How to Sell Your House: A Complete Guide for Sellers

 

Most home sellers dream of a stress-free sale in which they simply list their house, quickly find a qualified buyer, collect the cash and hand over the keys. If only it were that simple! In reality, selling a home involves many moving parts — some that you can control, and some that are out of your hands.

For example, geography might influence how long your house lingers on the market or how much mark-up you can get away with. Where competition is high and inventory is low, odds are you’ll sell faster and command a higher price. Conversely, in places where home sales have cooled, homeowners will likely have to work harder to attract the right buyer.

Given the unprecedented growth in the housing market since the coronavirus pandemic, there has been an uptick in pricing and bidding wars, and extremely low levels of inventory, over the past two years. However, the market is expected to settle down a bit as mortgage rates climb and prices begin to stabilize.

So, you’ll want to be prepared as a seller and control the factors that could have a big impact on your bottom line. Things like hiring a great real estate agent and maximizing your home’s online appeal can translate into a more seamless closing — and more money in the bank.

 

Here are 12 steps to take to sell your home in 2022:

1. Hire an agent who knows the market.
2. Set a timeline for selling your home.
3. Get a pre-sale home inspection.
4. Don’t waste money on needless upgrades.
5. Get professional photos.
6. Put your house on the market.
7. Set a realistic price.
8. Review and negotiate offers.
9. Anticipate seller closing costs.
10. Weigh the tax implications.
11. Gather necessary paperwork to close.
12. Consider hiring a real estate attorney.

 

 

1. Hire an agent who knows the market

The internet makes it simple to delve into real estate agents’ sales history and professional designations, so you can choose the right person to work with. Look up agents’ online profiles to learn how long they’ve been in the industry, how many sales they’ve done and what designations they may have earned. Pay attention to how and where they market their listings, and whether or not they use professional photos.

“Any designation they’ve earned is a huge plus, because it’s a sign they’ve taken the time to learn about a particular niche,” says Jorge Guerra, Global Liaison for the National Association of Realtors.

Some homeowners might be tempted to save on paying a commission and instead sell their home themselves, without an agent. This is known as “for sale by owner,” or FSBO. The amount sellers stand to save on those fees can be thousands of dollars, usually 5 percent or 6 percent of the total sale price.

However, an experienced agent does a lot to earn their fee. For example, they can expose your house to the broadest audience and negotiate on your behalf to garner the best offers possible. If you go it alone, you’ll have to personally manage prepping your home, marketing it, reviewing buyers’ offers and handling all the negotiations and closing details.

When working with an agent and negotiating a commission, keep this in mind: Real estate fees have fallen to all-time lows. So you might be able to get a break at the closing table.

 

2. Set a timeline for selling your home

Selling a house is a major undertaking that can take two to four months from start to finish — or much longer, depending on local market conditions and the level of inventory available.

As soon as you decide to sell your house, jump right into researching real estate agents to find someone with the right experience for your situation.

At least two or three months before you plan to list, consider getting a pre-sale home inspection (more on that below!) to identify any problem areas, especially structural or mechanical issues that might need addressing to facilitate a sale. Leave enough time to schedule necessary repairs.

About a month before listing your house, start working on staging and deep cleaning in preparation for taking photos.

Here’s a checklist of things to do before listing your home:

• Research and interview real estate agents.
• Declutter, perhaps moving excess items to a storage unit.
• Get an optional home inspection to identify any issues.
• Schedule repairs if needed.
• Deep clean.
• Stage the house.
• Have professional photos taken.

 

3. Get a pre-sale home inspection

A pre-sale home inspection is optional, but it can be a wise upfront investment. A detailed inspection report can identify any structural or mechanical problems before you list your home for sale. It may cost a few hundred dollars, but it will alert you in advance of issues that buyers will likely flag when they do their own inspection later in the process.

By being a few steps ahead of the buyer, sellers might be able to speed up the selling process by doing repairs in tandem with other home prep work. This means by the time the house hits the market, it should be ready to sell, drama-free and quickly.

