An Overview of the Home Selling Process
prepared by The Grand Gables Team
Making the Commitment - There are several steps that you must take in order to place your property on the market for sale. Certainly first on that list is to formally make the decision and commitment to sell your home. Your commitment to this process is key - don´t enter into this process lightly because it will have a significant impact on your life and the lives of the others in your household. If handled properly, the process should be an orderly one in which you can set the ground rules that will have the least amount of disruption on your family life. However, no matter how much planning you put into the process, this process will involve a change to your lives during this period of time and for the foreseeable future beyond until you are firmly settled in your new home.
Select Your Realtor® -- Selecting a Realtor® who can best help you achieve your objectives is critical to your overall success in this endeavor. There are those Sellers who try and go this step alone without the services of a full time professional. Certainly some are successful but the vast majority of "for sale by owners" become frustrated with the process and for a variety of reasons are either unsuccessful at selling their property or end up taking less for it than they should have received due to an ineffective marketing campaign.
Choose a Realtor® who has:
A sterling reputation as a professional in the industry, who is highly respected by both the public and his/her professional peers;
A strong connection and network within the local community;
An extensive knowledge of the local real estate market and the socio and economic issues that impact its activity;
A solid familiarity of the market´s current inventory - available, pending and sold properties;
A keen appreciation for the subtle differences that make each individual property unique;
An ability to compare and contrast and articulate the positive attributes of your property in relationship to the competition in such a way that prospective buyers will appreciate what your property has to offer and help you realize maximum value in the marketplace; and
A true passion for the business - buyers and sellers want to enjoy the process and they want quality service. Enthusiasm goes a long way in selling a positive experience and your home, in the process!
One of the best ways to select a Realtor® is to ask friends for some recommendations. It´s a good idea to interview two or three Realtors® before making your final selection. Be sure to ask each Realtor® what types of properties they have represented for sale in the marketplace; what properties have they sold and how long did it take to sell those houses. Each Realtor® should come prepared to discuss their marketing strategy with you.
Getting Started: Typically, there are four documents that you and your Realtor® will need to review and execute together to place your property on the market for sale.
The first document is a disclosure notice that is mandatory in Massachusetts, entitled Massachusetts Mandatory Licensee Consumer Relationship Disclosure . To learn more about this form and relationships with licensees, click the link above. This document is NOT a contract. Rather, it is a disclosure form that documents the understanding between the Realtor® licensee and the consumer as to who the Realtor® licensee is working FOR when the Realtor® licensee is working WITH the consumer signing the disclosure notice. Simply put, every consumer has the right to know which person in a transaction, Seller or Buyer or neither, is the party to whom the Realtor® licensee has a fiduciary responsibility.
The second document is a listing agreement, often referred to as A Contract Establishing the Exclusive Right to Sell Real Estate. This is the agreement between the Seller and the Realtor® regarding the marketing and sale of the Seller´s property. This agreement is typically a preprinted form produced by the local or state association of Realtors®. The form addresses what the Realtor® is agreeing to do on behalf of the Seller regarding the marketing and sale of the Seller´s home in exchange for the Seller´s consent and promises to the Realtor® as the exclusive marketing agent. Some of the items covered include:
The basic terms of the contract selling price, commission arrangement and length of the contract;
The Realtor´s® obligations to Seller in terms of using diligent efforts in connection with submitting information to the multiple listing service (MLS), cooperation with other real estate professionals; and
Authorizations given by the Seller to the Realtor® defining the Realtor´s® rights to offer cooperating agent compensation, submitting photographs to the MLS, placing a yard sign on the property and arranging access for showing the property.
The third document is a disclosure form required by the Massachusetts Department of Public Health entitled Childhood Lead Poisoning Prevention Program (CLPPP) Property Transfer Lead Paint Notificationand often referred to as "the lead paint form". The disclosure notification outlines the obligations of the Seller and Buyer regarding the presence of lead based paint or lead based paint hazards on the property. For compliance with federal and Massachusetts lead-based paint disclosure requirements, this form is completed and signed by the Seller and the listing agent for all residential properties built before 1978, it is then to be signed by any prospective purchaser before said purchaser signs a purchase and sale agreement or a memorandum of agreement (or by a lessee prospective purchaser before signing a lease with an option to purchase). Stop by our office and pick up a copy of the Lead Paint Transfer Notification. In addition, Click here to visit the Commonwealth's website for general information on the Childhood Lead Poisoning Prevention Program and a List of Licensed Lead Inspectors.
