Seller Resources

When to Sell?

Many property owners ask the question, “When is the best time to sell?” The housing market is ever changing. It is virtually impossible to “plan” the best time. Sellers should, instead take in to account their personal lives and plan accordingly. Maybe you need a larger home for a growing family. Maybe downsizing is in order. There may be a job offer that would require a move. Others feel they would like to capture the appreciation in their property and buy another property.

We also advise that prospective Sellers seek the advice of their accountant regarding possible tax liabilities. Tax laws vary depending on the property you are selling. Is your primary residence? Have you fulfilled the requirement of 2 years as your primary residence to qualify for the $250,000 single tax free gain, or the $500,000 co-owner tax free gain? If you’re selling investment property is a 1031 tax exchange in order? A qualified accountant should be able to advise you correctly and advise you on what costs are tax deductible.

Using a Realtor or “For Sale By Owner”

There is no law that requires a Seller to use an agent to sell their property. So, one might ask “why are an overwhelming majority of properties sold done so with the aid of an agent?” The answer may be that the cost of using an agent is far less than the cost of not using one. Many people underestimate what exactly goes into selling a property. An attorney can certainly review offers and explain what the terms mean and protect your rights; however an Attorney will not know how to market your home and reach the “best” buyer for your property.

The cost of using or not using an agent

The standard fee for most agents in San Francisco ranges from 5%-6% of the sales price. Many sellers look at that number and wonder what they get for that money. Is it really worth it? I can say with all honesty…YES! With the marketing you receive through a listing agent many Sellers are seeing higher prices than they would if they simply went the “sell it myself” route. Many times sellers hear that the house next door received several offers over asking. What they need to remember is that the property was marketed to other Real Estate Agents representing ready and willing buyers. If a Seller decided to do a “for sale by owner” here is what they can expect:

  • Increased Liability. With buyer’s regret can come lawsuits. An agent reduces that possibility by helping all sides be satisfied with the transaction and being sure that all necessary disclosures are completed by both the Seller and Buyer.
  • Reduced Access to Sales Venues. One of the most effective ways to reach qualified buyers is the local Realtor’s Association. The Multiple Listing Service (www.sfarmls.com) which is only available to SFAR members. The more buyers you reach, the more likely your property will sell at its highest possible price. A listing agent will have identified possible buyers and resources to contact them, along with proven marketing strategies. Listing agents will have access to other agents and their clients as well.
  • Lack of professional objectivity. Most people identify with their possessions. That is exceptionally true of a home which has intimacies of your life. An agent can see your home objectively and sell it. We can identify possible issues that buyers may see and assist you in correcting them. Since we also work with Buyers we have an acute understanding of their concerns and how to address them. It will not be personal but business.
  • Lack of Help. Simply put, it takes a lot of effort to sell a home. If you’re employed, you may find it difficult to contact buyers, financiers and other stakeholders in a timely manner. An agent understands that “time is of the essence” in home sales, and is prepared to immediately manage issues as they come up. An agent also has professional knowledge of the current market, standard practices, and negotiating skills directly related to real estate.

We are great believers in self-reliance and think selling your property (FSBO) may be a great alternative. However Sellers should be prepared and willing to accept the risks involved.

Choosing a Realtor

This is one of your most important decisions you will make in the selling process. What to look for? You should foremost feel comfortable working with your Realtor. It is essential to have an open and honest line of communication. If you trust your Realtor has your best interests in mind it will be much easier to accept their advice during the transaction.

Some of the questions you should ask are:

  1. Is your prospective Realtor full time? Real Estate moves rather quickly. Your agent should be there for every step of the way.
  2. Are they accessible? If you can’t reach them then how can prospective buyers?
  3. Ask for references from past clients. We supply potential sellers with contact information of past clients so they can ask first hand how we measured up.
  4. Ask for a CMA (comparative market analysis). Included in this would be the opinion of value, marketing plan, preparing the property for sale, the escrow period and finally the closing. The CMA should outline all these steps and show you what you Realtor is going to do for you.
  5. Ask for recommendations about preparing your property for sale. An experienced agent will be able to let you know the repairs that will result in more money and those that will not.
  6. Do they know your neighborhood? Prospective buyers will ask questions about the neighborhood and your Realtor should be able to show them points of interests such as shopping areas, grocery stores, and transportation.
  7. How does the Realtor plan on representing you? Will your Realtor represent both the buyer and seller, or just you the Seller? We do not represent both sides in a transaction. We feel to do so would compromise our ability to look out for our client’s best interests.
  8. What disclosures do I need? We will supply you with all the necessary disclosures required for the sale of your property. These disclosures will greatly reduce the possibility of future lawsuits.

