Selling your home can be incredibly anxiety-inducing – especially if you need to buy a new home immediately after selling your current home. Working with the right team of local real estate agents, stagers, professional photographers and real estate attorneys can alleviate much of the stress associated with selling your home. Knowing your home could sell above asking and close quickly should also quell certain fears. With prices soaring amid a continuing shortage, the housing market remains red-hot for sellers. In an article for CNN Business, Anna Bahney writes that last year’s median home sales price was $346.9k. This represents a 16.9% increase from 2020 “and the highest on record going back to 1999.” Market watchers expect a strong seller’s market well into the second quarter of 2022. Some economists initially thought rising interest rates would slow the pace of rising home prices and put an end to intense bidding wars. However, rising interest rates might actually heat up the market as we head into Spring. In his article “What to expect in the 2022 spring housing market, as told by 3 charts” for Fortune, Lance Lambert explains. Lambert writes that “each uptick in mortgage rates prices out some buyers from the market.” In the short term, however, rising interest rates are actually “increasing buyer urgency.” According to Lambert, buyers are rushing to find the right home because they are “worried the rates will continue to shoot up.” In this post, we explain exactly how to sell your house in 2022. From hiring the right agent to preparing your home for sale, we guide you through the entire process.
This Is How Much it Could Cost to Sell A House in 2022
As you prepare to sell your house, be sure to budget for a variety of selling expenses. Buyers typically pay the home’s sale price and the majority of closing costs associated with a home sale. However, many sellers are still responsible for the commission fees owed to the listing agent and the buyer’s agent. They might also incur costs related to necessary and cosmetic repairs, staging, photography, a pre-sale home inspection, and/or hiring an attorney.
In some cases, sellers might agree to pay a percentage of the buyer’s closing costs as well — though this is far less common in a hot market like today’s. In her article “How Much Does It Cost to Sell Your Home?” for US News, Josephine Nesbit writes that “sellers can expect to pay between 10% and 15% of their home’s sale price in selling costs.” Below, we outline how much each could cost you and which are actually necessary.
Listing Agent and Buyer’s Agent Commission Fees
In most real estate transactions, the seller is responsible for paying both agents’ commission fees. According to Redfin, the amount a seller pays in real estate agent commissions ranges “between 5%–6% of the home’s sale price” on average. Usually, half of this amount goes to the buyer’s agent and half goes to the seller’s agent. Of course, the true amount “can vary by agent and location.”
Staging and Photography Costs
Next, we have staging and photography costs which are often considered necessary expenses. According to Margaret Heidenry in her article “How Much Does It Cost to Stage a House—And How Much Will You Gain?” for Realtor.com, staging is well worth the cost. According to Heidenry, “staged homes sell 88% faster and for 20% more than non staged homes” on average. But how much does staging a single family home cost?
While costs vary, the average for most stagers is a few hundred dollars “for an initial design consultation, and $500 to $600 per month per staged room.” With most staging companies requiring “a three month minimum contract,” your final bill could amount to $7k or more for a 2,000 square foot home. As one might expect, staging costs are usually higher for luxury homes – around 1 to 1.5% of the home’s list price.
Though it can make a home more attractive to buyers, staging is not always necessary. Simply decluttering your home can make an enormous difference. It can make the home feel brighter, more spacious and more versatile. Decluttering your home also offers stagers a clean slate, making their job much easier. In her article “Selling Your Home: The 11 Most Important Spots to Declutter Before the Open House” for Apartment Therapy, Caroline Biggs offers a few tips. First, Biggs recommends tidying your front yard and clearing out storage spaces like “your garage, utility closets, and backyard sheds.” Homeowners should also declutter “first impression” spaces like the porch, entryway and mudroom. Most importantly, homeowners should clear personal items and excessive furniture from spaces that will not be staged.
Minor Repairs and Updates
Some sellers choose to make minor repairs and updates before listing. It is usually a good idea to fix any problems that could complicate the home’s title or impact the inspection report. However, any other repairs or cosmetic updates might not be worth much in a hot seller’s market such as this. In her article “What Not to Fix When Selling a House” for Investopedia, Rae Hartley Beck explains. Beck writes that “cleaning, decluttering, and increasing your curb appeal should be done ahead of every sale [but] expensive repairs and renovations should be avoided.” She also warns against taking on any repairs or updates the seller might not be able to finish in time.
As most homeowners already know, “home repairs are frequently more expensive, take longer, and need more skill than most people expect.” Today, delays are even more common due to “supply chain issues and a tight labor market as a result of the coronavirus pandemic.” Before listing, homeowners should try to fix “major leaks, infestations, sewage issues, or electrical hazards” but might not need to bother with cosmetic updates like new appliances.
