Selling a home, just like buying one, is among the largest financial transactions you will undertake. It can also be the most stressful, given that you’re dealing with relocation at the same time. To help make it all go a bit easier, here are the 10 essential steps to selling your home.
How to start the legal process of selling your home
1. Getting a real estate agent vs. DIY
Once you’ve opted to sell your home, the next big decision is: do you want to sell it yourself? If so, you can list it online, then manage every aspect of the process.
However, you are doing this without the expertise of a real estate agent, who can help you avoid the many pitfalls of selling your own home.
Real estate agents know the neighborhood, the market, will handle the showings and paperwork, and will walk you through each offer and counteroffer.
You will have to pay a commission, which usually ranges between 5% and 6%. But the vast majority of home sellers use real estate agents because their professional know-how is well worth their cost.
2. Setting the price
Here’s where your real estate agent starts earning that commission: they will first look at how much similar properties in the area have recently sold for.
Your agent will also consider the existing upgrades to your own home—like marble countertops and new appliances—along with its proximity to schools and shopping centers.
Another important consideration will be how fast you want to sell. Lowering the ask will expedite the process. Last, you might get an independent appraisal of your house, and then use all these factors to set the price.
3. Required disclosure
You are required, via written disclosure, to notify potential buyers about environmental and legal problems that may be present in your home and property. These include:
- Water damage
- Mold
- Termite damage
- Lead paint
- Asbestos
- Cracks in the foundation
- Pending lawsuit about property lines
There are also requirements for more salacious disclosures, like whether the home was ever a crime scene or if anyone has died there.
Disclosure requirements vary from state to state, but it’s best to be forthcoming from the get-go wherever you are. Otherwise, you will damage the trust you’ve established with your buyer, and possibly scuttle the deal.
4. Showing your home
Before opening your home to potential buyers, be sure to stow away anything that holds personal information, like mail, private documents, an open laptop, smartphones, and, of course, hide all valuables.
From an aesthetic perspective, make sure anything that needs repair gets repaired, like a squeaky door or cracked window. Clear off surfaces and clean out closets to show how much space your house has. Your real estate agent might even have your home ‘staged’, bringing in décor to help optimize its sale.
5. Negotiating a deal
Potential buyers will submit an offer. You can accept or make a counteroffer. They may counter that, and negotiations can continue until an agreement is reached.
Please keep the following in mind:
- The sale contract is not legally binding until both you and the buyer sign it.
- The contract should contain everything from price to closing date to various sale contingencies, such as the buyer obtaining a mortgage in order to close.
- The contract will allow the buyer to conduct an inspection of the property prior to closing.
6. Home Inspection
Next, a licensed inspector, chosen by the buyer, will conduct a thorough examination of your home.
If the inspection uncovers too many problems, the buyer can still back out of the sale. Or the buyer might enter into a renegotiation, and get you to do one of the following:
- Make the needed repairs.
- Put aside money in escrow for those repairs.
- Lower the home’s final price to cover the cost of the repairs.
7. Escrow
Once the purchase agreement is signed, the seller and buyer enter a period known as escrow. An escrow or title agency will be chosen, and the escrow or title agent will prepare all the necessary paperwork while the buyer’s lender starts processing the loan.
If issues arise during escrow, such as the discovery of a lien on your title, or a newly uncovered problem with the property, you will need to respond quickly, or the house can ‘fall out of escrow,’ and the sale will be voided.
8. Moving out
You and your possessions should be out of the house before closing but leave all the fixtures behind. You will most likely leave the appliances, too, unless otherwise stipulated in your contract. The house must be swept and scrubbed, and the buyer is allowed one final walk-through to make sure everything is as it should be.
9. Closing
Both parties review and sign all the paperwork at closing, including title and funds transfer. The new owners are given the house keys, alarm codes, garage ‘clickers’—in short, everything they need to move in.
You should come prepared to pay all closing costs, such as agent commission, transfer taxes, title insurance fees, pro-rated property taxes (unless the buyer moved in on the first of the month), plus any outstanding home equity loans you may still have on your former home.
10. Get a good real estate lawyer
As you can see, this is a complex process, and you will most definitely need legal support from a real estate attorney. If you have any questions about selling your home, sign up to become a LegalShield Member. You will get a direct consult with a real estate lawyer in your area, who will help you from listing to closing.
If you need to back out of a real estate contract for any reason, check out this U.S. News & World Report article that features helpful advice from a LegalShield provider lawyer.
Frequently Asked Questions
What are the steps for selling a house?
First, you want to lock down where you’re going next, as well as when. If you can take advantage of the off-peak moving season you can save as much as 30% on your move.
Then, figure out if you want to use a real estate agent, whose expertise will prove invaluable in the home selling process.
Next, set the price, list the house, disclose any problems your home might have. Show your house, negotiate the sale price, and allow the buyer to conduct a home inspection.
The last legal steps to selling a house are going into escrow, moving out, and closing.
What to expect at closing when selling a house?
This is the very last step of the home sale process. Be prepared to review and sign all paperwork. Give your buyers everything they need to move in. And come prepared to pay all closing costs, from the agent’s fee to any outstanding home equity loan you may still have on your former property.
What paperwork do I need to sell my house by owner?
If you’re wondering, when do I need a lawyer to sell my house?—this is it.
One of the requirements for selling a house is your John Hancock on a ton of paperwork, and it’s best if you understand what you are signing.
The paperwork in question includes the sale contract, tax papers, title transfer, written disclosure, loan documents, and more.