Taking out a another loan, buying a car, or making large credit card charges before you close can jeopardize your loan commitment. Lenders run a second credit check prior to closing to check for new charges.
Time to Close
Closing at the beginning of a month, the lender will require you to “prepay” the interest on your loan from the day of closing to the end of the month. Therefore the cash you need to close will be more than if you close at the end of the month. Talk with your lender about this.
Buyers Remorse
It’s common for buyers to feel stressed or remorseful during and after the purchase of a home, Educating yourself about the buying process will help minimize “buyers remorse”. You will probably forget it soon after you move into your new home.
Notify Services & Utilities
Don’t forget to contact services such as: post office, insurance, movers, telephone, utilities, newspaper, etc. a few weeks prior to you moving out to “change over” billing/mailing addresses.
Arrange for Mover
Get a couple of written estimates from movers on the services they provide for the costs of your move. Check the local Yellow Pages to get quotes and contacts.
Final Walk Through
Do a final walk through as close to the sign off as possible. Check appliances for operability. Test outlets with a radio or test device. Turn on light switches. Check water faucets and toilets. Make sure promised cleaning and repairs have been completed. Check that all items included in the purchase of the home(review contract) are present. For new construction, write down what needs to be completed or fixed, have builder sign. Include the date when these items will be completed.
Closing Costs
You will have to have your closing cost monies deposited in escrow before you can close. Don’t bring in a personal check to pay. Money should be in the form of a certified check or a money wire transfer. Check with your escrow officer.
Before you put your house on the market, its best to put a shine to it. The way you present your property to prospective buyers can make all the difference. Without investing in expensive and time-consuming renovation and redecoration, it’s still possible to show your home to its very best advantage.
Curb Appeal
That first impression when prospective buyers drive up is very important. If they don’t find the outside appealing, they won’t be interested in seeing what’s inside.
The Yard
- Mowed lawns, trimmed shrubbery and clean windows are a start.
- Planting a few flowers or plants can do a lot to a front yard.
- Fertilize and water the lawn and plants thoroughly 2-3 weeks before putting the house on the market.
- Clean up oil spots on the driveway. Make sure the garage door opens easily.
- Swimming pools should be clean along with the pump and filters.
- Clean up and throw away any junk or items laying around the yard.
- Now is a good time to have a yard sale, get rid of those items that you don’t plan
- to take with you. Do this before you put your house on the market to greatly reduce the “detrimental clutter look”.
- Start packing away little things that you don’t use everyday.
- Recycle magazines, newspapers, bottles, cans and so on.
- Pet droppings can easily turn the buyer back to the front door.
The Exterior
- If your house could use a paint job and you don’t have the time or money, some times hosing it off(from the bottom up) and repainting the trim will update the entire facade.
- At least paint the side facing the street.
- A clean front porch with a fresh looking front door that opens smoothly is a must.
- Any broken windows should be fixed now as they will most likely be before closing.
- A few gallons of stain or paint can add real impact to a fence.
The Interior
- Inside, everything should be spotless.
- Spending $100 to have someone do heavy “spring cleaning” if needed can bring a return many times over in the sales price and time on the market.
- A fresh coat of light colored paint on the walls is always recommended.
- Painting only the trim and the doors will add a lot.
- Check to see that all doors open and close freely. Oil any squeaky doors.
- Replace any burned out light bulbs. Brighter lights enhance many rooms.
- Steam clean the carpets if new carpeting is not possible and to help eliminate any pet odors. Wash and wax linoleum floors. Repair or replace damaged or missing tiles.
- Bathrooms should sparkle. Remove soap scum and mildew. Replace old looking toilet seats. Kitchens should be clean and bright. Clean oven and stove top. Exhaust fans should be free of grease and dust. Clear all unnecessary objects from the counter tops.
- Keep curtains and blinds open and interior lights on for a bright warm cozy feeling.
- Store stuff and clutter under beds, not in closets.
Focus Rooms
Buyers react most strongly to kitchens, bathrooms and closets, so it pays to concentrate your efforts here. Sometimes just switching door handles, knobs, and light switch plates is a dramatic improvement. Replacing new shower curtains and sink faucets can pay off.
