What are Sellers’ Costs?

Selling a home, very much like buying a home, can be an expensive procedure.  First-time sellers often do not realize the extent of the costs that they may face.  Educated sellers who have done their research are almost always able to significantly reduce the costs that they incur while selling their home.

If you are selling your home with the intention of moving to another home or relocating to another city, the first step in the selling process is the same as the first step in the buying process: contact a mortgage lender for a loan pre-approval.  This step is important because there have been cases where sellers have sold their home before learning that they could not qualify for a mortgage to buy the home they wanted.  In these cases, the sellers come out of the transaction unhappy and end up living in a home that is less than what they had expected.

The next step is to carefully research the costs associated with the new home that you intend to purchase.  If you plan to move to an area with a higher cost of living, you will need to evaluate affordability just like you did when you purchased your first home.

In most cases, the costs associated with obtaining a mortgage pre-approval and buying a new home cannot be avoided.  Fortunately, a seller who is also a well educated buyer usually can reduce the costs that he or she incurs to purchase a new home and assume a new mortgage loan.

In addition to the costs mentioned above, here is a list of other costs commonly associated with selling a home.

 

Agent Costs
Choose to work with a certified realtor who has vast expertise and years of experience.  The realtor fee that he or she will receive from your sale will be paid in the form of a commission at the time of the closing.

 

Closing Costs
The seller often assists the potential buyer by offering to pay some percentage of the closing costs.  Depending on the mortgage program that the buyer has chosen to use, the amount that the seller can pay may be limited.  This limit may be percentage-based or it may depend on the size of the buyer’s down payment.  Some Veteran’s Administration (VA) mortgage programs allow the seller to pay all of the closing costs.

Closing costs are one of the most variable costs for sellers, and the only way to clearly know the amount ahead of time is say that you will pay none of the closing costs, or to impose a ceiling on the amount that you are willing to pay.

Keep in mind that when you offer to pay closing costs, the offered price for the home is usually raised. In effect, the buyer reimburses you for your contribution.

 

The capital gains tax does not necessarily mean that you will need to write a large check.  The laws governing capital gains taxes defer payment for sellers who are going to buy a new home with an equal or greater value within a certain amount of time following the sale of their home

Repairs
The cost of preparing your home for sale is highly variable.  If you merely clean and apply a coat of paint to the interior walls, your repair costs will be insignificant.  However, if you determine that the home will sell for more with a new roof and an enclosed patio, the cost of making these modifications could be quite high. 

Naturally, these are not the only possible repair costs.  Home inspections often reveal problems that the seller is obligated to repair or update before the sales transaction can be finalized.  Sometimes the buyer is willing to assist with these costs, but at other time the seller must bear the burden alone.  Depending on the age, location and style of your home, as well as its upkeep over time, the home inspection may be favorable or unfavorable for the seller.

You can often reduce the unexpected cash outlay by getting a home inspection of your own before placing your home on the market.

 

Advertising Costs
When you opt to sell your home with a realtor’s assistance, you avoid the expense of advertising your home for sale.  However, if you opt to sell without an agent in the hopes of avoiding the agent commission, then you are responsible for all the advertising costs. These costs can be insignificant or substantial, depending on the location, the type of advertising you select, and the number of people who pass by your home daily.

A realtor will advertise your home to other realtors in the area, who will then pass along information to their clients, potential buyers.  Their expertise is in successful advertising, and they will do everything possible to make sure that you are pleased with the results.

 

Capital Gains Tax
Capital gains taxes apply only to those sellers whose home has increased in value.  The increase in value must be significant before the tax becomes a concern.

The capital gains tax does not necessarily mean that you will need to write a large check.  The laws governing capital gains taxes defer payment for sellers who are going to buy a new home with an equal or greater value within a certain amount of time following the sale of their home.

In some cases, particularly when the owner was the home’s primary occupant while the property was owned, capital gains taxes do not apply.  A tax advisor or governmental taxing agency can provide you with the information you need to estimate and pay any capital gains taxes that will be assessed when your home sells.

 

FSBO Costs
If you opt to sell your home as “For Sale by Owner” (FSBO) without a realtor, you will face many expenses during the sales process.  These costs can vary significantly, depending on how you market the home, which professional(s) you select to handle your paperwork, and how of the sale you can handle on your own.  Contact an FSBO expert for information about sellers’ costs in FSBO transactions.

Many realtors are experienced in FSBO sales, as well as traditional sales. If you are considering selling your home FSBO, contact a realtor at any time with questions or concerns.

Hopefully this list of sellers’ costs has helped you to determine the amount of cash that you will need to have on hand in order to successfully sell your home. 

By selecting me a realtor to watch out for your interests and act as your seller’s agent throughout the sale of your home, you can greatly decrease your expenditures.  A good realtor can offer you expertise based on years of experience. He or she can also tell you where you should spend your hard-earned money and where you can save it.

You have control over many of the costs listed above, but there may be additional costs that are not included in this list.  Contact your realtor and mortgage lender for more information, and even work directly with the buyer in order to make the sale of your home work for you.

