|There are a number
of steps to selling any house. Experience has taught
us that every home sale is unique. Yet every sale —
from putting the house on the market to settlement
day — shares a common process.
Long & Foster-Webber & Associates’ Home Sellers
Guide is designed to help you understand the selling
process beforehand. This inside know-how will help
you make smart decisions every step of the way — and
set aside any worries you may have from the
Of course, this short guide cannot answer all your
questions. For specific answers to your specific
situation, we encourage you to consult a Long &
Foster-Webber Sales Associate.
We will be happy to share our expertise. After all,
we want you to get the best selling price in the
shortest time. Every advantage is yours when you do
business with Long & Foster-Webber & Associates, The
Real Edge in Real Estate®.
Putting Your House On The Market
The first step toward putting your house up for sale
is to meet with a real estate Sales Associate at
your home. This is what we call the “listing
But beforehand, it’s important to understand “who’s
who” and how brokers may cooperate to sell your
LISTING BROKER OR LISTING AGENT.
An individual real estate broker whom the seller
hires to represent the seller through a contract
called a “listing agreement”. The listing agent
(Sales Associate) is associated with the listing
broker (the real estate company). The listing broker
is directly paid the listing commission and then
splits the commission with the listing agent.
(Although the broker and agent may be two different
individuals, the term “broker” is used throughout
the Guide for simplicity.)
SELLING BROKER OR SELLING AGENT.
In a “cooperative” sale, the house is listed by one
broker and a buyer is provided by another broker.
The selling broker receives the selling side of the
commission. If the listing broker also produces the
buyer, then the listing broker receives both listing
and selling sides of the commission. A selling
broker may have a signed buyer representation
agreement with a buyer and, therefore, represent the
buyer and not the seller. If the buyer’s agent is a
Long & Foster-Webber Sales Associate, Long &
Foster-Webber & Associates becomes a disclosed dual
agent with the consent of both buyer and seller.
A Little Homework
Before the listing appointment, both the home seller
and the listing broker are busy. While the home
seller collects a list of documents requested by the
broker, the listing broker studies recent
neighborhood sales of homes comparable to yours, and
also comparable homes currently for sale.
There’s No Place Like Home
At the listing appointment, the listing broker will
want to inspect the house and yard to become
familiar with its special features.
You have probably enjoyed living in your home and
have been pleased with its many unique features.
Your listing broker will want to tell prospective
buyers about the special features of your home and
neighborhood. Be ready to be specific about schools,
day-care, nearby public transportation, and other
desirable community features, as well as home
features not readily apparent.
Remember, prospective buyers will be “comparison
shopping” and keenly aware of subtle differences in
houses for sale in the area. Be sure to tell your
listing broker why yours is special — from any home
remodeling to afternoon winter sunshine.
Demand Sets Price
After conferring with the listing broker on market
conditions and comparable nearby sales and listings,
the home seller will set the listing or “asking”
price for the house.
A common definition of market value is: “What a
ready, willing and able buyer will pay, at a price a
seller will accept.” Buyers are sophisticated.
They’ve already been shopping, and when they see
your home, they’ll be comparing features and
There’s a rule of thumb that says: “A house priced
more than 5% over market value discourages offers.”
Buyers who can afford the price can get “more house”
for their money elsewhere. Buyers who cannot afford
the price simply won’t look. This is why we say, “A
house priced right is half sold”.
A fair market value will be determined by comparing
the property with similar properties which have
recently sold and (in some cases) with similar
properties currently on the market. Experience in
the industry has proven this “market analysis”
approach is more accurate than the “replacement
cost” or “potential rental income” methods.
Sample “Net Sheet”
Based on this sales price, the listing broker will
go through a worksheet that estimates the “net cash”
from the sale. Simply, this exercise subtracts
anticipated charges paid by the seller from the
sales price. A copy of the “net sheet” is left with
the home seller. (An itemized list of typical
selling costs is presented in the “Settlement”
chapter, which is the stage when these charges are
No sale can be completed without financing. That is
why it is generally to the home seller’s advantage
to appeal to the greatest number of home buyers by
accepting the greatest range of financing plans. The
listing broker will explain the basic differences
between VA (Veterans Administration), FHA (Federal
Housing Administration) and conventional financing,
as well as explain “discount points”.
What Is A Point?
A point is one percent of the amount of the buyer’s
mortgage loan. For example, if a loan is $300,000,
one point is $3,000. Lenders charge points to
increase the yield on their loans. On all loans, the
home buyer and home seller may share the charges by
Property Profile Folder
To enable the listing broker to prepare a folder of
information on the property, the home seller needs
to provide a number of documents and information
specific to the location and jurisdiction. Because
the list is long, you can understand why it’s best
to collect the papers before the listing
appointment. These materials may include:
PAY OFF NOTICE.