Final Tip
Preview the competition’s open houses to see what you are up against in both pricing and condition. Potential buyers will be previewing these and more.
In General
Try to look at your house “through the buyer’s eyes” as though you’ve never seen it before. A lock box is the number one importance. “If you don’t have it, agents won’t show it.”
The new capital gains law allows homeowners to avoid paying taxes on the first $500,000 of profit if they are married or on the first $250,000 if they are single. You must have lived in the home as your primary residence for two of the last five years. You are allowed to use the provision as often as you like, as long as it fits in that two year period. Any gains above the limit will be taxed at the new 20% capital gains rate – down from the current 28 %.
The old law provided a $125,000 “one time” tax free exclusion on profits for home sellers 55 or older. This no longer is used, but those who have used it will be allowed to use the new provisions without penalty. Under the old law you could roll over gains if you bought a more expensive house. If you sold a more expensive one and purchased a less expensive one you were liable for gains tax. Under the new law this provision is no longer in effect.
Time Frames
If you bought and sold a home within 1 year, any capital gains would be taxed as regular income. If bought and sold between 1 and 2 years, gains would be taxed at the long term capital gains rate. Filing an extension may be a consideration, talk with a CPA for advice. Needing to sell and move for specific reasons may have cause for exclusion of gains tax prior to two year ownership.
Save Receipts
Always save receipts for home improvements in a “house file”. If you don’t qualify for the 2 year ownership rule, the cost of improvements can be used to offset capital gains tax you may have after the sale of your property.
People Benefited Now
– Wanting to downsize, children have all moved out.
– Retirement and move out of the area to less expensive area.
– Job relocation from area with high property values to lower values.
One Thought
People with rental property could sell their current home, move into their rental for two years and sell it under the $500,000/$250,000 provision with the same benefits.
Change in Property Values?
It is unknown how many people have been waiting to sell their property until this bill was passed. One possible scenario: Many homes are suddenly put on the market.
The Immediate Impact
Should not immediately affect property values as there currently appears to be more buyers than sellers. Immediate effect would be properties with more “days on the market”. This would hurt sellers needing to move soon or those sellers who listed the house over market value.
The Next Impact
When more and more houses are put on the market with fewer buyers this market peak will end. Property values could go back down again like 7 years ago, to start a new cycle. Timing for those sellers sitting on the fence could mean more money made. Contact your accountant or tax attorney for advice.
Penalty-free IRA
The final package allows penalty-free early withdrawals of up to $10,000 from an IRA to help with the down payment on a first-time home purchase. The IRA can be the home purchaser’s own account or can be a parent’s or grandparent’s.
Need Answers
If you are not sure what tax consequence you face when selling real estate, consult with a CPA or tax attorney and not a real estate agent.
- - The right price
- - At the right terms
- - In the right amount of time
To Reach These Goals:
- - Make your home look good
- - Price it at market value right away
- - Use real estate professionals
Make Your Home Look Good
It’s important you make your home look presentable before you put it on the market. Exterior and interior paint will give you the best return on your money. Clean up the yard, fertilize and add some flowers for that most important first impression. Have an agent preview your house to give you suggestions. If yours is an older house, your agent should recommend a termite and or property inspection at the beginning. This can work to your advantage in a couple of ways. Negotiations go smoother if you are aware of problems at the beginning. Allows you time to fix or correct things before an offer is brought in, which may give the buyer the confidence to offer more. Knowing of problems up front will give you and your agent more time to come up with ways to negotiate around them, should you choose not to fix them.
Price It Right
Pricing your house at market value from the start will typically result in the best price you will get for the property in the least amount of time and inconvenience to you. Listing your property high at first only helps to sell the other houses like yours on the market. Remember, buyers preview a lot of homes so they know what is overpriced. The sales price also has to appraise at market value in order to get a loan on it.
Pricing a Home is Key
When you figure extra mortgage payments, property tax, insurance, the time and energy to keep your home looking good and the inconvenience of having your home on the market a couple extra months, over pricing isn’t practical.
Real Estate Professionals
Real estate today has become a business that is very labor intensive on many fronts. Continuing education is required to stay up with all the changes and requirements for a real estate transaction. Most home owners don’t have the time or knowledge to successfully market and sell their home and get the best price.
