How do I erase hard drive on iMac without a mouse

Fair enough, well borrow a USB mouse to format your drive. By the way, if you are trading it in with Apple there really isn't a need to format the drive. Your data is safe, however it's not a bad idea to erase either. Restart in the Recovery Partition, then open Disk Utility and do an Erase. However before doing so ensure you follow all the steps in What to do before you sell, give away, or trade in your Mac - Apple Support

Connect any USB mouse and it should work, if you somehow cannot get one then you cannot erase the drive. Why are you erasing the drive anyway?