Timing is everything
You can't always choose when to put your home on the market. You might need to buy another home to make room for a new baby that's on the way. Or, perhaps your employer is transferring you out of state. However, if you do have a say in the matter, you'll want to make sure that you're selling your house at the right time. Typically, you'll sell your home quicker and get a better price for it when the real estate market favors sellers (i.e., when homebuyers are plentiful and homes are scarce). The time of year you put your home on the market can also make a difference. Since many homebuyers prefer to move in the spring and summer, real estate markets usually heat up in late winter and early spring.
Preparing your home for the sale
Before you put your house on the market, take some time to get it in top condition. Start by giving your home a thorough cleaning--you may even want to hire a professional cleaning service to do it for you. Next, move on to smaller maintenance projects such as fixing that leaky faucet in the kitchen or replacing the loose tiles in the bathroom. Certain contractors specialize in this part of the home maintenance market. However, be sure not to get too carried away. You'll want to hold off on any major home improvements (e.g., renovating the kitchen) since you probably wouldn't be able to recoup the money you put into the project, and prospective buyers might not share your taste in design. Focus instead on minor, cosmetic improvements, such as a fresh coat of paint and some landscaping.
Setting the right price
When selling a home, it's important to set the right price. Your asking price shouldn't be so high that your house won't sell or so low that you'll miss out on some profit. If you use a real estate broker, he or she will do most of the work for you in determining the right price for your home. However, if you plan on selling your home without a broker or if you simply want to obtain some pricing information on your own, you should research the sale prices of comparable homes in your area. There are websites that offer this information for free. You may even want to hire a professional appraiser to help you determine your asking price.
Using a broker or doing it yourself
The majority of home sellers enlist the services of a real estate broker to help them sell their home. Real estate brokers are particularly helpful if you don't have the time or the expertise to correctly price your home, market it, and bring in potential buyers. More importantly, a broker will focus on bringing in buyers who have already prequalified for a mortgage, which can save you time and money in the long run. However, this expertise comes at a price--6 percent of a home's sale price, on average. If you're looking to hire a broker to help you sell your home, here are some tips to help you get started:
- Ask friends and relatives who have sold homes recently for recommendations
- Find out the names of the brokers and agents who work in your area by searching classified advertisements in your local newspaper, homebuyers magazines, and the Internet
- Ask other types of real estate professionals (e.g., lawyer, mortgage broker) for the names of brokers they work with
While doing it yourself (commonly referred to as a FSBO, or "for sale by owner") will allow you to save on broker's fees and commissions, it requires more legwork on your part. You'll need to advertise that your home is for sale (e.g., lawn signs and advertisements in local newspapers), show it to prospective buyers (e.g., hold an open house), and deal with the buyer during negotiations. You'll also need to supply the necessary forms and/or contracts (although you can hire a real estate attorney to draw up this paperwork for you).
Negotiating the sale
If you hire a broker, all offers and counteroffers are presented through your agent, so you'll probably be able to avoid any face-to-face negotiations with potential buyers. On the other hand, if you are selling your home on your own, you'll be in charge of the negotiating. Remember to be flexible during negotiations. However, don't jump to accept the first offer you get--especially if it is below your asking price.
As a seller, you'll probably have very little to do at the closing. Your main responsibility will be to make sure that any agreed-upon repairs have been made and that the buyer is getting clear title to the home. However, you'll want to make sure all of the paperwork is in order, and if you hire an attorney, have him or her attend the closing with you.
Other things to consider
- If you're buying another home and need to come up with a down payment on it before receiving the proceeds from the sale of your current home, ask your lender about a bridge loan, a short-term mortgage that is paid off once the sale of your home is complete.
- If necessary, include a closing-on-sale contingency clause in your contract to buy your new home, which allows you to delay the closing on your new home for a certain period of time while you find a buyer for your current home. If you can't find a buyer within the allotted time frame, the purchase contract is canceled and any deposits are returned to you (unless you and the seller agree to extend the agreement).
- Find out about the tax implications of selling your home. Most sellers can exclude from taxation some or all of the capital gains they realize (up to $250,000 for single filers and up to $500,000 for married couples filing jointly) if selling their primary residence. See IRS Publication 523, Selling Your Home, for details.