If you've decided to sell your home, chances are
you're caught up in a host of emotions. You may be looking forward to
moving up to a new dream house or facing the uncertainty of a major move
across country. You may be reluctant to leave your memories behind or
eager to start new adventures. Whatever turbulent feelings you're
experiencing right now, there are plenty of practical matters that need
your attention.
Time Becomes Money
It's a good idea to place your home on the market as
far in advance as possible of purchasing a new one. If you find a new
home first and then try to sell your present home, you may wind up with
two mortgages. If this does happen, ask your real estate agent or banker
about a bridge loan to help you make the double payments. Lenders use
the same criteria for offering bridge loans as they use for mortgages.
Should you qualify for a bridge loan, beware of the expense; during the
term of the loan you must continue to pay both mortgages. Shop around
for the best terms.
Keep in mind that when people move, sell and buy,
there usually is a domino effect. Closing and moving dates have to be
coordinated, and the more firmly everyone commits to a window of dates
and sticks to them, the better for all involved. Put all agreements
about dates in writing, and protect yourself by negotiating financial
penalties for failure to comply.
Check Your Curb Appeal
A home that's visually appealing and in good condition
will attract potential buyers driving down the street. Use this
checklist to view your property through an outsider's eyes.
- Are the lawn and shrubs well maintained?
- Are there cracks in the foundation or walkways?
- Does the driveway need resurfacing?
- Are the gutters, chimney and walls in good
condition?
- Do the window casings, shutters, siding or doors
need painting?
- Are garbage and debris stored out of sight?
- Are lawn mowers and hoses properly stored?
- Is the garage door closed?
On the Inside
Strong curb appeal will lure potential buyers inside,
where you have to live up to their expectations. Fortunately, there are
plenty of easy improvements you can make to your home's interior without
spending a lot of money. Check out my Presentation Tips for more
details.
Go It Alone--or Choose an Agent?
Some homeowners decide to sell their homes
themselves in order to save the commission charged by a real estate
agent. However, handling your own sale means you will be responsible
for placing ads, answering phones and showing your home to strangers.
What's more, buyers who know you are saving on an agent's commission
may offer less for your home, wiping out the financial incentive to do
it all yourself.
You may decide an agent's commission is a bargain
the first time that a would-be buyer shows up unannounced at
dinnertime. Also, be aware that a real estate agent probably knows a
lot more about the business of selling a home than you do. Here are
some of the advantages professional agents offer:
- They will help you establish a fair asking
price for your home.
- They will promote your home to other agents
and list your property in multiple listing services.
A multiple listing service is a book or computer database that all
real estate agents who subscribe to the service can access. Your
home will get exposure to all those agents, one of whom may have the
perfect buyer.
- They will schedule appointments to show your
home to prospective buyers even when you are not there.
- They can weed out buyers who will not qualify
for a mortgage.
- They can refer you to sources for insurance,
inspections, legal counsel and financing.
- They will help you negotiate with the buyer.
If you decide to sell through an agent, ask friends
and neighbors for recommendations. Talk to several agents before picking
the one you want to work with. Taking a walk through your home with an
agent should give you a feel for how that person will handle prospective
buyers. Don't sign with an agent just because he or she suggests the
highest asking price.
Setting a Fair Price
Naturally, you want to get top dollar for your home.
But, at the same time, you don't want to scare off potential buyers with
a price tag that's too high. Setting an artificially high price may
cause your property to languish on the market for months. Reducing your
asking price later on may lead buyers to wonder if there is something
wrong with your home. Here are some of the factors to consider in
pricing your home.
- Your location
- Economic conditions
- Supply and demand in the local housing market
- Seasonal influences
- Local schools
- Average home prices in the neighborhood
- Your home's extras -- pool, fireplace, central air,
etc.
To determine the value of your home, you probably will
want the advice of a real estate agent or appraiser. Ask an agent to
prepare a market analysis for you, showing the recent selling prices of
three neighborhood properties comparable to your own. The agent can help
you adjust for the unique features of your own property.
Qualifying a Buyer
Either you or your agent will want to quickly weed out
potential buyers who cannot really afford to purchase your home. A
number of factors will help determine whether or not you are wasting
your time negotiating a sale.
- The buyer's debt and credit history
- The buyer's current income and employment
- The buyer's cash position and availability of a
down payment
- The length of time the buyer needs before closing
on your home
- How interested the buyer appears to be in your home
versus others
Seek Legal Representation
When selling your home -- particularly if you are
selling on your own -- it's a good idea to be represented by an
attorney. Look for an attorney with expertise in real estate
transactions. When a potential buyer puts an offer in writing and you
accept it, the signed acceptance becomes the sales contract. Your
attorney will be present at the actual closing to protect your interests
and can assist you with the following elements of a sales contract:
- The sale price
- What is included in the sale price -- draperies,
carpeting, light fixtures, heating oil, etc.
- The amount of the down payment
- The date of settlement and possession date
- Contingencies to the sale--inspections (e.g.
structural, lead-based paint, radon), required improvements, legal
review of the contract by the buyer's or seller's attorney, etc.
- The amount and length of the mortgage loan,
interest rate and time limits to secure the loan
- Determining which closing costs are to be paid by
the buyer and which by the seller
Tax Implications
Selling a home can have a major impact on your federal
and state tax returns. Check with your tax consultant on the factors
that may affect taxes resulting from the sale of your home. For example:
- Whether you purchased the home or acquired it by
gift or inheritance
- Whether you used your home partly for business or
rental
- Costs associated with selling your home
- Home improvements or additions, which may help to
offset capital gains
- The sale of your home. In certain cases you can
exclude up to $250,000 in gain ($500,000 for married couples filing a
joint return) on the sale of property that was your principle
residence for at least two years. Generally, you can use this
exclusion every two years.
Congratulations!
You've successfully weathered the logistics of selling
your current home, and you're ready to move on to a new and exciting
chapter in your life ... BUYING a home!
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Seller's Overview...
