This guide will help you to sell your house fast. This guide will show you how to prepare your home for listing, what you can do to help you sell your house faster, how an open house works, what happens if you have an underwater mortgage, pricing strategies, preparing your home for showings, what happens during the home inspection, finding the right real estate agent and even how to sell by owner.
What Do I Need to Know Before Selling My Home?
Selling a home can be a daunting experience, one that most people undertake only once or twice in a lifetime. While it’s highly advisable to work with a real estate agent who can guide you through the process, you’ll also need to put in some legwork – and probably elbow grease – beforehand. One rookie mistake many sellers make is letting their emotional investment in the home overshadow common sense. A Forbes contributor offers this excellent advice: “Start thinking about your house as a commodity, not an extension of your identity.” When you can look at your home with objective eyes, you’re well on your way to packaging a product that will be appealing to buyers. Remember that your ultimate goal is to get the best possible price within the time frame that you’ve set for yourself.
Do I Need an Inspection?
In most cases, a potential buyer will pay for an inspection once they’ve made an offer that’s contingent upon satisfactory results. However, if you have any doubts whatsoever as to the condition of your house, it would be wise to invest in a pre-listing home inspection. Spending around $400 now could translate to big savings down the road. If you clear up any problems revealed by your pre-listing inspection, they won’t come back to haunt you during the buyer’s inspection. Otherwise, these issues can potentially give the buyer a lot of bargaining room – or cause them to back out of the sale completely.
Issues to Look For
Leaving minor issues unrepaired can have bigger repercussions – potential buyers notice these cosmetic problems and wonder what sort of disasters may be lurking unseen. They often assume that if you won’t take the time to replace a worn-out window screen or touch up scuff marks on the wall, then you’ve probably neglected more intensive maintenance like roofing, wiring, or plumbing. If you want to get the most money you can for your house, you can’t afford to create a negative impression.
Minor touch-ups and repairs that are almost always a good idea include:
A fresh coat of neutral paint, after you’ve patched nail holes in the walls
Good lighting – make sure all your bulbs work and consider adding light sources if needed
Kitchen and bathrooms should be sparkling clean with all appliances, plumbing, and fixtures in good working order
Curb appeal makes the first impression – resurface the driveway and spruce up the landscaping
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Disclosures
Real estate disclosure laws vary by state, so make sure you’re up-to-date on local requirements. Generally, you are legally obligated to tell the buyer about problems that could affect the home’s value, such as foundation damage or environmental hazards like a tendency for flooding. If your home was built prior to 1978, federal law requires that you take several steps to protect the buyer from exposure to lead-based paint. A real estate agent can help tremendously in understanding your liability and walking you through disclosure procedures.
Closing Costs When Selling A House
Selling a home can be expensive -- but many expenses can also be mitigated by pricing a property appropriately and ensuring that it sells quickly. Before you start selling your home, you may want to be more aware of the closing costs when selling a house and what they consist of. Most of the costs associated with selling a home are fairly straightforward, and some of them may even be negotiable.
What Are the Expenses Related to Selling Your Home?
- Real estate commission. Real estate commission can be negotiated and can vary depending on agency, location, experience, etc. For example, if you house sells for $350,000 and the commission you negotiated was 6%, you would pay a total commission of $21,000.
- Pre-inspection reports. Before committing to a contract, you will usually want to get your property inspected. This will give you information on any necessary repairs.
- Buyer concessions. During the process of negotiating, sellers may frequently offer some concessions -- such as a credit to the buyer for new carpeting or appliances.
- Transfer taxes. All counties in New York have a transfer tax of $2 for every 500, or $400 for every $100,000 of property value. You may also have to pay recording fees to satisfy any liens on the property that were paid at closing.
- Other associated expenses. Home staging, repairs, painting, landscaping, and other renovations may need to be included in the cost of selling a home.
- Legal fees. You will need to engage an attorney to represent you in the sale of your home. Although attorneys aren’t a required part of real estate transactions in every state, it is customary in New York for both sellers and buyers to be represented by their own counsel.
This does not include capital gains tax, which is a separate issue. Some property sellers will need to pay taxes on their capital gains when selling their home. However, this is only if the amount of profit exceeded $250,000 (if single) or $500,000 (if married). If selling an investment property, on the other hand, gains may be taxed at the seller's own income tax rate.
There are ways to save money during the sale of a home, including:
- Selling the home faster. Sometimes it can make more sense to discount a home and sell it quickly than to hold out for more money. A vacant home may cost an owner more than it's worth, in terms of both mortgage interest and insurance costs.
- Getting the right renovations. A renovation can sometimes improve the value of a home well beyond the cost of the renovation itself. But this all depends on the market and the neighborhood -- and it's something that a real estate agent can advise a seller regarding.
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Of course, getting more money for your home also means additional profit, even if your expenses aren't altered. A real estate agent can make sure that you get the most money for your home, so that you can clear as much profit as you can.
Should I have a Pre-listing Appraisal on My Home Before I Sell?
When selling your home, a crucial step for a successful sale is establishing the right asking price. Setting the price too low could mean missing out on some money. On the other hand, setting the price too high leaves you at risk for not attracting the right buyers and your house going stale on the market.
So how do you find that happy medium? Well, there are a couple different options available to help you make an informed decision.
Comparative Market Analysis
A comparative market analysis is performed by a real estate agent. They evaluate homes currently on the market or recently sold that are similar in size, features, and location to yours. The agent may have actually been inside some of the comparable homes and use their knowledge of that particular market. Taking this information into account, they use the comparative market analysis to establish your homes current market value.
