Knowing the cost of selling your home ahead will save you time and avoid surprises at closing , there is always cost associated to selling your home .
In this post you’ll know what to expect when selling your home, here are some cost attach to selling your home.
This is the remaining balance on your home loan. You will need to pay off your mortgage in its entirety when your home is sold. You or your title company should order a payoff from your lender when the home is listed for sale. This includes any 2nd Mortgages and home Equity loans.
Prepayment Penalties .
The lending institution that currently owns your mortgage may assess a pre-payment penalty. You should speak to your lender now, ask if they plan on assessing a prepayment penalty, and figure out exactly how much that amount is.
Any outstanding liens against the property must be paid before title can be transferred to the new owners. Examples of outstanding liens are: tax-liens, Mechanic’s Liens (for unpaid contractors who’ve don work on the property), Judgments, Office of Recovery Services (for past-due child support payments)
A title company will be selected when you decide to sell your home. A Property Report (PR) is ordered at the beginning of the transaction to identify all liens against the home. If you believe any of these liens are invalid, your Title Company & Escrow Officer will assist in getting them removed before the sale date
Buyers & Sellers each have their own, separate Closing Costs. All closing costs associated with the sale of your home will be listed for you on your Settlement Statement. Closing costs for the Seller include:
1. Title costs for documents and services fees, Recording/filing fees
2. Title Insurance Policy,
3. Prorated property taxes.
Taxes & Real Estate Sales.
The money that you make from the sale of your home is considered capital gains. The good news is that these profits can be excluded from your taxable income, up to $250,000 for an individual or $500,000 for a married couple, as long as your home was your principal residence. These numbers change and are not guaranteed. Please consult with your CPA
To exclude the full portion of those gains, you will need to have lived in your house for at least 24 months in the 5 years previous to the sale date of the property. This is considered the 2 in 5 rule.
If you do not meet the minimum occupancy requirement you still may be able to exclude a portion of your gains if you are selling your house because of circumstances related to your health or to your job.
You should speak with your accountant or a certified tax specialist if you believe you fall under one of the exclusions or need help in reporting your capital gains after the sale of your home.
If this property is a real estate investment your profits will be considered taxable income and will be subject to state, federal and self-employment taxes.
You can defer all capital gains taxes in a 1031 exchange, if you are planning to reinvest the proceeds of your real estate sale into a new property.
Again, in this circumstance you should speak to a financial specialist who can help you fully understand and minimize your tax liability.
5 reasons you should list your home for sale now.
1. Demand Is Crazy
The latest Buyer Traffic Report from the National Association of Realtors (NAR) shows that buyer demand remains very strong throughout the vast majority of the country.
These buyers are ready, willing and able to purchase… and are in the market right now! More often than not, multiple buyers are competing with each other to buy a home.
You should take advantage of the buyer activity currently in the market.
2. There Is Less Competition Now
Housing inventory is still under the 6-month supply that is needed for a normal housing market. This means that, in the majority of the country, there are not enough homes for sale to satisfy the number of buyers in the market. This is good news for homeowners who have gained equity as their home values have increased.
Historically, the average number of years a homeowner stayed in their home was six, but has jumped to an average of almost nine years since 2008. There is a pent-up desire for many homeowners to move, as they were unable to sell over the last few years because of a negative equity situation. As home values continue to appreciate, more and more homeowners will be given the freedom to move.
The choices buyers have will continue to increase. Don’t wait until this other inventory comes to market before you decide to sell.
3. The Process Will Be Quicker
Today’s competitive environment has forced buyers to do all they can to stand out from the crowd, including getting pre-approved for their mortgage financing. This makes the entire selling process much faster and much simpler as buyers know exactly what they can afford before home shopping.
4. There Will Never Be a Better Time to Move Up
If your next move will be into a premium or luxury home, now is the time to move-up! The inventory of homes for sale at these higher price ranges has forced these markets into a buyer’s market. This means that if you are planning on selling a starter or trade-up home, your home will sell quickly AND you’ll be able to find a premium home to call your own!
Prices are projected to appreciate by 5.2% over the next year according to CoreLogic. If you are moving to a higher-priced home, it will wind up costing you more in raw dollars (both in down payment and mortgage payment) if you wait.
Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?
Only you know the answers to the questions above. You have the power to take control of the situation by putting your home on the market.
Perhaps the time has come for you and your family to move on and start living the life you desire.
That is what is truly important
Demand Is High & Inventory Is Low!
The Joint Center of Housing Studies (JCHS) at Harvard University recently released their State of the Nation’s Housing Study.
The first two revelations centered around the shortage of housing inventory currently available in both existing homes and new construction.
Regarding Existing Home Inventory.
“For the fourth year in a row, the inventory of homes for sale across the US not only failed to recover, but dropped yet again. At the end of 2016 there were historically low 1.65 million homes for sale nationwide, which at the current sales rate was just 3.6 months of supply – almost half of the 6.0 months level that is considered a balanced market.” Regarding New Home Inventory:
“Markets nationwide are still feeling the effects of the deep and extended decline in housing construction.
