|
Selling a home or property |
This Life Advice
section about Home Improvement was
produced by the MetLife Consumer
Education Center reviewed by the Real
Estate Educators Association and the U.S.D.A.
Cooperative Research, Education and Extension
Service. |
|
|
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. Keep
in mind the following considerations to help the
whole process go more smoothly. |
|
|
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
preperly stored?
- Is the garage door closed?
|
|
|
|
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.
Cleaning is No. 1. Your windows, floors and
bathroom tiles should sparkle. Make sure you
have clean heating and air conditioning filters.
Shampoo dirty carpets, clean tubs and showers,
repair dripping faucets and oil squeaky doors.
Keep your home neat, clean and picked-up at all
times. It may not seem fair, but a peek in the
oven may be the hallmark by which a buyer judges
how well you have kept up your home. |
|
|
Remove unnecessary clutter from the garage,
basement, attic, closets and straighten stored
items. Also remove any items that might make a
statement that would be offensive to others who
may not share your same views, beliefs or sense
of humor. If your home is crowded with too much
furniture, consider putting some things into
storage. If a room needs a fresh coat of paint,
use a neutral off-white. Think, too, about how
your home smells. You may be used to the smell
of a pet or cigarettes, but such odors can be a
strong turn-off to others. Be certain to remove
valuables such as jewelry and other items from
view. It might be wise to put these items in a
safe deposit box before showing your home.
Finally, set a mood for the buyer. Make your
house homey with live flowers and fresh guest
towels in the bathroom. Place scented potpourri
around the house or, on the day you're expecting
a potential buyer, pop a batch of frozen
cinnamon rolls into the oven for a welcoming
aroma. |
|
|
Remember, cosmetic changes do not have to be
expensive. In fact, costly home improvements do
not necessarily offer a good return on your
investment when you sell. It's attention to the
basics—anything that says “this home has been
carefully maintained”—that will help you get the
price you want. |
|
|
Go It Alone |
|
Some homeowners decide to sell their homes
themselves in order to save the commission
charged by a real estate agent. The commission
rate may vary, depending on where you live or
what agency you choose, but it is generally
upwards of 5%. 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 create, pay for and
place advertising for you.
- 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.
- They can make suggestions to
help make your home more attractive to a potential
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.
Ask prospective agents how they plan to market
your home. Don't sign with an agent just because
he or she suggests the highest asking price.
Negotiate the broker's commission prior to
listing your home, and sign for a limited period
of time—usually three to six months. |
|
|
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 closing 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.
|
|
|
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. |
|
|
|