Friday, September 21, 2012

How to Sell a House

In an earlier post, I noted that my brother and I were selling a house in Pennsylvania.

Well, in mid-June we closed on the sale.

It was interesting to be on the other side of the table so soon after purchasing a home.  The process suffered a bit in the same way it did as when I was a buyer - lack of communication.

Because it is a negotiated deal that isn't complete until the buyer has the keys and the seller has the proceeds, neither side wants to show their cards.  When I was a buyer, I became terribly frustrated by the lack of responsiveness from the seller.  It was also impossible to know whether the seller was ignoring me, whether it was the seller's agent or lawyer that was behind the silence, or whether people weren't on the same page in terms of pace and reading / responding to e-mails.

Getting an offer
As the seller, I ran into this again.  We received an offer that we felt was low but we had at least one or two other potential buyers set to see the house before that offer would expire.  We didn't want to counter the low offer without knowing if we might have another offer coming in.  We'd also had a few other showings (although not the volume we'd have hoped), but often the agent for the other side wouldn't leave feedback.  This left us wondering if there was real interest in the house or if people were just using up a sunny Saturday to go "window shopping" through open houses.

In the end, the other interested parties either weren't interested, or cancelled their showings.  So, we were left with a low offer and not great prospects.  If we had regular showings, we might be inclined to think we could let the low offer go since another might be coming.  What really got us moving though was that the current renters let us know they were planning on moving out.

We eliminated the option of accepting the low offer which left us with two options: #1 Counter the offer with a number that we would be more acceptable or #2 No counter and keep the house on the market.

Our agent was careful to advise us that even if our higher counter offer was accepted, the agreement was still conditional and the Buyers could come back with requests for repairs and such to bring the effective price down.

We countered the offer and were happy yet cautious that it was quickly accepted.

The Sale Process
Pennsylvania thankfully has a standardized template for a sales contract so we didn't need to hire a lawyer.  The Buyers had agreed to our price, but the offer was conditional on an inspection and approval of their financing.

The Buyers also wanted to move in rather quickly, so we needed to have the current renters vacate so that the house would be ready.

The inspection did turn up several items in need of attention.  Some were "musts" - the bank would not approve the loan if they weren't remedied, while others were items where the Buyers were looking for us to pay for or help pay for repairs.

We had supplied the Buyers with our own inspection at the beginning of the process so we were less than keen on the idea of paying to replace the roofing shingles when they should have known they were old before putting in an offer.  We also knew they wanted to move in quickly, so this gave us leverage in terms of what we were willing to budge on.

We did have to pay for termite inspection and treatment, as well as treatment and pumping of the septic system, and for some old lead paint to be removed from window frames.  These were all required items.

The Buyers, given the time squeeze, didn't have much of an option - they could either accept where we were willing to budge or hold out for more, but potentially delay closing.  Again, because of lack of direct communication, I'll never know if they were perhaps furious at us for not budging on these types of repairs, or maybe they just thought they'd try and see what they could get.

Another breakdown in communication did end up delaying closing and I believe the Buyers were out of their previous house and had to stay in a hotel for a few days.  Pamela and I had to deal with this and understand how much of a hassle it is.  Their inspector had pointed out the lead paint on the windows needed to be removed and repainted.  Somewhere between their inspector, our agent, and the handyperson who we hired to do the work, the detail got lost that both the inside and outside of the window frames needed to be treated.

Their inspector came back a few days before closing to do a final walk though and pointed out the inside had not been dealt with.  We got our handyperson to go back, but the inspector couldn't return for a few days which delayed the bank's ability to close on the loan file.

On to Closing
Neither my brother nor I had to attend closing.  We had our agent attend and sign the final documents for us.  It was very straight forward for us - we got a statement the day before with the final numbers (which had a mistake), then we got a call after closing from our agent to say that it was complete.  We got a direct deposit of the net proceeds the next day.

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