Welcome to our Real Estate 101 series! This is another in a series of articles we’ll be doing to help educate clients and the public in general about relevant topics in the world of real estate. This is important because real estate is a “hyper” local market. What works in one location may not work in another. Lawrence, KS is very different from rural Kansas markets. Perhaps even more different than it is from say, New York City! So, these topics we cover will be very specific to Lawrence and the surrounding areas but may not relate to other places so well. With that being said, let’s dive into our next topic: An Overview of Selling!
Making the choice to sell a home is a huge undertaking! Without even getting into the process of it yet, just the choice alone is a daunting task. There are so many reasons that precede making the decision to sell: a new job, a growing family, or just a desire for new surroundings in a new place. The importance of getting it right is one of the very reasons real estate agents exist. The stats show us that around 90% or more home sale transactions are made through a real estate professional. There’s so much to account for, that it’s important to have someone to guide the process from the very start, all the way to closing!
So what does the process actually look like? Here’s a graphic to help guide our path as we go along:
When getting started with a REALTOR, the plan is hatched. The most common variables include timing, price, current market trends, inspections, showing procedures, repairs, appraisal issues, and general expectations of communication along the way. Once these discussions have been had and details nailed down, the process usually proceeds to final prepping of the house to be market-ready which can lead to paperwork being signed which leads to photos being taken and then the REALTOR will build the home’s listing in the MLS. Once on the MLS, it’s time for showings. Yay!
OK, so most home sellers dread this part. Sure, many sellers are excited to show off their home to potential buyers with pride in their home and any work they’ve put into it. But at the end of the day, leaving your home to allow strangers to come in and poke around is stressful. Luckily, these days, the time-on-market is generally low and this part can be over with pretty quickly. And when the showings stack up, the anticipation of offers builds!
The rule of thumb to know is that the seller is usually not present for showings. Rather, either the listing agent or a buyer agent will be the ones to facilitate showing the property. An electronic lockbox is commonly used in Lawrence that can only be accessed by agents in good standing with the Board. Another custom is that agents will leave their business card on the counter so the seller will know who’s been by. These days, showing management software also tracks the showing activity and who’s accessed the lockbox. This should provide some peace-of-mind and security for the seller.
Open Houses are another opportunity to consider, but in recent years they’re less common than they used to be. One reason is the short amount of time most homes sit on the market. Another is changes in buyer behavior and a huge increase in online information available on the home. This has led to decreased returns for holding an open house, but that’s perhaps a topic for another post!
If the home is priced right, an offer or offers should be forthcoming. Despite a cooling in the local market here in early 2023, multiple-offer scenarios are still common. Knowing how to handle these offers as they come in will be part of the plan you’ve created with your listing agent, and parsing better offers from good or not-so-good offers will constitute a lion’s-share of a seller’s relationship with their agent.
After an offer is chosen, the buyer will deposit their earnest money with the title company. The next step after that is the scheduling of inspections. All inspections are buyer-paid; the only exception tends to be pumping for a septic inspection for rural properties. The Lawrence contract defaults to 10 days for any and all of the buyer’s inspections. Typical inspections include (but are not limited to) a whole-house inspection, termite inspection, radon inspection, and sewer cam inspection.
By the end of the 10 days the inspection period is up and all inspections should be complete, unless otherwise agreed to in writing. At this point the buyer must deliver to the seller a resolution of the inspections. This must be in writing and can include a list of repair requests, an acceptance of the property “as-is,” or renegotiating and other considerations.
Per the Lawrence contract, the parties have 5 days to negotiate an outcome to the inspections. If they successfully come to an agreement, the contract moves forward. If no agreement can be reached, the parties can agree to cancel. As part of the inspection contingency, if the buyer chooses to cancel based upon deficiencies found and the seller is unwilling to make corrections, the buyer gets their earnest money back after cancellation and the seller returns to market.
A quick word on resolving the inspection period: This is often the part of the contract process where a good REALTOR’s value comes into play. Often getting a contract is the easy part. Keeping it together when surprises pop up at inspections is the hard part. Knowing how to navigate these troubles is what separates good agents from bad agents. All the more reason to make the right pick in choosing your listing agent!
Let’s say there’s agreement on inspections and everyone is moving forward. This is where things get a bit quiet again. If the buyer is using financing to purchase the house, this is typically where that work is taking place. The lender will often order an appraisal and during this time the appraiser will make an appointment to come out and evaluate the home’s value for the bank. If the appraisal meets or exceeds the contract price, no problem. Then it moves to underwriting and goes for final approval. If the home doesn’t appraise, that’s a problem. This is where having a good agent who’s experienced with appraisal shortfalls can mean the difference between success and complete failure!
As all this is going on, the seller is preparing to move out, making arrangements to turn off utilities and other subscriptions (think lawn care, satellite TV, etc.), and making any repairs they’ve agreed to complete prior to closing. A seller’s “closing” is where they will sign paperwork to transfer ownership to the buyer and this includes signing the deed which the title company will file with the county on the day of the buyer’s closing. The seller’s closing typically happens a few days prior to the closing date specified on the contract. Unless otherwise specified, a seller should plan to be moved out prior to the buyer's scheduled closing day and time.
And just like that, a chapter of one home owner’s life closes, and a chapter for the home’s new owner begins! Often this process goes fairly smoothly. Having a good agent will help ensure success in that aspect. But bumps can certainly arise, and having that good agent of you side will be all the more valuable. So, long story short: making the right decision from day 1 will help to make the process go as it should and will result in success all the way to the very end!