What do I need to know about selling a home?

Buying a home is always an exciting event. After all, you have achieved the American dream. Selling a home is another adventure, but it's one that could be stressful. That said, the financial rewards and the excitement of becoming a homebuyer again will be well worth it—if you are prepared. Below are some things you need to seriously consider when selling your home.

Preparing your home

You're ready to sell. But, before getting your property listed, there are likely a few home maintenance items you've let go for a while, and now you need to spruce up things to make your home look new again. Start with removing the clutter and personal items from your home, and, if you think you may have too much furniture, take some of it out. You might want to rent storage space so you can move out all of your extra personal belongings. Then you're ready to re-stage your home and make necessary repairs.

Your home has to be transformed into an irresistible showcase for potential buyers. Also, now's the time to create a budget and set aside the funds you'll need to get your home market-ready. You don't want to end up spending more than you can recuperate from the sale of your house. Remodeling magazine publishes an annual report that looks at the relationship between remodeling costs and resale value. The report also has specific data for 80 cities on the US. Also, be sure to do your own research online for your local area and ask your realtor for help with this.

Working with a realtor

A good real estate agent can make or break your deal. Interview at least three realtors. You want to hire the best real estate agent you can find, one who will put your interests above his or her own. Work with a realtor who has an active license with the state, participates in the local board of realtors, and has a good track record. Checklist for Finding a Real Estate Agent

Keep in mind that all agents are different. They charge varying rates, specialize in certain specific areas, use a variety of marketing techniques, and possess particular skill sets, all of which sets them apart. There are additional fees and commissions associated with hiring a realtor, but you could reduce stress significantly by having a realtor perform marketing local and nationally, negotiate for you, and handle all the required paper work. That may be well worth the additional cost.

For sale by owner (FSBO)

Selling your home yourself may be another option. You will save money by not having to pay both the listing agent and buyer agent commission fees (usually 6% or more). You are in control of when your home is shown, of whom you show it to, and of all the marketing you feel is necessary. But, is it ever work! You need to purchase your own sign, you have to pay for your own marketing, and you will probably be limited to people who drive by your home or to neighbor referrals. You should also visit a local title company so you can understand the process when you go the FSBO route. The title company will also provide you with template contracts and other home disclosures. Prepare yourself to understand the paperwork and legal requirements well enough to be able to provide the right documents to a prospective buyer.

Price your home right

How much is your home worth? Pricing a home correctly will determine how fast it sells. Don't let your emotions or your personal attachment to your home get in the way. The correct selling price is not how much you feel your home is worth; it is the price that will best allow you to sell your home in the current market. If you use a realtor, they will perform a Competitive Market Analysis (CMA). The CMA will usually show current homes listed and homes sold in the last six months. The market dictates what homes sell for, you do not want to overprice your home or try to "test the market," you want to price it just right.

Reviewing offers

This can be the fun and rewarding part of this whole process. While you are anxious to sell your home, you will need to be very diligent about reviewing the offers from all parties and weighing the pros and cons of each offer. For example, accepting an offer that doesn't go through because of the buyer's inability to secure financing could be a significant setback. Review the offer packages carefully and look for things like how quickly the buyers can close, whether or not they are pre-approved for credit, what their financials look like, if available, and are they making any contingencies to their purchase. Also remember to have a backup offer and a second back up offer and inform each of them as to their status.

Income taxes

Once you have sold your home, it's time to consider your taxes. Keep in mind that some items may be itemized deductibles. The allowable items vary from state to state, but ask a qualified CPA about the following:

  1. Lender Points paid (deductible only once for the year you closed the sale of your home)
  2. Property Taxes (deductible every year)
  3. Interest paid on the loan for the year (deductible every year)
  4. Various home improvements, such as energy efficient windows, air conditioning units, insulation, roofing radiant barriers, solar power panels, (deductible for the year they were installed)

Home inspections and disclosures

Congratulations! You have a contract on your house. But there are still hurdles before closing. Almost every home buyer will have a home inspection done before committing to buying your home. To make the process smoother, prepare your home for the inspector by making minor repairs beforehand. No home is perfect, not even new homes; however, buyers may offer less for a home if major defects are discovered. You could also hire a home inspector yourself to identify issues before putting your home on the market, it is an extra cost, but it might mean fewer headaches in the end.

Home selling mistakes

You house is on the market, but something is wrong. It has been weeks without calls from buyers or their agents. Or, maybe buyers don't spend more than 30 seconds inside your home before heading for the door. If your neighbor's homes are selling, but yours is sitting on the market, here is how to correct the problem.

Revisit the price you're asking for. It has been your "Home" for years, but now that you have it on the market, it becomes a "house", a product. As with any other product, consumers shop and compare in order to get the most for their dollar. So make sure your home is "priced right." Don't be the most expensive and focus on what other comparable homes in your area have sold for.