Over the past 10 years, just 9 million new housing units were completed and added to the housing stock.
This was the lowest 10-year period on records dating back to the 1970s, and far below the 14 and 15 million units averaged over the 1980s and 1990s.”
What Is your Home Worth?
Here’s the great news, your home really may be worth more than you are expecting.
So, the question becomes, how much is my home worth. Many factors impact the value of real property. Below is a list of some of the things that will affect your home value:
FACTORS THAT IMPACT YOUR HOME VALUE:
• Local Market Conditions
• Comparable Home Sales
• Buyer availability For Your Home
• Interest Rates
• Inventory Levels
• Condition of home & improvements
What is A Comparative Market Analysis (CMA)?
A CMA is a comprehensive examination of what homes that are similar to yours, have sold for in the last 0-100 days. You can go back 180 days, but appraisers prefer to stay within a 90 day window.
A good CMA will also take into account homes that are currently Under Contract & actively for sale in order to evaluate the market. It also allows you to spot ‘pricing holes’ that you may be able to exploit.
Pricing Strategies: One Offer Or Multiple Offers?
Every homeowner wants to make sure they maximize their financial reward when selling their home. But how do you guarantee that you receive maximum value for your house? Here are two keys to ensure that you get the highest price possible.
1. Price it a LITTLE LOW
This may seem counterintuitive. However, let’s look at this concept for a moment. Many homeowners think that pricing their home a little OVER market value will leave them room for negotiation. In actuality, this just dramatically lessens the demand for your house (see chart below).
2 . Use a Real Estate Professional
This, too, may seem counterintuitive. The seller may think they would make more money if they didn’t have to pay a real estate commission. With this being said, studies have shown that homes typically sell for more money when handled by a real estate professional.
A new study by Collateral Analytics, reveals that FSBOs don’t actually save any money, and in some cases may be costing themselves more, by not listing with an agent.
In the study, they analyzed home sales in a variety of markets in 2016 and the first half of 2017 . The data showed that :
“FSBOs tend to sell for lower prices than comparable home sales, and in many cases below the average differential represented by the prevailing commission rate.”
The Role Access Plays In Getting Your House Sold!
There are three key elements that affect how quickly your house will sell and how much it will sell for. They are: Price, Condition & Access. It’s seriously inconvenient to have people coming through your home, but if you do it right…you won’t have to do it for long!
Here are some things to DO…and some things to NOT DO!
DO Put A Secure Realtor Lockbox on the Door
Only Realtors & approved partners of the Local Board of Realtors can access this box. It allows Buyer’s Agents to show the home at their convenience. The box will also record the time & date it was accessed and all of the agent’s information. We ALWAYS know who has come through your home.
DON’T Use A Contractor’s Lock Box
These boxes are easy to break into and impossible to track. They operate like a simple combination bike lock. You can’t tell who’s used them. And ANYONE with the combination can get into your home.
DO Step Out During A Showing
Although the buyer’s agent & Buyer may be friendly, they need privacy to discuss your home’s features & benefits. You may also inadvertently say something harm your ability to negotiate a full price offer.
DON’T Wait Too Long To Respond To Showing Requests
Respond to showing requests quickly. Don’t give that buyer an opportunity to write an offer on someone else's home!
DO Use A Showing Service
Ask your agent if they use a showing service. This is a service that answers the phone 24/7 to take showing appts. Don’t miss out on showings because your agent wasn’t available to take the call! (The Service will confirm the appointment with you first, so you always know when showings are scheduled).
In a competitive marketplace, access can make or break your ability to get the price you are looking for, or even sell your house at all.
Do Home Improvements Pay Off?
When it comes to listing your home, there’s no single set of rules regarding property improvements.
The question to keep in mind is will you get a return on your investment? As a general rule, you will not recover 100% of your costs on big-ticket improvements.
Most big home-improvement projects will only recoup 70-90% of their cost, so what does that mean to you? It may not be worth it.
Here are a few improvements that can pay off:
Paint A Neutral Color
Provides a clean canvas for the new buyers and gives the open a bright, open feeling.
No one wants to inherit someone else's do-do list. Make sure all minor repairs have been done before buyers view your home.
If professional cleaning just isn’t going to do the trick, it may be worth investing in new carpet. Especially, if that’s the only way to address lingering pet odors!
New Front door/Garage Door
Replacing either or both of these can dramatically change the appearance of the home.
DON’T CONFUSE HOME IMPROVEMENTS WITH HOME STAGING! Getting your home ‘ready’ for sale is different from remodeling your kitchen! There are specific, low cost things you can do to dramatically change the appearance of your home.
Expect the unexpected with home inspections.
