Seller - Frequently Asked Questions
Q: When will my house sell?
A: It depends on Condition, Location and Price. Your competition is any house "LIKE" yours that is currently on the market or sold in the last 6-12 months. "Like" is defined as similar size, style, age, materials, finishes, and area which means in your neighborhood or within a 3-5 mile radius. If your house is in better condition, located in a great part of the neighborhood and priced at or below the competition, your house should be one of the first to sell. The final determining factor is available Buyer Pool.
Q: What does Buyer Pool mean?
A: There are Buyer's who are currently looking for a home ... "Buyer Pool" ... and Buyer's who will be looking at some time in the future. Depending on the desirability of our type of house, the Buyer Pool may be large as with a $250k house in Carmel vs. a $750k house in Kirkland, IN which would be much smaller due to location and price. The more expensive the house, the fewer people who can buy them.
Q: I received an offer right away, shouldn't I hold out for a higher offer?
A: Refer to the Buyer Pool. Unless it's a really low offer, such as from an investor, statistics show that the first offer is usually the best offer. Holding out for a better offer most often results in the house sitting on the market longer waiting for new Buyers to enter the market. In addition, new Buyers will see that your house has been on the market for a while and instinctively offer less, hence, your house is on the market longer and ultimately sells for less.
Q: What is a multiple offer situation?
A: If your house condition, location and price are good, and there is a high demand for your type of house, it's possible to get more than one offer at the same time. This often results in a higher sell price and the best terms and conditions. We will ask the agents to submit their best and highest offers on behalf of their Buyers.
Q: What is meant by Best and Highest?
A: Highest is the highest amount the Buyer is willing to offer. Best is with respect to terms and conditions. A clean, cash offer without any contingencies is better than a Buyer who needs to get a loan, asks for the seller to pay money towards their closing costs, wants a seller paid home warranty and is contingent upon selling their existing home before they can buy your house. By the way, most buyers need to get a loan to buy your house.
Q: What should I expect once I have an offer?
A: It essentially boils down to 3 primary steps.
1. Offer Acceptance
a. Getting an offer accepted may require multiple counter offers between Buyer and Seller to come to agreement on the price, terms and conditions. If the Buyer and Seller cannot come to agreement on price, terms and conditions, then the Buyer will walk away and the Seller continues to market the house and find another Buyer.
b. A contract is not valid until both the Buyer and Seller accept price, terms and conditions within the contract period or before the contract expiration date.
c. If the Seller counters the Buyer's offer, the Seller is essentially out of contract and if the Buyer does not respond, there is NOT a valid contract.
2. Inspection Response
a. Most Buyers will have a whole house inspection. If the inspection reveals any MAJOR Defects such as foundation, structural or other significant issues with plumbing, electrical, mold ... etc., the Buyer can cancel the contract. Unless you know that your house is in great condition, I always recommend a pre-sale inspection especially on older houses.
b. If the Buyer's inspection reveals a significant number of defects that require repair such as rotted wood around windows, malfunctioning sump pump, failed window seals ... etc. and the Buyer & Seller cannot come to agreement on the repairs, the contact can be cancelled.
c. It's important to respond to the inspection response quickly since contracts have a clause stating if the Seller does not respond within the time period allowed by the Buyer, then the Seller agrees to make the repairs.
3. Financing Approval
a. When the Buyer is getting a loan (Financing), there is a process that the Buyer's Lender (Bank) has to go through to approve the loan for the Buyer. This typically takes around 30-45 days and requires that the Buyer provide proof of income, tax returns, credit report, lender appraisal, review of title, compliance with Lender underwriting guidelines ... etc. Even though the Buyer will provide us a preapproval letter, it's possible that financing could be denied at any point during the 30-45 day process which would terminate the contract.
b. The Buyer's Lender will require an Appraisal.
Q: What are Purchase Agreement Terms and Conditions?
A: Examples of Terms and Conditions are price, closing date, prorated taxes, seller contribution toward Buyers closing costs such as Buyer financing fee, escrow, closing fee (Seller Concessions), home warranty & survey or sale contingent upon Buyer's Inspection or sale of Buyer's existing house before they can buy yours.
Q: What are common issues found during an inspection?