The fourth document is a Seller´s Disclosure Form, which documents the Seller´s disclosures regarding the property. This document, while not mandatory in Massachusetts, is often used as a means of providing prospective purchasers with important information regarding the property.
Massachusetts Regulation Title 5: Your property may be fortunate enough to have access to town sewer but for many south shore property owners, that luxury is not available. Massachusetts Regulation Title 5, which governs the design, construction and maintenance of private onsite sewage disposal systems requires that septic system or cesspools must be inspected for compliance prior to transfer in most cases. The inspections must be performed by licenses inspectors. If the system fails the examination, it must be replaced if you plan on selling your house. While there is no hard and fast rule which party is responsible for the cost of such repair, in most cases, the Sellers pay for such repairs. However, through negotiations between the parties, the Buyer may pay for the cost of the upgrade. An often misunderstood fact regarding the upgrade is that the repairs do NOT have to be made prior to closing. Generally all that is necessary to satisfy most Buyers´ lenders is that a system designed by an engineer be prepared and approved by the local board of health. In these instances, sufficient funds are escrowed at the time of closing from the closing proceeds and used to ensure that the repairs are performed after the closing in a timely fashion. Here is a link that will provide Some Useful Information regarding Massachusetts Regulation Title 5 from the Bureau of Resource Protection .
Let the Showings Begin: Once the documents referred to above have been properly executed, the Realtor® can place the property on the market for sale. Be sure to establish the ground rules with your Realtor® for showing times and access to the property. Rely upon the expertise of your Realtor® for providing you with customary practices in the marketplace but make sure that your Realtor® is aware of your specific needs regarding showing times and access. Obviously, the more available your property is for viewing, the easier it will be to show and sell but remember, you still have to live there and maintain some normalcy to your life while the process is underway.
Open Houses: A common practice used by Realtors® in today´s market is the use of open houses to attract brokers and buyers to view the property. In our local market, the local Realtor® community schedules open houses for the Realtors® on Friday for new property listings on the market, generally between the hours of 10am and 1pm. This is an opportunity for Realtor® to view available properties with the hope that they may have a prospective buyer to show the property. Open houses for the public are typically held on Sunday afternoons between 1pm and 4pm and sometimes on Saturdays between 11am and 4pm. Although open house can be successful, they are not always advisable in all circumstances. Discuss this as an option in detail with your Realtor® before deciding if open houses are right for your property.
Negotiating an Offer: The first thing to keep in mind is the following: An Offer to Purchase Agreement, when signed by both Buyer and Seller, is a legally binding document in Massachusetts. It creates certain obligations between the parties. If you are unsure about what these binding obligations are, you should consult an attorney before signing.
An Offer to Purchase Real Estate Agreement is a contract that contains the essential components of an agreement that make it binding on the parties. These items include, among others:
A description of the property being transacted;
A date which the Offer is made and by which the Offer must be accepted in writing by the Seller in order to be binding on the Buyer;
A purchase price and schedule of amounts to be paid by the Buyer;
A list of any terms upon which the completion of this transaction is contingent (examples of contingencies include a home inspection contingency, a pest inspection contingency, a mortgage financing contingency and the contingency on the sale of another property);
A date by which the parties will negotiate and sign a Purchase and Sale Agreement;
A date by which the parties will transfer funds for and title to the property; and
Signatures by both the Buyer and Seller along with the time of acceptance of the Seller.
The process of presenting an offer may be started and completed in one step. Sometimes, the Buyer´s first offer is acceptable in its entirety by the Seller without any changes being made. In other cases, the Seller is only wiling to accept a Buyer´s offer with modifications to some of the terms proposed. The negotiation process is conducted by the Realtor® with both Buyer and Seller through a series of counter proposals until agreement is reached. Although the process seems straight forward, strong negotiating skills of your Realtor® are essential to the process if you hope to achieve the results you´re looking for. As a Seller client of Grand Gables Realty Group Inc., you will be apprised of much more information regarding how this negotiation process typically happens, how to handle contingencies in the Offer and what we do to represent your interests.