Home inspection reveals the present condition of the house you’re intending to sell . It’s a great way to get any issues addressed ahead of time!
the key is to find out what, if any, of these repairs are really necessary in order to proceed to the closing table!
Here are some of the things a home inspector will be checking:
• HVAC Systems – They will inspect your furnace/boiler, Air Conditioning Unit, & Water Heater along with all duct work.
• Plumbing – They will inspect all of your plumbing, check the pressure in the pipes, and look for any evidence of current or past leaks and water damage.
• Electrical – They will check outlets, wiring, and inspect the electrical panel. They will be looking for double-tapped breakers, faulty wiring, etc.
• Structure – They will inspect the roof, foundation, windows and interior structures of the home.
• Hazardous Substances – It’s also very common now for home inspectors to test for the presence of mold, methamphetamine, and radon gas.
You can save yourself a lot of headaches and hassle by having your home in good repair before any inspections take place. You may even consider having home inspected prior to listing.
How An Agent Can Help When Selling Your Home
When a homeowner decides to sell their house, they obviously want the best possible price with the least amount of hassles. However, for the vast majority of sellers, the most important result is to actually get the home sold.
A Realtor is a Consultant, a Contract Negotiator and a Marketer all rolled into one. What you may NOT know, is that your Realtor is very similar to your Attorney.
Like an Attorney, your Realtor has a Legal Fiduciary Duty to look out for your best interest (even over their own) throughout your transaction with them.
You also need to consider that most Buyers will be represented by a professional.
Buyers may search for a home online, but 96% of buyers purchased their home through a real estate agent/broker or from a builder or builder’s agent. Only 2% purchased their home directly from a seller whom the buyer didn’t know.
Every year, the laws and contracts that govern the sale of real estate change. (And they’re NOT getting simpler!)
It pays to have a dedicated professional to Connect-the-Dots for you throughout the process.
If you are thinking of selling your home, don’t underestimate the role that a real estate professional can play in the process
it may impact the sale of your home; not someone only interested in trying to sell you on how great they are. Request our list of ‘Insider Questions To Ask When Interviewing Listing Agents”.
It would be great if closing a real estate transaction was like buying a new bike or TV, just cruise through the aisles, pick your favorite model and head for the register. But this just isn’t the case.
Real estate transactions are complex and involve as many as twenty different players including real estate brokers, buyers, sellers, attorneys, inspectors, appraisers, lenders, and often contractors. Because of this, even the simplest transaction today typically takes between 30 and 45 days to close.
Here's an overview of how the process will typically work once an interested buyer has submitted an offer.
1. Dealing With Offers
When a buyer or a buyer's agent makes a formal offer we will review the offer in its entirety together. It will include the offer price, as well as the terms and conditions of the offer.
Offers will come on a legal form, and if accepted, you will be entering into a legal contract with the buyer. (Keep in mind that there are still lots of ways ‘out' for both you and the buyer at this point.)
2. When we evaluate offers we'll of course consider the offer price, but we also need to review the following:
• Terms & conditions of the offer, such as deadlines, and any personal property they may be asking to be included in the sales price
• Their pre-approval letter and the strength of their loan qualification.
• Compare to any other offer on the table that may be a better fit.
After a buyer submits an offer you can accept, reject, or counter offer. We will prepare any counter offers together, and I will submit that to the buyer's agent or the buyer and guide you through the negotiations.
Once You’ve Accepted An Offer
Once we’ve received an acceptable offer and entered into a contract, there are several steps that will need to be completed before the transaction and transfer of your property is complete.
The paperwork involved in selling and buying a home has increased dramatically as industry disclosures and regulations have become mandatory.
This is one of the reasons that the percentage of people FSBOing has dropped from 19% to 8% over the last 20+ years.
During the time between Acceptance & Settlement a number of items will be completed, including home inspections, appraisals and negotiating any repairs items the buyer may request.
Understanding Property Discloses (YES, You Must Disclose!)
When you list your home, you will be asked to fill out a 6-page disclosure statement that will list "material facts" about problems you are aware of regarding the condition and history of your home.
Both federal and state laws govern what must be disclosed during a property sale and as the homeowner you must be the person to complete these disclosure forms.
The general rule of thumb is that you must disclose anything that you have direct knowledge of.
As you fill out these forms just remember, you should strive to answer all of the questions to the best of your ability. Don't sweat the small stuff, but make sure you disclose everything that you'd want disclosed to you if you were the buyer.
If you don't know the answer to a question (such as exact age of the roof if you're not the original owner or the like), answer "Do Not Know." But not having precise facts about defects you know exist does not permit you to answer "Do Not Know" to every question. This will always raise a red flag.
If you feel like you don't properly understand the disclosure requirements, you should consult your Realtor.
I’m sure you have questions and concerns…
I would love to talk with you more about what you read here, and help you on the path to selling your house. My contact information is below. I look forward to hearing from you…
GA / SC Agent