How do I sell a house?

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mountainsoft

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My mom had a stroke in May, so we've been busy making repairs to her house and trying to get it cleaned up so we can sell it. Unfortunately, I have never sold a house before so I have no idea what is involved. This is complicated by the fact that we live two hours away so I'm not there to handle things.

How do I even figure out what the house is worth? Should I hire an appraiser or does a real estate agent do this? I tried to get a rough estimate by looking at ads online, but that doesn't tell me much.

Will I have to pay the real estate company anything up front, or do they make their money once the house is sold? Assuming they sell it, how much of the sale typically goes to them?

What kind of legal paperwork will I need? Mom never had any kind of "title" for the house. When I was trying to sort through her paperwork after her stroke I think I saw a bank statement saying she had paid the loan off. But that's about the only paperwork I found for the house.

I do have a Power of Attorney. Will that be enough to sell her house, or am I going to need additional legal representation?

What kind of taxes or fees will need to be paid when the house is sold?

We still have at least two months of work before we can sell it, so I've got a bit of time to educate myself.

Thanks!
 
That's a lot of questions and your going to need to spend some time with your friend Google...

Is your Mom still living and does she need assisted care? That's the first place to start.
 
Typically, you will hire a real estate agent to represent you in selling the house. The typically only get paid when the house sells and get 6% of the selling price. You'll sign a contract with them to represent you in selling the house and then they will take care of the rest, but monitor them closely.

Typically, you might interview 3-5 local agents and each will do a desktop appraisal of the property by looking at recent sales of comparable homes, much like an appraiser would. Be wary of any selling prices that are unusually high or unusually low. Some agents will go high in hope of winning the business. Some will go low in hopes of a quick, easy sale.

It would probably be prudent to engage a local lawyer to help you with the contract with the real estate agent (not really needed but a local lawyer might be helpful), and to do a quick check of the title to make sure it is clean... some friends bought a property from a widow in her 90s recently and closing was delayed for a couple month because of flaws in the title that needed to be remedied. The lawyer can then also help you with the purchase and sale contract and the closing.

If the property is/was your Mom's principal residence then the first $250k of gain would not be taxable by the feds.
 
Sometimes people just need a little primer so they can start Googling stuff!

What most people do is sign a contract with a real estate agent. There's typically no fee up front, but if they get you a buyer, you're on the hook to pay whatever rate you negotiated. In the normal arrangement, they are legally obligated to represent you (not the buyer), but they'll try to get you to price the house lower, so it sells quickly. You can look it up on Zillow.com and get a general idea. Your agent will show you "comps" (recent sales of comparable properties), which will be constructed so that you should price low, lol!

The real estate agents get their cut. Selling agent gets a cut and the buying agent gets a cut. They get paid at "closing", where the money actually changes hands. So you don't pay anything...you simply receive a smaller check at the closing meeting, reduced by the real estate agent's fees (and a bunch of other stuff, taxes, closing costs, etc). There's a "going rate" for real estate fees in various communities, and the agents will tell you it's "not negotiable", but it is. So you can shop around when it's time to find an agent. They love those percentages, because it's a wave of the hand and "magic", they make thousands...and how much different is 2.5% versus 3.5%? Yeah, multiply it by the sale price of the house and it becomes real money. Just so you know, you can find listing agents that will do it for a flat fee ($400 or something). Now, you won't get all of the services, but it will be in the "MLS", which is something you'll absolutely need to have. That's Multiple Listing Service, btw. In the listing, you'll specify what the buyer's agent will get. So for instance, it might be 3% for the seller and 3% for the buyer, but nothing wrong with $400 for the listing agent and 2.5% for the buyer's agent if the market will bear that.

Don't worry too much about the nitty-gritty of the expenses with selling...they'll all be detailed in the closing statement. There will be a closing attorney, and they'll make sure that prorated taxes are taken care of. Often the attorney is there when there's a bank involved, but you can get your own closing attorney, which might be advisable since the house is paid-off. This is definitely something to research.

