Buying or Selling Property?

Take the mystery out of buying or selling property by reviewing these simple steps of a home sale. This page will help guide you through the real estate sales transaction process.

Most property sales in the U.S. still occur through the help of real estate brokers, who are usually paid a fee for their services. The current average total commission on a residential sale is 5.1%, which is down from the 6% average of the past. On a typical sale, the listing agent (represents the seller) and the buyer’s agent would split the total commission that the listing agent pre-negotiated with the seller when they took the listing. The listing agreement is a document signed by the seller and real estate agent, outlining the terms of the listing (i.e. list price, listing time period, commissions, etc.). Thus, the commission is already built into the sales price.

The most common way newly-constructed homes are sold is directly through the builder/developer.  Some of the time, the builder/developer will employ real estate brokers on either the selling or buying end to help facilitate sales, and other times, the builder/developer will take on the sales functions internally.

It is also important to note that everything in a real estate contract is negotiable, including commission splits, seller concessions (for example, pay closing costs, include personal property, etc.), and escrow time periods.

Most real estate agents will use a local M.L.S. (Multiple Listing Service) as a primary means to market the property. In a strong seller’s market, often this is the only marketing needed to sell a property. Of course, agents could employ other conventional means of marketing, including on-property signs, newspaper ads, Internet ads, direct mailers, or radio/television advertising.

Once a legitimate buyer comes forward, a good agent will negotiate with the other side (another agent or directly with the potential buyer) and come to a mutually agreeable sales price and terms, which is usually contained in a formal written contract to purchase real estate, which is signed by both the buyers, sellers, and any agents involved. Within a few days of this acceptance, the buyers will give an initial deposit to the closing company or seller.

From here, the buyer has a predetermined (from the contract) time to do their due diligence on the property. This due diligence usually includes physical inspection of the property, usually with a licensed home inspector (who will prepare a formal home inspection report), mortgage pre-approval, appraisal (a formal appraisal report will be prepared by the licensed appraisal), and review of title documents and any HOA information. Often, a pest control report ("termite" report) is also prepared.

By the end of the due diligence period, if the buyer is satisfied, his deposit money will "go hard" (non-refundable) and the deal will proceed to closing. At closing, the buyer will sign final loan documents (assuming there is a loan) and closing instructions prepared by a closing company (either a title company, escrow company, or lawyer, depending on the state). At this time, the remainder (net of deposit money) will be due to the closing company, who is responsible to disburse the proceeds to the various parties (i.e. seller, seller/buyer agents if applicable, mortgage company, tax assessor, insurance company, etc.).

A good mortgage broker/banker can provide a valuable asset to real estate agents and builder/ developers by pre-approving buyers, representing buyers with the best loan programs, rates, and service, as well as funding the deal on the exact day the agent or builder requests the loan to be funded. Please contact us if you want truly exceptional service and programs, rather than the "if it isn’t broke, don’t fix it" mentality of many larger mortgage companies.