Pre-listing Appraisal
An appraisal is similar to a comparative market analysis, however it is performed by a licensed appraiser for a fee that typically ranges from $300 to $500. In addition to comparable homes like in the market analysis, they also utilize property tax records and sales trends. Because the appraiser has no vested interested in the property, they can create an independent and unbiased opinion of value based on factual market data.
Is a Pre-listing Appraisal Worth It?
With the associated fee and similarities to a comparative market analysis, you are probably wondering if it is really necessary to invest in a pre-listing appraisal. This ultimately depends on your particular situation. When deciding whether or not a pre-listing appraisal is worth it for you, consider the following:
- Do you disagree with your agent’s comparative market analysis? Have you met with several agents that provided a wide variety of prices? Then this is a case where obtaining a professional pre-listing appraisal might be the deciding factor you need to set the price of your home.
- Buyers tend to discredit an appraisal acquired by the seller. Even if the report is well-supported and completely unbiased, a buyer is typically more willing to trust an appraisal they initiated themselves.
- The buyer’s mortgage company will always order their own appraisal prior to closing. They typically utilize and trust a few proven appraisers. This is to protect the lender from loaning out more than what the property is worth. Therefore, a pre-listing appraisal does not really add value to the transaction or save the buyer a step in the process.
In general, investing in a pre-listing appraisal is not necessary. Because buyers and their lender will require their own appraisal, the only person who uses it is you. Additionally, your real estate agent’s comparative market analysis will likely yield similar results, while also bringing in their current experiences of the housing market. Unless you disagree with your agent or simply want another opinion, it may be a better idea to put that money towards small improvements to add value to your home.
Should I pay for a pre-listing home inspection?
What is a Pre-Listing Home Inspection?
A pre-listing home inspection is a good idea if you plan on selling your home. The cost of doing this could save you a lot more money in the long run. It could uncover some hidden flaws that you were unaware of that you could easily fix on your own rather than waiting for the buyer's inspector to uncover it and the buyer asking for a much larger concession on the sales price.
Uncover Issues Ahead of Time
You pretty much have an idea of what your sale price should or needs to be, so by uncovering any potential problems ahead of time, you will have time to research and know exactly how much it will cost to remedy the problem, and either take of problem right away - or know what concessions the buyer may ask for and adjust your price accordingly. Disclose these issues to a potential buyer so they may be taken into consideration during negotiations.
No Surprises
Most buyers will still do their own home inspection, but at least you can feel confident in knowing that there shouldn't be any surprises uncovered that you were unaware of. The buyers should also feel a little more comfortable making an offer with the pre-listing inspection knowing that any major issues with the home should have already been disclosed and maybe even remedied before they make their offer.
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While a pre-listing home inspection can cost you a few hundred dollars, it is money well spent and can save you money in the long run. Ask your real estate agent for the names of some home inspectors they have worked with or contact the American Society of Home Inspectors.
FSBO vs. Selling with an Agent: Which Is Right for You?
Most homeowners have a vested interest in selling their property fast. The quicker you sell, the less you need to pay in mortgage interest, taxes, maintenance, and other associated costs. And the process of selling can be difficult, too, especially if you're planning a move. A professional real estate agent can help you get an overview of how quickly properties will sell in your market -- and help you sell even faster.
If you’re thinking of selling your house, you may be wondering whether it’s better to use a real estate agent or go the “For Sale by Owner” or "FSBO" route. Each choice has its pros and cons. Ultimately, 89 percent of home sellers choose to enlist the help of an agent when putting their home on the market.
Legal Requirements
Although you are not legally required to sell with a real estate agent in any state, 22 states (including New York and New Jersey) require a real estate attorney to close a sale. These specialized attorneys ensure that all paperwork and documentation is completed in compliance with state law. If you choose FSBO, make sure you’re up to date on your state’s real estate laws.
Advantages of For Sale by Owner
Approximately 11 percent of homeowners choose For Sale by Owner, or FSBO, but these sales only accounted for eight percent of total home sales in 2015. This means that about 27 percent of sellers who go it alone aren’t able to close. The primary reason sellers give for choosing to sell the home themselves is that they don’t want to pay the agent’s commission. That brokerage fee is, on average, six percent of the final sale price. That means if you sell the home for $200,000, you net $188,000 and the agent gets $12,000. While it can seem like you’ll maximize your profits by “saving” that six percent, there are a lot of other factors to include in your calculations. You may find that FSBO can cost you more than that six percent.
Advantages of Selling with an Agent
There are considerable benefits to selling with an agent. Realtors have access to knowledge and resources that the average homeowner does not, and statistically, a real estate agent will get you a better price than FSBO. The median sale price for a FSBO home in 2016 was $185,000, while the median for homes sold by an agent was $245,000.
Homeowners who sold by themselves reported that some of their biggest challenges were:
Selling within the time frame they’d set for themselves
Understanding and completing all the paperwork
Setting the right price
Having enough time to do everything required for the sale
Agents earn their commission by putting in the time and effort to get you the best price possible, often within a much shorter time frame than a FSBO sale. Most real estate agents have years of experience navigating the ins and outs of sales, and paperwork that can seem overwhelming to a first-time seller is old hat to an agent. They have detailed information about the current state of the local market, so they can pinpoint the best list price for your property. Additionally, agents are an objective eye to spot areas that need upgrades, repairs, or staging, whereas owners are often blinded to their houses’ flaws because of their emotional investment in the home.
If you’re considering selling your house in the near future, talk to a real estate professional to decide whether FSBO or an agent is right for you.
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