A letter signed by the home seller and mailed to the
lender by the listing broker to notify the lender of
the intention to pay off the mortgage in order to
minimize prepayment of interest penalties to the
seller. The home seller should provide the broker
with the lender’s address, loan balance,
assumability, years remaining on present mortgage,
P.I.T.I. and the interest rate, if possible.
WELL AND SEPTIC INSPECTION.
If the property is on septic/ well, current
inspections by local health authorities are required
while home is occupied. The listing broker will
usually arrange for the inspection after contract is
ORDER LENDER APPRAISAL.
Lenders usually require an appraisal to ensure that
the property is adequate collateral for a loan. A
lender will usually insist on ordering its own
appraisal for this purpose.
The listing broker will ask the home seller if any
tax assessments or easements exist on property that
must be paid or included in the purchase contract
and passed with the land when sold.
PROPERTY TAXES/CONDOMINIUM FEES.
The home seller provides a record of property tax or
condominium fee payments which the buyer will
reimburse a pro-rata share to the home seller at
VA/FHA and most lenders of new mortgages require a
termite inspection certificate that shows the house
is free of infestation. If the home seller does not
have a current certificate, then the listing or
selling broker (depending on area) will arrange
inspection at home seller’s expense.
Sometimes a home inspection and radon testing will
be ordered. The home seller should also provide all
information as to the physical condition of the
property, such as the presence of fire retardant
home seller should provide a record of the past 12
months’ utility bills, including gas, electric,
sewer, water, and trash where applicable. Most
buyers will want to know history of utility costs.
If possible, the home seller should provide the
listing broker with the deed, house location survey,
condominium bylaws or homeowners association
documents, subdivision plat map, house floor plan,
previous title search abstracts, legal description
of property (subdivision, section and lot), home
warranties on major systems, if still in effect, and
a copy of homeowner’s insurance policy for
endorsement in the purchase contract.
In anticipation of a buyer’s offer, the home seller
must be ready to supply the listing broker with a
specific list of the personal property that is
included in the real estate property for sale.
Examples of items to “convey” may include:
draperies, drapery rods, remaining heating oil,
firewood, washer, dryer, refrigerator, stove,
microwave, disposal, swimming pool chemicals,
awnings, storm doors and windows, screens, Venetian
blinds, shutters, window air conditioner, etc. The
home seller should tag or remove items which do not
When the home seller is ready to put the house on
the market, a listing agreement is filled out,
indicating a specific period of time the agreement
is in effect (“listing period”), and signed by the
seller. You’ve now hired a listing broker and
Questions And Answers
What is a “Lockbox”? A lockbox is a universal metal
container for your house key that is hung on the
front door and can only be opened by licensed Sales
Associates. It provides access when the owner is
away, thus assuring full exposure to prospective
Clean Up, Fix Up, Or Toss Out
Today, the home that stands out among
similarly-priced houses is the home that sells. Why?
Because it makes a good first impression that lasts
right to the settlement table.
You may not be able to improve the market value of
your house (finish basement, remodel kitchen, etc.),
but you can improve its marketability. And usually
this can be done with more elbow grease than hard
cash. The key is to put yourself in the buyer’s
shoes. In fact, if you drop by some open houses (you
may soon be a buyer yourself), you’ll pick up some
pointers. Then practice making your house as
appealing and uncluttered as the home you wish to
Start here with “curb appeal”. Basics: A trim lawn,
well-proportioned shrubs. Remove garden hoses, lawn
tools, dog house and toys from the yard. Check for
flat-fitting roof shingles; straight lines on
gutters, shutters, windows and siding; solid
caulking around frames and seams; paint. Keep walks
and steps free of snow and ice. Extras: Brass door
knocker. Seasonal door decorations. Wrought iron
lamp posts. Small landscaped courtyard. Flower beds.
THE FRONT HALL.
Aura and atmosphere give a hint of what’s inside.
Basics: Light (from window, skylight, lamp or
overhead fixture; perhaps even use a stronger light
bulb). For evening inspection, turn on every light
in the house for a welcoming glow. Make sure the
house smells fresh and clean. Make sure that the
woodwork is unmarred and the carpeting spotless. A
fresh coat of paint is a good investment, and it’s
most appealing in a neutral tone, since strong color
is so subjective. Remove unsightly or worn throw
rugs. Extras: Door chime. Dead bolt lock and chain.
THE LIVING ROOM.
Strive for a lived-in, cozy feeling. Discard worn,
chipped or frayed furniture. Open curtains.
Furnishings here and throughout the house should be
well placed and in good repair. Set out fresh
flowers, and even put a drop of bath oil or vanilla
on light bulbs for a subtle scent.
