HOW TO DETERMINE YOUR PROPERTY’S SALES PRICE
For most people, selling a home is one of the biggest financial transactions of their lives. The choices that one makes in regards to how they sell their home can greatly affect their actual profit and the ease of the transactions. There are several ways to approach the sale of a home; the most common is to use a real estate agent. Real estate agents are familiar with the legal process and negotiations involved in selling a home so they can help simplify the process for homeowners. There is cost involved in using a real estate agent that includes a commission on the selling price of the house. Auctions are another way to sell a house. Selling your home at auction is just like selling other goods; you set a reserve price or a minimum that you want for the home. During the auction process the homeowner or an agent for the homeowner is allowed to bid up to three times to let the buyers know they have not yet reached your minimum price. Hopefully, the reserve price will be exceeded and the home will sell to the highest bidder.
If the reserve is not met you or your agent may negotiate a sale after the auction with the highest bidder. A third option is to sell your home yourself without the assistance of an agent. This can save a lot of money in commissions, but requires you to learn a great deal about the market and the selling process. There is more to selling a home then simply putting a for sale sign in the front yard. Some of the things you need to be familiar with in order to sell a house are the current market conditions in your area so you know how to set a reasonable asking price. You will also need to figure out how to advertise your home and take photos of the home for these ads. You will also need to have the property inspected and make any necessary repairs. All if this must be done before you sell the house. Once you have an offer you will need to negotiate the price and deal with the contract for the home. That is a lot to handle for a real estate professional, even more so for someone who is just learning about selling a home.
You might not be aware of the fact that there is another option. There is a way to sell a home with the expert help of a real estate agent but without the cost of hiring one. There are professional services that offer a low cost option to the home sale business. If you choose this option you gain access to top rated real estate professionals who can help guide you through the marketing and home sale process for a fraction of the cost of hiring an agent. They do this by cutting out the inspection portion of the property sale. This allows you to cut down on commission cost significantly. In fact, these companies usually charge a flat fee for their service and guarantee a quick sale. If the home does not sell they will refund your money and refer you to a traditional real estate agent. Before you decide which way to go with your home sale you should evaluate the work involved as well as your costs. You might find that you are capable of selling your home with a bit of assistance. With the right people on your side you can sell your house quickly with little cost. As long as you understand the market you can put a fair value on your home, which will make it easy to find the perfect buyer.
THE IMPORTANCE OF A PROPERTY EVALUATION REPORT
A property evaluation report is an assessment of the value of your home. These reports take into account a great deal more then how your home looks and what you paid for it. This report appraises the real value of your home based on current market conditions, the sales prices of comparable homes in you area. There are many reasons to get a professional evaluation report the first being that you are probably not able to assess your own property. Most people buy homes based on an emotional response to it. Often people say they knew as soon as they walked into a house that it was the perfect one for them. When you go to sell that house it is easy to attach those same emotions to it, when in fact emotion should not play a part in pricing. Your professional appraiser can look out the house objectively and compare it to other homes objectively. They know which characteristics add value to a property and how to assess that value so the home is priced to sell. Both the home buyer and the home seller benefit from the home evaluation. The seller, because the house will be priced fairly making it easier for their home loan to be approved and the home buyer because they will know they are asking a fair price for the home. An evaluation report though is only as valuable as the evaluator that you hire to do it. It is worth the cost to hire a reputable, licensed and certified real estate evaluator to do this task. The fee can be up to a few hundred dollars, but it is money well spent and can be rolled into the sale price of the house. This person can help you decide whether or not to spend money on certain improvements and how much value those improvements will add to the home. Due to the dynamic nature of real estate your evaluation should be done no more then six month prior to listing it for sale.
Things To Look For In A Good Evaluation Report
- Confidentiality Clause – You and your appraiser are the only ones who have access to the evaluation report. He or she is not allowed to discuss it with any other party, make sure that you get the confidential agreement in writing.
- A walk through – It may seem hard to believe, but many times an evaluation is done without anyone stepping foot into the house. Make certain your evaluator goes in to the home, every room, the closets and the yard to get an idea of its real condition in order to compare with other homes that are similar.
- Documentation – A good evaluator will request documents from you in order to price the home. These include a land survey, the title, a home inspection report, and documentation of any improvements or remodelling.
