immediately need
- If you don't have a storage shed then rent a storage unit, borrow a friend or relative's garage or whatever to store boxes and furniture
- Have a garage sale and donate or throw away the items that don't sell
- Make sure entrance ways and doors are clean
- Focus on things that should shine - windows, doors, light switches, appliances and the kitchen and bathrooms
- Clean out the closets, garage, etc
- If cleaning is not your cup of tea - have professional cleaners come in and spend an afternoon, tell them why they are there
- If you want your carpets to look their best - have them cleaned
- Clean out stuff that could or should be thrown away (it will make your move easier and cheaper as well)
B) SETTING THE ASKING PRICE:
The price is the most important factor affecting how quickly your house will sell. The price of your home should be based on the market value of homes similar to yours in your area. There are numerous ways to determine your asking price:
- Check out homes for sale in your area that are similar (in terms of size, features, yard, etc). Visit their open houses and collect their feature sheets. You can also compare your property to property listed on the MLS by visiting www.mls.ca.
- Free market analysis - most real estate agents will provide (for free - no obligation) a comparative market analysis to help you determine your price. Make sure it's free and with no obligation.
- Independent Appraisal - done by a professional real estate appraiser. The beauty of an independent appraisal is that you will have an objective measurement of the value of your property. It isn't your opinion, it's the opinion of a professional appraiser and that can be helpful in your advertising and during negotiations.
A home has the best chance of selling if the price is based on market value. Sometimes the seller determines their asking price by taking the price they paid (possibly when the market was high), adding in the amount of money they've spent on renovations/repairs and then adding in some room for movement. This kind of reasoning is not based on market value and can lead to overpricing. There can also be a temptation to purposely overprice your home on the chance that someone will buy it anyway. Problems that can result from overpricing are:
- Missed opportunity - It is normal for buyer interest to be high when a home first goes up for sale, potential buyers may move on to other homes
- Longer time to sell - not only can this be costly to the seller but potential buyers wonder why a house is on the market for so long
By doing your research up front you can also avoid the possibility of under pricing your home (especially in a hot market). In the end it is still your decision on the price - often tied directly to how anxious you are to sell.
When selling a home For Sale by Owner your competitive edge is that you don't need to pay real estate commission and can therefore offer your home at a price below what MLS real estate would. Be willing to share the commission savings with the buyer, they are shopping without the help of a real estate agent, ensure that they share in the savings.
Final Comments on Price:
The first month that your property is for sale is typically your best chance to sell - the interest level will be high because your listing is new. Your listing on OKHomeseller has a "New" status for the first 30 days to help maximize the exposure. It is important that you take advantage of that first month by making sure your property is properly priced.
The same reasoning is used by realtors when they list a property on the MLS - a property that has been for sale for an extended period of time can be seen as less attractive - potential buyers will ask themselves, "why has this property not sold?".
This "first month" rule doesn't apply in the same way to the more expensive properties, they typically take longer to sell because the number of potential buyers is lower.
Whether your property is in a high price range or a lower price range, you can still sell after 30 days - many do, but if you are keen on selling don't waste that first month with an overpriced listing.
Other things to consider:
- What are your deadlines (school, job, winter, etc)
- Determine a possession date
- Determine what's included in the price (fridge, stove, dishwasher, etc)
- Determine the minimum price you will accept for your home
- When determining your bottom line don't forget your closing costs
Now that your house is ready to show and you've decided on an asking price you need to get the word out that your home is for sale. You need to advertise. The more avenues and opportunities there are for people to find your house, the better. You may decide to use only some of the possible avenues, remember that in so doing you have narrowed the number of people that can find your property.
Determine your advertising budget. A rule of thumb used to determine your budget is to take 10% of what the commission would be and spend that amount on advertising. The commission on a $200,000 home would be at least $10,000. Ten percent of $10,000 is $1000. The 10% number is only a rule of thumb and may be far more than you are willing to spend and that's fine. If you are selling for sale by owner and want the maximum exposure possible, then that number seems reasonable. The advertising budget would cover the major avenues including yard signs, feature sheets, internet advertising and newspaper advertising.
- Word of Mouth. Tell friends, relatives and co-workers that your home is for sale.
- Yard Signs are a cost effective method of advertising. Unless you have a good reason for not having a yard sign, get one. Also consider using directional signs - that point to your property from busy streets.
- Newspaper advertising is a common avenue used to get the word out. Try spreading the ads around to different papers and on different days to reach a wider audience.
- Flyers can be handed out, pinned up at work or the grocery store.
- Internet advertising is a cost effective method of advertising. The key advantage of internet advertising is that you can reach a much wider audience than you can with a yard sign or the newspaper.
If you have a listing on OKHomeseller or are considering listing your home on our site, we strongly recommend that you read the document Effective Use of Your Listing available on our Selling page. It offers additional tips on using your listing to advertise, using your listing in your advertising and also how to use your OKHomeseller listing as a tool to save time and make your job easier.
D) The SHOW:
The "show" begins when you start advertising. Be sure that you have prepared a feature sheet. Feature sheets or hi-lite sheets are an important part of selling your home. They are a one or two page summary of your home and property (usually with one picture). Feature sheets are a part of standard realtor practice and you should have one as well. When a potential buyer visits it is important that you hand them something that describes your property. They can read it, make notes on it and most importantly walk away with it and are less likely to forget about you as a result.
If your home is on OKHomeseller and you don't already have a feature sheet you can print them from your listing on the website. You've taken the time to complete the information, use it to your advantage. Also read the document Effective Use of Your Listing available on our Selling page for additional tips.
You need to be as easy to reach as possible. The main phone number you use in your advertising should have an answering machine to make sure that you don't miss the calls from potential buyers. When you're not home make sure to turn on the answering machine, they won't always call back.