Many buyers judge the house by the way the oven and
stove are kept. Basics: Appliances should be
spotless and in perfect working condition. Replace
or repair anything that sticks, squeaks or drips.
Counter, cooking, cabinet and eating spaces should
be kept open and uncluttered, without countertop
appliances. Clean butcher block. Floors and walls
should be in inviting light colors, and serviceable
(resistant to grease and moisture).
THE MASTER BEDROOM.
The second-most appealing room to the buyer (after
the kitchen, before the garage). Basics: Uncluttered
furnishings; defined areas (sleeping, dressing,
sitting) by furniture arrangement. Show the true
size of closets by removing or packing items that
can be stored elsewhere (since you’re moving away),
like off-season clothes.
Practicality combines with attractiveness. Basics:
Sink, toilet, bathtub, tile, even shower curtains
should be immaculate. Fix leaky faucets—rust stains
indicate faulty plumbing. Repair caulking and
grouting. Minor flaws suggest neglect to the
prospect. Light should be soft (no harsh
fluorescents), but bright. Extras: Use some
potpourri for a pleasant scent.
THE RECREATION ROOM.
An atmosphere of relaxation, fun and activity should
Basics: Open space to accommodate an assortment of
activities. Make sure the fireplace or wood stove is
clean, with fresh logs. Extras: Track lighting;
Convenience is the key here (the perfect garage
holds only cars).
Basics: Uncluttered space. Sell, giveaway or toss
unnecessary articles. Clean oily cement floor.
Strong overhead light (fluorescent or bulb). Orderly
storage area, tidy workbench.
Organize, hang tools on peg boards, and put items on
shelves. Cure damp smell by placing bag of limestone
in damp area. Clean the water heater outside, change
the furnace filter and make inspection- access easy.
Brighten the basement by painting walls.
THE ATTIC. Yes,
it’s for sale, too. Tidy it up. Light it up. Again,
pack anything you’re going to move. Get rid of the
rest. Be sure your energy-saving insulation is
apparent and the air vent works.
Questions And Answers
Should we redecorate? The big problem in major
redecorating arises because it is very difficult to
anticipate the tastes of strangers. Best to stick to
fresh paint in very neutral colors and present a
sparkling clean house without the redecorating
Is it possible to over-improve? Yes. Your
landscaping may be divine. You may have the only
cabana and swimming pool in the neighborhood, but it
may be difficult to sell a $450,000 home in an area
of $420,000 homes. Consult your listing broker to
determine if added improvement means added
Are “fixing up expenses” tax deductible? Yes. You
can reduce your taxable capital gain by “fixing up”,
but only under strict guidelines. Check with your
tax consultant for details.
Many states now require that sellers provide buyers
with either a residential property disclosure or a
Leave The Selling To Us
While the home seller is actively getting the house
ready to show, the listing broker is actively
spreading the word that the property is available.
Generally speaking, the listing is promoted to two
groups: the real estate community and the buying
Many home sellers are surprised to learn that
approximately 56% of all buyers come from referrals
between brokers and their vast network of contacts.
Approximately 17% of buyers come from inquiries
stimulated by “for sale” signs in yards. The
remaining 27% of buyers come from a combination of
the real estate company’s reputation and image, open
houses, and advertising or other promotional
efforts. Obviously, the most productive source of
buyers is working closely with other brokers, and
this is where your listing broker begins.
The listing broker enters a profile of your house in
the Multiple Listing Service computer. This profile
includes everything from location and price, to
available financing and number of baths, from house
style and heating system to special features and
showing instructions. Now your house description is
instantly available to the entire MLS membership.
(MLS is a membership service available exclusively
to brokers belonging to the Board/ Association of
In addition, your listing broker announces the
listing at regular office sales meetings, and points
out noteworthy features. At Long & Foster-Webber &
Associates, the listing office, as well as other
Long & Foster-Webber & Associates offices, may
“tour” the property. In addition, other real estate
companies may also ask to tour your home. (Without
the lockbox, your house is inaccessible to this
large network when you are not home.)
The yard sign provides additional exposure to the
neighborhood and prospects touring the area. Signs
often create high-quality inquiries because
prospects like the area and the house and want to
get a closer look inside. Your home, as well as
homes similar to yours, will be advertised from time
to time in major metropolitan and community
newspapers and on the Internet for mass reach.
Direct mail cards are used to target specific
When It’s “Show Time”
With all this activity, your listing broker and
other selling brokers will be bringing prospective
brokers to see your house. Brokers will make an
appointment with the home seller, and will give you
as much advance notice as possible. That will give
you time to tidy up, make beds, light dark areas,
perhaps pop something in the oven, like a spicy
cake, pie, bread, or even a pan of cinnamon. Make
every effort to accept all appointments — you never
know when your buyer will walk through the front
door. Also, have the property brochure available
with utility bills, MLS profile, house location
If You’re Home
If you’re home, greet the prospects at the door and
politely excuse yourself and leave the selling to
us. (Perhaps check the baking or take the dog for a
Buying a home may be the largest single purchase a
family will make in a lifetime. It is a serious
matter for them; therefore, too many distractions
could spoil the sale. We have found over the years
that a number of pointers make things a little
easier for your Sales Associate and the buyers.
