Whether a first-timer or seasoned home buyer, your home buying and selling process can be as challenging as learning a new language. Before you make your move, it's important to first understand the steps involved and the buzzwords of the "deal" to ensure the smoothest transaction possible.

Your best source of information will be from your Realtor.  The real estate industry and financing are constantly changing, so even if you've bought a home in the past the process may have changed.  Friends and relatives are often well-meaning, but they may not have purchased or sold recently either and could be giving you inaccurate information.

So how does this work?

Get prequalified by a lender so you know how much you can afford and how much your payments will be.

Choose a Realtor who will represent you (ask about Buyer Representation).  Your Realtor will have access to the Multiple Listing Service and can show you every house in town regardless of which agent or company has it listed.

Once you find a house you will make a written offer.  When it's been completely accepted you are officially Under Contract!

Your Realtor will help you schedule inspections, deliver the contract to the lender and review the title commitment.  There are a lot of things happening behind the scenes while you are under contract and your agent will be handling the details for you.

Once you've accepted the inspection, title commitment, and survey, and you have loan approval, you will be on your way to closing.

About a week prior to closing you can schedule utilities connections for the date of closing.

Closing typically takes place at the title company.  When you go to sign documents, you will need to bring identification (usually your driver's license or passport) and your funds for closing.  The funds for closing must be in the form of a money wire or cashier's check - the title company will not accept cash or personal checks.

When you and your REALTOR® sit down to analyze comparable homes and recent sales, you may find that prices of homes similar to yours can be thousands of dollars apart. 

It’s tempting to pick the highest price and say, “Let’s list it here.”

That’s a strategy that usually works in an accelerating market, but what if your neighborhood is flat or declining? Would you pick the lowest price and list it there? Probably not.

That’s why pricing your home is as much an art as a science.

The science of home price analysis

As a home seller, the science is choosing the right price at which your home will sell. How do you do that? By analyzing your local real estate market conditions.

You want the highest price, while the buyer wants to pay the lowest price. The only way your home will sell at the highest price possible is if your buyer agrees to your home’s value.

To best determine market value, you have three important tools: CMAs, appraisals, and your REALTOR’s® knowledge of the market.

The comparative market analysis

A comparative market analysis (CMA) is a side-by-side comparison of similar homes for sale and recently sold homes in your neighborhood. CMAs are composed of data compiled for comparison purposes by your REALTOR’S® multiple listing service (MLS.)

REALTORS® use CMAs to illustrate the range of homes in the marketplace and the features that make them unique, including age, location, number of bedrooms, baths, room sizes, updates, condition, etc. As a seller, you should be able to see where your home fits – in the top or lower price range of similar homes.

Buyers get CMAs from their practitioners to help them understand the selection in the market, and to prepare them to make an offer on a listing.

CMAs are typically used by buyers and sellers before an offer is made.

The appraisal

An appraisal is a market analysis performed by a professional appraiser using a variety of sources, including MLS data and conforming loan formulas.

Appraisers most often work for lenders to determine market values, so that lenders can weigh the risk of making a loan to a home buyer. Appraisals come after an offer is made when the buyer applies for a loan.  Even though the buyer pays for the appraisal, the lender uses it to determine whether or not to make the loan at the contract price.

Buyers have one advantage over sellers when it comes to appraisals – their bank has the last word. If the appraisal doesn’t meet the contract price, the bank refuses to make the loan, unless the seller agrees to a new contract price. 

You can hire an appraiser to help you determine at what price a bank will loan a buyer money to buy your home.

The art of the deal

It’s your REALTOR’S® knowledge and experience in the local market that can take the numbers and put them with other market conditions. She or he will help you read the market, and help you choose the right price, based on current trends analysis and news.

Her experience with current customers tells her how buyers are behaving today. Are they paying top dollar, or saying they’re waiting for prices or interest rates to drop?  

His network of contacts provide valuable intel into whether other sellers have run into problems. He helps you avoid the same issues. For example, did another seller lose a deal due to an inadequate disclosure or bank appraisal?

Your REALTOR® knows your motivation, what you need to get out of the home financially, and your terms. While it’s her job to help you meet your goals, it’s also her job to help you face the realities of the current marketplace, whatever they are.

His job is to help you price your home high enough that it sells quickly, without sitting on the market longer than you can afford. By the same token, his job is to make sure that you don’t list so low that the market questions the condition of your home.  

And that’s where the art of the deal comes in – putting all the moving parts of the market together.  

It’s an art and a science

Ultimately, you are the one who will choose your listing price, based on your understanding of all the data. And the results will tell the tale.

You can’t list and sell your home for any more than a buyer is willing to pay.

And that makes pricing it right both an art and a science.