Those first tentative thoughts about selling your home will bring on a rush of questions: What should I do? Where do I start?
All first-time home sellers go through this.
A lot of homeowners are under the misconception that calling a real estate company comes first. While that’s an important part of the process, there are three other steps you need to take before hiring a realtor.
These three steps will arm you with the information both you and your agent need to intelligently set a price for your home.
1. Find Your Loan Documents
If you’ve lived in the home for a long time you may not remember the conditions under which you took out the original loan. Take a look at the papers to determine:
- Who is on the title other than yourself?
- Is there a loan pre-payment penalty?
- Is the loan assumable?
- What is the loan balance? You may need to contact the mortgage company to get the payoff amount.
- Is there a second mortgage or a line of credit that also needs to be paid off? If so, what is the balance?
All of these items are important for different reasons. If someone else is on title with you, that person will need to sign all the documents involved in the sale of the home.
If the person is deceased, you’ll need to take steps to have him or her removed from the title before you sell. The best way to do this is through a lawyer. And, it won’t happen overnight so be patient.
It’s important to understand if there’s a pre-payment penalty on your mortgage and the terms of the penalty. Some lenders don’t require payment of the penalty if you sell your home. But, others require its payment regardless of why you are paying the loan off early. First-time home sellers may have put this element way back in their minds – it’s time refresh yourself on the finest of details.
Finally, figure out how much you still owe on your home, including any second mortgage or home equity line of credit (HELOC).
This helps you determine the amount you need to realize from the sale to pay off the lender and to move on with your life, whatever your plans may be.
2. Take Stock of the Condition of Your Home
Take a critical look at the home’s current condition. Will you try to sell it as-is or are there items that you will repair or replace? For first-time home sellers, you may be shocked how a home can depreciate if not maintained properly. And, if not addressed now, a home buyer looks at these items as deferred maintenance – expenses they will incur upon them taking ownership.
Consider the more run-down the home appears, the less likely it is you’ll get top dollar for it and the longer it will remain on the market.
Finally, be aware that some repairs are mandatory, either by the lender or the buyers’ homeowners insurance company. These typically include anything that impacts the inhabitants health and safety. These include (but aren’t limited to):
- Leaky roof
- Pest infestations
- Exposed wiring
- Major plumbing issues
- Kitchen appliances in need of repair or replacement
- Inoperable HVAC system
- Defective (wobbly, etc.) stairway bannisters
- Rotting wood
3. Get a Ballpark Figure on a Sale Price
Yes, this is something your real estate agent will help you with, but having a ballpark figure helps you determine how much money you can expect to walk away with at the end of the deal.
First-time home sellers want to ask their realtor for an “estimated closing costs” sheet. It won’t be exact as all transaction are different… but a decent ballpark number will help you plan in advance.
If you’re planning on purchasing another home, knowing the latter is crucial.
I’m happy to offer a no-cost, no-obligation assessment of the current market value of your home.
Armed with this information, you’re prepared to discuss the next step: listing your home for sale.
