Real Estate Sales Process

89% of home sellers use real estate agents when selling their home. A solid number in theory. However, when you also consider that a massive 33% of those sellers would not use the same agent again you start to see a problem. The real estate sales process can be long, frustrating and precarious, and if not done correctly you stand a very good chance of alienating future custom.

However, here at Process Street, we've been working hard to write a collection of process documents which will help ease the pain.

By running through this checklist every time you start the sales process, you can be sure that no key details or opportunities are missed whilst getting the deal running smoothly.

In this checklist, there are links to separate workflows you can use to have more control over your working life, like home staging, home cleaning, and other parts of the real estate sales process that are vital and bound to help you move your inventory.

Ready to process a sale? Let's get started.

Whilst it may seem over the top, a purchase agreement needs to be made for every offer and signed by the potential buyer. Save copies of the purchase agreement as necessary using the form fields below for safe keeping.

Remember that this document needs to include the following sub-checklist items:

Examples of purchase agreements are available online, such as the file below, which originates from Central Michigan University's website. This is a vital step in the real estate sales process and cannot be overlooked!

What to include when making an offer

Your purchase offer, if accepted as it stands, will become a binding sales contract—also known as a purchase agreement, an earnest money agreement or a deposit receipt. It’s important, therefore, the offer contain every element needed to serve as a blueprint for the final sale. These purchase offers should include the following:

• Address and sometimes a legal description of the property
• Sale price
• Terms—for example, this is an all-cash transaction, or the deal is subject to you obtaining a mortgage for a given amount.
• Seller’s promise to provide clear title (ownership)
• Target date for closing (the actual sale)
• Amount of earnest money deposit accompanying the offer—whether it’s a check, cash or a promissory note—and how the earnest money will be returned to you if the offer is rejected (or kept as damages if you back out of the deal for no good reason)
• Method by which real estate taxes, rents, fuel, water bills and utilities are to be adjusted (prorated) between buyer and seller
• Provisions about who will pay for title insurance, survey, termite inspections and the like
• Type of deed that will be granted
• Other requirements specific to your state, which might include a chance for attorney review of the contract, disclosure of specific environmental hazards or other state-specific clauses
• A provision the buyer may make a last-minute walk-through inspection of the property just before the closing
• A time limit (preferably short) after which the offer will expire
• Contingencies (these are extremely important matter and discussed in detail below)

Contingencies

If your proposal says, “This offer is contingent upon (or subject to) a certain event”, you’re saying you will go through with the purchase only if that event occurs. The following are two common contingencies contained in a purchase offer:

• Financing. You, the buyer, must be able to get specific financing from a lending institution. If you can’t secure the loan, you will not be bound by the contract.
• Home inspection. The property must get a satisfactory report by a home inspector “within 10 days after acceptance of the offer” (for example). The seller must wait 10 days to see if the inspector submits a report that satisfies you. If not, the contract would become void. Again, make sure all inspection conditions are detailed in the written contract.

Is the listed price the right price? A REALTOR® can give you a Comparative Market Analysis (CMA) of the home’s value, or you can check local listings on realtor.com® to see what similar properties sold for. Based on the home inspection, you might also ask for a lower price or repair contingencies if the home needs fixes.

You’re in a strong bargaining position—meaning you look particularly welcome to a seller—if the following conditions apply to your situation:

• You are an all-cash buyer;
• You have been pre-approved for a mortgage;
• You don’t have a house that must be sold before you can afford to buy.

In those circumstances, you may be able to negotiate discounts from the listed price. On the other hand, in a hot seller’s market, if the perfect house comes on the market, you may want to offer the full list price (or more) to beat out other early offers.

It’s very helpful to find out why the house is being sold and whether the seller is under pressure. Keep these considerations in mind:

• Every month a vacant house remains unsold represents considerable expense for the seller.
• If the sellers are divorcing, they may just want out quickly.
• Estate sales often yield a bargain in return for a prompt deal.

Earnest money is a deposit you put down with your offer on a house. A seller is understandably suspicious of a written offer not accompanied by a cash deposit to show good faith. A REALTOR® or an attorney usually holds the deposit. The amount varies from community to community, and it becomes part of your down payment.

Once you have discussed the offer with the seller, it is your responsibility to contact the buyer and either relay their acceptance or provide a counter-offer. Once again, record the offer in writing.

If this counter-offer is further negotiated upon, keep relaying offers to both parties and answering any questions either may have. Bear in mind that negotiations may not be entirely based on price; aspects such as concessions, financing and timing can all be altered to suit both parties.

Do this until negotiations end and a final offer is accepted and confirmed by both sides. Record both a copy and base details of the accepted offer using the form fields below.

The sales process is almost at an end; time to arrange dates and times for the last few important steps to take place. Obviously, these times should be agreed upon by both the buyer and seller, and need to include the following form entries.

