Selling your home has tremendous financial implications. Owning a home typically is an individual’s single largest investment, so it is critical to be well represented when selling. You should expect professionalism, superior customer service, market knowledge, honesty and integrity from your real estate agent. The following steps will help make selling your home as effective and efficient as possible.
When hiring a real estate agent to sell your home, do your homework. Think of this as a job interview – with you doing the hiring. Be certain to choose the right person to represent you and your home.
Questions you should ask potential agents:
An agent should provide you with a comparative market analysis (CMA) which will consist of properties currently on the market, those recently sold and closed, and those in contract. All apartments used in this comparison should be comparable to yours in terms of location, size and type (co-op or condo). This is the basis for your pricing strategy. You might even want to visit other homes on the market against which you will be competing. Look at them objectively and through a buyer’s eyes.
Pricing an apartment is not an exact science. The marketplace will ultimately tell you what your home is worth; however, pricing accurately typically will generate the most interest in your home which will enable you to achieve the highest price. If an agent asks you “what do you want for your home?” and relies on you to price your home, then the agent probably is not right for the job. You will do yourself a terrible disservice if you have an agent who tells you what they think you want to hear.
Carefully watch the market’s reaction to your home’s listing in the initial few weeks of marketing. If there are no offers after 12 to 20 showings, then a price adjustment may need to be made.
Find an agent you trust, ask lots of questions, but do not forget to listen.
Sellers can give the exclusive right to sell their home to one real estate firm and to a particular agent at that firm. Your home then becomes that firm’s exclusive “listing.” You enter into a formal contract stating offering price, length of listing agreement with the brokerage firm, commission, etc. If you hire a firm on an exclusive basis you have the right to expect that the agent you choose from that firm will be your “point person.” They will market your home, arrange all appointments, handle negotiations and oversee the board process (in the case of a cooperative).
The firm with your exclusive listing should immediately co-broke your listing with all of the other brokerage firms in the area. Co-brokering is the process by which real estate firms share their exclusive listings with other firms in their market. This will ensure that your home is exposed to as many buyers as possible. If the listing firm brings in the buyer to buy your home, they collect the entire commission. If another firm with whom they have co-broke brings the buyer, then the commission is divided equally between the two firms.
An Open Listing is a scenario in which you can list your home with as many firms as you like. You manage the process and you do not have an exclusive relationship with any one firm. The commission is paid wholly to the firm bringing you the buyer. The downside is, for the same amount of commission dollars, you are doing all of the work. There’s no one advertising your home, no one scheduling appointments and no one negotiating on your behalf.
For your property to be marketed in the most effective ways possible, make sure that:
Your agent should be vigilant in ensuring that all potential buyers are financially qualified to purchase so as to minimize wasted traffic through your home. Your agent should be comfortable asking the necessary questions.
While executing the marketing plan, your agent should be in regular communication with you to provide feedback on showings and changes in market conditions.
Offers are made verbally between buyers and sellers in New York City. Your agent has a legal obligation to present all offers to you. A buyer will place a bid or offer on your home either to your agent or to you directly. Once an offer is received, your agent should discuss with you not only price, but also the other terms and the qualifications of the potential buyer such as likelihood of closing, closing date, etc. An offer means nothing if the buyer is not qualified to purchase or pass the Board (in the case of a co-op).
You may “counter” the offer thereby beginning the negotiation process in which both parties agree on the price, terms, and closing date. Be certain you feel comfortable with the negotiation skills of your broker. This is where you want the best protection possible!
A real estate attorney is required in all property transactions in New York City. Contact an attorney familiar with real estate in Manhattan to represent you. Once you have come to terms with a buyer, your attorney will begin preparing a contract of sale.
After the buyer’s lawyer concludes that the building’s financial condition is satisfactory, and that the by-laws of the building and contract of sale are acceptable, the buyer’s attorney will allow the buyer to sign the contract. At that time the buyer will usually be required to present a deposit of 10% of the purchase price. The contract plus the deposit will then be forwarded to your attorney for signature. The deposit will be held in your attorney’s escrow account until closing. It is important to note that until the contract has been delivered and signed by all parties, you can still entertain and accept other offers.
If financing, the buyer should move forward with his/her loan application. It is advised that the buyer pre-qualify for a mortgage prior to beginning the housing search.
By now, the buyer will have received the board requirements and application materials from their real estate agent. The application materials can be similar for a cooperative and condominium. The buyer will need to complete all of the required materials which typically include: an application, a financial statement signed by a CPA, all requisite support for your financial statement, three years of tax returns, bank statements, letters of personal and financial reference, letters of professional reference, the contract of sale, bank documents indicating that your loan is in place (if financing), etc.
While the buyer’s agent will actually prepare the package, your agent should work with the buyer’s agent to ensure that the best possible board package is prepared and submitted to the Managing Agent for review. When the “package” is finished, it will be forwarded to the building’s Managing Agent for review. Once the Managing Agent determines that the buyer’s application is complete and all credit checks are approved, the package will be forwarded to the Board of Directors.
In the case of a co-op, if the board package passes “muster,” the buyer will be invited to meet with members of the board for an interview.
The Managing Agent will generally inform your broker when the potential buyer has been approved by the Board. After approval by the Board, all parties are ready to begin planning for a closing!
In the case of a condominium, there is generally no formal interview. The buyer’s application will be reviewed, and if all required materials are included and in order, an approval is typically granted. The entire process can move quickly in a condominium, and assuming a loan can be secured in a timely fashion, the process can move from contract to closing in about 60 days. The cooperative process is more involved and may take longer than 60 to 90 days.
The Managing Agents, banks, attorneys, buyers and sellers will all work to coordinate a time and place for the closing. Generally, if all parties are ready to close, a closing can be scheduled within two to three weeks of board approval, if not sooner.
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