Don't take the word of your real estate agent on face value, no matter what the topic. Their main interest is not saving you money, only getting the transaction to go through as quickly as possible. They are a great resource, and they will guide you through everything, but you need to keep asking "do I have to do it that way", or "what alternatives exist", and unless they are just diabolical, they'll have to tell you that "no, you don't have to spend that extra money" or "no you can do it yourself". Then you can research and decide how to proceed.

And another thing they do is they have a pre-printed contract of sale they'll give you when you get an offer on the house. There's all kinds of crap in those contracts that make it easy for the buyer to take advantage of you. Just because it's in the offer doesn't mean you need to agree to it. For instance, if they say that if an inspection finds something wrong you're on the hook for up to 2% of the sales price, you can line through that and put $1,000 or something. Whatever you want. If they don't like it, they can counter or go elsewhere for their house.
 
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The two main things to do are to interview a few realtors and select one, and track down the title.

The realtor can answer most or all of those questions. You don't pay anything up front the realtor gets commission on the sale. 6% is usually standard, but some areas are different. Taxes and all fees like that, plus your proceeds are all handled at the closing by whoever does it in the area. In some states its a closing attorney, in at least one it was done by a title company.

You may have to track down that title or get a new one. Talk to the realtor first as they may just get a new copy at closing anyway but if you need it before the country clerk at the property tax office is probably the place to go, and again, the realtor can point you in the right direction.

How the realtor answers your questions may be a good indication of how they'll be to work with. They will advise you on an asking price to set, which should be based on comparisons to similar properties that have sold recently. That's a good reason to interview multiple, but don't just accept the one that recommends the highest price as that may just be to get your listing, and too high of a price may discourage potential buyers from even considering it. If they're all over the board, you might get an appraisal but usually the buyer gets one for the loan. Also ask about how they will market it.

How to pick one? If you know anyone in town, ask for recommendations. Or try neighbors. Otherwise, I guess you can look at online reviews, and also see who has a lot of signs up in the area.
 
Depending on where the house is located, you might look into auctioning off the house. MIL passed earlier this year leaving 2 properties to DH, her only child. She lived in the midwest, we live in CA. We were interviewing auctioneers to auction off the home's contents (no estate sales in the area; all contents are auctioned off) as well as RE agents to sell the homes.

To our surprise, the auctioneers could also sell the homes, in fact MIL bought her primary residence at an auction. The auctioneer we choose had a RE license, advertised, and showed the property. The day of the auction, the auction started with the contents and after about an hour, the house was auctioned off, then his associate finished the contents auction. We even had a bidding was with 2 couples who wanted the property and realized a 20% above market final price. I don't think we would have gotten that add'l 20% as the RE market in the area was not white hot. Additionally, we only paid his 3% commission, not the typical 6%.
 
Where is the house located (what state)? That will tell you whether you need a lawyer or a title company to handle the transaction. If there are online public records, you may be able to search by your mother's name or by the assessor's parcel number of the property to find the recorded deed granting her title and the release of lien for the mortgage. Otherwise the escrow agent should be able to pull the title information.

If you want to sell the house on the local multiple listing service, you will need to hire an agent. Most agents work on a commission basis, with a percentage of the sales price payable when the transaction closes. The escrow agent (title company or attorney, depending on where the house is located) will handle all the money. A good agent will recommend a good escrow company or attorney.

You want to hire a knowledgeable agent with strong selling experience in your mother's neighborhood if you sell on the open market via MLS. Being two hours away makes that difficult. Is there a reliable family member in the area to do the research? If not, it might be helpful to make the trip and interview several agents you find on line and talk with first. Get references and find out how many homes they sold in the last year. Also get commissions, and negotiate them down if that market allows that.

Valuing the property is easiest if you hire an agent to sell the property. Have prospective agents tour the property and give you their estimates of likely selling price, backed up with sales of comparable properties. Often they will give you suggestions of things to do to improve the selling price.

Taxes and fees will vary by location. If the capital gain is large, there may be income tax ramifications.

That's a start, keep reading about the process and talk to real estate people in the location of the house. You should have a decent base of knowledge and a good feel of how to proceed after doing that research.
 
