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sell your home

Should You Sell Your Home With a Real Estate Agent or Sale by Owner

Sell Your Home With a Real Estate Agent and Avoid Major Mistakes

Should you sell your home by a real estate agent or sale by owner

Here are major issues you may face selling your home by owner:

  1. Real estate agents know the process and documents you need to execute the entire selling process properly.
  2. The real estate agent will understand how to fill out all the real estate documents correctly.
  3. The real estate agent can monitor the process and make sure everything is done in a timely manner. They will get the right documents, and help you find the right mortgage and escrow company, title company or real estate attorney.
  4. Sometimes the real estate agent can negotiate a higher price for your home, than you can since they know the price trends in your area.
  5. Safety is a major concern when you do a “sell by owner”. When a real estate agent brings someone to your home, they have usually vetted them and met them at the real estate office in advance. Most of the potential buyers you let into your home will drop in randomly from the sign in your yard, so they may have sinister ideas when they come visit, and are not actually looking for a home.

I don’t recommend that anyone sell their home by owner unless you have a buyer you know already as a friend, relative, neighbor, or close associate. Make sure you research the process thoroughly before you start.

The only reason I can think of that anyone would want to sell a “home by owner” to the greater is that 1. You MUST sell to move 2. Don’t have enough equity to pay a real estate agency (the fee is as much as 6%-7% of the sales price).

I have sold two homes as a “for sale by owner” seller. So, it is possible to do a “sell your home by owner” home sell, but It wasn’t as easy as I thought it would be. If you sell you home with a real estate agent you will avoid mistakes that can cost you later.

real estate home buying success you must know your finances like the back of your hand

I made the decision since I had not owned the one home long enough to generate enough equity to pay a real estate agent commission, they other home I wanted all of the equity for a down payment on my next home.

These are the things I learned from my actual experience, my research, talking to real estate agents, and talking to others who had sold a home. I spoke with two friends who are ex-real estate agents, and they helped me quite a bit.

I also took an appraisal course many years ago in anticipation of starting a real estate appraisal business. I did not start the business, but I learned a lot about appraising homes.

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First, expect to be bombarded by real agent’s eager to list your home, when they see your, “For Sale by Owner” sign. They will contact you over and over hoping that you will become frustrated with the whole process, throw up your hands and say, “where is that pesky real estate agent? I’m listing my house with her or him, yesterday!” Unfortunately, sometimes you will feel like that, but don’t give up too soon.

The following “for sale by owner” information should be helpful: 

  1. There are many legal forms, those dreaded forms! They are dreaded but necessary for the legal transfer of your property to another person. You will need legal real estate sales and disclosure documents for your home sale.

You can get these documents from a title company or you can pay a real estate lawyer to do the work for you. The real estate lawyer will provide you with the documents and fill them out correctly, for no more than an hourly fee. Verify his/her fee, the time it will take, and agree on a fee before he/she fills out the documents.

  1. Then you need to decide how much to sell your house for. If your asking price is too high, your home could stay on the market a long time. If your asking price is too low you may lose money you deserve. There are several ways to find out the right sales price. If the homes in your neighborhood are very similar, i.e. square footage, number of bedrooms (bathrooms), and similar size yard, you can use the recent sales from the last two homes like yours, in your immediate neighborhood. It gets a bit more complicated when the homes are all different, but appraisers use a similar method.
  1. You will have to find homes with your similar square footage, number of bedrooms, number of bathrooms, and if the home is on a lake, gulf course or ocean, or has a lot of land. You can also pay for a sales appraisal, use your local yellow pages for a listing of real estate appraisers. The next option is to check city or county records. Just call your local city records office and ask them where you can find information on the most recent home sales in your area. Verify which of these homes are like yours and use those comparisons to price your home.
  1. Fix up your home to make it presentable to sell. That includes electrical and plumbing in tip-top shape, clean carpet, clean walls, clean doors, an attractive front door, and well-groomed landscaping, and maintenance painting, just to name a few.
  2. Let the buyer know that he/she can pay for an independent inspection of your home, and put it in writing. The new buyer can have an inspection for plumbing, electrical, and structural soundness as well as other things. To be on the safe side, I paid for an independent inspection on my home sells, I had several things fixed as a result, before I sold the home.
  3. Let them know that they need to choose a mortgage company, you can also talk to mortgage companies up front. Both buyers in my case had never purchased a home. So, I did some research on the best mortgage companies in the area and gave them several to choose from, this just helped to speed up the process.

In real estate and home buying successOpportunities don't happen, you create them.

The mortgage company gave them title companies to choose from or they can search for their own title company. For safety purposes, you could have the person go to your mortgage company of choice and get pre-qualified, before you show your home. This way you will know, who the person is, and that they are serious about purchasing your home.

