Selling A Home – 7 Steps to Preparing For An Open House
- Hire a cleaning service. A spotlessly clean home is essential; dirt will turn off a prospect faster than anything.
- Mow your lawn, and be sure toys and yard equipment are put away.
- Serve cookies, coffee, and soft drinks. It creates a welcoming touch. But be sure the kitchen has been cleaned up; use disposable cups so the sink doesn’t fill up.
- Lock up your valuables, jewelry, and money. Although the real estate salesperson will be on site during the open house, it’s impossible to watch everyone all the time.
- Turn on all the lights. Even in the daytime, incandescent lights add sparkle.
- Send your pets to a neighbor or take them outside. If that’s not possible, crate them or confine them to one room (a basement or bath), and let the salesperson know where to find them.
- Leave. It’s awkward for prospective buyers to look in your closets and express their opinions of your home with you there.
10 Ways To Make Your Home Irresistible At An Open house
- Put fresh or silk flowers in principal rooms for a touch of color.
- Add a new shower curtain, fresh towels, and new guest soaps to every bath.
- Set out potpourri or fresh baked goods for a homey smell.
- Set the table with pretty dishes and candles.
- Buy a fresh doormat with a clever saying.
- Take one or two major pieces of furniture out of every room to create a sense of spaciousness.
- Put away kitchen appliances and personal bathroom items to give the illusion of more counter space.
- Lay a fire in the fireplace. Or put a basket of flowers there if it’s not in use.
- Depersonalize the rooms by putting away family photos, mementos, and distinctive artwork.
- Turn on the sprinklers for 30 minutes to make the lawn sparkle.
Selling A Home – 7 Terms to Watch for in a Purchase Contract
- The closing date. See if the date the buyer wants to take title is reasonable for you.
- Date of possession. See if the date the buyer wants to move in is reasonable for you.
- The earnest money. Look for the largest earnest-money deposit possible; since it is forfeited if the buyer backs out, a large deposit is usually a good indication of a sincere buyer.
- Fixtures and personal property. Check the list of items that the buyer expects to remain with the property and be sure it’s acceptable.
- Repairs. Determine what the requested repairs will cost and whether you’re willing to do the work or would rather lower the price by that amount.
- Contingencies. See what other factors the buyer wants met before the contract is final—inspections, selling a home, obtaining a mortgage, review of the contract by an attorney. Set time limits on contingencies so that they won’t drag on and keep your sale from becoming final.
- The contract expiration date. See how long you have to make a decision on the offer.
Selling A Home – Does Moving Up Make Sense?
Answer these questions to help you decide whether moving up makes sense.
- How much equity do you have in your home? Look at your annual mortgage statement or call your lender to find out. Usually, you don’t build up much equity in the first few years of paying a mortgage, but if you’ve owned your home for a number of years, you may have significant unrealized gains.
- Has your income increased enough to cover the extra mortgage costs and the costs of moving?
- Does your neighborhood still meet your needs? For example, if you’ve had children, the quality of the schools may be more of a concern now than when you first purchased.
- Can you add on or remodel? If you have a large yard, there might be room to expand your home. If not, your options may be limited. Also, do you want to undertake the headaches of remodeling?
- How is the home market? If it’s good, you may get top dollar for your home.
- How are interest rates? A low rate not only helps you buy more home, but also makes it easier to find a buyer.
Selling A Home – Moving Tips For Sellers
- Give your forwarding address to the post office, usually two to four weeks ahead of the move.
- Notify your credit card companies, magazine subscriptions, and bank of the change of address.
- Develop a list of friends, relatives, and business colleagues who need to be notified of the move.
- Arrange to have utilities disconnected at your old home and connected at your new one.
- Cancel the newspaper.
- Check insurance coverage for moved items. Usually movers only cover what they pack.
- Clean out appliances and prepare them for moving, if applicable.
- Note the weight of the goods you’ll have moved, since long-distance moves are usually billed according to weight. Watch for movers that use excessive padding to add weight.