Make sure property taxes, insurance and any homeowner association fees are paid up to date.
Contact the attorney who wrote your POA to make sure it’s still valid. You may need to record it with the county recorder of deeds to make it valid.
Interview a few realtors. Try to find one by referral if you can. They will walk you through the process of selling. Six percent is a typical fee. Pay less and they may not market your property as hard. They will provide comps to help you price your home, but make sure they’re apples to apples. Homes have many differences that affect the price.
The title company will research the deed, so no need for you to, but you may find it online if your county is online with their documents.
Learn how to negotiate. Be fair and honest in your dealings.
 
I suggest that you start with a experienced elder law attorney. One tricky thing with selling assets is that if you were to inherit her house your tax basis would be its market value on the date of death. Then if you sell the house before it appreciates any more, you will pay no tax because there is no gain.

In your mom's case she may or may not owe tax on the sale. It depends on her basis, its total value, and its status as a principal residence. Also, there are considerations if she were to end up with public assistance paying her nursing home bills.

An elder law attorney will be able to quickly answer all of the questions in yor post as well.

An elder law attorney will also help with any estate planning that is possible, which will depend on whether she is legally competent.
 
My sister and I were POAs for our bachelor uncle who lived 5 hours away in another country (Canada). For us, time was of the essence.

We had 3 realtors come through the house and give us their estimate for the price range at which this house should be listed. They also prepared a sales brochure for us as to how they were going to market the house (including # of open houses, etc.) They can often also give a guesstimate on how quickly a house will sell. As we knew we would not be around to 'supervise', we chose the realtor who had a lot of sales under her belt (aka high-performer) and who had the most experience. The chosen realtor drafted the sales documents (we didn't need any proof that our uncle was the owner, as all that is recorded along with the property description at the city offices), so we had no need to provide anything other that our IDs and Power of Attorney document. In most areas, there's a usual realtor fee (aka commission) of 6-7% that is taken out of the proceeds of the sale. Also, any other sales, tax, recording title search, etc. fees are taken out of the proceeds before you get the remaining proceeds when the hosue sale closes (= the sale transacts). So no money is paid upfront.

The house was chock-full of our uncle's stuff that we needed to get rid of, as he was moving into 1-room at an assisted living place. We let his close neighbors help themselves to anything they wanted (= heavy-duty snowblower, refrigerator, washer & dryer, microwave, some original paintings our uncle had done). For the rest, we called 1-800-GOTJUNK. They gave us an estimate for the stuff that needed to be hauled away ($2800. for I-forget-how-many-truckloads of household and various garage/workshop materials (huge chains, huge metal gears, etc.). It took them a little over a day. All we had to do was point at what needed to go and they took care of it.

A neighbor who worked on cars wanted to buy the contents (tools, lathes, fasteners, welding gear, etc.) from uncle's metalworking shop. I asked him to make an offer, I then knocked $200 off what he offered us, handed him the workshop key and said, please take your time in getting everything moved over to your place, all I ask is that you leave it broom clean and also dispose of the various chemicals and paint cans that are in the garage (and we had no idea how to get rid of.)

Uncle had an ancient Crown Vic in the garage that hadn't been driven in a decade or more -- we called the police dept to ask them for ideas how to quickly dispose of it. They suggested calling the fire dept to see if they might want it for firefighting practice. We called them and they sent over a tow truck the next morning.

Typically, properties are sold "broom clean" -- so we made sure everything was swept up, but didn't put tons more effort into deep cleaning (as we knew the entire property was going to be massively renovated by any new owner -- as the area had become very upscale and popular. )

Working [-]fast[/-] like maniacs, in less than 3 days we were able to get the contents of his house and huge pole barn garage disposed of (except for the aforementioned metalworking shop contents that the neighbor purchased), sign the paperwork with the realtor and put the property up for sale. It sold within a couple of months. She also kept us informed as to her open houses and how much traffic had come through. Additionally, she paid to have the walkways and driveway cleared of snow.

The realtor faxed me the offers. When we accepted the final offer, I had to get my signature notarized and I faxed the documents back.