The final report should include details about the home and the neighbourhood noting schools, shopping, and availability of services. It will also note the distinct features of your home both inside and outside and a comparison of them to at least three other homes. The report should also include a market value for the home. Once you have an unbiased assessment of the market value of your home you can decide how to price it. Keep in mind that the market value should be realistic and is devoid of the emotion that you attach to your home. If you choose to price your home far over the market value you might not be able to sell it, because buyers simply will not view it as a good investment. Further, it is unlikely that buyers will be able to finance a house that is overpriced, because lenders are unwilling to make the investment. Getting a good evaluation report and then using it to price your home is the best way to sell it quickly and at a cost that is fair to all parties.
PROS AND CONS OF SELLING A HOME BEFORE YOU BUY THE NEXT
Selling a home is an intense and stressful process whereas buying a home is exciting and fun. You get to look at lots of new homes, research new neighbourhoods, and meet new people when buying, which is why a lot of people focus on buying a new home whilst they are still trying to sell their old one. Looking at new houses relieves some of the stress of dealing with your old house, sellers, and necessary repairs. However, the jury is still out on whether or not to buy a house before your old home is sold. In an ideal world you would be able to sell your house and purchase a new house at the exact same time. Unfortunately, this sort of alignment of the stars rarely happens.
Pros Of Selling Your Home First
You can wait for the right buyer that is willing to give you the price you want for your home If you do an extended settlement agreement you will be able to find your next home and close on that sale before moving out of your current house. This way you will not need to do bridging finance or move into a rental home between the two houses.
Cons Of Selling Your Home First
If you are unable to find a new house within your extended settlement time frame you might still have to move into a rental home spending additional money on that as well as on the extra move. If you are stuck renting for a while the market conditions could change. If housing prices go up you might wind up getting less for your money then you would have if you had bought sooner.
Pros Of Buying Your New Home First
You will not have to worry or spend money on renting a home in between the sale of the old one and the purchase of the new one. Moving is expensive, you can guarantee that you will only have to move once, instead of twice if you had to rent a house between the sale and purchase.
Cons Of Buying Your New Home First
It could take longer then you anticipate to sell your home, which could leave you in a tough financial spot paying two mortgages. Your old home might sell for less then you planned or you might be forced to sell it for less so you can meet your settlement commitment. Not knowing how much or when your home will sell can make it difficult to make a financial commitment to the new home. As we said before, ideally you could sell your old home and move into the new home at the same time. But, even if you plan things perfectly home purchases run into bumps that cause delays and hang ups, so the best laid plans can fall apart. As you look at your options the best choice is to look closely at your needs and your finances. Are you moving because your family has simply grown out of the old house or just because you want a change in scenery? If it is the former reason then it might make sense for you to sell before you buy, if it is the latter then you might be better off waiting. Check your finances, can you afford bridge financing if it is necessary? Can you afford to pay two mortgages for a few months? If not, you might want to sell your old house first, maybe even plan to live in a rental home for a year while you search for your new house. The choice is an individual one, but the important thing to remember is to do what suits your finances and what you feel the most comfortable doing, that alone will relieve a great deal of stress.
LEGALITIES OF THE CAPITAL GAINS TAX
Capital gains tax is the taxes that are paid on capital gains; it is part of income tax. Selling or buying real estate is on of the most common ways Australians make a capital gain or a capital loss. When you sell a home that was your main residence you are entitled to a full residence exemption as long you meet the following criteria:
- The home was your main residence for the entire time that you owned it.
- You never used it to produce assessable income.
- The land your home is on is on two hectares or less.
If you do not meet all of these criteria, for example if you used the home as a rental property during the time that you owned it or the land is more then two hectares, you may still be able to claim a partial exemption. You might also be able to reduce the amount you pay in capital gains taxes if you own the home for less then one year. Other pieces of property including, holiday homes, vacant land, and business property are also subject to these taxes. Regardless of how you plan to use your home when you first purchase it, it is important to keep good records in case things change. If at some point you decide to use that house as a rental property you will need to know the full cost of it so that you do not wind up spending more money on taxes then necessary. Along with the initial cost you should also note the timing of your capital gains tax event. Capital gains or losses can be included in either the year you made the contract for them or when the actual settlement occurs. The capital gains tax is hefty at 30% to 45% depending on your income bracket. The percentage is based on half the amount that you purchased the home for and is paid as part of your income tax. The amount of money that you owe in capital gains can be quite expensive if you are not able to avoid it. The best way to make sure that you have the money when tax time rolls around is to set it aside when you sell the home. If you do that you will not have to worry about being strapped for cash or worse unable to pay your taxes when the time comes.