A: The Buyer's inspection is going to find something even if you have a brand new house. We just want the inspector to find small issues that can be easily fixed with the least amount of cost. If the inspector finds a Major Defect such as mold, electrical, plumbing, structural ... etc. it could kill the transaction because the Buyer is concerned about the rest of the home or at the very least it will cost you more money because the Buyer's Agent will require that the repairs are done by a licensed & qualified contractor and as soon as possible. We commonly see issues such as missing anti-tip brackets on ovens, no high loop from the dishwasher to garbage disposal, no air gap from the water softener to sewer line, pointed screws in the electrical panel, wood rot, failed window seals, garage door opener eyes not properly adjusted, ceiling stains from leaking sky lights ... etc. Again, I recommend a pre-sale inspection so you can identify issues up front. Many times, significant issues are found in crawl spaces or attics where the typical home owner does not go.
Q: What is Radon?
A: Radon is an odorless gas that the EPA has determined to contribute to lung cancer if inhaled at high levels. The EPA recommends that radon level be below 3.9 pCi/l. Most Buyers will have radon tested and will ask for a radon mitigation system to be installed if the level is above 3.9 pCi/l. Radon is a relatively new issue (the new mold scare), so millions of homes in Indiana have not been tested for radon. Radon is most often found in houses with basements or crawl spaces.
Q: What are prorated taxes?
A: In Indiana, taxes are paid in arrears which means the taxes due in May and November of the current year are actually for the previous year. The Seller has to bring these current at the time of sale so if you were closing at the end of February, the Seller would pay the May and November installment of taxes plus the per diem amount through the end of February. The Buyer receives this as a credit and in turn, the Buyer would pay these when they sell the house.
Q: What is Earnest Money?
A: A contract is valid when the Buyer and Seller accept and sign the Purchase Agreement. The Earnest money makes it more painful for the Buyer to simply walk away from the contract without a good reason such as financing denial or a major defect found during their inspection. Rule of thumb is to ask for 1% of the sales price, however, this varies of course.
Q: What is the difference between Closing Fee and Closing Costs?
A: The closing fee is what the Title Company Charges and is often around $400. Closing Costs are a lump sum category such as the Buyer's financing fee, prepaid items like hazard insurance and property taxes that are part of the escrow account, loan origination fee ... etc.
Q: What is a Preapproval or Proof of Funds?
A: A preapproval letter is provided by the Buyer's Lender (Bank) that basically says the Lender has pulled the Buyer's credit report to verify the Buyer's credit worthiness and has discussed the buyer's income and debt such as car or student loans, time on job ... etc. to confirm that the Buyer meets the Lender's guidelines to give the Buyer a loan to buy your house. Proof of funds is provided by a CASH buyer showing that they have enough money in an account to purchase your house. It could be a bank account or stock portfolio statement or letter from their bank ... etc.
Q: Why is showing feedback important?
A: Showing feedback is what the Buyer thought of your house when they saw it. Sometimes the Buyer Agent will not provide feedback or the feedback is unprofessional. We want the good constructive criticism and will throw out the feedback that is not of any value. Yes, there will be feedback that you cannot change like ... Buyer did not like where the house was located in the subdivision. If we get repeat feedback like, did not like wallpaper in the kitchen, then you need to consider making a change to appeal to the masses.
Q: Why can't we close on the date specified in the Purchase Agreement?
A: The date that the Buyer puts in the Purchase Agreement is quite often a target date to close as it depends on a number of factors ... see Offer Acceptance, Inspection Response and Financing Approval.
Q: I thought you were an employee at FC Tucker so any agent could help me?
A: REALTORs are self employed. We pay for all of our own expenses such as gas, insurance, office supplies, phone, internet, self employment income taxes, state licensing, real estate contracts, continuing education, subscription to the MLS ... etc. Although we could practice as a stand-alone real estate agent, we have chosen to pay the FC Tucker Company for corporate advertising, access to professional conference rooms, office administration staff support, world class training, state of the art marketing and legal counsel just to name a few. As a professional, full time agent, we pay close to $25,000 a year to provide you with industry leading service and support. When we work with a client, we don't get paid until the home closes. We greatly value the relationships we develop with our clients and hope that you will see the advantage of working with a real estate professional
Q: Will you cut your commission?