Taxes and Fees
As mentioned above, buyers pay most closing costs related to inspections, appraisals, title searches, etc. However, sellers might still pay some taxes and fees. For example, the Zillow Seller’s Guide “How Much Are Closing Costs for Sellers?” notes that certain states require sellers to hire an attorney. According to Zillow, “attorneys are required to oversee closing in 21 states” including Florida.
Sellers might also pay transfer tax and prorated property taxes. Because property tax bills usually go out at the end of the year, sellers might give buyers a credit to cover the period of the year during which the seller occupied the home. Attorney fees, property tax bills and transfer tax rates vary widely from state to state and city to city.
When you sell your home, you must pay off your mortgage and any HELOCs or home equity loans. In doing so, you might pay off your mortgage before the end of its ten, fifteen or thirty-year loan term. Depending on your lender, you might owe a prepayment penalty after settling the debt. Lenders often charge prepayment penalties to make up for the interest they would have earned on the loan if payments were spread out over 10, 15 or 30 years as planned.
Penalties range from 1% to 3% of the remaining balance. However, not all lenders can charge these fees. Most government-backed home loans cannot include prepayment penalties in their mortgage contracts.
How to Sell Your House in Eight Simple Steps
#1 Choose a Great Real Estate Agent
Over the last couple of years, home buyer preferences have changed significantly – due in large part to the continuing COVID-19 pandemic and the emergence of remote work. Depending on where you live, these trends could impact your local market significantly – or they could have no impact whatsoever. In his article “How 4 Experts Say You Can Prepare Now for a Busy Housing Market This Spring” for TIME’s NextAdvisor, Jason Stauffer explains. According to Stauffer, “all real estate is local.”
While certain trends are expected to continue nationwide across all markets, “real estate can be hyper-local and demand can vary from one neighborhood to the next.” This is why working with a real estate agent who understands your local real estate market is vital. As Stauffer writes, “a local real estate professional [will] determine an ideal listing price and if any improvements or repairs need to be completed before putting your home on the market.”
What to Expect When Working With a Real Estate Agent
In our recent post “How to Hire a Real Estate Agent in 2022,” we note that a great listing agent will guide sellers through every step of the process. He or she will sift through a list of recently sold properties and conduct a comparative market analysis to determine the right price for your home. Your agent will then recommend necessary repairs and/or staging if necessary before arranging professional photography.
After determining the right list price, your agent will list your home on the MLS (Multiple Listing Service). Next, they will market your home extensively online and through traditional print media. As offers pour in, a good real estate agent will negotiate on your behalf and help you close the transaction.
Finding the right local real estate agent is an invaluable part of the home selling process. According to the National Association of Realtors, homes sold by the owner often close at a lower price than those marketed by a real estate agent. In 2020, the typical FSBO home sold for just $260k while the typical agent-assisted sale closed at $318k.
A survey conducted by NAR in 2021 found that homeowners selling on their own struggled to prepare their homes, determine the right listing price and understand all the paperwork. Real estate agents guide sellers through each of these stages and so much more. To find the right one, be sure to interview real estate agents with proven track records in your neighborhood. Read our post “How to Hire a Real Estate Agent in 2022” for more tips as you search for the right agent to sell your home.
#2 Determine the Value of Your Home
The next step in our guide on how to sell your house is to determine its fair market value and set an initial asking price. According to Michele Lerner in a recent article for The Washington Post, “56.5 percent of homes sold for more than their list price” last June. Lerner writes that “the average home sold for 2.6 percent more than the asking price” as bidding wars between buyers heated up. In a hot seller’s market such as this, homeowners might think they can shoot for the moon with their listing price.
However, listing your home for a competitive asking price is key to generating buzz around your property and quickly closing a sale. Pricing too high could lock out a large group of qualified buyers while pricing too low could cause would-be buyers to question the home’s condition. Working with a qualified local real estate agent is a great way to ensure your home is listed at a fair price.
How Real Estate Agents Set a Home’s Asking Price
In her article “How to Set Your Home’s List Price: 5 Factors that Matter Most” for Homelight.com, Dena Landon explains how agents value properties. First, agents perform a comparative market analysis or CMA, which considers comparable sales. Comparable sales are those of properties like yours within the last few weeks or months. This is more reliable than comparing your property to current listings which have not yet sold, though agents also consider pending sales.
To help them set a competitive price, agents also consider the home’s location. This means assessing both the neighborhood and the actual lot. For example, a lot with an amazing view might be priced higher than the lot at the bottom of a cul-de-sac. They also consider the home’s condition and any recent updates made to the property. Unlike regular homeowners, agents have access to the MLS where much of the data required to perform a CMA is stored. According to the National Association of Realtors in this article, “pricing a home fairly and competitively requires both evergreen knowledge and a finger on the pulse of market trends.” This is why working with an agent is vital.