 

4. Don’t waste money on needless upgrades

If you’re going to spend money on costly upgrades, make sure that the changes you make have a high return on investment. It doesn’t make sense to install new granite countertops, for example, if you only stand to break even or even lose money on them. Plus, these improvements may not be necessary to sell your home for top dollar, particularly if inventory levels are low in your area.

Here’s where a good real estate agent can help guide you. They often know what people expect in your area and can help you plan upgrades accordingly. If local shoppers aren’t looking for super skylights or a steam shower, then it doesn’t make sense to add them. A fresh coat of neutral paint, new carpet and a spruced-up landscape are typically low-cost ways to make a great first impression.

In general, updates to the kitchen and bathrooms provide the highest return on investment. If you have old cabinetry, you might be able to simply replace the doors and hardware for an updated look. For example, you can swap out those standard-issue kitchen cabinet doors for modern, Shaker-style doors in a weekend without breaking the bank.

 

 

5. Get professional photos

Work with your real estate agent to schedule a photographer to capture marketing photos of your home. High-quality photos are critical, since maximizing your home’s online appeal can make all the difference between a quick sale or a listing that languishes.

Some real estate agents build professional photography and virtual online tours into their suite of services. If they don’t, though, you might want to seek a photographer out on your own. The fee for professional photography will vary based on the size of your home, its location and how long it takes to shoot the property.

A professional photographer, with a strong portfolio, knows how to make rooms appear bigger, brighter and more attractive. The same goes for your lawn and outdoor areas. Dimly lit online photos can turn off homebuyers before they even have a chance to read about the lovely bike path nearby or the new roof you just installed, so well-taken photos can really pay off.

 

6. Put your house on the market

Here are tips to get your home market-ready and attract buyers for a speedy sale:

 

Focus on the home’s online appeal

You’ve probably heard of curb appeal, but professionals say online appeal is now even more important. “Your home’s first showing is online,” Guerra says. “The quality of your web presentation will determine whether someone calls and makes an appointment or clicks on the next listing.”

 

Stage it and keep it clean for showings

Real estate agents will often suggest that sellers stage their homes. Staging a home simply means removing excess furniture, personal belongings and unsightly items from the home while it’s on the market, and arranging rooms for optimal flow and purpose. If you’re in a slower market or you’re selling a luxury home, investing in a professional stager could help you stand out. Nationally, professional home staging costs an average of around $1,200, according to HomeAdvisor, but prices can range between about $500 and $2,000.

 

Let someone else show the house

Make yourself scarce when potential buyers come to view your home. Let them imagine themselves in the space, free from the distraction of meeting and talking to you. Generally, buyers are accompanied by their own real estate agent to view your home. You can also ask your own agent to be present at showings.

“Seeing the current homeowner lurking can cause buyers to be hesitant to express their opinions,” says Grant Lopez, Realtor at KW Heritage and former chairman of the San Antonio Board of Realtors in Texas. “It could keep them from really considering your home as an option.”

 

7. Set a realistic price

Even in competitive markets, buyers don’t want to pay more than what the comparables, or “comps” show, so it’s crucial to get the pricing right. Going too high can backfire, while underestimating a home’s value might cause you to leave money on the table.

To price your home right from the start, consult your neighborhood’s comps. These are data sheets about recently sold properties in a specific area. At a glance, you can get an idea of what homes around you are selling for.

“A frequent mistake sellers make is pricing a home too high and then lowering it periodically,” Lopez says. “Some sellers think this practice will yield the highest return. But, in reality, the opposite is often true. Homes that are priced too high will turn off potential buyers, who may not even consider looking at the property.”

In addition, homes with multiple price reductions may give buyers the impression there’s something wrong with your home’s condition, or that it’s undesirable. So it’s best to eliminate the need for multiple reductions by pricing your home to attract the widest pool of buyers from the start.

 

8. Review and negotiate offers

After your home officially hits the market and buyers have seen it, ideally the offers will start rolling in. This is where a real estate agent (or attorney) is your best advocate and go-to source for advice. If your local market is competitive and favors sellers, buyers will likely offer at or above asking price. You might even get multiple bids. On the other hand, if sales are slow in your area and you don’t get many offers, you may have to be open to negotiating.