  1. Talk to escrow companies before your put your home up for sale, (in the case of fee simple states-talk to a title company or real estate lawyer for closing).
  2. Now let’s get back to those pesky real estate agents. There may be an aggressive real estate agent or two who will present you a buyer. If that agent is willing to take 3 or 4%, which very few can, and they have a buyer, then you may want to talk, if your equity covers that reduced commission.

The problem you may experience is trying to negotiate with an experienced real estate agent, they will most likely try to get you to reduce your price for their buyer. Make sure you add up your cost, 4% to the realtor, fixing up the home for sale, your mortgage sellers cost (sellers usually pay around 2%), and your moving cost. This is one of the disadvantages you face when you sell your home with a real estate agent and you don’t have much equity.

Do you have enough equity in your home to pay these costs and still have a substantial amount to put down on another home? Most homeowners who sell their own home, do so because they don’t have enough equity to pay a real estate agent cost of 6 or 7%.

Home buying the right way take skill

So, don’t let an experienced real estate agent come along and talk you into decreasing the price of your home, and giving them 3 or 4% real estate commission, in that case you could have hired a real estate agent to do everything to begin with, and the agent could get full commission for your home. If there is not enough equity to pay the commission, you will have to come out of pocket to pay the commission, using an agent.

  1. Keep yourself safe. Consider “for sale by owner” only when you can’t justify the real estate agents commission (6-7% of sales cost). Take appointments from interested buyers, get caller ID and ask for their name and address first. Send a postcard to the address your potential buyer gives you to remind them of their appointment. If the postcard comes back, “not at this address” cancel the appointment.

10. Ask lots of questions on the phone of your potential buyer. Get their name, address, and employment and salary, if they are pre-qualified for a loan or if they will pay in cash, before you give them an appointment. Ask to see an ID before they look. Verify information you are given by searching the internet for their presence. Use a private investigator to authenticate information if you can afford it.

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Doing a “for sale by owner” can also be done by companies that help with the process. In other words, most areas have “for sale by owner” real estate agencies that assist you with the process to make sure the sells process is done right and they will help to keep you safe. These agencies usually charge a flat fee. Here you can “have your cake and eat it too”, you will sell your home with a real estate agent, but do it at a greatly reduced cost. The process and the contracts are different for each state, be sure to research your state.

If you have plenty of equity in your home, a real estate agent should be your first option. Make sure you get references on which real estate agent to use, don’t choose one at random. There are good agents and bad agents.

Lois Center-Shabazz | Course Delta Agency

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Sell Your Home Tax-Free

Tax-Free Savings

sell your home tax-free

You may be able to sell your home tax-free. This is a tax saving Americans rarely discuss when they are complaining about tax rates. The tax-free benefit that comes with the sale of a home is one of the major benefits of home ownership. The interest deduction is another benefit that occurs while occupying the home.

Most earned income is taxable, but the income you earn from the sale of your home may not be. Therefore, you will not have to pay taxes on the equity from the sale of your home if you meet certain IRS requirements.

In most states, if you sell your home with a real estate broker you will have to pay fees to the real estate company for the sale as well as other costs.

Other cost includes sellers escrow cost and repairs to the home as required by law or requested by the buyers.

Many of your cost are tax deductible, which means you will get some of the money back when you file your taxes.

To get homeowners tax breaks when you sell your home pay attention to the requirements for a tax-free home sale

If you qualify, you can exclude part or all of the gain from the sale of your home. To get the exclusion, the tax law requires that you use the home as your main home, and own it for 2 out of  5 years prior to the date of sale.

There are exceptions to this rule if you are military, handicapped, or have been in the peace corps. Read IRS publication 523 for the specific rules.

There is a limit to the financial exclusions when you buy a home. You can only get up to $250,000 tax-free if you are single and a $500,000 tax-free gain if you are married. In most cases, you can exclude the gain on the sale of your home every two years. If you
sell your home at a loss, it is not tax deductible.

If your home sale is not taxable you may not need to report the sale to the IRS, if all or part of the sale is taxable you will need to report the sale.

Some of you may have used the first time home buyers credit to buy your home, if so, this is an exception and certain rules will apply to your sale.

These rules are current as of August 2016, verify if there are new rules in place when you sell your home after this date, by going to IRS.gov.

There are many advantages to selling your home tax-free up to the exclusions.

1. You get to keep some or all of your profits from equity up to the $250,000 for singles or $500,000 for married couples.
2. You can have a large down payment for your next home or use it for retirement income.
3. When you sell, you can use part of the money to pay off bills, fund an education or start a savings account.
4. You don’t have to purchase your next home immediately; you have time to evaluate all of your options for a new home.
5. If you live in your previous rental home 2 of the 5 prior years, you can sell your home tax-free now that it is not be considered a rental home.

