Selling your home can be an overwhelming process and most homeowners have a number of questions about the listing price, preparing for showings and accepting offers. There are also a number of legal considerations involved in the sale of a home, including regulations that dictate the disclosure of known defects about the property.
Here are the most common questions homeowners have when selling their Denver-area residential properties:
Realtors, Listing Agents and Selling Agents
The term “listing agent” refers to the Realtor (or Real Estate Company) that you choose to represent your interests during the sale of your home. The “selling agent”, also known as the “buyer’s agent” represents prospective buyers and presents purchase offers to you via your listing agent.
Selling Price, Offers and Showings
Who chooses the listing price?
When you work with a licensed Realtor, they will help you choose a listing price for your home based on recently completed sales of comparable properties, the condition of your home and the current market conditions. Your Realtor will also consider how quickly you want to sell your home, and advise you on a listing price that will maximize the interest in your property while helping you achieve the highest possible price.
Remember that although your Realtor can provide you with professional advice on how much to list your home for, the final decision on the listing price is left up to the homeowner.
Once set, can the listing price be changed?
Yes! The listing price is simply a starting point in the sales process. If you find yourself overwhelmed by the number of people who are interested in your property, you can always increase your price. Conversely, if your initial listing price is failing to attract buyers, you always have the option of adjusting it to match the current market conditions in your area.
What does “Median Price” mean?
Median price is a measurement of how much homes have sold for in a particular area over a specific period of time. During that time, half of the homes sold were priced above the median price, while half were purchased for an amount that was less than the median price.
What about “Average Home Prices”?
The term “average home price” is determined by totaling the number of homes sold in a certain area during a set time frame, adding up all the final sale prices and dividing the sales total by the number of homes sold. For example, in an area where 5 houses sold over a period of one month and the total sales value was one million dollars, the average home price was $200,000. This value often fluctuates, particularly in areas where there is a broad range of housing prices.
Showings and Open Houses
How do I prepare for showings?
A clean, clutter-free house always sells quicker and for a higher price than one which is unkempt and filled with extra furniture and belongings. Prepare for showings by thoroughly cleaning your home, including all windows and light fixtures. Ensure there are no burnt-out lightbulbs and remove personal items like make-up and toothbrushes from counters. If you are short on storage space, consider renting a storage unit for extra items – overstuffed closets give potential buyers the impression that your home is too small to be livable.
Should I be home for showings?
No. Your Realtor will handle all showings on your behalf – having the homeowner present while prospective buyers tour the property tends to discourage buyers and makes them feel uncomfortable.
Do I need to hold an Open House?
That depends – in general, an open house is a great way to showcase your home to numerous potential buyers while minimizing the disruption to you and your family. In some areas, homes are sold almost exclusively through Open Houses – ask your Realtor what the best approach is for your specific property.
Should I be concerned about security during showings?
When you list your home and are preparing for showings, it is always a good idea to secure valuables like jewelry, coins and small electronics. While your Realtor will pre-screen and register all potential buyers before allowing them to tour your home, you should minimize the risk of theft by removing any tempting items that may be easily removed.
Inspection Reports and Disclosures
Who is responsible for pre-sale inspections?
Generally speaking, the buyer is responsible for preforming any pre-purchase inspections, however, this fee may be negotiated into the sales agreement. If any deficiencies are discovered during the home inspection, the buyer and seller can discuss who will be responsible for the repairs. Your Realtor can advise you as to which repairs are generally considered to be necessary and which ones are non-essential, cosmetic improvements.
What is a Property Disclosure Form?
Also referred to as a Seller’s Property Disclosure Form, this document must be completed in full prior to sale closing. The seller is legally obligated to disclose all known material defects about the home, otherwise, the sale can be voided and the seller may be subject to litigation from the buyer.
What about lead paint?
If your home was constructed prior to January 1978, according to HUD regulations you must complete a Lead Paint disclosure form before signing a sales contract. Failure to do so can result in stiff federal penalties and liability issues.
Expenses and Offers
When will I receive my first purchase offer?
That depends on a number of variable factors, including the condition of your home, your location, how many similar homes are available and your listing price. Other things that influence how long it takes for a listed property to solicit offers include current economic conditions including the local and national job market, mortgage interest rates and the demographics in your community.
Whether or not you begin to receive purchase offers on your home also depends on exposure and advertising – unless buyers know your home is actually for sale they won’t be able to make offers on it. Your Realtor has a number of options for advertising your home, including local signage, MLS and broker websites – discuss these with your Realtor to decide which marketing tools are the best ones to use for your home.
Which expenses are sellers responsible for?
Generally speaking, sellers are obligated to pay off any outstanding liens against their home upon completion of the sale. These can include the mortgage (along with any penalties for early payouts), HOA fees and property taxes.
Sellers are also responsible for payment of their broker’s commissions along with completion of any property repairs that were negotiated in the sales agreement.
What will my taxable gains be?
Consult your financial adviser or accountant for assistance in determining what your taxable gains are on the sale of your home.
Closing The Sale
What if the buyer’s appraisal is lower than the sale price?
In the unlikely event that the appraisal from the buyer’s finance company is lower that the negotiated sale price, your Realtor will work with the appraiser to try to resolve any issues that may be the basis of the low appraisal. If this does not resolve the discrepancy between the appraisal and the price, the buyer will either need to come up with alternative financing or the seller will need to reduce the price. In many cases, a successful compromise is reached between the buyer and seller that allows the deal to proceed without fail.
What is a “Cloud on the Title”?
Before a property sale closes, the seller must provide the buyer with a Title Opinion confirming that the seller has the right to sell the property and that the property is free of any liens, encroachments or easements. If the title search reveals that there are claims against the property it is considered to have a “Cloud on the Title”; issues which must be resolved before the title can be transferred to the new owners.
Note that the above information is provided as a general guide and is not intended to replace legal advice. Speak with your lawyer, tax adviser and/or Realtor about specific laws and regulations regarding the sale of your home.