Reselling Your Home
What to do and expect when selling your Homestead home
Introduction and Overview of Timeline
If you have decided to sell your Homestead home you probably have a lot of questions. Please review this page and the associated documents so that you know the steps to take to prepare to sell your home and you’ll know what to expect during the process. If you still have questions after reviewing this page, please contact Mary-Jayne Walker to inquire further and to talk through your specific circumstances.
First, we want to manage your timing expectations. The whole process can take as many as four to six months.
If you are hoping to purchase another home, please WAIT to enter into a purchase and sale agreement to purchase a home until you’re well on your way to selling your Homestead home. Because of the various funder approvals required as part of the selling process it can take longer than a typical purchase and we don’t want you to get stuck paying two mortgages if possible.
Step 1: Notification, Home Inspection and Photos.
Homestead staff will then contact you to schedule an inspection of your home to identify deferred maintenance issues and take photos for marketing. You should make sure to ready your home for photos prior to submitting your resale documents.
Step 2: Determining Your Resale Formula Price.
After Homestead staff completes the inspection of your home, Homestead is able to determine the resale maximum resale formula price under your ground lease or affordability covenant. This is the maximum price that you can sell your home for, although it is not a guarantee that you will find a buyer for this price. Homestead will send you a letter explaining the calculation of this price. Once you have reviewed that letter and are ready, Homestead launches marketing.
Step 3: Marketing your home and identifying an eligible and qualified home buyer.
According to your ground lease, or in the case of a condominium unit, the affordability covenant, Homestead has 60 days to exclusively market your home from the date Homestead receives your Notice of Intent to Sell.
You’ll need to be willing to show interested buyers your home and host an open house.
Marketing will take a minimum of a month. Marketing can easily take much longer, however, depending on how much interest there is in your home. More details on this step are below in Section A.
Step 4: Entering into a contract and proceeding towards closing.
You’ve found the income-qualified buyer who is going to purchase your house – yay! Now you will work with Homestead Staff (or your real estate agent if you have hired one - see below in Section A.6.) to come to an agreement with that buyer about timing, appliances and the condition of the home.
During this period the buyer will order a home inspection and there may be items on the inspection report that you’ll need to address. Closings typically take up to 60 days as this is when the buyer is also working with the bank and other various funders to get their financing in order. You may remember from when you were a first-time home buyer that this can be very stressful. This time can be stressful for sellers as well. We understand. Homestead staff will continue to work with you to try to keep you informed about how things are going in the process. More details regarding this step are below in Section B.)
Step 5: Moving out and moving on.
We hope you remember moving into a nice clean home. Please make sure that the buyers of your home have that same experience. Please be sure to take all of your belongings with you, do not leave any garbage or packing materials, clean out the fridge, clean the carpets and leave your home in the condition that you would be excited to move in to.
More Details Regarding the Process
There are many things you can do to make your house more attractive to potential homebuyers and therefore sell your house more quickly. Please see these tips on staging your home for helpful ideas to prepare your house to be marketed and sold. Homestead and any homebuyer’s lender will require the house to be in good condition before it is sold. Below is a list of common required repairs. It is in your best interest to make sure these are completed before you begin actively marketing your home in order to make it more attractive to would-be buyers. In any case, since the repairs must be completed prior to closing the repairs should be addressed prior to the buyer’s inspection date. A failed inspection will delay the closing.
- Clean the chimney/wood stove and show proof they are fully operational (if applicable),
- Clean the gutters,
- Have your furnace serviced,
- Remove any moss from the roof,
- Ensure there are no plants touching the siding around the base of the house,
- Address any pest infestations,
- Ensure that there are no leaks, rot or damage to any part of the house,
- Ensure that no smoke odors remain,
- Ensure all required smoke detectors are present and functional,
- Ensure all required carbon monoxide detectors are present and functional,
- Ensure all electrical outlets and lights are working. Replace light bulbs if needed.
- Ensure all plumbing is in good working order.
Be sure to keep receipts or service records if the work isn’t obvious (like chimney cleaning or servicing of furnaces) to prove that the work was done.
A.2. Marketing Your Home: (there’s no second chance to make a first impression)
Homestead maintains a waiting list of interested and eligible applicants. After we coordinate with you to take pictures of your home, Homestead staff will send notice of the house for sale to the applicants on our waiting list and post the home on the Homestead website. It remains your responsibility to find a buyer, but Homestead will help by reaching out to the list of potential buyers already familiar with our program.