Preparing the property for sale

Once you decide to sell your property it is a good time to look at it through the eyes of potential buyers. Take an honest look and make changes as needed. First impressions are the most important. If a potential buyer drives by and doesn’t like the outside they will usually not stop to see the inside.

  • Make the entry inviting with a fresh coat of paint and add plants and flowers. Keep front porch or yard free of such things toys, hoses, or refuse.
  • Inside keep rooms in scale. Remove overly large pieces that although useful may make a room seem smaller.
  • Clear out closets and storage areas to show off the space.
  • Remove personal belonging. If the house is full of family pictures a potential buyer will not feel as if this could be their home.
  • Clear surfaces. Show off the homes usable spaces by removing objects from such things like kitchen counters and bathroom vanities.
  • Remove items such as magnets and memos from the refrigerator
  • Let the sun shine in. Keep window treatments neutral and clean. Have the windows cleaned inside and out so everything appears sparkling clean.
  • Replace broken tiles and clean grout
  • Replace dated light fixtures and replace with ones that give abundant light
  • Replace worn carpeting and give walls and ceilings a fresh coat of paint. Pick soothing neutral colors.
  • Make minor repairs such as fixing a broken garbage disposal, or cracked windows.
  • Tighten loose door knobs, oil hinges, and make sure the homes components are in good operating condition.
  • Store all valuable items such as jewelry and medications
  • Wood floors are a huge selling point. You may want to consider having the floors refinished if they are worn
  • Pack what is not needed. Now is the time to remove small items and clear out rooms to enhance a rooms space. You want prospective buyers to notice your home and not your personal items.
  • Although pets are important members of the family we recommend removing pet beds, water dishes, and litter boxes during the open houses. Pets should be kept in a safe place or outside the home during showings.

Staging your property

If your property will be vacant during the sale you may want to consider employing the services of a professional stager. A professional stager is acutely aware of what appeals to buyers and will customize a look that will showcase your home. If you will be living in the home during the marketing period a stager can also be enlisted to “enhance” your home with individual pieces of furniture, fresh flower arrangements, and artwork.

An important note: When enlisting the services of a Professional Stager please remember that they are not hired to enhance your home to your specifications and decorate for you. Professional Stagers are aware what potential buyers are looking for and are creating an atmosphere that will appeal to an array of buyers. This may include removing pieces of furniture and artwork that you love, but remember everything done is with the mindset to get the most for your property, which is after all the goal.

Disclosures and Forms

Sellers are required by law to disclose any and all items known to them about the property. The necessary forms and disclosures will ensure a smooth transaction and will result in a happy buyer and seller and greatly reduce the possibility of a lawsuit down the road.

Some of the forms required are:

  • Real Estate Transfer Disclosure Statement
  • Seller’s Supplement to the Real Estate Transfer Disclosure Statement
  • Lead Based Paint & Paint Hazard Report
  • Residential Earthquake Hazards Report
  • Smoke Detector Statement of Compliance
  • Water Heater Statement of Compliance
  • General Information Statement for Buyers & Sellers
  • Environment Hazards Booklet

We also recommend that Sellers have a Pest Report conducted on the property. This report typically costs $300 and includes damage caused by termites, fungi (dry rot), word boring beetles, and any type of wood destroying organisms, which usually are the result of excessive moisture

The report includes two sections.

  • Section 1 Conditions: Conditions were there is “active” or currently causing damage to the property.
  • Section 2 Conditions: Those of which are not currently causing damage but are likely to if left unattended. A typical section 2 item is a plumbing leak where moisture has not yet caused fungus decay.