Tips for Single Homebuyers

 

There are probably few things in life that are as exciting--or as nerve- racking--as the search for a house. With an organized home buying plan, you can minimize a great deal of the emotional impact. By determining your buying power, your wants and needs, and having an organized search plan, your chances of a stress-free experience are much better.
Certain types of homes may appeal a bit more to some single homebuyers. For example, since most of the maintenance will be done by one person rather than two, many single buyers prefer homes such as townhouses and condominiums where some or all of the exterior maintenance, landscaping, snow removal, etc. is handled by the homeowner's association. In addition, some single buyers prefer the community aspect of these types of homes and the sense of safety that may be conveyed by having neighbors close at hand.
Many single homebuyers are single parent families, and a common mistake made is to tailor their purchase too closely to their current needs and not enough to future resale. For example, a one bedroom, two-bath single-family home with a huge great room and kitchen may be perfect for you, but it could be next to impossible to sell. It would be far better to have an additional bedroom or two sit empty (use as an office, exercise room, etc.) than to not have it at all.
Gertrude Singer, a real estate agent with National Realty in Palm Bay suggests that single buyers consider a few issues when preparing for and purchasing a home. According to Singer, the single homebuyer should
· Run before walking. This is easy to do once the decision to buy a home has been made. It means rushing off looking at homes, surfing the web or calling on advertisements before doing some up-front preparation.
· Don't over-buy the first time. A large and beautiful home with little or no furniture tends to be empty and cold. A life where almost every dime of your earnings goes to the support of your house wears thin very quickly and is a frequent cause of family stress. Leave yourself some breathing room!
· Compare mortgages. Don't simply accept the first plan presented to you. Spend time comparing to get the most advantageous plan for your requirements and financial situation
· Get mortgage pre-approval. Pre-qualification and pre-approvals are a necessary part of the home buying process. Not only will it give you an exact price range for your purchase, pre-approval will add a great deal of strength to your offer
· Don't wait for the "perfect" home. Many first time buyers make the mistake that they will, if they look around long enough, find a home that has a full 100% of their needs and wants. Instead, it makes sense to determine the most important of your needs and the most desired of your wants and selecting a home that meets the majority of them.
· The inspection process. This can involve skipping a whole house inspection completely in order to save the relatively small amount of money involved, or it may involve using a friend or relative with limited experience to conduct the inspection. In either case you run the risk of not exposing potentially expensive--or even hazardous--defects in the property. Protect yourself by investing the $200 to $500 for a professional inspection.
John Kuehne, a real estate agent with Pruitt Real Estate, Inc., advised that once the decision to buy a home has been made, you take the time to prepare before you go on your home search.
· Get your financial house in order first!
· Determine what your budget will comfortably allow and stick to it.
· Get pre-approved for a mortgage.
· Get familiar with the different housing types available to narrow your search.
· Determine your minimum requirements as well as any desired additional features-your needs and wants.
· Take note of any items that you don't want in a house.
· Determine the desired location (schools, work, public transportation, etc.)
· Choose an agent that you feel comfortable with and who understands your needs.
Kuehne also suggests that as you are searching, you use a scorecard to compare homes. "A scorecard is a great tool when it comes time for comparisons (and for remembering which home had which features)."

Biggest Mistakes A HomeSeller Can Make

Don't let the market scare you away from selling your home. Using the right tools can get you apart from the rest of the selling crowd putting you ahead. Here is a list of some of the mistakes sellers tend to make when listing their homes. Use this to your advantage to be sure you are not one of those sellers.
Misrepresenting Your Home
Don't lie about features your house does or does not have in the listing description or photos. Some buyers and agents may retouch the listing photos to make things appear better than they are, you will not fool anyone. Also do not include an illegal bedroom as a legal one. In a basement a room without an easily escapable window aka an egress window is not a legal bedroom. Most buyers do not even like to include a legal basement bedroom in their room count because they prefer bedrooms to be all on the same level. Just be honest and the right buyer will come your way.
Overpricing
This can be tough in the current market. You may have purchased your home at a market peak but it is important to follow your local pricing guidelines. Overpricing is an easy way to get your house overlooked by many buyers. Your Real Estate agent can help you strategize the best price for your area. Using comparables to see what they sold for is usually the best way to find that price range. To find out what your home could be worth we have a free home analysis service, visit our website today.
Procrastinating Repairs
If you know that your bathroom shower needs the drain replaced or some of your flooring needs replaced or fixing, do the work before the open house. Deducting the cost from the asking price could cost you more in the long run than simply doing the task yourself. Doing small repairs will also help your home show better, you may get a buyer coming in who is not interested in doing work on a home before moving in.
Hiring the Wrong Agent

Your Real Estate Agent is your major means to selling your home. Choosing the right one is the most important decision. You must be sure he/she knows the ins and outs of the area you are wishing to sell your home. Choosing the wrong one can result in your home sitting on the market far longer than you had hoped. You can ask for references and even for a history of their sales. Be sure to check that their list price and actual sell price ratio is desirable. If they have a record of listing a home for a certain amount and that home actually sells for much less you may want to look elsewhere. Ask your family and friends if they have dealt with or know someone who has dealt with an agent they were happy with.

Listing Too Few Photos
The internet is usually the first place a buyer or their agent will see your home for sale. You want to get as many pictures of your home out there for them to be intrigued in your property. This is your best form of advertising your house so do it the best you can, make them want to see it in person. Also be sure to remove any major clutter or obstruction to important features before taking pictures for the listing and showings. Show your home at its best!
Turning Away From Low Offers
It is still a buyer's market so they feel they can haggle that much more. Buyers like to test the waters to see just how low a seller can or will go. It is not meant to be offensive to you; it is just the way the market has taken the buyers recently. Negotiate with a realistic counter offer rather than turning your nose at a low offer. Your agent can advise you on the best negotiating strategies.
Being Unavailable
You want your home sold so be accessible when your agent needs to show your home. Not returning phone calls or allowing showings when the buyer is available is a good way to let your house stay on the market. Leaving a key in a lock box is the best way to allow a realtor to show your home when needed. No need to worry, only members of the MLS can get an electronic key to open the box, it is completely safe.

Happy Selling!

For More Real Estate Advice Articles, Click here.  To Contact a Realtor today, Call 231.773.4300 or Click Here!