How To Sell Your Home
How to Sell Your Home
Are you in the process of selling your home and feeling a bit overwhelmed? There's no disputing that selling your home is a monumental task. Here is a 10-step guide to walk you through the basics of the home selling process. Before beginning any of those steps, you'll want to ask yourself what your priorities are.
Things to Consider: What Are Your Priorities?
Before selling your home, you'll want to know what your priorities are. Are you trying to sell the home as quickly as possible? In that case, it could be best to sell the house to a large company that buys homes in any state. These are real estate companies called instant buyers, or iBuyers.
If you're willing to take more time, you'll probably want to go another route. This will likely involve using a broker and the other types of professionals one tends to use to sell homes. This route will likely mean you'll make more money, but it will take more time.
The speed at which you want to sell the home is important to consider, one of many things to think about while you're working on selling your home. Whatever the case may be, you should be sure to consider your priorities when you're selling your home.
Continue reading to learn even more.
Step One: Know Your Local Market
Understanding your local market can make a huge difference in terms of when you should sell and what your asking price is. During hot markets, multiple bidders can drive up home prices. An example of the effect of prevailing conditions on the market could be seen during the 2020 pandemic. In down-market times, you may have to settle for less than your anticipated sale price.
In general, go to open houses and talk to your neighbors and real estate agents to get a feel for what condition your local housing market is in. In general, it's best to sell when:
- The economy is doing well
- Interest rates are low, allowing people to borrow money more easily
- People are likely to move during spring, and summer before school starts
- Supply of houses is low and demand is high
Step Two: Compare Your House With Similar Houses
To get a good idea of how much you should sell your house for, find out how much comparable homes sold for in your area. These are known as "comps". To ensure that it's really comparable, a similar house should:
- Have sold within the past six months
- Be in the same neighborhood
- Be similar in terms of age, size, and number of rooms
To get a list of comps, check websites, classified ads, and open houses. The National Association of Realtors publishes the Multiple Listing Service (MLS) which can also be a good source of comps.
It's important to keep in mind that comps are just listing prices, not what the house actually sold for. Although it's worth checking listings to set your price, also investigate what similar homes actually sold for in your area.
Often, a comparative market analysis is needed to determine the home's value. To do this, you could visit neighborhoods where homes have visible for sale by owner signs up. You could do the same in your own neighborhood.
Step Three: Understand the Tax Consequences
The profit you make on selling your house produces capital gains, subject to capital gains taxes. Fortunately, except for some exceptions, sellers can avoid paying capital gains taxes entirely. This is because under the Taxpayer Relief Act of 1997, individuals can exclude up to $250,000 in capital gains. In addition, married couples can exclude up to $500,000 in capital gains. In practice, this means if you bought your house for $100,000 and sold it for $300,000, that $200,000 in capital gains is entirely tax-free.
If the sale of your house will generate more capital gains than you can exclude under the Taxpayer Relief Act, you may need to do some additional homework to see if there is a better way to structure the sale of your house. A good way to start is to check out FindLaw's article on the tax consequences for selling your house.
Step Four: Decide To Hire a Realtor or Go It Alone
Hiring a real estate agent can be expensive but is often worth it. Selling a house, even with an agent, is an exhausting process. If you are the one stuck doing all the paperwork, as well as showing the house all on your own, it can be like taking on a second job. Expect a real estate agent to charge you around a five to six percent commission on the final sale price.
If you have a background in finance, are organized, and understand the legal issues involved, you always have the option to go it alone. Be aware, however, that it takes a surprising amount of time and energy to sell a house, so make sure you have plenty of both to spare.
Step Five: Fix Up Your House
Before you sell your home, you should hire a professional home inspector. Home inspection can be an integral part of the home selling process. Eventual buyers certainly will hire an inspector of their own, and it pays to know what deficiencies might be lurking under the surface.
An inspector can provide you with a list of to-do items before you put your house on sale. Make the repairs before you sell the house because existing problems with the house can reduce the value of your home more than the actual cost of repair.
Finally, since appearance is everything when selling your home, be sure to give your house a thorough deep cleaning, inside and out. You may need to do upgrades.
Step Six: Fill Out Your Paperwork
The buyer and your real estate agent will have to do most of the paperwork, but the seller often still has their fair share of paperwork to complete. For example, several states require that the seller fill out disclosure forms. These detail the house's physical condition and any defects.
An example of such a form might be one that requires disclosure of the condition of a home. It could include details about any known defects. Another of such forms might relate to disclosures around lead-based paint. It's usually required of homes built prior to 1978. These forms vary by state. It's important to check for your state's forms specifically.
You can read more about these forms in FindLaw's article on required real estate disclosures.
Step Seven: Advertise Your House
Use the same sources you employed to locate comps to advertise your house. This means you should list your house on a multiple listing service. You should consider listing your house on websites, in classified ads, and holding open houses. Hiring a professional photographer can also make sure your pictures capture the true appeal of your home.
That said, realize that many inquiries are simply curious neighbors or potential sellers like you, getting a feel for the local housing market. Utilize social media to broaden your reach. You might want to work with a listing agent.
Step Eight: Evaluate Offers
Once you receive offers on your house, it pays to sit down and carefully consider them. If you have a real estate agent, this is where they can really prove their worth. The highest offer is not necessarily the best offer, and your real estate agent can explain some of the nuances of home buying.
For instance, although one buyer may have offered more, there may be conditions attached to that offer. Another common example is when the buyer's financing is questionable, which may not be worth the risk even if the buyer's offer is the highest. If you can, find out who the prospective buyer's lender is.
Step Nine: Close the Deal
Once you and a buyer have offered and counter-offered, you are considered in contract. If the conditions of the contract are met, you cannot back out without facing a lawsuit. However, there are exceptions for certain contingencies, such as the collapse of the buyer's financing. In this process, you'll likely work with the buyer's agent.
Once the contract is signed, it will include a closing date. This is usually a few weeks into the future to allow the buyer to do the following:
- Secure financing
- Make any inspections
- Secure insurance
That time also allows the seller to move out and make any agreed-upon repairs. Once the contract closes, the buyer has the right to occupy the house. You need to make sure you either are out by that time or negotiate a working alternative with the new homeowner.
It's always a good idea to keep closing costs in mind, as well, as you plan. Remember that agent commissions need to be accounted for.
Step Ten: Finalize the Sale
Before handing over the keys to the new owners, ensure that all liens are cleared, and any agreed-upon renovations are completed. The buyer's down payment and the purchase price should be handled as specified in the purchase agreement. Be aware of the real estate commission that will be due upon closing. Conduct a final walkthrough with the buyer to ensure everything is as expected before finalizing the sale.
Selling your home can be a rewarding but complex process. Consider consulting with a professional stager to enhance your home's curb appeal and ensure you get top dollar for your property. Home staging and decluttering beforehand are always good ideas.
When engaging with prospective buyers, it's important to be prepared for any legal aspects that may arise. Consulting with a real estate attorney can be beneficial. It can be beneficial in navigating the complexities of the real estate market and real estate transactions.
You can also explore online platforms like Zillow or FSBO to stay informed about the market and connect with potential buyers. Often, you'll only need a real estate agent to handle escrow and other home-selling processes, but sometimes, it's a good idea to work with a lawyer.
The home sale process can be hard. It's important to get the help you need. It can help you with many things, including getting the best price for your home.
You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.