- Check with your condo or co-op about restrictions on using the elevator or particular exits.
- Have a “first open” box with the things you’ll need most—toilet paper, soap, trash bags, scissors, hammer, screwdriver, pencils and paper, cups and plates, water, snacks, and toothpaste.
Plus, if you’re moving out of town:
- Get copies of medical and dental records and prescriptions for your family and your pets.
- Get copies of children’s school records for transfer.
- Ask friends for introductions to anyone they know in your new neighborhood.
- Consider special car needs for pets when traveling.
- Let a friend or relative know your route.
- Carry traveler’s checks or an ATM card for ready cash until you can open a bank account.
- Empty your safety deposit box.
- Put plants in boxes with holes for air circulation if you’re moving in cold weather.
6 Items to Have on Hand for the New Owners
- Owner’s manuals for items left in the house.
- Warranties for any items left in the house.
- A list of local service providers—the best dry cleaner, yard service, etc.
- Garage door opener.
- Extra sets of house keys.
- Code to burglar alarm and phone number of monitoring service if not discontinued.
Selling A Home – Tips For Holding A Yard Sale
Hold a yard sale to reduce the clutter in your home and get rid of items you don’t want to move.
- Check with your city government to see if you need a permit or license.
- See if neighbors want to participate and have a “block” sale to attract more visitors.
- Advertise. Put an ad in free classified papers, and put up signs and balloons at major intersections and in stores near your home.
- Price items ahead and attach prices with removable stickers. Remember, yard sales are supposed to be bargains, so don’t try to sell anything of significant value this way.
- Check items before the sale to be sure you haven’t including something you want by mistake.
- Keep pets away from the sale.
- Display everything neatly and individually so customers don’t have to dig through boxes.
- Have an electrical outlet so buyers can test appliances.
- Have plenty of bags and newspaper for wrapping fragile items.
- Get enough change, and keep a close eye on your cash.
Selling A Home – Understanding Capital Gains in Real Estate
When you sell a stock, you owe taxes on your gain—the difference between what you paid for the stock and what you sold it for. The same is true with selling a home (or a second home), but there are some special considerations.
How to Calculate Gain
In real estate, capital gains are based not on what you paid for the home, but on its adjusted cost basis. To calculate this:
- Take the purchase price of the home: This is the sale price, not the amount of money you actually contributed at closing.
- Add adjustments:
- Cost of the purchase—including transfer fees, attorney fees, inspections, but not points you paid on your mortgage.
- Cost of sale—including inspections, attorney’s fee, real estate commission, and money you spent to fix up your home just prior to sale.
- Cost of improvements—including room additions, deck, etc. Note here that improvements do not include repairing or replacing something already there, such as putting on a new roof or buying a new furnace.
- The total of this is the adjusted cost basis of your home.
- Subtract this adjusted cost basis from the amount you sell your home for. This is your capital gain.
A Special Real Estate Exemption for Capital Gains
Since 1997, up to $250,000 in capital gains ($500,000 for a married couple) on the sale of a home is exempt from taxation if you meet the following criteria:
- You have lived in the home as your principal residence for two out of the last five years.
- You have not sold or exchanged another home during the two years preceding the sale.
Also note that as of 2003, you also may qualify for this exemption if you meet what the IRS calls “unforeseen circumstances,” such as job loss, divorce, or family medical emergency.
Selling A Home – What Is Appraised Value?
It’s an objective opinion of value, but it’s not an exact science so appraisals may differ.
For buying and selling purposes, appraisals are usually based on market value—what the property could probably be sold for. Other types of value include insurance value, replacement value, and assessed value for property tax purposes.
Appraised value is not a constant number. Changes in market conditions can dramatically alter appraised value.
Appraised value doesn’t consider special considerations, like the need to sell rapidly.
Lenders usually use either the appraised value or the sale price, whichever is less, to determine the amount of the mortgage they will offer.