To save a commission, some people start marketing their home by FSBO (for sale by owner). Some are successful, while most eventually list with an agent.
Most buyers work with an agent, because they don’t want to go through the buying process without the use of a knowledgable professional which they essentially get their service for free. Since the commission on a listed house is typically the source of income for the buyers agent, FSBOs get far less market exposure. Agents typically prefer not to work with FSBOs as they wind up doing much more work. Why – because FSBOs typically don’t have the knowledge and required forms needed for selling a home so the agent winds up providing for and consulting with the owner.
Real estate professionals have the needed information to arrive at market value. A real estate agent will conduct a Comparative Market Analysis(CMA) using the Multiple Listing Service(MLS). This involves a survey of homes that are on the market or have recently sold that are similar to yours. The agent will advise you on the additional value (or deficit) of your home’s unique features and factor that into the equation.
Going with the agent who recommends the highest price isn’t always the best. This technique is used to get the listing. Dismiss any agent who can’t justify a high price estimate. Sellers mistakenly believe that they should price their house higher knowing that they can come down in price if it doesn’t sell. Buyers shop around before buying and recognize value in a specific price range because of comparison shopping. Homes that wind up on the market a long time typically sell below market value.
Commission
A quick word about commissions. Commissions are negotiable. They can vary between 4%-10%, depending on the type of property, current market conditions, and the sellers motivation. 6% seems to be most typical. Many people wrongly assume the whole commission goes to one person. Typically it is divided four ways: the listing agent, the listing agent’s broker, the buyer’s agent and the buyer’s agent’s broker. Referral fees and franchise fees many times are a factor also.
5% Commissions
Getting your home listed at 5% may not net you more then if you listed at 6%.
When a home is listed, the commission is split between the listing office and the buyers agent’s office. When agents show properties to potential buyers, one thing they generally look at is how much commission is being offered. Agents typically will show homes offering 3% before the ones offering 2.5%. If your home is offering 2.5% to the other agents, it will get fewer showings meaning fewer people will even look at your house. The result: you will be helping other sellers get their homes sold first. If the listing office offers 3% to buyer agents on a 5.5% or less listing contract is the best of both worlds. This scenario reduces costs to you along with good marketing incentives for other agents. MLS fees, insurance and membership dues can run thousands of dollars a year for each agent. There is the cost of overhead, computers, office equipment, transportation, signs, advertisement and so on. It’s a business with many expenses without a weekly paycheck.
Marketing Real Estate
The MLS is still the best effective way to market your home to the public.
The Internet
The internet is fast becoming the preferred method for finding homes. More and more potential buyers start looking for homes on the internet. A tremendous amount of information can be found on the internet. Soon it will be the norm for buying and selling real estate. Now one can take a virtual tour of a home at the click of a button. More and more homes will be marketed this way, especially high end homes or special property. Real estate companies that use this technology will be serving their clients better. Flyers on a For Sale sign are common today, virtual tours will be common tomorrow.
Signs
A FOR SALE sign should be placed on your front yard. Not allowing a sign on you property will greatly decrease your marketing power. Use signs that have a box for flyers about the property.
A Lock Box
It’s important that you have a lock box so agents can preview and show the property during the day. Not allowing a lock box will dramatically reduce the needed exposure to properly market your home. Lock boxes are very secure devices that records who uses it. Agents don’t like to show property if access is an inconvenience. Use a lock box.
Advertising in property magazines, newspapers and open houses are additional methods used and probably the least effective ways to market real estate.
Does Size Matter?
Is a bigger real estate company better? Most large franchises want sellers and their agents to believe that.
Which Company is the Best?
Today, most of the large “name brand” companies were bought out and owned by one company – NRT. Companies such as Coldwell Banker are owned by NRT. Larger companies can’t be as flexible on commission because they have more layers to feed. Smaller companies have less overhead with less or no other ownership involved to feed. As a result, a lower commission can be agreed upon with the same effective marketing a large company offers. Talk with agents from different companies to find out what services they can provide and decide what is the best value for getting your property sold.
Choose an Real Estate Agent / Realty Company:
- - Good local market knowledge
- - That markets through the MLS
- - Has good web site – internet marketing
- - Give the best value for commission rate