When you receive an offer, you have a few choices: Accept the offer as it is, make a counteroffer or reject the offer.

A counteroffer is a response to an offer, in which you negotiate on terms and price. Counteroffers should always be made in writing and have a short timeframe (48 hours or less) for the buyer to respond. You can offer a credit for paint and carpet, but insist on keeping your original asking price in place, for example. Or, you might offer to leave behind certain appliances to sweeten the deal.

If you’re lucky enough to get multiple offers, you might be tempted to simply go with the highest one. But look closely at other aspects of the offer too, such as:

Form of payment (cash versus financing)

• Type of financing
• Down payment amount
• Contingencies
• Requests for credits or personal property
• Proposed closing date
• Be mindful that if a buyer is relying on lender financing, the property has to be appraised. Any shortfall between the purchase price and appraised value will have to be made up somewhere, or the deal could fall apart.

 

9. Anticipate seller closing costs

Both the homebuyer and seller have closing costs. The home seller typically pays the real estate agent’s commission, usually around 5 percent to 6 percent of the home’s sale price.

Some other costs commonly paid by the seller include:

• Government transfer tax
• Recording fees
• Outstanding liens
• Attorney fees

Additionally, if the buyer has negotiated any credits to be paid at closing for repairs or closing costs, the seller will pay those too. Your real estate agent or the closing agent should provide you with a complete list of costs you’ll be responsible for at the closing table. While the buyer typically pays a bulk of closing costs, anywhere from 2 percent to 4 percent of the sales price, be aware that you might have to pay some fees, too.

 

10. Weigh the tax implications

The good news is, many home sellers won’t owe taxes on profits from the sale of their primary home. If you’ve owned and lived in your home for at least two out of the previous five years before selling it, then you will not have to pay taxes on any profit up to $250,000. For married couples, the amount you can exclude from taxes increases to $500,000. However, if your profit from the home sale is greater than that, you need to report it to the IRS on your tax return as a capital gain.

 

 

11. Gather necessary paperwork to close

There’s lots of paperwork needed to properly document a home sale. Organize it all in one place to help things go more quickly. Some of the main documents you’ll need to gather include:

• Your home’s original purchase contract
• Property survey, certificate of occupancy and certificates of compliance with local codes
• Mortgage documents
• Tax records
• Appraisal from your home purchase
• Homeowners insurance
• Home inspection report, if you had one

 

12. Consider hiring a real estate attorney

Not all states require sellers to bring a real estate attorney to the closing. Hiring one could cost a couple thousand dollars, but the expense might be worth it to protect such a large financial transaction. (Especially if you’re selling your home solo.)

An attorney can help fill out paperwork, review contracts and documents, identify potential issues and ensure the sale goes as smoothly as possible. An attorney would also be able to spot title issues that could hold up your sale for weeks or months — or even torpedo the deal — such as:

• Outstanding liens or judgments
• Trust issues
• Mortgage balances
• Tax issues
• Encroachments

 

While the past year or more has been a roller-coaster ride on many fronts, there was a silver lining for homeowners: Home prices have risen considerably. You might be wondering if you should take advantage of the climb in values and sell your home or tap its newfound equity. As you consider your options, a good starting point is to ask yourself: exactly how much is my house worth?

 

How much is my house worth?

When getting a home value estimate, consider the three main types of valuation:

• Fair market value: Fair market value encompasses what your home looks like to prospective buyers compared to other homes in the area. Consider the sale price of a home that’s similar to yours (the same number of bedrooms and bathrooms, square footage, or outdoor space, say). If you work with a real estate agent to help you sell your home, this is where your agent will start: by looking at comps to gauge what buyers have been willing to pay for a property comparable to yours.

• Appraised value: While the appraised value of your home factors in comps, it differs from fair market value. To calculate the appraised value, a licensed appraiser considers the location, size, and condition of your home, and any renovations you’ve completed. The appraised value is what mortgage lenders look at when a borrower buys a home or refinances their mortgage.