A: The FC Tucker Company has established a company wide Professional Service Fee in their contracts. If an agent agrees to discount their commission, the agent bears the full amount of the discount because FC Tucker will pay the co-op agent and charge the FC Tucker Corporate fees based on the company established rate regardless of what the agent agrees to. If an agent is willing to cut their fee just to get your listing, what else are they willing to discount. Our policy is that we do not discount the fee. We hope that you see the value of our services in getting your house sold as quickly as possible for the most money.
Q: What is a co-op Agent?
A: A co-op Agent is a REALTOR most often from another real estate brokerage like Prudential or Keller Williams who has a potential Buyer for your house.
Q: Why is it important to show my house whenever possible?
A: When we work with Buyers we always recommend that we give the Seller a 24 hr. notice, however, there are some situations where a Buyer needs to see a home ASAP. It might be a situation where an out of town Buyer is driving through the neighborhood, didn't have your house on their list for some reason but has to fly out that afternoon. I would not let someone drive up to see your house at 8:30 pm on a school night, but experience says that if someone wants to see a house right away, there is a much higher possibility that they could write an offer. In addition, you only need 1 Buyer. If you decline a showing, that could have been an offer. If you have an event like a birthday party scheduled, we will do our best to have the Agent schedule for a different time or day.
Q: Why does the Buyer need 45 days to close?
A: When a Buyer is getting a loan, there are many steps that take place including financial document collection for their lender, IRS response regarding the Buyer's 4506T, appraisals can take 5-8 days to be completed, lender underwriting review, inspection response ... etc.
Q: What does the title company do?
A: The title company is a transaction facilitator. They check the Seller's title to make sure there are not any issues that would affect the ability to sell the house, make sure the terms and conditions of the Purchase Agreement are met, prepare the deed, make sure all the Buyer's loan documents are prepared and signed correctly, provide notary service and insure the closing against any future legal action from a faulty title ... etc.
Q: What is a closing and closing packet?
A: The closing is where the Buyer and Seller meet to sign documents allowing the Buyer to Purchase the Home and the Seller to transfer ownership to the Buyer. The closing packet includes all of the legal and ancillary documents required to Sell a house.
Q: What are Seller Paid Concessions?
A: Quite often the Buyer will ask the Seller to pay for some of their closing costs. These are called Seller Paid Concessions. The most they can ask for is 3% but usually suggested by their Lender to help offset the total amount they will need to close. Most often we see this with FHA loans because the Buyer might be a first time home buyer and does not have a lot of money. FHA loans require 3.5% down payment plus closing fees and private mortgage insurance (PMI). Seller concessions can not be applied toward the Buyer's down payment.
Q: What is a Home Warranty?
A: Most of the time the Buyer will ask for the Seller to provide a Home Warranty at closing. Its typically an annual policy which covers most of the mechanical systems in the home such as furnace, water heater, appliances, electrical ... etc. Its usually around $400 a year and many times the Seller will get a Home Warranty in advance to help promote their home.
Q: What is a HUD statement?
A: The United States Department of Housing and Urban Development (HUD) developed this document which is used by Title Companies at the closing. It is essentially a document that provides detailed financial information with respect to buying & selling a home. It has columns for the Buyer and Seller showing details of the transaction like purchase price, closing fees, taxes, broker commission and any other fees associated with the closing. This document is provided prior to the closing.
Q: Why is the Buyer being so picky with their inspection response?
A: There are a number of different reasons why a Buyer may want everything on their inspection report replaced or repaired and work to be done by a licensed / qualified contractor. Most important is that once the closing is done, they own the house and any issues you had now become their issue. If during the inspection, the Buyer's Inspector finds a lot of issues, the Buyer may be concerned that the home has a lot of deferred maintenance and the potential cost to repair or replace becomes an issue with the Buyer. Also, most Buyers think repairs are a lot more expensive than what it really would cost. Again, it's always best to take care of any significant issues before you put the house on the market. An inspector is going to find something because it's their job; we just want the issues to be minor.
Q: Why is staging and maintaining the home important?
