I Wish I Knew This Before Selling My First House
Updated: Jan 3, 2021
There are some things we do all the time, like grocery shopping.
Other things come naturally and feel intuitive, like riding a bike.
But some things are weird, messy, and leave many of us with a lot of questions.
Selling your house is one such thing that's likely to have you asking a million and one questions.
Here are a few things I wish I knew before selling my first house.
Hopefully, my experiences will help answer some of your questions, and better prepare you for selling your house.
Buyers Will Ask You To Help With Closing Costs
Before I sold my first house, I had no idea buyers would ask for me to help pay their closing costs.
When a buyer asks a seller to put money towards their closing costs, it's known as seller concessions.
Buyers may ask sellers to give a credit towards repairs
Help put cash towards their down payment
Or contribute some money towards their other closing costs
These costs don't necessarily come out of the seller's pocket. But they will show up on a settlement statement in some way or another as credits to the buyer.
I've received offers asking me to contribute over $10,000 in buyer closing costs, and I've been presented offers with no mention of concessions.
It's the luck of the draw. The only thing you can do to manage the amount of concessions a buyer will ask for is to note a cap in your listing.
For example: "Seller will contribute up to $5,000 in closing costs."
But, if you do this, you run the risk of negotiating against yourself if someone was going to request no, or less of a contribution.
Buyers Will Ask You to Make Repairs
Before I sold my first house, I had no clue buyers would ask me to make repairs to the property.
What threw me off is that I had just fully remodeled/renovated the property, and yet, almost every offer came with a request for repairs.
Let's face it; no matter how excellent condition you believe your house to be in, it won't be perfect. It's incredibly likely buyers will ask you to make repairs, small or large, before you sell.
I've had offers include repair requests as small as installing carpet on the stairs, and I've had offers where they wanted me to replace the roof.
Your mileage will vary here, but be prepared for people to ask you to perform some work on the house, and set aside a budget for it.
If you don't want to make any repairs, you can offer a price reduction equal to the amount of work they're requesting, and hope the buyer goes for it.
You'll Get A Lot of Showings, But Not A Lot of Offers
Getting showing requests is exciting after you list your house, but it's important to remember that not every showing will result in an offer.
I remember calling my agent after almost every showing asking if the interested party was going to write up an offer.
More often than not, the answer was no.
Just be patient, and the offers will come.
You don't want to wear out your agent by calling them after every potential buyer finishes their tour. If something important happens, such as:
The buyers are interested in putting in an offer
The buyers left you some vital feedback
Anything else that needs to be brought to your attention
Your agent, so long as they're good at their job, will call you and fill you in.
Not All Offers Are Created Equally
You must understand that not all offers are created equally. There are many significant differences to consider when choosing which offer to accept.
Let's discuss them all in detail, starting with the financing type.
Cash Offer / No Financing
Cash offers come with no financing strings attached. Your buyer will not have to get approval from a lender, and they will not be bound by an appraisal to determine the maximum sales price.
Investors most commonly make cash offers for properties that need rehabilitation, so it's unlikely you'll receive a full price cash offer for your house if it's in top of the line condition.
Back in 2017, about one in four homes sold for cash, according to the National Association of Realtors. However, most of those sales were to investors and buyers of distressed properties.
FHA Financing
When a buyer uses an FHA loan, the property has to meet what's considered the minimum property standards.
Generally speaking, these standards are put in place to ensure buyers are purchasing a safe home and that all the major systems are in working order.
Some examples of things that may prevent an FHA loan from closing are:
Electrical issues
A roof having more than three layers
A missing water heater
Foundation issues
If a property does not meet the minimum standards, the deal isn't necessarily over. You may be able to perform repairs that will bring the property into compliance so the loan can close.
VA Financing
VA loans are powerful tools for buyers who qualify (VAs).
These loans also require a property to meet minimum property standards before the deal can close.
Some examples of the minimum property standards include:
Crawl spaces are free and clear of debris
Lead-based paint being safely remediated, if it's detected on the property
The property provides adequate space for living, sleeping, cooking and dining, and bathrooms
Similar to an FHA loan, a property can be brought up to the minimum VA standards so the loan can close.
USDA Financing
USDA loans are another loan type available to buyers. USDA loans can only be used for properties that are in rural areas, and properties must also meet another set of minimum property requirements.
Some of the minimum requirements for a USDA loan are:
No cracks in the foundation
All exterior doors must have functioning locks
Roofs must have at least five years of life left, with no visible holes or leaks
Just like a VA and FHA loan, a property should be able to be brought up to the standards if it doesn't already meet them.
Conventional loan
A conventional loan doesn't come with all the strings attached, like the VA, FHA, and USDA loans.
Conventional lenders may require properties to meet their standards, but there's no general guideline that all lenders follow that I'm aware of.
If you were to receive four identical offers, one FHA, one VA, one USDA, and one conventional, it might be safer for you to go with the conventional offer as the lending requirements are less strict.
Closing Date
The closing date determines when the sale will be finalized, and when the title of the property will transfer to the new owner.
Whether or not an extended or shorter escrow period is better is up to you to decide.
Buyers using any type of financing will likely need at least 30 days to close. The banks have a lot they need to do behind the scenes.
Cash buyers can typically close much quicker. Sometimes in as little as 7 - 10 days.
Earnest Money Deposit
Earnest money acts as consideration for the purchase of the property.