Sell a Home FAQs

Home sellers are so wrapped up in maintenance and upkeep that it can be hard to know when it is the right time to sell. Home buyers may need to move to a different city, get more room for a family, or downsize after the kids are out of the house, which can complicate the home-selling process.

Here are some frequently asked questions and helpful tips about selling a home.

• When should I sell my house?
• Should I do anything to my house before I sell it?
• When it's a buyer's market, should I wait to sell my house?
• How do I determine how much to sell my house for?
• Should I list my house for more than it's worth?
• How Long should I collect buyers' offers?
• How do I decide between multiple offers?
• How do I get the money from a home sale?
• Does the seller always pay the closing costs?
• What are the tax consequences of selling my house?
• Can I do it myself, or do I need a real estate agent?
• How do I know if a real estate agent is ripping me off?
• What are some alternative ways to finance the sale of a house?
• Where can I find a lawyer to help sell my home?

When Should I Sell My House?

It's best to sell a home when there are more buyers than houses available, known as a seller's market. This encourages bidding wars on houses and can substantially increase the selling price for your home. Some of the best indicators of a good time to sell a home include:

• When the economy is doing well, and people's outlook for the future is positive
• When interest rates are low — this allows people to borrow money more cheaply, encouraging competitive purchase bids
• When people are more likely to move and spend on moving costs — traditionally, many more houses are sold during the spring than during the winter
• When your community is considered especially attractive — a common example of this is to sell your home during the period when schools in your area are enrolling new students

Should I Do Anything to My House Before I Sell It?

Absolutely. Before you sell a home, you should probably hire a professional home inspector or home advisor. It pays to know about issues before a buyer does. A professional home inspection can:

• Allow you to address problems and complete repairs or upgrades before you sell a home
• Help you set the price of your home
• Ensure that the sale process won't get held up by unseen homeownership issues
• Boost your credibility and trustworthiness
• Reduce your liability by relying on professional documentation in your disclosure statement
• Help you or your buyer get a home warranty

You may also want to consider home staging and landscaping. After renovations, your primary home will look much more appetizing to potential buyers.

When It's A Buyer's Market, Should I Wait To Sell My House?

Not necessarily. A home's value is more than just a function of average costs set by market trends. Potential buyers are always in the market for new homes. During a buyer's market, the economy might be weaker. Credit might be harder to get, and interest rates may be higher. This might make it more difficult for a seller to get competitive purchase bids.

But some properties are always in demand. Some neighborhoods are always demanding top dollar. Most importantly, the future is uncertain, and you never know if things could get worse. There is never a perfect time to sell your house. Ultimately, you have to do what makes the most financial sense in your circumstances. If you need the money now or you need to move soon, then waiting might not be a good idea, even in a slow market.

How Do I Determine How Much to Sell My House For?

The easiest way to determine your house's value is to get a professional appraisal. A professional appraisal will compare your home to similar houses in your area (called a "comp") and give you a good idea of how much you should sell your house for. When evaluating a comp, it is important not only to find similar houses in the area but also to look at how recently those homes sold. Sales closer in time are a more accurate guideline when setting the price on your home.

Many websites allow you to see what houses in your neighborhood have sold for lately. This can help you determine a value on your own. Still, you should be careful when looking at this data since it doesn't take into account any special features of your home, such as a unique location or recent remodeling efforts.

Should I List My House for More Than It's Worth?

Be careful in setting your list price. If you overprice your house, most potential buyers will simply ignore you. Your home could sit on the housing market for a very long time. The longer a house sits on the local market, the more likely other buyers are to think there's something wrong with the house and avoid it.

Real estate agents will have local sales figures and can give you a good estimate of your house's market value. Be aware that many listing agents may overvalue your house slightly in the hope that you will list your house with them. If you have a real estate agent determine a value for your home, ask to see the data on similar houses and see for yourself whether it makes sense. You can also order an appraisal to have your home valued by a professional. They have market analysis tools, such as property comparison reports, that can accurately price property.

How Long Should I Collect Buyers' Offers?

Competing buyers may offer top dollar to close a real estate transaction quickly. It might take anywhere from a few days to a few weeks to collect your offers. If you don't wait long enough, you might not get all the money you can. But, if you wait too long, you might lose any offers you have. Plus, potential buyers will not make offers on a property that's been sitting on the market for too long. Ideally, you shouldn't wait longer than a couple of weeks. In big cities with attractive markets, a few days might be enough. In rural areas or when you're dealing with special properties, it could take months to find the right buyer.

How Do I Decide Between Multiple Offers?