When the house sold, we did go back, as the closing in Canada occurred in 2 parts - -first the buyer signed the papers at his lawyer's office and a courier carried the documents to our uncle's lawyer's office. A few hours later we signed them there on behalf of our uncle, collected the check and took it to the bank and invested it in GICs (the Canadian version of CDs) in our uncle's name, with us as POAs.

As I stated, for us, time was of the essence. So paying a bit more for that GOT JUNK company to haul most everything away and letting the neighbors take items they could use (and that we sure didn't have time to figure out how to sell) was a good strategy, as we had everything done in 3 days.

omni
 
OP - real estate agents fees are flexible, and many would love to get 6% or more, but many will work for 5% and even lower.

Remember the realestate agent is really working for themselves, not you.

I would phone some to come into the house and see it and give you their numbers, and ask them what you should fix/clean/throw out. Don't sign with any right away no matter what they say, sleep a couple of nights on it.

You could be doing a bunch of fixing/cleaning/repairs that are simply a waste of time and not needed, so listen to the repair list the agent tells you.

If you are the person who will inherit the house, and your mom is not going to live long, then OldShooter had some great advice to heed !!
 
omni550 said:
My sister and I were POAs for our bachelor uncle who lived 5 hours away in another country (Canada). For us, time was of the essence.

We had 3 realtors come through the house and give us their estimate for the price range at which this house should be listed. They also prepared a sales brochure for us as to how they were going to market the house (including # of open houses, etc.) They can often also give a guesstimate on how quickly a house will sell. As we knew we would not be around to 'supervise', we chose the realtor who had a lot of sales under her belt (aka high-performer) and who had the most experience. The chosen realtor drafted the sales documents (we didn't need any proof that our uncle was the owner, as all that is recorded along with the property description at the city offices), so we had no need to provide anything other that our IDs and Power of Attorney document. In most areas, there's a usual realtor fee (aka commission) of 6-7% that is taken out of the proceeds of the sale. Also, any other sales, tax, recording title search, etc. fees are taken out of the proceeds before you get the remaining proceeds when the hosue sale closes (= the sale transacts). So no money is paid upfront.

The house was chock-full of our uncle's stuff that we needed to get rid of, as he was moving into 1-room at an assisted living place. We let his close neighbors help themselves to anything they wanted (= heavy-duty snowblower, refrigerator, washer & dryer, microwave, some original paintings our uncle had done). For the rest, we called 1-800-GOTJUNK. They gave us an estimate for the stuff that needed to be hauled away ($2800. for I-forget-how-many-truckloads of household and various garage/workshop materials (huge chains, huge metal gears, etc.). It took them a little over a day. All we had to do was point at what needed to go and they took care of it.

A neighbor who worked on cars wanted to buy the contents (tools, lathes, fasteners, welding gear, etc.) from uncle's metalworking shop. I asked him to make an offer, I then knocked $200 off what he offered us, handed him the workshop key and said, please take your time in getting everything moved over to your place, all I ask is that you leave it broom clean and also dispose of the various chemicals and paint cans that are in the garage (and we had no idea how to get rid of.)

Uncle had an ancient Crown Vic in the garage that hadn't been driven in a decade or more -- we called the police dept to ask them for ideas how to quickly dispose of it. They suggested calling the fire dept to see if they might want it for firefighting practice. We called them and they sent over a tow truck the next morning.

Typically, properties are sold "broom clean" -- so we made sure everything was swept up, but didn't put tons more effort into deep cleaning (as we knew the entire property was going to be massively renovated by any new owner -- as the area had become very upscale and popular. )

Working [-]fast[/-] like maniacs, in less than 3 days we were able to get the contents of his house and huge pole barn garage disposed of (except for the aforementioned metalworking shop contents that the neighbor purchased), sign the paperwork with the realtor and put the property up for sale. It sold within a couple of months. She also kept us informed as to her open houses and how much traffic had come through. Additionally, she paid to have the walkways and driveway cleared of snow.

The realtor faxed me the offers. When we accepted the final offer, I had to get my signature notarized and I faxed the documents back.