- Too many
people present during inspection may make the
potential buyer feel like an intruder, which
makes it difficult for selling broker and buyer
to be at ease.
- It’s better
that you and your children busy yourselves in
one part of the house or outside, rather than
tagging along. The broker knows the buyer’s
desires and can better emphasize your home’s
- Quiet is the
ideal environment. Noise is distracting, so
don’t have the radio or TV on — the broker and
the buyer need to hear each other!
- It’s better to
keep pets out of the house. Buyers may be timid
around an unfamiliar animal.
- Chatting with
a potential buyer may dilute the broker’s
ability to present your home’s features in the
best light. If asked a question, respond
honestly, but diplomatically refer questions to
- The lived-in
appearance makes it a home. There’s no need to
apologize for its appearance. Let the trained
broker answer any objections.
- Many a sale
has been lost by trying to dispose of furniture
and furnishings to the potential buyer. Wait
until after the sale is made.
- Your listing
broker is most qualified to bring negotiations
to a favorable conclusion.
- Do not discuss
price, terms, possession, or other factors with
the potential buyer.
If You’re Not
Have the house ready and enclose pets in the
basement, garage or back yard. Selling brokers may
leave their business cards or register at the
listing broker’s office, depending on local custom.
Be sure to keep any cards and give them to your
listing broker as soon as possible for follow-up.
When an open house is scheduled, plan to be away for
the afternoon. Make the house accessible to the
listing broker and be sure to leave word on how to
Seller And Broker Team
During the listing period, the listing broker will
periodically update the home seller on the mortgage
market, new competitive listings and sales in the
area, and progress in selling the home. The feedback
between broker and seller is vital to exchange
selling suggestions and maintain maximum
marketability. The listing broker will follow-up
with the other selling brokers and provide feedback
to the home seller. This mutual teamwork becomes
especially important later when negotiating offers
Questions And Answers
Should I let anyone in to see the house? If a
prospective buyer calls or comes by unexpectedly
without a broker, get their name and phone number.
Do not show the home. Explain that it is not a
convenient time. Call your listing broker so that
the buyer can be qualified and identified prior to
showing. This is for your benefit and protection.
If an offer is imminent, should we still show the
house? A property is either sold or available—there
is no in between. However, if there is an accepted
contract that contains a contingency, and backup
contracts are invited, then this must be made clear,
and the house should be shown. Refer the selling
agent to your listing agent for details.
OFFERS & CONTRACT
Signing On The Dotted Line
A buyer makes an offer by submitting a written and
signed offer to purchase, which will become the
sales contract when ratified by everyone’s
signature. Once the seller and buyer sign the paper,
they are bound by the contract conditions.
The “presentation of a contract” begins when the
selling broker registers the offer with the broker’s
own office and notifies the listing broker of the
offer. The listing broker then arranges a
presentation appointment with the home seller, and
with the selling broker in some areas. (The buyer
doesn’t attend the presentation.)
Either the selling broker or the listing broker
presents the terms of the offer, depending on local
customs. The listing broker acts as the home
seller’s advisor. Part of the presentation is
determining that the buyer is qualified financially
to make the purchase. (Should either the seller or
buyer be out of town, the contract is presented via
telephone and confirmed later by FAX.)
Content Of Presentation
Included in the presentation of the offer are a
number of specific concerns. After all, once the
contract is signed, it becomes the binding guideline
for the transaction. Description of the offer will
include, but is not limited to:
- Date, name and
address of the buyer and seller, and the legal
description of the property.
- Amount of
earnest money deposit, which will be held in an
escrow account by the broker, unless otherwise
- Sales price.
- Size of down
payment, and how the remainder of purchase price
is to be financed. The offer should indicate the
maximum interest rate the buyer is willing to
pay, and the right to cancel without penalty if
such financing proves unavailable.
settlement and occupancy date, and daily rent
provision for “post-settlement occupancy” if the
seller cannot vacate and becomes the temporary
tenant of the buyer.
if any, such as satisfactory review by attorney,
structural inspection, appraisal, or sale of the
buyer’s present house.
important provisions, including a list of items
that convey with the sale, stipulation that
title must be insured, and who is to pay various
Taken all together, this offer is reduced to dollars
and cents on a sample net sheet, similar to the
exercise during the listing appointment. The
estimated outcome is determined, which allows the
home seller to consider the “bottom line”.