The offer amount isn't the only important factor. Some prospective purchasers might be making offers they aren't approved to make. Other potential buyers might be coming in with hard cash. Yet, others might have pre-approved paperwork from their banks. Other than the amount of the offer, you should consider the capacity of the buyer actually to make good on their offer. If someone offers you top dollar but can't get a loan actually to close the real estate transaction, they're wasting your time. Ideally, you should select the most qualified buyer to commit to the sale.

How Do I Get The Money From A Home Sale?

The money for the house, including the down payment, is normally kept in an escrow account. The escrow company holds onto the buyer's funds until inspections and other formalities are complete. When the real estate transaction is ready to close, escrow funds are ready to go toward:

• Lender fees and recording fees
• Title insurance and escrow fees
• Outstanding property taxes and HOA fees
• Seller's mortgage payoff (to clear their mortgage balance)
• Brokerage commissions

Once these and overhead costs get deducted, the escrow company will wire the rest to the seller's bank account.

Does the Seller Always Pay The Closing Costs?

No. Closing costs are typically shared equally between the buyer and seller. Negotiations may result in seller concessions. For example, if a buyer offers a very generous purchase offer, the seller might agree to cover extra costs. Or perhaps the buyer discovered structural issues with the property that were unknown. The seller might entice the buyer to close the transaction by crediting them and also offering to pay all closing costs.

What Are the Tax Consequences of Selling My House?

The sale of your house above its original purchase price generates capital gains tax as defined by the IRS. However, since the Taxpayer Relief Act of 1997, individuals can exclude up to $250,000 in capital gains for individuals, and married couples can exclude up to $500,000 in capital gains.

To see how this works in practice, imagine you bought your house for $100,000 and then sold it for $300,000 in net proceeds. That sale would generate $200,000 in capital gains, all of which could be excluded since individuals can exclude up to $250,000, and married couples could exclude up to $500,000. Accordingly, you wouldn't owe any taxes on the capital gains from the sale of your home.

There may also be transfer taxes depending on your city, county, and state laws. Transfer taxes may also apply depending on whom you sell to. For more information, see FindLaw's article on the tax exemption for the sale of your home.

Can I Do It Myself, or Do I Need a Real Estate Agent?

A home that is directly for sale by its owner (FSBO) may reduce overhead costs. Only a few states require you to hire a real estate agent or attorney, but it may be worth it. Selling a house, even with a real estate agent, is an exhausting process. If you are the one stuck doing all the paperwork and showing the house, it can be like taking on a second job. Or, you may consider hiring a real estate agent to only help with portions of the process and take on other parts yourself. Dealing with the buyer's agent on your own might reduce the cost of selling, but you might miss out on crucial advice and required legal formalities.

How Do I Know If a Real Estate Agent is Ripping Me Off?

Just as hiring a lawyer incurs attorney fees, real estate agents charge agent commissions through their brokerages. A homeowner usually pays all agent fees as a percentage of the home sale price. For example, if the sale value of your home is $100,000, the real estate agent commissions might be 5% or $5,000. That means your real estate agent (seller's agent) gets 2.5% or $2,500. The buyer's agent would get the other $2,500.

Some agents and their brokers demand higher commissions. They might negotiate a flat fee or a high percentage of the property. You might feel that they're not worth their salt, and you might be right. Consider the following factors:

• Typical commission rates in your area
• Average rates for the type of property you're selling
• Your agent's experience and license standing
• Your agent's reviews and reputation
• How hard is the agent working to sell the property? Are they just sitting around doing nothing, or are they constantly marketing it to help you get the best price?

What Are Some Alternative Ways to Finance the Sale of a House?

There are two common ways outside of a common mortgage scenario to finance the sale of a house. The first method is to loan money to the buyer and take back a mortgage on the home when you sell it. The buyer would sign a promissory note (to repay the loan) and either a mortgage or a deed of trust (both of which would allow you to foreclose on the house if the buyer failed to pay). In return, the seller would sign a deed transferring the title of the house to the buyer (which allows the buyer to sell or refinance the house).

The second method is to create what is commonly referred to as a "contract for deed," "contract of sale," "land sale contract," or "installment sales contract." This document will allow the seller to keep the title to the property until the buyer pays off the loan. Unlike this first method, this means that the buyer is unable to sell or refinance the house. Once all payments have been made, the seller would sign a deed transferring the title to the buyer.

Where Can I Find a Lawyer for Help Selling My Home?

Your real estate broker may not be able to handle all your questions about selling a home. A real estate attorney can help you deal with the legal questions you may have when it's time to sell. Speak with an experienced real estate attorney in your area. Whether you're in California, New York, or elsewhere, having a lawyer on your side is always a good idea.