When the house sold, we did go back, as the closing in Canada occurred in 2 parts - -first the buyer signed the papers at his lawyer's office and a courier carried the documents to our uncle's lawyer's office. A few hours later we signed them there on behalf of our uncle, collected the check and took it to the bank and invested it in GICs (the Canadian version of CDs) in our uncle's name, with us as POAs.

As I stated, for us, time was of the essence. So paying a bit more for that GOT JUNK company to haul most everything away and letting the neighbors take items they could use (and that we sure didn't have time to figure out how to sell) was a good strategy, as we had everything done in 3 days.

omni
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P@@@
 
Sorry, butt posted, so to speak. Had the thread open and put phone in pocket...
 
One more not so minor detail. After the eventual property inspection, there will likely be a list of items that you are expected to correct. I prefer to discount the sale price of the estimated cost to make repairs (except maybe frivolous stuff where I can easily do it or just say "nope"). I don't want to be in the repair business and have a "customer." I prefer to take a little beating on the sale price instead of being the middleman between buyer and repair contractor(s).
Good luck!:)
 
Red Badger said:
One more not so minor detail. After the eventual property inspection, there will likely be a list of items that you are expected to correct. I prefer to discount the sale price of the estimated cost to make repairs (except maybe frivolous stuff where I can easily do it or just say "nope"). I don't want to be in the repair business and have a "customer." I prefer to take a little beating on the sale price instead of being the middleman between buyer and repair contractor(s).

Good luck!:)
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Neighbors prefer you don’t lower the sales price for this. They want property prices as high as possible. Another way is to negotiate an amount to be put into escrow for the repairs. Stipulate the buyers submit receipts to get payment from whoever holds the escrow money. Set a specific time they have to complete the repairs, like 30 days, or the money is returned to you.
Remember, everything is negotiable.
 
The ownership question will be handled by the title company doing the closing, or attorney if your state works that way, by way of title search which has the purpose to show legal owner and any liens or other money due on the property (like prop tax or utility assessments, etc).

Otherwise as the rest said time to get discussion with some local realtors. You should be good with your financial POA to sell as representative for your mother who is now unable to do that herself.

Pick a realtor that you feel comfortable with. You will be in regular contact with the realtor. Commission is typically 6%, split 3% each buyers agent and your listing agent. Sometimes the commission is less, like 2% listing and 3% selling, or 2.5% each. The important thing is to have good relationship with your listing agent. Yes can be difficult to judge the relationship based on limited contact, use your gut feel to help.

Pricing is always a concern. Too low and you leave money on the table, too high and you sit on it waiting for sale. What is the market like in the area? Realtors should be able to help answer many of the questions above. Be prepared for the inspection to find some items, good advice to just negotiate the reduction in sale price and leave it to the buyer to deal with. Don't be afraid to call BS on some inspector items and just say no. A good listing agent can help with all of the inspections and evaluating the results.

As suggested, from tax standpoint if the house value is above $250K capital gain, if you are set to inherit then you get a stepped up basis may save your mother paying those taxes. You sell right after she has passed and there is next to no capital gains for you to pay on. It is wise to get an appraisal or other official value documentation if you can.
 
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Dash man said:
Neighbors prefer you don’t lower the sales price for this. They want property prices as high as possible. ...
Click to expand...
These would be the not-very-smart neighbors, IMO, who want their property taxes to go up.
 
Dash man said:
Neighbors prefer you don’t lower the sales price for this. They want property prices as high as possible. Another way is to negotiate an amount to be put into escrow for the repairs. Stipulate the buyers submit receipts to get payment from whoever holds the escrow money. Set a specific time they have to complete the repairs, like 30 days, or the money is returned to you.
Remember, everything is negotiable.
Click to expand...
What does the OP owe to neighbors 2 hours away? I wouldn't want it complicated anymore than needed, especially for a few thousand or less in most cases.
 
Did you perhaps find a title insurance policy on the house, or at least a document that tells you who they are. Depending on when the house was purchased, there may be a closing document hiding somewhere in the house (you generally want to save those for when you sell) Note also if major repairs were done they add to the basis of the house (the last new roof, new hvac equipment...) see if any such documents exist around the place. Note on the HVAC equipment there might be a sticker with the dealers name.
 