A decision on an offer should be made at
presentation, if possible. A home seller has three
- Accept the
offer as written.
- Make a
“counter offer” on unacceptable aspects.
Counters are written in the margin of the
contract or in addenda, and initialed by the
home seller. A purchase offer with counters is
not a ratified contract until the home buyer
accepts and initials the counters. Buyers can
withdraw, accept or counter the counter offer.
- Reject the
offer, if it is totally unacceptable. (Outright
rejection, without a counter, should be the last
A contract exists
when all terms including changes are ratified by
initials of all principals. When the contingencies
are satisfied, the contract becomes enforceable.
All offers registered must be presented to the home
seller. They will be presented in the order
registered. The home seller should hear each offer
completely and ask questions. No action is necessary
until all offers are heard. If more than one offer
is accepted or countered, an order of precedence
must be established, such as primary, first backup,
second backup. Be careful not to sell the home
Questions and Answers
Is it best to turn down the first offers? In any
transaction, it’s normal for the seller to wonder
“Could I have gotten more?” and for the buyer to
wonder “Should I have paid less?”. When your
reasonably-priced house is put up for sale, the very
first lookers may make an offer to buy. That doesn’t
mean that you’ve priced your home too low. It means
qualified buyers and their brokers have been looking
— and waiting — for the right house to come on the
market at just the right price. Your listing broker
will advise you on all offers.
Does the sale of a condominium or a property within
a Homeowners Association (HOA) require any special
action? The purchase offer for a condo sale or
homeowners association property will contain, in
compliance with the law, a requirement that the
seller furnish the buyer with certain disclosure
information and documents. Ask about condo and
homeowners association resale procedures in your
Do buyers ever offer more than the listing price?
Rarely, but they do offer “above list” sometimes if
they believe it makes their offer more acceptable
than other competing offers. For the protection of
all parties, it is best to include a separate
statement signed by the buyer, indicating the
buyer’s awareness of the list price and their
reasons for the higher offer.
What do you do if the property doesn’t sell? The
first step is to go over carefully with the listing
broker why the property has not sold. Usually price
and property condition are the key. Study and
analyze what has sold in your area and at what
price. Then relist the house after adjusting for
shortcomings. Another option is to withdraw from the
market and rent until the market improves, or
simultaneously offer for sale or rent.
When will the yard sign be removed? Placing a sign
in the yard is always done by mutual agreement
between the listing broker and home seller. The law
in Maryland, Virginia, and the District of Columbia
allows the sign to remain in the yard after contract
ratification, even though “for sale” is changed to
“sold” after contract acceptance. However, ask your
listing broker about local sign ordinances.
If a buyer forfeits the deposit, who gets the money?
If the buyer fails to make full settlement, the
deposited earnest money may be forfeited only after
a release is signed by all parties. In the event of
forfeiture, the deposit will be divided equally
between the seller and the real estate brokers, but
not to exceed the amount of the commission, or
according to the sales contract.
Processing The Case, Etc., Etc.
The listing or selling broker (depending on local
custom) oversees a contract through to closing and
helps to place the financing, process the case,
arrange various inspections and review financing and
At this stage, all contingencies will be satisfied
and removed. The buyer will select a settlement
and/or a title company, and the listing or selling
broker will notify those firms and provide the vital
A number of professionals come into the home selling
process during this period, including a home
inspector (if requested by the buyer), well and
septic inspectors, termite inspector, appraiser and
attorneys. A mortgage approval can be made at
application in many cases subject to verification of
the information provided. However, on the chance
that the financing falls through, the seller should
keep the property in showable condition.
This inspection is required by most lenders and is
specified in the contract, although it’s not usually
required for hi-rise condominiums. The termite
inspections is ordered by the selling or listing
broker according to local custom. If existing
coverage is in effect that might avoid an
unnecessary inspection, the home seller should
mention this to the listing broker. The seller is
responsible for payment of the inspection, removal
of any infestation if required, and the repair of
damage if needed.
Your listing broker will keep you informed about the
buyer’s loan approval progress. Most contracts
require the buyer to make a loan application
immediately after contract ratification.
The lender’s loan officer takes the buyer’s
application. A property appraisal is ordered to
confirm that the property is adequate security for
the mortgage (the home seller should expect the
appraiser to call for the inspection appointment).
The lender verifies the buyer’s employment, income,
deposits, credit rating and debts.
Upon receipt of any information requested and the
appraisal, the lender issues final approval of the
mortgage application. VA, FHA, and occasionally a
conventional lender may specify requirements which
must be met before the loan will be made, such as
repairs. Ask your Long & Foster-Webber Sales
Associate about this situation. When the loan is
approved, a commitment is issued to the buyer. Many
contracts require loan commitment from the lender
within a specified period of time.
