Selling a house is one of the biggest financial and legal transactions you can engage in. The process can be stressful but also rewarding. Understanding the basic steps to selling your house can help ease your stress and ensure the transaction goes as smoothly as possible.
Hiring a Real Estate Agent
You are not required to hire a real estate agent or agency to sell your house (though some states require you to use an attorney). Nevertheless, hiring an agent is something you should at least consider doing. Every state requires real estate agents to be licensed, meaning that they are trained in the basics of your state's real estate laws (though they cannot give actual legal advice), and they have ready access to the needed paperwork, which they can in most cases prepare on your behalf.
Agents also have experience and contacts to help prepare your house for showings, arrange to have photos and videos taken, market the house, and thus find prospective buyers and analyze which offers are the strongest.
When hiring a real estate agent, you ordinarily (under the standard arrangement) agree to pay that agent a commission fee for selling your house, regardless of who brings in the buyer. This means that even if you happen to find someone who wants to buy your house, you will still owe your agent a commission fee.
Your real estate agent represents you and must act in your best interests (while following the laws of the state), such as by telling you about all offers made on your house, including cash offers.
The National Association of Realtors offers more information on the benefits of working with a real estate agent.
Setting a Price and Listing Your House
Before listing your house for sale, your real estate agent will look at recently sold comparable houses in your area to determine its market value. Based on that analysis, the agent will suggest to you the appropriate list price.
The real estate agent will take into account, among other things, the size of your house and lot, upgrades to your house (such as granite countertops, new appliances, or updated flooring), and proximity to schools, shopping centers, and freeways.
The best list price for your house won't necessarily be the same as its market value or the amount you hope it will bring in. You might want to set the list price lower than the house’s market value, to bring in lots of lookers. You might want to set it at exactly market value, if that seems most appropriate in your local market. Or you might even want to set it on the high side, and wait for buyers to negotiate it downward—though this strategy risks turning away home searchers.
Making Disclosures About Your House
In most states, the law requires certain written disclosures to be made when you sell your house. These disclosures include any physical, environmental, legal, or other defects in the house or property, including things like whether lead-based paint or asbestos are present in the house, whether there are cracks in the foundation, whether the nearby airport is noisy, or whether the neighbors are suing over boundary-line issues.
Your agent will have the disclosure form that’s required in your state (if any). Be sure to fill it out completely and honestly. Not only will that help build confidence and trust among buyers (which you may need to fall back on if negotiations later get sticky), but if you knowingly fail to make a disclosure, you could be penalized or sued.
Receiving and Accepting Offers From Buyers
Prospective buyers will submit offers on your home. In most states, this takes the form of a written sale contract, covering everything from price to closing date to contingencies, such as a condition that the buyer must successfully obtain a mortgage and be satisfied with the results of a home inspection in order to close. You could sign onto this sort of offer immediately, making it legally binding.
States vary, however, on whether it’s the seller or buyer who prepares the full sale contract. In a few states it’s the seller, after receiving a short written offer from the buyer.
Few sellers accept the buyer’s offer as presented. Your other options include to refuse the offer or to counteroffer, changing some but not all of the terms, such as price or closing date. Talk to your real estate agent before making a decision.
The buyer’s offer is time sensitive. The sale contract is not legally binding until both you and the buyer sign onto it.
Allowing a Home Inspection
The buyers will likely ask, as a condition of closing the sale, to have your home inspected. A licensed inspector, chosen by the buyer, will walk through your house and prepare a written report on any problems, perhaps even ones you weren't aware of.
A buyer who is alarmed at the scale of issues can, without violating the contract, back out of the sale at this point. Or the buyer might negotiate to have you either make the necessary repairs to your house, put aside money in escrow for repairs, or lower the home's final price to cover the costs.
Following Through on Seller’s Obligations During Escrow Period
Once an offer is accepted and the purchase agreement is signed, the seller and buyer enter a period commonly known as escrow. You and the buyer will choose an escrow or title agency to handle closing the sale of the house, to occur on a date set forth in your contract.
During this time, the escrow or title agent will start preparing paperwork, such as reports related to the title and the property deed. The buyer and the buyer's lender will start processing the loan and order a home appraisal and possibly inspections.
As the seller, you will need to respond to any issues that come up during escrow and make your home available for the appraisal and any other inspections. If issues arise during escrow, such as the discovery of a lien on your property title, then you will need to respond to these as quickly as you can.
Attending the Closing
During the closing of the sale, both parties review and sign all of the paperwork, including title and funds transfer. The buyers and sellers may do this at the same time and place or separately.
You will have to make sure the new owners have everything needed to move into your house, including keys and alarm codes and instruction manuals for appliances, security system, and so on.
Contacting a Lawyer
Real estate law can be complicated and the laws and local customs vary widely from state to state. If you have any legal questions or concerns when selling your house, talk to a real estate lawyer in your area.