We just sold our home last year. We downsized to our already furnished 2nd home. So we had a "lot" of stuff to sell/give away. Lucky that I have trucks that can handle that!

Our commission was 5%, so look/ask around. In Oregon the agent splits his half with the Managing Broker. So 5% is 2.5% to each agent and split again to Managing Brokers. When looking for agents ask them for a Buyers agent deal. So that they work in your interest. If you just sign a regular agent deal they can work both sides of the transaction. Which they might lower the commission. But they may let the buyer know your intentions. Say traffic is a bit slow and you say to the agent If we don't have an offer after the open house we might think about lowering the price. Guess what happens? No offers come in. But agent has a buyer in his pocket. So for a small decrease in commission he gets a fast sale

Traditionally the Spring is best time to sell. School folks looking to move and be settled during the summer and be set for new school year. You may want to target April which would give you time to clear out the home and make the first street impression good. Or as @shooter97 says hold it for bump in basis.

Take some time to find a good agent. Ours was a family friend. And as i am in construction I had some sense of the emotional roller coaster. But i was a wreck. Our agent held me together. They are half agent half psychologist. Giving us help when the repair addendum came in. Our agent attended all walk throughs and repairs done. Buyers agent attended none.

We signed almost all by docusign, Which helped a bit. I think the final signing we did in person at the Title company. Oh, for a very rough valuation you can look at Zillow. (very rough)
 
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Sunset said:
...........Remember the real estate agent is really working for themselves, not you. ..................!!
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An important point. Real estate agents are not really professionals and their personal integrity varies widely and can be hard to gauge in advance.

Dash man said:
.......... Another way is to negotiate an amount to be put into escrow for the repairs. Stipulate the buyers submit receipts to get payment from whoever holds the escrow money. Set a specific time they have to complete the repairs, like 30 days, or the money is returned to you.
...........
Click to expand...
I had to do this due to a septic tank failure when I sold my house. It was a nightmare. I'd avoid this scenario if at all possible.
 
Dash man said:
Neighbors prefer you don’t lower the sales price for this. They want property prices as high as possible. .
Click to expand...

I understand. My next door neighbor is selling his 25-year old house as is. Same roof, same rotten fence, same flooring, etc. It will make it hard for me to sell my well maintained home for more.
 
Thanks for the feedback everyone. Sounds like the real estate company will be a good place to start when the time comes.

Mom has moved to an assisted living home and the house is vacant. She had really let the house go and it was in terrible shape. Every faucet in the house leaked and several plumbing fixtures had hacked together repairs. Most of the electrical outlets were broken and real fire hazards. The ceiling sheetrock in the kitchen was collapsed from a previous roof leak (still trying to determine if that has been fixed). The hot water heater was 35+ years old and was scalding hot even after turning it all the way down. There was no heat source in the home, her furnace died years ago. Carpets and walls were filthy and stinky from years of smoking. We had to remove all the popcorn ceilings just so we could paint. The yard hadn't been mowed in ages, weeds 5 feet tall and a fence had fallen over in the front yard. Lots more smaller issues.

We initially started making repairs because we weren't sure if mom was going to be moving back home. Now we're just trying to finish up what we've already started.

Most of the major work is done now, just some minor repairs, painting, and new flooring. So far we've probably invested less than $3500, it's mostly been the time we've put into it. Thankfully we enjoy doing home improvements.

Still debating whether to replace the large front windows that are cracked and fogged up inside. Big expense, but it's a very visible window, first thing you see when you walk up to the house.
 
mountainsoft said:
Still debating whether to replace the large front windows that are cracked and fogged up inside. Big expense, but it's a very visible window, first thing you see when you walk up to the house.
Click to expand...

That may not be as expensive as you think. It may be a simple remove the glass portion and replace. Or more expensive to replace the entire unit(frame + glass) plus maybe rot around the unit.

I bet the neighbors are happy you are cleaning up
 
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