Related Links:
Create Your Home Buying or Selling Budget Here
Understand How Money Works on a Global Scale
Save Money The Right Way

 

sell your home tax-free

Sell Your Home by Owner

Sale Your Home by Owner; For Sale by Owner

I have actually sold a couple of homes as a “for sale by owner” seller. So, it is possible to do a “sell your home by owner” home sell, but It wasn’t as easy as I thought it would be. But I made the decision based on the fact that I had not owned the homes long enough to generate substantial equity to pay a real estate commission. These are the things I learned from my actual experience, my research, talking to real estate agents, and talking to others who had sold a home. I spoke with two friends who are ex-real estate agents, and they helped me quite a bit. I also took an appraisal course many years ago in anticipation of starting a real estate appraisal business. I did not start the business, but I learned a lot about appraising homes.

First of all, expect to be bombarded by real agents eager to list your home, when they see your, “For Sale by Owner” sign. They will contact you over and over hoping that you will become frustrated with the whole process, throw up your hands and say, “where is that pesky real estate agent? I’m listing my house with her or him, yesterday!” Unfortunately, sometimes you will feel like that, but don’t give up too soon.

The following information should be helpful:

1. Fix up your home to make it presentable to sell. That includes electrical and plumbing in tip-top shape, clean carpet, clean walls, clean doors, an attractive front door, and well-groomed landscaping, and maintenance painting, just to name a few.

2. Then you need to decide how much to sell your house for. If your asking price is too high, your home could stay on the market a long time. If your asking price is too low you may lose money you deserve. There are several ways to find out the right sales price. If the homes in your neighborhood are very similar, i.e. square footage, number of bedrooms (bathrooms), and similar size yard, you can use the recent sales from the last two homes similar to yours, in your immediate neighborhood. It gets a bit more complicated when the homes are all different, but appraisers use a similar method. You will have to find homes with your similar square footage, number of bedrooms, number of bathrooms, and if the home is on a lake, gulf course or ocean. You can also pay for a sales appraisal, use your local yellow pages for a listing of real estate appraisers. The next option is to check city or county records. Just call your local city records office and ask them where you can find information on the most recent home sales in your area. Verify which of these homes are similar to yours and use those comparisons to price your home.

3. Then there are the forms, those dreaded forms! They are dreaded but necessary for the legal transfer of your property to another person. You will need legal real estate sales and disclosure documents for your home sale. You can get these documents from a title company or you can pay a real estate lawyer to do the work for you. The real estate lawyer will provide you with the documents and fill them out correctly, for no more than an hourly fee. Verify his/her fee, the time it will take, and agree on a fee before he/she fills out the documents.

4. Let the buyer know that he/she can pay for an independent inspection of your home, and put it in writing. The new buyer can have an inspection for plumbing, electrical, and structural soundness as well as other things. To be on the safe side, I paid for an independent inspection on one of my homes, I had several things fixed as a result, before I sold the home.

5. Let them know that they need to choose a mortgage company, you can also talk to mortgage companies up front. Both of the buyers in my case had never purchased a home. So, I did some research on the best mortgage companies in the area and gave them several to choose from, this just helped to speed up the process. The mortgage company gave them title companies to choose from or they can search for their own title company. For safety purposes, you could have the person go to your mortgage company of choice and get pre-qualified, before you show your home. This way you will know, who the person is, and that they are serious about purchasing your home.

6. Talk to escrow companies before your put your home up for sale, (in the case of fee simple states-talk to a title company or real estate lawyer for closing).

7. Now let’s get back to those pesky real estate agents. There may be an aggressive real estate agent or two who will actually present you a buyer. If that agent is willing to take 3 or 4%, which very few actually can, and they have a buyer, then you may want to talk. The problem you may experience is trying to negotiate with an experienced real estate agent, they will most likely try to get you to reduce your price for their buyer. Make sure you add up your cost, 4% to the realtor, fixing up the home for sale, your mortgage sellers cost (sellers usually pay around 2%), and your moving cost. Do you have enough equity in your home to pay all of these costs and still have a substantial amount to put down on another home? Most homeowners who sale their own home, do so because they don’t have enough equity to pay a real estate agents cost of 6 or 7%. So, don’t let an experienced real estate agent come along and talk you into decreasing the price of your home, and giving them 3 or 4% real estate commission, in that case you could have hired a real estate agent to do everything to began with, and the agent could get full price for your home.

8. Keep yourself safe. Consider “for sale by owner” only when you can’t justify the real estate agents commission (6-7% of sale cost). Take appointments from interested buyers, get caller ID and other information up front. Ask lots of questions on the phone. Get their name, address, and employment before you give them an appointment. Ask to see an ID before they look.