#3 Prepare Your Home for Sale
If you hire a realtor to aid in the home selling process, he or she will help you prepare your home for open houses and private showings. As mentioned above, this might involve staging and professional photos. Preparing for sale could also involve making minor repairs and cosmetic updates like a fresh coat of paint in the living room or a new front door. Regardless of how much you update the property, preparing your home for sale will certainly involve deep cleaning and decluttering.
To make your home attractive to potential buyers, remove personal property like family photos, out of season clothing and memorabilia. If you have yet to buy a new house or rent an apartment, place these items in a storage unit until closing. In her article “How to Take Great Pictures of Your Home” for The Spruce, Ronique Gibson explains why removing personal and controversial items is necessary.
Gibson writes that buyers who view photographs of a cluttered home are “more focused on the objects and not your space.” Worse yet, “images that express strong personal opinions or views can be an immediate turn-off.” Help prospective buyers picture themselves in your home by using neutral colors, “neutral themes” and lots of natural light.
#4 Market Your Home With the Right Campaign
To attract buyers, your realtor will market your home in a variety of ways. Some will be traditional — like taking out ads in a local newspaper, posting signs or sending out paper mailers. Others will be more contemporary — like posting on social media, sending out emails and advertising on the brokerage’s website.
An effective marketing campaign will bring in serious home buyers who are excited about your property and eager to close the deal. Home sellers should choose an agent with a proven track record of selling homes like theirs and a wide network of investors and other agents to ensure their property is marketed properly.
#5 Show Your Home to Potential Buyers
After staging, photographing and listing your home for sale, your agent will arrange private showings and open houses. Some will be in-person while others might be virtual – scheduled via Zoom or FaceTime. Showings made by appointment are usually a half hour to an hour long, with the listing agent leading prospective buyers and their agents through the property. Open houses are typically much longer – sometimes stretching from morning to afternoon.
It is during these viewings that your agent will connect with buyers and their representatives. Thus, finding an agent who understands your property and effectively communicates its features to potential buyers is very important.
#6 Cooperate With the Home Inspection and Appraisal Process
To help a home sale move along, be sure to cooperate with the home inspector, appraiser and buyer’s lender. Most mortgage lenders will not lend the full list price of a home to their borrower if the house appraises under that price or if major issues pop up during the inspection.
If issues do pop up during the appraisal or home inspection, the buyer might ask you (the seller) to lower the price or cover repair costs. In a seller’s market, homeowners have a lot of leverage over buyers. Cooperate with all parties involved, but allow your agent to negotiate on your behalf.
#7 Receive and Negotiate Purchase Offers
The last two steps of the home selling process are handled primarily by your listing agent, who negotiates with the buyer’s agent. As offers pour in, your agent will negotiate with prospective buyers and their agents. If the buyer or the buyer’s lender does order an inspection or appraisal, there might be a second round of negotiations afterwards.
It is during this stage of the home selling process that your agent might bring up contingencies. At the same time, buyers might offer to waive common contingencies like the appraisal and/or inspection to make their bids more attractive. In some cases, the seller’s agent might ask the buyer to release funds but wait to transfer the home’s title until the seller has closed on a new home. An agent who works with both buyers and sellers should be able to help you sell your home and find a new property concurrently. They will also negotiate these contingencies as needed.
#8 Accept an Offer and Close the Deal
After your agent has sifted through offers and negotiated with the right buyer, he or she will help you close the deal. In the article “12 Steps of a Real Estate Closing” for Investopedia, Shobhit Seth explains what to expect at closing. According to Seth, real estate transactions “are generally completed over a span of weeks and have many moving parts.” They typically begin when an escrow account is opened and “end with a final walk-through before signing on the dotted line.”
Once negotiations have ended and the seller has accepted a final offer, both buyer and seller will remove contingencies. After this, the buyer’s mortgage lender or the buyer himself will release funds and conduct a last-minute walkthrough. Finally, both parties will sign and complete the transaction. Because real estate transactions can be incredibly complicated, both buyers and sellers often hire agents and attorneys to guide them through the process.
Final Thoughts on Selling a House in 2022
From staging and taking professional photos to setting the right list price and negotiating with buyers, we outlined exactly how to sell your house in 2022. In almost every section of this guide, choosing the right agent was essential to an efficient, stress-free and profitable home sale. This explains why “90% of sellers were assisted by a real estate agent when selling their home” in 2021 according to the National Association of Realtors. Of the sellers surveyed, 90% would “definitely use that same agent again” in the future.
If you are planning to sell your home in 2022, reach out to the team at Levin Rinke Realty. With extensive local knowledge and incredible dedication to their clients, our agents are happy to help sellers in the Greater Pensacola Area.