As the real estate market continues to heal and prices rise, more Americans are considering a home sale this spring. Before you jump in, there are a number of factors to consider. Beyond the obvious question of where you will live next, it is important to weigh the tax implications of a sale -- you may be on the hook for capital gains taxes on primary home sale profits that exceed $500,000 for couples and $250,000 for individuals. Check out IRS Publication 523, Selling Your Home, for rules and worksheets. Also note that if you are hoping to downsize, you should carefully research your options. Many retirees have found that the purchase price for a smaller, but newer house or condo with desirable amenities, costs more than the sale proceeds received from the sale of their larger homes. If you are ready to take the plunge and to list your home, the most important thing to know is that setting the right price is essential. The first three weeks of a home’s entrance on the market are the most critical for creating interest and attracting buyers. Realtors note that buyers often dismiss a listing that is “old and stale”, which means that the longer the home stays on the market, chances are the selling price will be lower, both in absolute dollars and as a percentage of list price. The corollary to overpricing is not recognizing when you need to reduce the price. Generally speaking, if there hasn’t been a bite for three to four weeks, it’s probably time for a price cut.
In both instances of setting the price and knowing when to reduce it, you hopefully will lean on your realtor. That’s why engaging a good one is so important. In addition to asking friends and family for referrals, make sure that you invite three agents to create a comparative marketing analysis. Be sure to find a realtor who has experience with your neighborhood and price range. During the realtor interview process, you will see which of these professionals has leapt into the digital age, with a variety of ways to reach potential buyers. You may want to ask for the marketing plan in writing, so that the agent is on the hook.
Your realtor will also help you prepare the house for sale. First impressions matter, so identify the important home improvements that must occur before the open house. If you haven’t done so in a while, you will probably have to paint the house, replace the broken windows, clean or replace old carpets, cut the lawn, plant the flowers and tend to the garden. Even the small stuff counts, so make sure all light bulbs in the house are working, remove all clutter from closets and surface areas, fix leaky faucets, re-caulk the showers and tubs. If all of this prep sounds like too much work, you can hire someone to “stage” your home, which takes the process to a more professional level. Some sellers, especially those with older homes are choosing to schedule a pre-inspection for their own benefit. While this increases the costs associated with the sale, it may identify a potential problem earlier in the process.
As potential customers show interest, don’t thwart their progress by making it hard for them to see your house. Avoid putting too many restrictions on showing times that may encourage potential buyers to move on to the next home in their price range. If you are fortunate enough to get a bid, your realtor to skillfully and calmly handle the negotiations. Your reactive or emotional responses can impede the process or worse, kill a deal.