After Loan Approval
After the buyer receives written loan approval, the
selling and listing brokers will coordinate a
settlement date. Your listing broker will notify you
to confirm the date, place, and time and will give
you a checklist of everything you need to bring to
settlement. Your listing broker will also let you
know when you should notify utility companies to
The home seller can now make definite moving plans.
If the move is to another city outside of Long &
Foster-Webber & Associates’ Mid-Atlantic region,
Long & Foster-Webber & Associates can arrange for
you to receive destination area information from our
affiliated broker. This out-going referral ensures
the seller of working with a broker of the same
quality as Long & Foster-Webber & Associates, and
makes the move easier by providing information prior
to house-hunting trips.
Anticipating The Move
A number of items a seller might consider, now
that settlement is set, include:
- Begin to use
food in your freezer.
items you won’t be moving. (You may want to have
a garage sale.)
- check with
your insurance agency if you want to purchase
full coverage on moveables. Make sure your
family car and household goods are adequately
protected while enroute and initially after
arrival. (If the seller plans to vacate the
house more than 30 days before settlement, be
sure hazard insurance covers risk during that
period and until the deed is recorded.)
transcripts of children’s school records.
- Have birth and
baptismal records made of all family members.
medical, dental, and optometry records for the
- The selling
broker will remind the buyer to arrange for
insurance coverage in at least the amount of the
mortgage as of closing, and to bring a certified
or cashier’s check made out to the settlement
attorney or title company.
provided in the contract, the buyer gets possession
at settlement. The seller should make plans to
clean, remove trash, and vacate the day prior to
settlement, or in any case, not later than
settlement day. All appliances should be in good
working order in time for the buyer’s final
Buyer’s Final Inspection
The purpose of the walk-through inspection prior to
settlement is to determine if conditions in the
contract are satisfied. The time for the buyer to
inspect and note defects for correction by the
seller is during the contract negotiation and prior
to signing the sales agreement. Repair or
replacement items should be noted in the contract.
Most resale homes are sold in “as is” condition,
however, mechanical, electrical, and plumbing items
should be in working condition.
It is up to the buyer to perform the inspection, not
the seller who may or may not be present. The buyer
should be accompanied by the selling broker and/or
the listing broker. The home seller should be sure
utilities are on so that equipment can be operated.
Room By Room
Expect the buyer to try all lights and switches;
turn all faucets on and off, run shower and flush
toilets; turn on furnace and central air
conditioning (in off-season, the buyer may hire a
professional to certify proper function); test all
stove burners, oven at bake and broil; run some ice
cubes through disposal to test the blades; run the
dishwasher, washer, and dryer through complete
cycles; open and close all windows and doors. In
short, the buyer should try everything, including
the keys and the fireplace flue.
All deficiencies should be noted. If seller does not
correct problems prior to settlement, funds may be
withheld by the settlement attorney for repairs. The
selling broker will coordinate with the listing
broker and seller to make repairs before settlement,
if possible. Upon receipt of bills and notification
that repairs are complete, the attorney will release
the balance of funds to the seller, if money is
escrowed for needed repairs.
Signing Papers And Transferring Keys
The big day is here! Tonight you can pop open the
champagne, but today there will be a lot of paper
signing and a poignant passing of the keys (don’t
forget the garage keys, and the electric garage
At the settlement will be an attorney or title
company representative, the buyer, listing and
selling brokers, and all owners. The home seller
should bring all warranties on equipment (or leave
them in the house) and any instructions on equipment
maintenance or operation.
The attorney will have searched the title, and
obtained old and new lender instructions. First, all
unresolved walk-through deficiencies are resolved.
With the buyer, the attorney explains the deed of
trust, deed of trust note, and settlement sheets.
The buyer signs all three, and pays the balance of
the down payment and buyer’s closing costs.
With the seller, the attorney explains the deed and
settlement sheets and gets the home seller’s
signature on them. The seller pays appropriate
Seller’s Settlement Costs
Closing costs for the seller may include: (Again,
ask your listing broker.)
fees (preparation of the deed, settlement fee,
and any release fees)
- State deed
transfer tax or recordation fee
- Condominium or
homeowners association packet fees
- Water escrow
(to reduce, bring canceled check and last bill;
amount prorated at settlement)
- Loan discount
fee (points based on loan amount)
pay-off penalty (see deed of trust note)
- Interest up to
the date trusts are paid off
If the seller’s
taxes or insurance have been escrowed, the seller
will receive any money accumulated in the account
for bills not yet due. Additionally, the seller will
be reimbursed for any money paid in advance and not
used, such as property taxes. The seller will
receive these refunds at or after settlement,
depending on the locality. Taxes and homeowners
association dues or condominium fees will be
prorated on a daily basis. The seller, buyer, and
brokers are supplied a copy of settlement sheets for
their records. The house keys are transferred to the
The attorney or title company will disburse funds
after all funds are in hand, checks have cleared,
the new lender has reviewed papers, and the title
has been re-checked and the deed recorded. The
seller should not plan to receive funds for up to
four days, although they may be disbursed the same
day in some localities. Check with your listing
The house has now been sold, settled, and funds
Different Mortgage Strategies
When it comes to paying for a home buyers today have
numerous financing options. This is a summary of the
primary alternatives. Information about rates and
programs is available from your Long & Foster-Webber
Sales Associate or your Prosperity Mortgage® Company
Loan Originator. Prosperity Mortgage is a Long &
Foster and Wells Fargo Home Mortgage company.
