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How to sell your house: The basics

At a glance:

Even in down markets, there are buyers for homes.

If you're selling a home, you need to time the sale properly, price the home accurately, and understand the laws (such as disclosure requirements) that cover house transactions. Take the time to learn what is involved in selling a home.

When to sell your house

Ideally, you want to sell your home in a seller's market. That means there is more demand than there is supply. You can afford to keep your asking price high, and you have a good shot at selling the house in a short period of time. Here are some other indicators of a good selling climate:

The economy is healthy, and people have spending power

More money floating around can be good for sellers. On the reverse side, if there have been many layoffs, widespread pay cuts, industry closures, and other events that cut into people's buying power, there will be little incentive for them to pay the price you are asking or to want to buy a home at all.

Mortgage rates are low

Buyers like to buy when interest rates are low, because the amount of interest one pays on a mortgage is usually huge — often exceeding the mortgage itself. Generally, when interest rates are low, prices rise, on the notion that if people are paying less in interest, they can afford to pay more in principal.

The weather is warm

Spring is traditionally the most common time to sell, though this isn't absolute, especially in areas that are warm year-round or when there aren't many homes on the market to begin with. Some people even find that they can do better by selling in the winter, when there is less competition.

The area is attractive to buyers

Low crime, good jobs, good schools, and anything else that lets people live comfortably and prosperously in an area will make homes in that area attractive to buy. This illustrates a cardinal rule of real estate: location, location, location.

Everyone is buying

When everyone is buying, there is competition for homes, meaning you can raise your asking price.

There is not a glut of homes on the market

When there is a glut, prices will fall to clear them out. But if there are not many homes available, and all other factors are positive for you, then it's a good time to sell.

To get a sense of the best time to buy, watch your local housing market. This is one area where having a real estate agent can really help — they are trained to read the state of the market. They know how many homes are on the market in your area, what the price ranges are, and what the trends are.

Set the right sales price for your home

Setting the selling price for your home involves knowing what it is actually worth and what comparable homes in your area are selling for. To know what it is actually worth, the home must be appraised.

To know what comparable homes in your area are selling for, you need access to sales data. The recent sales prices of comparable homes are the biggest factor in setting a selling price.

Where to find sales prices

You can find sales data on your own through certain Websites that provide it, such as Zillow.com and RealEstate.com. You can input your address and receive information about what homes in your area have sold for. You can also find it through your city property tax assessor's Website. Real estate agents also keep this information handy.

Where to find asking prices

The selling price of a home is usually not the same as its asking price. The asking price is what the seller is hoping to get. The selling price is what the seller actually got. Usually, sellers err on the high side. If they don't sell it within a certain time period, they lower the price. Asking prices can be found on real estate Websites such as Realtor.com and Homegain.com. You can also find them in the classified ads in your newspaper or online.

Setting the price of your home requires studying prices of recently sold homes in your area, the values of existing homes, and the general trend of prices. If you set the price too high, buyers will avoid it until you drop the price. If you set it too low, you miss out on making a profit — and that profit could recoup the cost of improvements you have made on it.

Many factors go into setting the price. Among them are:

  • Prices of recently sold homes in your area

  • Values of existing homes in your area

  • Trend of home prices in your area

  • Appraised value

  • Location

  • Amenities (new furnace, well-insulated front door, etc.)

  • Upgrades

  • General maintenance and upkeep, and condition of appliances

  • Curb appeal

  • Current interest rates

  • Your need for money

  • The price you paid when you bought it (if it was too high, this may prompt you to increase your asking price)

  • How badly you want to move

The price you set will reflect these. As a rule, the asking price is usually set a few percentage points higher than the fair market value of the home. Real estate agents are trained to help you set your price and change it, if needed, as time goes by. They are also trained to negotiate with buyers on prices. Alternatively, you can set the price yourself and change it yourself as need be.

