Selling your home or investment property can be a stressful decision. In this article, we’ll discuss some things you should consider before making the final decision to sell your home.
We’re going to dive into some very important topics to help you make the final decision of whether you’re ready to sell your home. So you can finally put your mind at ease.
BE CAREFUL – Your mind can fill up with anxiety by overthinking the decision for whether or not to sell your biggest asset, your home! If your mind is already made up and at ease, still read on anyway.
1) What Price Should You List Your Home At?
Will you get enough of a sales price to cover all of your repair costs, sales commissions, and escrow fees? If you were expecting to roll over some equity for a down payment on your new home purchase, is there enough left over?
To know for sure, you’re going to need to evaluate and estimate all of the repairs that are required (to fix up your property), so that it will sell for the highest price possible.
For example, if your roof leaks, then you’ll need to fix it or get a new one. The same goes for the siding, drywall, flooring, doors, windows and anything else that needs to be fixed up before the home can be sold.
After the cost of repairs is calculated, you’ll also need to think about how capital gain taxes will affect you.
You did not think that uncle sam would just let you keep all the equity now, did you?
Definitely, run some numbers by your tax professional to see how much capital gain taxes you might have to pay or if you’re exempt. Generally, if you lived in the home at least 2 out of the last five years (before you sell it), you may qualify for an exemption on any home appreciation up to 250k if your single, or 500k if you’re married.
I have taken advantage of the exemption every single time I sold one of my properties!
Depending on the market conditions, you’ll want to sell your home when it’s a seller’s market. Ultimately, you’ll want to do it between April and September, in a year where the overall economy is healthy, and people are spending money.
How To Get The Highest Market Price For Your Home
It’s always a good idea to get some comps in your neighborhood for what you think your house might be worth. Luckily, with the help of the Internet, you can use sites like RedFin or Zillow to research the recent comps of properties that sold in your local area.
If you live in a development where the layout and style of your home are standard (such as condos, townhomes, or a new home division), it will be easy to find identical properties that sold recently.
If not, you’ll have to do a bit more research by visiting an Open House nearby. Find one that is a close match to your own home to make an accurate comparison. Open Houses typically happen on a Saturday or Sunday.
As you compare it, make sure you consider the home’s upgrades, lot size, and overall condition.
The Internet is a perfect place to research, but nothing beats seeing what your competition looks like in person!
After the comparable home (open house) has a sale pending status and the deal closes, you’ll be able to find out what the official sold price was. Usually 30 days after the close. The recently sold prices are by far the most credible resource for appraising an estimated range of value on your home or piece of property.
2) Ready For A Construction Zone?
If you are going to do some remodeling in your home to increase its value, then you’ll want to focus on the rooms that will bring the highest rate of return. Kitchens and bathrooms are the two areas of the house that will really boost up your home’s resale value.
Think about how your living environment will be impacted when having contractors in and out of your home! I don’t know about you, but I hate living in a construction zone.
You should consider other renovations as well.
Other typical renovations include updating the landscaping, plumbing, electrical, adding solar panels, installing energy efficient windows, and insulating empty attic and wall spaces.
Also, don’t forget to ask your friends, neighbors, or a Realtor if they know any good home improvement companies (general contractors).
By having all of the repairs and renovations completed ahead of time, you’ll be ready to get the highest possible listing price for your home.
But you’ll be living in a construction zone too. It’s a bit of a tradeoff.
3) Should You Consider Doing A For Sale By Owner (FSBO) or Hiring A Realtor?
Listing your home as a ‘for sale by owner’ is quite a responsibility. You’ll be putting in a lot of the sweat equity selling the house yourself, but will save on realtor fees.
On the other hand, there’s a bunch of legal liabilities associated with selling a home.
For 90% of the people selling their homes, they’ll choose to use a realtor to represent them. Some people will consider using a flat-fee realtor to save on high commission fees by helping out with open-houses and other responsibilities etc.
One last thing about doing a For Sale By Owner
If your lucky and it’s a buyers market or a hot area like the SF Bay Area, you may have an easier time to sell a home as an FSBO. If not, it will be very tough without a rock-star realtor with access to the MLS and a network of other real estate agents with buyers.
To make it easy to decide between hiring a realtor or selling the home yourself as a For Sale By Owner. I recommend you review the below guides that cover each method in more detail.
btw. I recently wrote them too.
Check out both articles and decide which way to go, I bet you hire the realtor!
4) Why Are You Selling Your Property?
Selling your home or investment property is a big decision and not something you want to do on a whim.
Out of all the considerations, this one is the most important in my opinion.
The reasons that force people into selling their home will surprise you.
Let’s review some of them below
- Your upgrading to your dream home.
- You want to cash out your investment because you’re house flipping.
- You’re relocating to a new job, and don’t want to rent out your home.
- It’s time to downsize to something smaller, a popular trend these days.
- You just got married, and that bachelor or bachelorette pad just doesn’t cut it anymore!
Those are all excellent reasons to sell. But other reasons will come up as well. Those unexpected life situations, you know the ones I’m talking about! It’s the negative ones such as divorce or a financial hardship. This can bring some very strong negative feelings.
I highly recommend that you take your time to sort out these feelings and keep a rational mind. You want to position yourself to sell at the right time so you can gain the most profit and pay the least amount of taxes.
ALWAYS REMEMBER! Seek out professional help (or do it yourself) and research all of the options available before you pull the trigger while keeping a rational mindset!
5) Are You Mentally Ready?
Are you Ready for Inspectors and Homebuyers to nitpick your home?
This can be an extremely difficult time if you just recently completed repairs and renovations before you did the listing. You might have just paid a contractor thousands of dollars too.
People will be coming into your home a lot during this time. You’ll need a lot of patience as people will knit-pick your property and tell you all the things that are wrong with it.
Keep an open mind and realize that there is no perfect home. Put yourself in the buyer’s shoes to have a better understanding of their mindset.
Quick Tip: If your property is vacant, that is awesome. It will make the selling process so much easier. It might help to stage it with decorations and furniture too!
After you get through the first few weeks after accepting an offer, you’ll be ready to put this whole thing behind you. After 20 to 40 days you’ll walk away with a big fat check from the sell (hopefully.)
6) Does The Home Appraiser Really Work for the Bank?
Your buyer will most likely get a loan from a bank that will demand a home appraisal. For the same reasons, you got one when you bought the home.
Typically, the appraiser is working more in favor of the bank, than for you or the buyer. The bank hires them to give the home a quick inspection inside and out. They’ll take some measurements, write a report, and take some photos.
Then the appraiser will review the comps and compare recent sells in the neighborhood. They’ll be charging the buyer hundreds of dollars in fees, then reporting back to the bank what the home is actually worth.
The buyer will get a PDF of the home appraisal report via e-mail that contains all the reports and photos that were taken.
If the value comes back low, you can contest the comparables that were used.
If you know your neighborhood and did a little bit of research ahead of time, you’ll be ready to provide proof to make your case. Remember, recently sold comps close to your home is your best bet!
I’ve seen many people contest and then get a higher value that was approved. It’s always worth a try!
Cash buyers are cool because they’ll usually have fewer inspections as well as a quick turnaround for closing. It could end up being as little as 14 days! So you most likely won’t have to deal with a home appraisal.
Selling your home or investment property is a big decision. It can be one heck of an emotional ride depending on your attachment to the home as well.
Carefully plan and put some thought into how you’re going to sell your home. It will make a huge difference in how your overall experience will go. Happy selling!