A.3. Images of Your Lovely Home:
You must schedule a Homestead staff member to come out and take photos although you may also send us your own lovely photos of your home. Be sure that your home is clean, clutter-free and looking its best! Give buyers the best opportunity to see themselves in your home. You’ll want to ensure that there are photos of the front, of the back and of every room, if possible. If you think there are other great features – a new washer and dryer you’re including the sale, a view from the top bedroom, etc. feel free to include photos of these as well.
A.4. Pitching your Home with Words:
Draft a short paragraph about the things you love about your home and its location. Can you walk to a grocery store or to parks? Do you like your neighbors? What would get potential buyers excited about buying your home? Even if it’s just a list of great qualities, write-it up and send it to us. It will help us create your home listing for marketing.
A.5. Other Ways to Generate Interest:
In addition to Homestead’s outreach you are encouraged to post the availability of your home for sale in neighborhood list serves, blogs, or any other outlet like Craig’s List or Zillow to generate as much interest as possible. It’s a best practice to post the link to your home's listing on Homestead’s website so that all buyers are alerted to the eligibility requirements and the fact that they’ll need to work with Homestead to purchase the home. If you want to also post a sign or create flyers to advertise, Homestead has For Sale Signs you can borrow and we may be able to help with the creation of a PDF flyer that you can email or post on bulletin boards around the neighborhood to spread the word. Again, it is critically important to work with Homestead to ensure the appropriate information about the eligibility requirements and restrictions are disclosed.
You can also choose to list your home with a real estate agent. However it is your responsibility to pay that agent for their service and the commission (usually 6% total of the purchase price split between your agent and the buyer’s agent) paid at closing will come out of your equity. We recommend that you work with someone who is already familiar with Homestead's program. Please contact staff for a list of agents who know our program.
A.7. Always Refer Buyers to Homestead:
If you find an interested buyer, refer them to Homestead to ensure that they are meet our eligibility requirements, we can explain how the community land trust works and provide an overview of the process and answer any questions.
A.8. Hosting Open Houses – necessary to find a buyer:
Potential buyers may drool over the gorgeous pictures of your home but they will not make an offer to buy your home without seeing it in person.
You will need to set at least two different dates and times when you will be hosting open houses. We’ll want to send those dates out with the first notice that your home is available for sale. Homestead staff will not attend your open house, so it’s helpful to keep a list of people who attended so we can follow-up with them to encourage them to submit full applications if they are interested in buying your home.
Use your open house to show the best that your home has to offer. Make sure it’s clean, smells good (might try baking cookies beforehand) and that all minor scuffs and scraps can easily be over looked. Here are some general staging tips.Tell people why you love your home! If people have any questions about the home buying process or Homestead's program, please refer them to Homestead staff.
B. The Outreach Process From the Buyer’s side and General Timeline:
People who have submitted a pre-application and have been categorized as “short-term eligible” (meaning they are income eligible, and they don’t have credit or debt issues that would prevent them from qualifying for a mortgage) receive the email with the link to your home listing. They view it and get excited about your lovely home available for sale for such an affordable price.
If they are interested in learning more they are asked to respond to our email to express their interest. They will hopefully attend your open house and if they are still interested they are given two weeks to submit a full application which includes a pre-approval for a mortgage from a participating lender. This creates both urgency for the buyers as well as a level playing field for buyers to make appointments and get responses from lenders.
The timeline looks like this:
Days 1-7: We post your home to our website and send an email out to our large and growing interest list. Interested buyers are given 7 days to respond that they are interested (this gives us a smaller group to focus on encouraging them to submit their full application and to assist through the mortgage process).
Day 7-21: Potential buyers who are interested in purchasing your home collect and submit their documentation and a pre-approval from a participating lender.
Day 21-25*: Homestead staff review all of the documentation submitted to determine the buyer or buyers' eligibility under the rules of our various funders.
*Depending on how many applications we receive from interested buyers this review can take 7-10 days.
Day 25-26: If there are several interested and eligible buyers we will use an objective tie-breaker scoring process to determine who has the first opportunity to enter into a purchase and sale agreement with you.
Day 26-31: Homestead staff schedules a meeting with the buyer to review and hopefully sign the purchase and sale agreement (PSA) and another meeting with you to review and sign the PSA.
Once an eligible Buyer has been identified, the buyer is provided with your Seller Disclosure (what's called a Form 17) prior to the signing appointment. If the buyer is satisfied with the Form 17, the buyer will sign it at the same time the buyer signs the Purchase and Sale Agreement (PSA).