Interest rates are for illustration only.
A conventional loan is a mortgage made between a
lender and a borrower with no other parties involved
(such as VA or FHA). Conventional loans customarily
require a 20% down payment. Down payments may be as
low as 5% with mortgage insurance; there may be no
down payment when using secondary financing to make
up the difference.
Example: A buyer purchases a $400,000 home. The
lender requires a 20% down payment ($80,000). At 7%
the $320,000 balance has a monthly P&I payment of
$2,391 over 30 years. Mortgage insurance could lower
the down payment requirement to 5%, or $20,000,
which increases the monthly payment.
Advantage: Conventional mortgages are
straightforward and easy to understand. Conventional
loans offer the largest variety of financing
Fixed Rate conventional loans feature equal monthly
payments that are made over the term of the
mortgage. The standard time period is 30 years or
less. The interest rate remains the same which keeps
the principal and interest payments the same over
the term. Payments can vary if taxes or insurance
escrow payments change.
Adjustable Rate loans are mortgages that allow for
payments which change periodically over the life of
term of the mortgage. An ARM loan has a set interest
rate and payment for a period of time and then
adjusts to the market rate at a predetermined point.
ARM loans feature lower rates over the initial loan
Balloon Loans are also conventional mortgages. They
include a provision for amortization over the
typical 30 year period but call for payment in full
at an earlier date. Balloon loans offer a lower
interest rate and payment over the period covered
but may require either refinancing or a large
payment at the end of the term.
Interest Only is a feature allowing for payments to
be applied to just the interest over a period of
time. Initially the loan does not amortize; the
principal does not decrease each month. Later
payments amortize the principal over the remaining
loan term. An assumption is made that rising
property values will increase borrower property
VA LOAN. The
letters ‘VA’ stand for Veteran’s Administration – a
branch of the US government. VA is not a lender but
rather guarantees mortgages for lenders to help
eligible veterans. VA loans require no down payment
up to the VA maximum loan limit. VA loans can be
assumed by qualified borrowers.
Example: A veteran purchases a $235,000 home. With
no down payment the loan amount is $239,700
including the VA Funding Fee. At 7% interest over 30
years the monthly P&I payment is $1,595.
Advantage: VA requires no down payment. The seller
can (but is not required to) pay all closing costs
for a veteran.
FHA LOAN. FHA
is the Federal Housing Administration, a division of
the US Department of Housing and Urban Development.
FHA does not lend money; instead, like VA, it
guarantees mortgages allowing lenders to make loans
that might not be eligible for conventional
financing. Down payments are as low as 2.25%. Both
fixed-rate and ARM mortgages are available. FHA
loans are assumable by qualified borrowers. FHA
mortgages have credit standards and other rules that
are more flexible than typical conventional
Example: A buyer of a $200,000 home makes a down
payment of $4,500. The loan amount including
up-front MIP would be $198,432. At 7% interest over
30 years the monthly P&I payment is $1,320.
Advantage: FHA offers a low down payment and is
designed for first-time buyers.
Long & Foster-Webber & Associates is not a mortgage
lender. These figures are provided by Prosperity
Mortgage® Company. Prosperity Mortgage is a Long &
Foster and Wells Fargo Home Mortgage company. The
actual terms of any financing are subject to the
requirements of each individual case. Choosing the
“best” mortgage depends upon the circumstances of
the individual borrower. Your Long & Foster-Webber
Sales Associate will be happy to explain the options
available to each buyer for mortgage financing.
Words To The Wise
AGENT. A person acting on behalf of another, called
Agreement of Sale. Known by various names, such as
“contract of purchase”, “purchase agreement”, “sales
agreement”, or “binder”, according to location or
jurisdiction. A contract in which a seller agrees to
sell and a buyer agrees to buy, under certain
specific terms and conditions spelled out in writing
and signed by both parties.
PERCENTAGE RATE (APR). Includes quoted
interest rate on the loan plus all additional
service and finance charges associated with the
loan. Includes all costs of financing; those paid at
the time of closing and those paid over the term of
the loan. The APR is usually slightly higher than
the note rate.