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How to sell your house with a real estate agent

Real estate agents exist for a purpose — they can do a lot of things that you don't know how to do, don't want to do, don't have the time to do, or just plain can't do (like show up onsite to show the home during your workday). In return, they are usually compensated the traditional commission of 5–6% of the home's selling price.

Real estate agents are not required by law, but a few states require the use of a real estate attorney to do your closing paperwork.

Here are some advantages of using agents instead of selling on your own:

  • Agents know the state of the housing market. This means that they know what you are competing against as you try to sell your home.

  • Agents know what the price ranges of your type of home are.

  • Agents know how many homes are on the market in your area and they have at least a basic idea of the condition they are in.

  • Agents know how to make your home more appealing to buyers. This alone can be worth thousands of extra dollars at selling time.

  • Agents market your property more widely than you can. They market it to other agents and sometimes work cooperatively with them. They market your property to the public at large more extensively than you can. They have access to the Multiple Listing Service (the most heavily used listing site available) and various home search engines, which market your home across the country. Another note: agents typically only show homes that use agents. That means that if you sell your home on your own, a lot of buyers won't see it.

Real estate agents, Izzy Buholzer from Home and Business Realty, Inc. and Shellie Young from Fortune International Realty look at a house for their prospective clients. (Photo: Joe Raedle/Getty Images)
Real estate agents, Izzy Buholzer from Home and Business Realty, Inc. and Shellie Young from Fortune International Realty look at a house for their prospective clients. (Photo: Joe Raedle/Getty Images)
  • Agents usually know more about your buyers than you do. They prescreen buyers and accompany them as they look at your property. This results in more efficient use of time and effort.

  • Agents know the tricks of selling and negotiating. They know how to work with buyers to generate interest in your home.

  • Agents have the advantage of you not being there. Your presence in the home when buyers come to see it can make them uncomfortable and unwilling to ask important questions about the property. A certain amount of space between buyer and seller can be a plus.

  • Agents are trained to evaluate proposals without compromising you.

  • Agents understand the paperwork, how to deal with unexpected events, title issues, legal issues, disclosure requirements, etc. This can prevent lawsuits or other tangles.

How to sell your house without a real estate agent

Not all home sales need an agent. In some cases, home sales are agreed upon in advance — others take place between family members. You can probably do okay on your own if this is your situation.

Why sell on your own?

The most commonly cited reason for selling your home yourself — often called "for sale by owner" (FSBO) — is that you can save money in real estate commissions. This can preserve some of the equity you have built up, which can be very important when the market is down. You can also put that money toward a down payment on another home.

There's a lot to learn first

In return for saving this money, you must educate yourself on how to make your home presentable, how to set a price that is fair to you and that attracts buyers, the paperwork involved, laws to abide by, how to prescreen buyers, how to list and market the home, how to negotiate, and how to generate interest — the things that a good agent would do. Some sellers find they thrive when learning and doing all this. others find it a hassle, and some just give up.

Those interested in FSBO selling need to educate themselves on all parts of the process — practical, legal, financial, and marketing — and allocate time and energy to it. The time includes being available nights and weekends for showings. FSBO sellers can list their homes on FSBO sites such as owners.com, fsbo.com, forsalebyowner.com, and others. They can also list them in their local newspapers or on sites like Craigslist.

Getting some outside help

Some people hire agents to do limited tasks for them such as advertising the home in the MLS, handling the paperwork, or doing some marketing tasks, while a small percentage use discount brokers, who also perform limited tasks. The commission for these services may be smaller than the traditional 5–6%, or it may be an hourly fee.

Summary of how to sell your house

You now know many of the most important choices to make and obligations to meet when selling your home. If you follow the advice here as well as from any real estate professionals you hire, you can hope to have a satisfactory selling experience in many markets. Even when the market is down, there are opportunities.

This content was created in partnership with the Financial Fitness Group, a leading e-learning provider of FINRA compliant financial wellness solutions that help improve financial literacy.

Read more information and tips in our Buying/Selling a home section

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