Prep work to do before anyone comes to visit:
- Place your feature sheets in the entry way - so you don't forget about them
- Consider a guest book for visitors to sign - you can use it as a tracking list to follow up (if you wish)
- Make sure valuables are not accessible
- Turn on all the lights
- Open windows and curtains
- Clear away any clutter and accumulations of personal pictures
- Shovel sidewalks and decks in winter
- Try to make other arrangements for the pets and kids when showing your home
When the potential buyer arrives:
- Don't have the washer, dryer or dishwasher running
- Turn off the TV
- Music is nice, but not loud or annoying
- Give the potential buyer some space when they come to visit - Don't follow them around explaining every minor flaw - You may appear over anxious to sell
- Try to qualify the buyers - Ask them if they are pre-approved for financing
- Ask them how they found your home - So you can determine which advertising method is most effective
An open house is another way to attract buyers. It allows buyers to visit without making an appointment. Use the same guidelines mentioned above for the prep work and when the potential buyer arrives. Here are some more hints that may help:
- Try to schedule the open house at least one week in advance
- Limit the open house to 3-4 hours
- Advertise your Open House - use the newspaper, signs and your internet listing. At OKHomeseller we'll gladly put the dates and times of open houses on your listing.
- Use directional signs off busy streets to direct traffic to your open house
- Leave plenty of parking space for visitors
- Have feature sheets and a guest book ready
- Visit a show home or a builder's model home and notice how the professionals show a home
- Remove or secure valuables
E) NEGOTIATIONS AND THE DEAL:
At this stage you will need to enlist the services of a real estate lawyer or a notary. The notary or real estate lawyer is a professional you hire to help you with the contract and other legal documents involved in a real estate transaction. Note that even if you were selling through the MLS and with the help of a realtor, you would still require (and pay for) the services of a real estate lawyer or notary. Discuss with the legal representative that you've chosen what service they provide and the associated costs.
It is important to be upfront with the potential buyer from the start, you don't want things to fall apart later because of any surprises. Advise the buyer of any deficiencies, easements or tenancy and also whether GST applies to the sale. Your legal representative can help with these and other questions.
I. The Offer:
Your hard work has paid off; you have an interested buyer that is ready to make you an offer. An Offer to Purchase is a written contract that specifies the terms under which the buyer agrees to buy. An Offer to Purchase (also known as a Contract of Purchase and Sale) can be bought at most stationery and office supply outlets or they may be available from your legal representative.
Self Counsel offers a package of forms for sale, they can be downloaded from the Self Counsel Website. It may be in your best interest to have a few blank copies yourself, in case an inexperienced buyer is uncertain where to start.
The Offer to Purchase is presented by the buyer to the seller and normally specifies the following:
- Purchase Price
- Amount of Deposit - money placed in trust by the buyer and usually held by the seller's legal representative until closing date when it is given to the seller
- Dates for Completion, Adjustment and Possession
- Completion Date - also known as the Closing Date - must be a business day- the date that ownership/title is transferred from the seller to the buyer
- Adjustment Date - also known as the Date for Proration - for property taxes, utilities, insurance, liability any prepaid house expenses
- Possession Date -- the date when the new owner takes possession (and keys)
- Fixtures and Chattels - specifies Items Included in the Purchase Price and Items Excluded from the Purchase Price
- Conditions or Subjects - fully understand each condition that is specified and that it is clear how and when the condition is to be removed. Talk to your legal representative about each of them. More on conditions later in step III.
You have three options when you are presented an Offer to Purchase:
- Reject the Offer - unless the offer is ridiculously low you should always counter offer
- Counter Offer - if any of the terms in the buyer's offer are unacceptable make a counter offer. All of the terms in the Offer to Purchase are negotiable.
- Accept the Offer - before accepting any offer, review the offer with your legal representative
III. Accepting The Offer And Removal Of Conditions:
If you decide to accept an offer, ensure that you review it with your legal representative before signing. Even though you have accepted the offer, the conditions have to be removed before the sale can proceed and the deal can be closed.
Common Conditions or Subjects are:
- Subject to financing - as part of this condition the buyer's lender will normally order an appraisal
- Subject to a satisfactory home inspection (paid for by the buyer)
- Subject to the seller providing a satisfactory PCDS (Property Condition Disclosure Statement) your lawyer/notary can assist you
Ensure that the conditions are taken care of promptly. Each of the conditions will have a date by which they must be removed for the sale process to continue. Make sure that conditions are removed by the dates specified.
If you are purchasing another property an important consideration is coordinating the closing dates in the contracts. Discuss this with your legal representative prior to signing any of the contracts.
Once all the subjects/conditions have been fulfilled they must be removed from the contract in writing. Visit your legal representative to sign the documents. It is the seller's responsibility to provide clear title by the closing date. Discuss with your legal representative the documents that you need to supply and what you are responsible for on closing. You don't want any last minute surprises.
Closing or completion date is the date that ownership/title is transferred from the seller to the buyer. The buyer is responsible for the cost of conveying the title. Conveyance is performed by the buyer's legal representative and involves a title search and title transfer to the buyer.
The seller is responsible for providing clear title on closing date. Your legal representative will attend to clearing the title of financial encumbrances (dealing with the lender that holds your existing mortgage) on your behalf. Your legal representative should also prepare a settlement statement accounting for all monies including closing costs and legal rep fees
On closing day your legal representative collects all monies, pays your mortgage, pays outstanding bills and closing costs and gives you the rest of the money.
Before the actual closing date be sure to:
- make arrangements with the utility companies (power, gas, telephone, cable, garbage disposal, etc)
- make arrangements for moving your possessions to your new home
- make arrangements for transfer of the keys to the buyer on the possession date