APPRAISAL. An expert judgment or estimate of the
quality or value of real estate as of a given date.
VALUE. The valuation placed upon property
by a public tax assessor as the basis for taxes.
SALE. An instrument which transfers title to
personal property (chattels); a “Deed” transfers
CERTIFICATE OF TITLE. A document signed by a title
examiner or attorney, stating that the seller has a
good marketable and insurable title.
STATEMENT (SETTLEMENT). The computation of
financial adjustments between the buyer and seller
as of the day of closing a sale to determine the net
amount of money which the buyer must pay to the
seller to complete the purchase of the real estate
and seller’s net proceeds. Also, “Settlement
COMMISSION. Payment to a real estate broker for
CONVEY. To deed or transfer title of property from
one person to another.
DEED. A formal written instrument by which title to
real property is transferred from one owner to
another. Also, “conveyance”.
TRUST. Like a mortgage, a security
instrument whereby real property is given as
security for a debt. However, in a deed of trust
there are three parties to the instrument: the
borrower, the trustee, and the lender (or
MONEY. The money given to the seller by the
potential buyer (usually held in escrow) upon the
signing of the agreement of sale to show that buyer
is serious about buying the house. Also, “Deposit”.
EQUITY. The interest or value which the owner has in
real estate over and above the debts against it.
(Sales Price – Mortgage Balance = Equity.)
ESCROW. Funds, property, or other things of value
left in trust to a third party. The escrow may be
released upon the fulfillment of certain conditions
or by agreement of the parties.
FIXTURE. What was formerly personal property which
is now permanently attached to real property and
goes with the property when it is sold.
INSURANCE. Protects against damages caused to
property by fire, windstorms, and other common
CONTRACT. Between a homeowner (as principal)
and a licensed real estate broker (as agent) by
which the broker is employed to market the real
estate within a given time for which service the
owner agrees to pay a commission. Also, “listing
VALUE. The highest price which a buyer,
ready, willing and able but not compelled to buy,
would pay, and the lowest price a seller, ready,
willing and able but not compelled to sell, would
accept. Basis for “listing price”, or “asking
Market Price. The actual amount for which a piece of
property is sold. Also, “Sales Price”, “Purchase
MORTGAGE. A lien or claim against real property
given by the buyer to the lender as security for
NOTE. A written agreement to repay a loan.
The agreement is secured by a mortgage, serves as
proof of an indebtedness, and states the manner in
which it shall be paid. Also, “Deed Of Trust Note”.
(PRINCIPAL, INTEREST, TAXES AND INSURANCE).
Most residential mortgage payments include the above
and are therefore referred to as P.I.T.I. Also,
POINTS. Sometimes called “Discount Points”, a point
is one percent of the amount of the mortgage loan.
Penalty for the payment of a
mortgage note or deed of trust note before it
actually becomes due.
PRINCIPAL. This word has several meanings:
- to denote the
- a capital sum
lent on interest;
- one who
appoints an agent to act on their behalf;
- either party
to a contract.
PROPERTY MANAGEMENT. The operation of real property,
including the leasing of space, collection of rents,
selection of tenants, and the repair and renovation
of the buildings and grounds.
PRORATE. To allocate between the seller and buyer
their proportionate share of an obligation paid or
due. For example, a prorate of real property taxes,
fire insurance, or condominium fee.
SALES ASSOCIATE. A person with a real estate license
and associated with a specific real estate broker.
SURVEY. A map or plat made by a licensed surveyor
showing the results of measuring the land with its
elevations, improvements, boundaries, and its
relationship to surrounding tracts of land. A survey
is often required by the lender to assure a building
is actually sited on the land according to its legal
TITLE. As generally used, a document that indicates
rights of ownership and possession of a particular
TITLE ABSTRACT. A summary of the public records
relating to the title to a particular piece of land.
An attorney or title company reviews an abstract or
title to determine whether there are any title
TITLE INSURANCE. Protects lenders and homeowners
against loss of their interest in property due to
legal defects in title.
TITLE SEARCH OR EXAMINATION. A check of the title
records, generally at the local courthouse, to make
sure the buyer is purchasing a house from the legal
owner and there are no liens, overdue special
assessments, or other claims.
TRANSFER TAX. State tax, local tax (where
applicable), and tax stamps (in some areas) required
by law when title passes from one owner to another.
Ask your Long & Foster-Webber Sales Associate for a
copy of the “Understanding the Role of the Real
Estate Agent” (LF1192, for use in the state of
Maryland only); “A REALTORS® ROLE”, (LF1193, for use
in the state of Virginia only); or “The Agency
Disclosure Brochure” (LF1195, for use in the
District of Columbia only).
© 2006 The Long & Foster® Companies. All Rights
Webber & Associates is a licensee of Long & Foster®
Real Estate, Inc.