We will also recommend additional inspections if necessary including an energy inspection, roof, foundation, mold, underground storage tanks, or general contractors.

We will also encourage prospective buyers to conduct any and all inspections deemed necessary.

The Marketing Period

Simply put this is the timeframe in which we will market your property to buyers and their agents. There are many aspects of marketing that we will discuss with you. The Marketing period will vary depending on all aspects including Sellers needs, and the current market. Our CMA will clearly outline our Marketing Period along with all proposed marketing materials. We pride ourselves are being innovative in our marketing material and capturing the attention of potential buyers.

Receiving Offers

Part of our marketing plan is addressing “Receiving Offers”. Along with price there are many items that go into a “good offer” We will assist you in determining which offer is the best and also recommend what items to “counter” to compile the best possible offer. The goal is to accept the “best” offer and to have that offer completed in the timeframe.

Some of the items to look for include:

  • Purchase Price: Obviously the highest is always appealing!
  • Down payment: A strong down payment will ensure the Buyer is well prepared to purchase the property and increase the likely hood of completing the sale.
  • Contingencies and Timeframes: There are several contingencies that are typically included in a purchase contract. We will discus each one and the pros and cons concerning them and the timeframes of removing the contingency.
  • Close of escrow: how long is the COE and is it beneficial to the Seller.
  • Pre Approval vs. Pre Qualified: Buyers should be Pre Approved which means credit, employment and funds have been approved by the lender. Being Pre Qualified is just a determination of probable credit. Buyers should be Pre-Approved.
  • Terms of Buyers loan: We need to ascertain if the terms of the Buyers loan contingency (interest rates, points, etc.) are realistic and can be obtained.
  • Liquidated Damages & Mediation: Does the Buyer agree to these items and what does that mean to the Seller.
  • Any Additional Terms: What if any are included in the contract. Items such as “contingent” on Buyer selling their property first may not make their offer the best. We will discuss all “additional term” items.

The Escrow Period

Once we have an accepted offer the “escrow period” will begin. Escrow will be opened with an Escrow Company typically the choice of the Buyer. An Escrow Company is a neutral third party that facilitates the transaction and also provides Title Insurance to the Buyer. The time frame follows the terms set forth in the purchase contract.

During that time we will ensure that the “timeline” is followed and that all pertinent information is transferred to the Title Officer. During this time the Title Officer will also prorate some of the fees in the sale including such things like Taxes and HOA fees. We will set up appointments with the Seller to sign documents and go over the closing statement provided by the title company.

Costs Involved

For Sellers there are several costs involved that will need to be accounted for so the Seller can see exactly what their Net gain will be. Some of the costs are:

  • Agent’s commission: This is typically between 5% – 6% and is mutually agreed upon between the Seller and the Listing Agent when signing the agreement to “list” the property for sale.
  • Transfer Tax: In San Francisco the Seller pays the transfer tax and the fees are constructed as follows: $6.80 per $1,000 for a purchase price between $250,000 and $1,000,000. If the selling price is over $1,000,000 the transfer tax is $7.20 per $1,000.
  • Pro-rata share of property taxes: Depending on when the sale occurs in the cycle of tax payments, you will either receive a credit for taxes you will have paid forward or you will owe the buyer money for time you have owned the house for which the payment has not yet been made.
  • Compliance with San Francisco Residential Energy and Water Conservation Ordinance: For a single-family residence the cost could be a maximum of $1,200. This includes energy work such as weather stripping outside doors, attic insulation, wrapping heat ducts and water heater, low flow showerheads, etc. For multiple units this cost could be up to 1% of the purchase price from the real estate sales contract or 1% of the assessed value of the building (whichever is greater).
  • Report of Residential Record (3R Report): $53.25. We will order this document & prepay.
  • Environmental Hazards Report: $65.00. We will order this document & prepay
  • Miscellaneous fees: Drawing documents, reconveyance of your lender’s deed, recording and notary fees can approximate $200.00.

We look forward to speaking with your regarding your decision to sell your property and detailing to you how we can achieve the maximum sales price for your property. Contact us anytime!