Translation:Sell the house.
Both 팔아요 and 파세요 have the same level of politeness, but the difference is 파세요 is from the honorific form 파시다. It's a little complicated, but basically, all verb forms ending in ~시다 are used when you want to show deference to the person you're referring to, NOT necessarily the person or people you're speaking to, unless of course they are the same person. For example, if you tell your little sibling that Grandmother sold the house, you can say: 할머님이 집을 파셨어. That verb ends in ~어 because you're being informal to a younger person, but it's conjugated from the honorific past tense verb 파셨다 (from 파시다) because the subject is Grandma, whom you're showing deference to or giving honor to. I hope that makes sense.
Korean social hierarchy is deeply embedded in the language; there are also honorific nouns (댁 being the honorific of 집, 생신 being the honorific of 생일, etc.), and inverses of honorifics called humble words, when you are talking about yourself and want to show humility (저 being the humble form of 나, 드리다 being the humble form of 주다, etc.).