In addition to the standard language in the Purchase and Sale Agreement, you may wish to sell additional items to the Buyer. All appliances and items included in your original purchase of your Homestead home must be transferred to the Buyer. They don’t have to be the same appliances but if, for example, you purchased your home with a washer and dryer, you must sell your home with a washer and dryer.
B.2. Your Responsibilities Until Closing:
In the meantime, you are responsible for paying all costs associated with owning your home including all utility bills. If, at any time, for whatever reason, you are unable to do so, you should call your lender. Let them know that you’re in the process of selling your home. If you owe them any back mortgage payments or penalties etc. the amount you owe them will come out of your proceeds and be paid to the lender at the time of transfer.
B.3. The Inspection:
From PSA signing by both parties (sometimes called mutual acceptance) you can expect closing to take place within around 60 days. Immediately after signing the PSA, the buyer will schedule an inspection of your home to take place usually within 10 days of mutual acceptance. The best way to facilitate the inspection is to provide Homestead with a set of keys to your house so we can give the inspector access. A Homestead staff person will be present at the inspection with the inspector and the buyer. You, the seller, are not allowed to be present at the inspection so that the buyer can ensure that the inspector is a neutral party.
Please review the above list of items (at Section A.1.) to address as these often come up on inspection reports as items that need to be addressed prior to closing. (Here is a checklist that the inspector will have to fill out. All items on this checklist must “pass”. This is not to say that there won’t possibly be other things that the buyer will ask you to fix.) You can speed the process along if you take care of all these things before the inspector visits your home. Keep receipts to prove the work has been done.
If items come up on the inspection that require repair, you’ll negotiate the details of any such repairs with the buyer via Homestead staff. The buyer will submit what is called a form 35R with the requests that they have for repairs. You will respond to that request, in writing, with how you intend to address those issues, or not. If there are no repair requests or after you and the buyer have a mutual agreement on how to address the repair requests, the transaction moves forward.
B.4. The Appraisal:
Once the inspection contingency is satisfied the timeline process is out of our hands and into the hands of the buyer’s lender. The lender will order the appraisal of your home. This step will need to happen even if you ordered an appraisal to determine your formula resale price. The fee for this appraisal will be charged to the Buyer. You will need to be available to let the appraiser into the house.
The last bit is a waiting game for all parties as the lenders, funders, title and escrow agents push paper around, get all the ducks and dollars in a row and generally work to get documents to the closing table for signing by all parties. This last step can be the hardest to wait for as it is a bit of a black box, sometimes even for us.
B.5 Insurance and Utilities:
You must keep your insurance current until the home has sold and is no longer in your name. You must also keep all utilities on and the bills current until the home closes. It is the buyers' responsibility to set up utilities in their own name after closing.
B.6. Costs to Sell and Expected Gain on Sale:
There are a number of expenses that you will be have to pay to sell your home. These costs will be deducted from the gain on the sale of the house at the time of closing.
You will pay half the escrow fees for the transaction, (estimated $2,000) and the State Real Estate Excise Tax (or REET) of 1.78% of the sales price. Taxes and property insurance will be pro-rated to the closing date. If there are any outstanding tax payments, lease fee payments, HOA dues, other lender debts or other liens on the property, they will be reduced from your gain on the sale of the home. Liens could include any unpaid debts associated with your ownership of the property, including unpaid utility bills, sewer capacity charges, or mechanics liens from unpaid contractors as well as liens placed by creditors as a result of a lawsuit (such as credit card companies or child support).
Additionally, Homestead will include a program fee to be paid by the buyer as part of the transaction. This amount will be reflected on the letter that you receive at the time of Notice of Intent to Sell and does not come out of your sale proceeds.
The Title Company will prepare all the documents for closing, and you will need to sign those with a Notary present. The Title Company Homestead uses is Old Republic Title, LTD. You may choose to use the same title company or a different one. Homestead will requires you to sign a Termination of Ground Lease that cancels your obligations under your ground lease and enables the Buyer to enter into a new ground lease with Homestead.
Please be sure to take all of your belongings with you, do not leave any garbage or packing materials, clean out the fridge, clean the carpets and leave your home in the type of shape that you would be excited to move in to. It is typical for a buyer to request a final walk through the week before closing to assure that all negotiated repairs are completed and all trash and personal possessions are removed.