If you own a home, it's probably crossed your mind that one day you may want or need to sell it. Selling a home presents a different set of challenges than buying one, but with a little preparation you can move out and move on to your next house with minimal problems.
Here are some basics to keep in mind:
Make sure you're really ready
If you're planning to sell your home, you hopefully know where you are going next. A competitive seller's market might be enticing, but you might also have a hard time finding a new place to live by the buyer's closing date.
Don't close a sale if you're not certain that you, your family and your belongings have somewhere else to go.
Selling your home is a financial decision, but it can also be an emotional one if your home has sentimental value. Before you move out, ask yourself why you're planning to sell and if you're really ready to move on. If you're not ready yet, consider taking some time to decide if it's the right decision for you. The closing table is not the place to confront any hangups about selling your property.
Decide how to sell
When weighing your sale options, remember the difference between cost and value.
Hiring a real estate agent typically costs between 5% and 6% of your home's sale price. But, it can save you a lot of headaches and maybe even more money down the line.
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If you're representing yourself, you'll need to be on call to show your home, answer questions and host open house events. In a hot market, that may be a lot of work.
If housing inventory is low in your area, you may attract buyers when you list your home on the multiple listing service (MLS) or on sites like Zillow. But you could still miss out on valuable exposure if you don't work with a real estate agent. Professionals have networks of buyers and other agents who may be interested in your property.
Additionally, some buyer agents won't show homes for sale by the homeowner unless the owner agrees to pay a seller's commission.
You'll also need to complete a lot of legal paperwork. If you make mistakes, you could pay more money later for inaccurate disclosures or other faulty documents. Real estate agents know the laws and requirements for each document. If something goes wrong, they have insurance that may keep the liability off of you.
If you're selling your own home, consider hiring a real estate attorney to check over your paperwork and handle any legal complications.
Prepare your home for sale
To close your sale quickly, you'll want to handle problems before your home hits the market.
Consider having a presale home inspection to point out necessary home repairs. You should also take a look back at receipts and records to ensure all of your home's maintenance is up to date. Some lenders require documents like a termite letter or treatment history for homes in certain states.
You might want to paint or pressure wash the exterior, mow the lawn, or prune overgrown hedges outside your home to increase curb appeal.
If you've already moved into a new home, professionally staging and decorating your old one might help a buyer imagine themselves living there. If you're still living in your home, keep it clean and put away clutter that makes the rooms feel crowded. Consider storing some of your furniture until you get a new place.
Online appeal is equally important. Professional real estate photos tend to show a brighter and wider perspective on your home's living areas than amateur photos.
Make sure online property facts and descriptions are up to date, including information on any renovation projects you've completed. Highlight the property's best features high up in the description to entice buyers to keep reading.
Price your home and list it
Setting the right price is important. Keep your home's appraised value in mind, but also consider the market.
Take a look at sale prices and online estimates for comparable homes in your neighborhood, or ask your real estate agent for a realistic price range. In the housing industry, the data from comparable sales are called "comps."
It may be tempting to shoot high and negotiate, but you might not get that far. Some buyers may not consider negotiating on a home that is already out of their price range. If you drop the price later, buyers might think there's something wrong with the house.
Have an idea of how much you're willing to negotiate, and what perks you're willing to offer ahead of time. Offering a home warranty or closing cost assistance can help seal the deal if a buyer is considering other options.
Show it off
Here's where you may wish you had a real estate agent if you're selling your home yourself. Frequent showings and open houses are important. You or your agent should be on call to answer questions and offer showings while you're selling. Missing a call or a showing could be the difference between receiving a high offer and or removing the home from the market. The more people see your home, the better.
Review your offers
If all your hard work pays off, you may end up with a few -- or a lot -- of offers on the table. Before you say yes to the highest bidder, carefully compare the proposed closing dates and payment types, including types of financing. Some loans require strict appraisals and for sellers to cover certain fees.
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Make sure buyers who are financing submit a pre-approval letter and proof of funding. Also, take a look at buyer requests. Buyers may ask for financial concessions like fee assistance or for any personal property they saw during the showing.
Look at buyer contingencies as well. If a high offer is contingent upon the sale of the buyer's current property, you may be better off going with a lower offer that's a sure thing.
If an offer is way over asking, remember to calculate the tax implications. If you profit more than $250,000 (or $500,000 for married couples) on the sale of your primary residence, you may owe capital gains tax.
If your offers are lower than expected, you can make a counter-offer, but the buyer can walk away if the price is still higher than they're willing to pay.
Close the deal
Once you pick an offer, the buyer gets to inspect the home. If the buyer is working with a lender, the lender will double-check the home's value and the buyers' finances. To close, you'll need:
- Your original home appraisal
- Inspection report and purchase contract
- Your property survey
- Certificates of occupancy and code compliance
- Mortgage, tax and any required home maintenance records.
If everything is in order, you -- with your valid photo ID -- will head to the closing table. There, you'll sign your title and escrow documents. Once the property transfer is on public record, you should get paid.
This article by Mortgage Research Center originally appeared on a property owned by Three Creeks Media, LLC or its affiliates as mutually agreed upon.
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