A: Buying a home is an emotional experience for most people. If the Buyer is moving from a cramped apartment with kids toys everywhere and they see your house is very neat, clean and smells great, it elicits the "I want it now feeling" and they are often more willing to pay more money. In addition, if a Buyer sees maintenance issues with a house, they are more inclined to offer less and still want the items repaired when they do their inspection. Remember, "clutter eats equity". You want to get the house in a condition as close to a HG TV home as possible. Why do you think builders have staged, model homes?
Q: Why didn't the Buyer take off his shoes or why did they use my bathroom?
A: Since we as the listing agent are not at the house when another agent is showing it, we cannot control the actions of Buyer. Our response would be to call the Agent's Manager and complain. Most agents are professional and most Buyer's are decent people so it's not a common issue.
Q: The Buyer left the back door open?
A: Most professional agents are trained to lock all doors and turn off lights when they leave but of course this doesn't always happen.
Q: Why can't I let my pet run loose in the house during a showing?
A: Not all people have animals and if they do, they probably don't like your pets. You don't want a dog barking while a potential Buyer is trying to see the home or worse yet have your dog jumping on them, biting them or run out the door and get lost.
Q: I smoke in the house, but can't I just open a window?
A: Now days, most people do not smoke so it's a big turn off to a potential Buyer. Since they don't smoke, they can smell it no matter how hard you try to cover it up. The same goes for pet smells.
Q: Why do I have to leave the house during a showing?
A: If you are home while a Buyer is looking at your house, it makes the Buyer feel uncomfortable and they subconsciously want to leave because they feel like they are invading your space. In addition, they cannot speak openly to their agent when looking at the house.
Q: What about my personal items like a laptop or jewelry during a showing?
A: Locks keep honest people honest. The fact that a licensed agent is showing your home to clients will deter any unscrupulous activities by the Buyer, however, the agent likely does not know everything personal about their client either. It's always a good idea to keep any personal items out of site or locked in a cabinet during a showing. Open Houses are even more important to do this because multiple people are walking through and an Agent cannot be with everyone at the same time.
Q: What is an Open House?
A: An Open House is where the Seller opens up the house for anyone off the street to stop by and see the house. It's usually done on a Sunday afternoon. It's all about getting more foot traffic through the home to raise awareness to as many people as we can.
Q: Is it normal to feel anxiety during the house selling process?
A: Yes. Selling a house is, for most people, the biggest transaction in their life and it's an emotional experience. You are uprooting your family, changing jobs, moving kids to a new school, having to coordinate the move ... etc. We as agents do real estate every day and the average Seller does it every 5-7 years. Rest assured, we are doing a lot of activities behind the scenes that you never see and we do our best to communicate with you to a level that makes you feel comfortable. It is in our best interest to sell the house as quickly as possible for the most money. Remember, we don't get paid until we close so this is a team activity.
Q: What is my recourse if the Buyer cannot execute the contract?
A: If the reason is one of the standard clauses in the Indiana State contract such as financing contingency, inspection finds a Major Defect or Seller violation of the Indiana State Sellers Disclosure, there is nothing you can do. If the Buyer simply decides they don't want to purchase your house and without a valid reason, then keeping the Buyer's Earnest Money is the common recourse unless there are extenuating circumstances. The Buyer would also have to agree to sign a Mutual Release document agreeing to forfeit their Earnest Money. If the Buyer does not, you would have to take them to court.
Q: What is a Mutual Release?
A: A mutual release is a document that both the Buyer and Seller agree to sign to mutually agree to terminate the contract and includes a clause to return money to the Buyer or forfeit to the Seller.
Q: What is the Seller's Disclosure?
A: The Seller's Disclosure is a Indiana State required document that requires the Seller to disclose any known defects with the house.
Q: What is an Appraisal?
A: The purpose of an appraisal is to verify that the house is worth what the Buyer is willing to pay and to make sure the house is habitable which means the Buyer could move in after closing and live there ... i.e. running water, heat, electricity, roof is not leaking ... etc. There are a number of common items that appraisers look for which would prevent the Buyer's Lender from approving the loan and would be called out on the appraisal as an appraisal contingency. These items would need to be replaced or repaired prior to getting a clear to close and the appraiser will go back out to confirm they have been completed.
