It is without a doubt an exciting time to be a home seller. Buyers are plentiful thanks to low interest rates, and it’s not at all uncommon for a home to sell for above asking price. If you decide it’s time to sell, you want to get every dollar out of your property. Unfortunately, there are several ways home sellers can sabotage themselves. Before you put your home on the market, make sure you aren’t tempted to make any of these mistakes.
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1. Interview a single real estate agent
Most of us know at least one real estate agent, and many of us feel pressured to hire them when it’s time to sell our home. The problem with hiring someone out of obligation is that they may not be the right person for the job, especially if they are only telling you what you want to hear. For example, they may tell you that you should list your house for a price that you have decided to aim for, even if that is not realistic.
Getting the best price is more likely when your home is priced accurately and doesn’t dwell on the market. At the very least, interviewing three different agents gives you a general idea of your home’s value in the current market. If two agents give you a similar estimate, but the third is in left field, it may be a red flag. Some agents, anxious to sell a house quickly, undervalue a property. Others artificially inflate the value in order to entice owners and get listed. These are the same agents who come back to you two weeks later to tell you that you have to lower the price.
Choosing someone to sell your home is a business decision. You want an agent who is honest with you, even when they say something you don’t want to hear. Don’t be afraid to ask for references – from past clients who have used the agent to list their properties. Call these references to get their information.
Finding the best real estate agent is the difference between selling your home for a fair price and letting it idle in the market. This can raise red flags for potential buyers who are wondering why it hasn’t sold yet.
2. Invest Too Much To Prepare Your Home For Market
No matter how competitive the housing market is in your neighborhood, there is no reason to spend more on upgrades than it might increase the value of your home. It is usually the small investments that have the most impact. Renovating a room can wow people, but you can’t expect a buyer to be so blown away by the improvements that they are willing to pay more than the home’s value in the current market.
Preparing a house to go to market is a balancing act. Here are some affordable upgrades that make sense:
- A new coat of neutral paint
- Professional carpet cleaning
- Live plants and flowers near the front door
Other small efforts also pay off. For example, you could:
- Mow the lawn and trim the bushes
- Thoroughly clean the interior of the house
- Declutter the property and sell, donate or put away things you no longer need
The objective is to neutralize, clean and allow a buyer to easily imagine his goods in space. It’s easier for them to do this if they’re not busy figuring out how much time, effort, and money it will take to get the property back to normal. Think about the small chores you could do to accomplish this rather than undertaking big renovations.
3. Make a conditional offer
If you sell your home while also looking for a new home, you might be tempted to make a conditional offer. This is when you bid on a house with conditions attached. Let’s say you stumble upon your dream home before your current home is sold. You make an offer, but it includes a possibility that you have to sell your current home before you can close on the new property.
While there is nothing inherently wrong with the unexpected, falling in love with another home before selling yours can lead to bad business decisions. Maybe you’re taking a modest offer or agreeing to make some expensive changes to your current property just so you can put the sale behind you. Or maybe you offer to pay more for the new property than it’s worth if they agree to extend the emergency period.
Again, there is nothing inherently wrong with contingencies, as long as you can separate your emotions from the financial matters at hand.
4. Sell too soon after purchase
Although there are a few exceptions, most people must live in their home for at least two years to protect up to $ 250,000 from capital gains tax ($ 500,000 if you are married and file jointly ). Imagine that you are single and bought your house 18 months ago for $ 500,000. You put in 20% funds and borrowed $ 400,000. You’ve paid extra for your mortgage every month, while at the same time house prices in your area have skyrocketed. You now owe $ 325,000, but your house is worth $ 560,000.
Selling now could cost you dearly. It is because you will have to pay capital gains tax based on the difference between the amount you paid for the house (including closing costs) and the amount you received when you sold the property (less fees paid). The amount you owe can range from 0% to 20%, depending on your deposit status and income. If you get close to the two-year mark and can put off selling your home, you could end up with more money in your pocket.
Ideally, you’ll come back to selling your home with emotion, knowing that you did everything in your power to get every penny out of the transaction. The more money you earn on this house, the more you will have to contribute to your savings account.