• Assessed value: The assessed value is then assigned dollar value of your home used by local county tax assessors to determine property taxes. “Tax assessors calculate an assessed value based on various factors, which may include the appraised value and the fair market value, as well as any home improvements, whether you generate income from the property, and any tax exemptions,” explains Jade Duffy, a Realtor with TXR Homes based in Carlsbad, California. Usually, the assessed value is lower than fair market value and doesn’t actually represent how much a property could sell for, Duffy says.

 

My home’s value went up. What should I do?

Your home’s value can rise due to a range of factors. Right now, home prices have increased in many places due to a shortage of supply mixed with the lowest mortgage rates in history. If your home value has increased, you have a few options and considerations to make:

• You might be able to save money by eliminating private mortgage insurance. If you’re paying for private mortgage insurance (PMI) and your home’s value has gone up to the point where you now have at least 20 percent equity, you can ask your lender to cancel your PMI premiums.

• You might need to adjust your homeowners’ insurance policy. Your homeowners’ insurance cost and coverage are typically based on your home’s value. If it’s increased, you’ll want to make sure you’re fully protected. “It’s important to review your property’s value with your insurance agent yearly to make sure your residence has the proper insurance coverage,” explains Kimberly Smith, owner of Garnet Property Group in Bristol, Connecticut.

• You might be in a better position to improve your home. With more equity in the property, you can take advantage of a home equity loan or cash-out refinance and invest in a renovation or remodeling project. “Determining a home’s valuation is useful if you’re considering tapping into your home’s equity in the form of a home equity loan, home equity line of credit or cash-out refinance so that you know how much equity you’ve accrued,” Smith says.

• You might consider selling your home. You could stand to profit if your home’s value has gone up considerably, but before putting it on the market, carefully evaluate whether it really is the right time to move for you or your family, whether you’ll be able to find a new home quickly and how you’ll pay for it. “If it is a good time, making minor repairs and decluttering your property is always going to help increase the final sales price,” Duffy says.

 

What factors affect home value?

A number of factors can affect the value of your home, including:

• The neighborhood
• Its age
• Its condition
• Its size
• Any home improvements or upgrades

There are other factors that impact property values overall, too. These include the local housing market, economy, interest rates, and tax rates, Reed says.

 

How can I add value to my home?

You don’t get a second chance to make a first impression, and this bit of wisdom can apply to your home and its value.

“Your property’s curb appeal does make a difference,” Duffy says. “Make your home welcoming and tidy — cut your grass, trim any shrubs and add some new plants or flowers.”

A fresh coat of paint either on the interior or exterior of the house will more than pay you back for the money spent, Duffy adds: “This is one of the most cost-effective ways to improve value.”

A minor bathroom or kitchen update (as opposed to large-scale renovations) can also help improve your home’s resale value. You can simply replace an outdated sink, old tiles, or dated light fixtures to give these spaces a refresh.

“It also pays to install a new garage door,” Duffy says. “Some reports estimate a new garage door can increase home values by 4 percent — great curb appeal does matter.”

 

Bottom line

No single home valuation method is guaranteed to be 100-percent accurate. That’s why using a combination of resources can help give you a more informed perspective of what your home is worth.

For example, you might get a free CMA and conduct your own research using an online home value estimator, as well as the FHFA calculator and county auditor’s website. Additionally or alternatively, you could pay for a professional appraisal. Averaging together all the final values you gather could give you a more accurate picture of your home’s value.

Ultimately, however, the most reliable home value estimates come from professionals who take the time to carefully assess your property based on a variety of factors.

“All of the evaluation tools are useful in giving an idea of the worth of your home, but an appraiser and/or an experienced agent will be the most accurate sources for determining value,” Krasnow says. “A trained professional will have an advantage, as a computer cannot determine the intrinsic value or consider the condition and improvements you’ve made to your home.”

 

Home equity is at an all-time high

Thanks to rapidly rising home values, many Americans are now equity rich.