IS THERE A BEST TIME TO SELL?
The sale of a home should put extra money in your pocket. Because houses in general are seen as good investments you should be able to sell your property, as long as it is still in good condition for more then you paid for it. This is why you have to pa attention to what is going on in the housing market when you think about selling. Like any other economic factors housing prices can rise and fall. If the market is in a slump you should probably wait until it has recovered, if possible, to sell your home. That being said, selling at the peak of a market it good but can also be risky. You do not want to wait until it peaks because you might miss out and wind up actually closing on a sale when the market has begun to drop. Of course, some people do not have the luxury of waiting on the market to turn in that case you might have to sell your house for less money then you originally planned. As far as the time far as the time of year goes the seasons also can affect your ability to sell a home. The general consensus is that spring is the best time to sell. It is an excellent time of year when everything looks lovely and buyers can see your home looking its best as far as the outdoors are concerned. Conversely, winter is seen as the worst time to sell a property. It is cold, flowers have died, and most people just do not want to be out and about looking at houses. However, there are exceptions to both of these rules, in the winter you probably have much less competition for a home sale then you would in the spring. Summer and fall have good and bad points too; remember there is always someone looking to buy a new home. The best time to sell a home is when you are ready and when you believe you can sell your home quickly.
HOW TO GET MORE MONEY FOR SELLING YOUR HOME
Selling real estate whether it is your residence or an investment property is a good way to make money. In most cases houses and property appreciate in value over time meaning that you can sell them for more then you originally purchased them. That is why real estate ventures are so popular and why homeowners are able to continually move up the housing ladder. However, there is also cost involved in selling a house and you have to be smart about the money you spend to sell your house so that it does not affect your bottom line too much.
One of the biggest costs associated with selling a home is the commission fee paid to a real estate agent. As the seller your liability to the real estate agent is often thousands of dollars. These fees can be negotiated, but even with the best negotiations will be quite costly. You have to ask yourself if you really need a real estate agent or if there is another way for you to sell your home without incurring these high costs. Some people choose to sell their homes themselves by putting a sign out front and listing it in local advertisements. While this is one way to sell a home it is not always feasible for those who do not have the time or the knowledge to really market their house appropriately. The other choice is to use a third party real estate agent like For Sale For Lease that will list your home at a much lower cost. Companies like this take care of the marketing, listing, even negotiating of the sale of your home for a fixed low rate. However, they do not do home inspections like traditional real estate agents. Removing this single act from their cost saves loads of money often allowing you to list your home and take advantage of other benefits for less then one thousand dollars. All you have to do to reduce your cost is hold your own Open For Inspection on the property.
Doing improvements on a home before you sell it can help you get more money for it. The only thing to be careful of is spending money on things that will not add much value. Things like changing out carpets if it is worn or stained is a great way to increase the value with little cost. Bigger projects like kitchen or bath renovations can increase the value of a home significantly. However, these big renovations are time consuming and costly. If you are looking to sell the home quickly you might not be able to make big changes. Some ideas for increasing your homes value include:
- Clean up the house, remove all clutter and wash the windows.
- Improve the homes curb appeal. Repair walkways, clean up flowerbeds, and mow the lawn.
- If the outside of the house needs to be repainted, do so.
- If the inside of the house is painted with bright colours, repaint with more neutral and universally appealing tones.
- Repair things like leaky faucets and downed gutters as these can make buyers worry about other potential repairs.
- Send pets to a kennel or friends home for a week or two.
- This will help to remove pet odour from the house, which can be very unappealing to some buyers.
One of the best ways to make these choices is to ask your real estate professional which items you can improve on prior to selling and then evaluate the cost to make those changes as it relates to the additional money you can earn from them.
Location, Location, Location
One of the other ways to make sure you get top dollar for you home is to choose carefully when you buy a home. The key to this, and the worldwide realtor mantra, is location, location, and location. A house is only as valuable as the area that it is located. You could by a spacious, beautiful home that anyone would love, but if it is located next to an industrial park or under a freeway you will find it difficult to sell for top dollar. When you look at homes you must play close attention to the local factors that will impact its saleability.