The Purchase and Sale Agreement (P&S) is a more extensive document that is generally prepared and signed within two weeks of the signing of the Offer to Purchase. Once signed, it becomes the new binding document between the parties. Generally, the Seller and Buyer engage attorneys to negotiate the terms of the P&S; in many cases, these attorneys will attach additional provisions to the agreement in Riders to the main contract.
Satisfying all Remaining Contingencies: The Buyers´ lender will need a copy of the signed Purchase and Sale Agreement in order to furnish the appraiser with the pertinent information to complete the appraisal. Depending on the time of the year and volume of work in their pipelines, the appraisers may need a week to ten days notice in order to schedule and complete a typical residential appraisal. Generally, the appraisal is the last item that the lenders are waiting for in order to package the loan and send it to their underwriting department for final loan commitment approval. There may be other contingencies in a transaction that need to be addressed and if they have been agreed to by the parties in writing, you should make sure that each of these are on track to be completed in a timely fashion so that the closing will not be delayed.
Once the loan commitment is issued, the lender will notify the closing attorney that the loan can be scheduled for closing. The closing attorney will order a title examination of the property and notify both Buyers and Sellers as to the time and date and any information that they will need to bring with them to the closing. Again, the title examiner will need some lead time to schedule and perform the title search as well as time for the attorney to review the results of the search to determine if the title is sufficiently clear, from the lenders point of view to secure the buyers´ loan against it. Generally, the closing attorney will need ten days to two weeks to schedule and prepare for the closing.
During the week before closing, the Sellers will need to arrange a time with the Buyers for their final "walk through" of the property (generally provided for in language of the Purchase and Sale Agreement) and to notify the current utility, telephone and cables service companies that the Sellers will no longer need service as of the closing date. Don´t wait until the last day before closing to notify these companies; try and make the notification at least a week in advance of the scheduled date so that the Buyers will have ample opportunity to schedule services to begin for them as of the closing date. This is especially important for gas and electric companies since these companies will often not let Buyers arrange for service commencement until the Sellers have arranged for the termination of their services.
In addition, you will need to arrange for the following:
schedule with the town´s water department to read the water meter and provide you with a final billing amount which you will need to pay for at or before the closing; and
schedule with the town´s fire department to inspect the property´s smoke and carbon monoxide detectors and issue a certificate that they are in the appropriate locations and are in working order. Closings in Massachusetts cannot take place without a valid smoke/carbon monoxide detector certificate!
"When do I have to leave?" Unless otherwise agreed to between Buyers and Sellers in writing, the Buyers are granted full and complete occupancy of the premises upon the transfer of title. Therefore, Sellers, you and all of your personal effects must be vacated from the premises at the time of closing.
Although most Purchase and Sale Agreement call for the closing to take place at the applicable Registry of Deeds, in reality, it is the office of the Buyers´ Lenders´ legal counsel (the closing attorney) that is most often used. If a location other than the registry of deeds is chosen, the Sellers will have to wait to receive their proceeds from the sale until the closing process is completed AND the closing attorney records the deed, mortgage and other appropriate paperwork at the registry of deeds. Closings held in the morning generally are recorded before the end of the business day so that a Seller would have access to their funds by the end of the business day. Depending on the timing and the proximity of the registry of deeds to the place where the closing was held, afternoon closings may not go "on record" until the following morning at which point Sellers typically won´t have access to the funds until the following day.
Remember, these time frames are just guidelines. What you may experience could easily be different depending on the dynamics of your individual transaction. Engaging the right professionals in a team to help you through this process is one way of helping your transaction proceed in a smooth and orderly fashion. You have a lot riding on the success of this transaction; it´s wise to seek the advice and services of those who help people do this for a living.
Call a member of the Grand Gables team today and learn how we can help you get the results you´re looking for - you owe it to yourself!
This information is property of Grand Gables Realty Group, Inc. This information is not to be copied or used without permission from the organization.