In fact, a recent report from data firm Black Knight found that the average U.S. homeowner has $153,000 in “tappable” home equity — an all-time high.

That pent-up wealth can be put to work making home renovations, paying off debts, buying new properties, investing, and more.

But how do you actually take equity out of your home? And when is it a good idea to do so?

 

What does it mean to have equity in your home?

Having equity means you have cash value built up in your home. Your equity will grow year by year as you pay off your mortgage and as your home (likely) increases in value.

Of course, equity isn’t liquid cash. The wealth built up via home equity is tied into your property’s value.

That means you can’t just spend your home equity. To put the money to work, you first have to convert home equity into liquid cash. This is typically done via a cash-out refinance loan or a second mortgage.

But first, here’s how you can determine whether you have equity available to cash out.

 

How to calculate your home equity

Calculating home equity is simple. Just take the current value of your home minus your mortgage balance today.

FIND OUT THE CURRENT VALUE OF YOUR HOME

 

What is ‘tappable’ home equity?

Tappable home equity is the amount of money you can actually withdraw from your home’s value via a cash-out refinance or second mortgage. Your tappable home equity is typically equal to your total amount of equity minus 20% of your home’s value.

The reason your tappable equity is lower than your total home equity is that mortgage lenders want you to leave 20% of your home’s value untouched. That way, if you were to default on the loan, the lender would be protected financially.

There are exceptions to this rule, mostly for VA loans which may allow up to 100% loan-to-value (LTV). And a few lenders let you retain less than 20 percent.

But for the most part, borrowers should expect to need significantly more than 20% equity to be able to cash out.

Remember that Black Knight estimates homeowners currently have $153,000 in tappable equity on average — even after accounting for that 20% buffer.

 

Are Home Updates Actually Worth It Right Now?

Should you update your home before putting it on the market? Three in four homeowners say they’d rather replace their appliances than accept a low offer on their home.

Cinch Home Services surveyed over 1,000 homeowners and renters to figure out how important updates are in the homebuying process. And they discovered that a majority of homeowners think upgrading their appliances will increase their value by almost $14,000.

Due to this ideology, over half of homeowners plan to upgrade their appliances before putting their homes on the market. Almost 60% will repair or replace their air conditioner, almost 46% will prioritize their dishwasher and about 40% will take a close look at their water heater.

 

Examine Return On Investment 

Unfortunately, upgrading your appliances won’t necessarily allow for a huge return on investment. While upgrades can make your home more desirable, you may not completely recoup the cost of what you spend.

Take major kitchen remodels, for example. According to 2021 research, the average cost to remodel a kitchen was around $75,000. This included upgrades like a built-in microwave, dishwasher, custom lighting, etc. But even with these changes, that only added $43,000 to the resale value and the cost recouped was about 57%.

On the other hand, a simple garage replacement costs on average about $4,000 and adds about $3,000 to the resale value, bringing the cost recouped at $94%.

Here are a few other updates with the highest return on investment:

 

Stone Veneer

• Average cost: $10,386
• Average resale value: $9,571
• Cost recouped: 92.1%

Minor Kitchen Remodel 

• Average cost: $26,214
• Average resale value: $18,927
• Cost recouped: 72.2%

Sliding Replacement

• Average cost: $19,626
• Average resale value: $13,618
• Cost recouped: 69. 4%

 

 

Renovations Can Be Beneficial

Certain home improvements are considered “capital improvements.” For example, if you replace your flooring, upgrade kitchen appliances, etc. that fall under “capital improvements.” While not every upgrade will increase your home’s value, when you sell your house, you can write off your capital improvements.

If you refinance your home after you’ve made upgrades, your home will most likely appraise higher than when you bought it. This means you can potentially increase your home’s equity and lower your loan-to-value ratio.

 

Bottom Line

Renovations might make you feel better about putting your home on the market one day. While we’re currently living in a seller’s market, people looking to sell their homes may not need to put in the effort right now. But having an upgraded home wouldn’t hurt.