Doodle is a fantastic dedicated way of managing your meetings. For more information and alternatives, check out How to Manage Small Business Calendars in the Cloud.

Self-explanatory to the utmost, you need to conduct any necessary negotiations after the property inspection on the buyer's behalf.

This step may not always be necessary, largely being dependent on your initial property assessment and the information given during the sale. If you have already disclosed any problems with the site or building then there will usually not be any points on which the buyer can further negotiate.

If, however, negotiations are required then you must relay offers between the buyer and seller until a satisfactory conclusion is made.

Although this task can also be carried out by a legal representative or consultant on the seller's behalf, it is possible that you, as the agent, will have to exchange contracts (purchase agreements) between the buyer and seller.

Not only does both party need to sign the contract of sale, but a copy of the signed document needs to be given to both sides within 24 hours of signing. Ensure that the buyer pays the required deposit on the property.

Whilst much of the closing procedure is handled by the buyer and seller's legal representatives, the closing documents on the seller's side include:

• The HUD-1 settlement statement
• A certification of title
• The deed
• Loan payoff

• Mechanic’s liens

• A bill of sale
• A statement of closing costs
• A statement of sale

For more information on any of these documents, Zillow provides a succinct explanation for all.

Remember that, although the buyer generally has a 5 working day settlement period to think over their choice and back out with no repercussions, the seller does not have this grace.

Within the First 10 Days of Acceptance

• Contact your mortgage person to apply for your mortgage. The mortgage person will begin the financial process and order an appraisal for your new home.

• Order your home inspection. A home inspection is not required, but highly recommended. This will no doubt be the largest purchase you make. Spending a couple of hundred dollars to have a qualified person thoroughly inspect your future home may prevent thousands of dollars of unexpected repairs later on. Contact a licensed home inspector of your choice (if you are working with a "buyers agent", then he/she may recommended one). The home inspector will set an appointment that is convenient for you. The inspection must take place during your inspection period, usually 10 days from acceptance of your offer.

• Arrange for the second deposit. The second deposit on your new home is usually due 10 days from the date of your offer. This is normally 5% of the purchase price, but could be significantly less depending on your financing and your available funds. This must be made by bank check, certified check or money order. If you need to transfer funds from a retirement or money market account, or borrowing money from a relative, do it as soon as possible to allow time for the check to clear.

• Have the purchase and sale agreement reviewed by your attorney. Although not required, having an attorney familiar with real estate law will save you peace of mind and possibly money should any legal issues come up. An attorney will help to make sure you are financially protected should anything go wrong during the home buying process.

• Sign the Purchase and Sale Agreement. The is the contract that contains all the details of the real estate purchase. Occasionally, this may take place beyond the 10 day period if there are any concerns that are being negotiated between the buyer and seller.

• Inform your landlord you are purchasing a home if you are renting. Most landlords require at least 30 days notice that you are moving or you may forfeit any deposits you have on your apartment.

Within 30 Days of Acceptance

• Contact your insurance person to arrange for coverage for your new home. Most lenders require you to pay one year's insurance premium up front. Your insurance broker can let you know how much this will be, and will provide a binder for you to bring to the closing.

• Stay in contact with your mortgage person. You must obtain a mortgage commitment letter before your financing period ends (usually about 30 days after your offer is accepted).

• Arrange for a mover. This should be done 30 to 45 days ahead of the closing date. Care should be given not to make firm arrangements until you have a confirmed closing date and you have received your financial commitment letter from your mortgage person.

1 to 2 Weeks Before Closing

• Arrange to have the utilities for your new home transferred to your name. And don't forget to have your current utility services disconnected. This includes (if applicable) gas, electric, telephone, cable television, and internet service. If your new home has city or town provided water, this will be handled by the seller's agent. If the home you are purchasing is heated by oil, you will have to pay for any oil that is left in the tank at the closing.

• Make sure you have the funds available for closing. Your mortgage person should have given you a good faith estimate of the amount that you will need. If not, contact him/her as soon as possible.

• Make final arrangements with your movers.

1 to 2 Days Before Closing

• Arrange for a final walk through of your new home. Your agent will arrange a final inspection of the home you are about to purchase. Most likely everything will be fine, but check to make sure everything is in the same condition as when you first put your offer in.

• Verify the time and place of closing. Call the closing attorney for the time and place that the closing will occur. Your agent may do this for you.

• Get the final amount you need to bring to the closing. Call your mortgage person for the amount of the certified or cashier's check you need to bring to the closing.

For the Closing

    Bring the following items to the closing:

• Picture I.D. (drivers license, passport, etc.) The closing attorney will need to make a copy of it for the registry of deeds.

• Personal checkbook. In case you have to pay for any incidental charges such as heating oil, bottled gas, taxes, etc. that have already been paid by the seller.

• Certified Check in the amount given to you by your lender.

• Insurance Policy or binder.

• Your personal attorney, if any.

Congratulations! You Can Move Into Your New Home!