|
|
 |
SELLING
A HOME |
| Can I sell my
house myself?
Many people believe they can
save a considerable amount of
money by selling on their own.
They look at the average commission
on a house and remember stories of
friends or relatives who managed
to get through the process with
seemingly little trouble.
"Other people have sold their
own homes," they say —
"so why can't I?"
Approximately 10 percent of
American homeowners handle their
own sales. But in order to do
this, you'll need to realistically
assess exactly what's involved.
The routine parts of the job
involve pricing your house
accurately, determining whether or
not a buyer is qualified, creating
and paying for your own
advertising, familiarizing
yourself with enough basic real
estate regulations to
understand (and possibly even
prepare) a real estate contract,
and coordinating the details of a closing.
These are serious responsibilities
to take on, and they include the
concerns that your house is only
on the market
when you're home, your marketplace
is limited to those you can reach
locally, and a mistake may cost
you the money you're trying to
save.
The best reason for working
with a real estate broker
is the enormous amount of
information they have at their
disposal — information that can
help make your house sell faster
and easier. Professionals know
about market
trends, houses in your
neighborhood, and the people most
likely to buy in such
neighborhoods. They also know how
to reach the largest number of
people who may be interested in
your house (both through
old-fashioned sales skill and the
Internet resources of a reputable
real estate company), and are
trained in areas like screening
potential buyers and negotiating
with them. Finally, they're always
"on-call," and willing
to do the things most of us don't:
working on the weekends and
answering the phone at all hours.
What makes a house sell?
An entire book could be devoted
to answering this question. But to
be as concise as possible, a
successful sale requires that you
concentrate on six considerations:
your sale price, your terms of
sale, the condition of your house,
its location, its accessibility,
and the extent of marketing
exposure your house receives.
While some of these factors are
beyond your control (such as the
actual sale price), you can
compensate by taking advantage of
others (like a new paint job) to
make your property as attractive
to prospective buyers as possible.
When is the best time to list a
house for sale?
The "best" time to
list your house is actually as
soon as you decide to sell it.
If you want to get the best
price for your house, the key is
to give yourself as much time as
possible to sell it. More time
means more potential buyers will
probably see the house. This
should result in more offers;
it also gives you time to consider
more options if the market
is slow or initial interest
is low.
Should I fix my house up
before it goes on the market?
Unless your house is nearly
new, chances are you'll want to do
some work to get it ready to
market. The type and amount of
work depend largely on the price
you're asking, the time you have
to sell, and the present condition
of the house.
If you're in a hurry to sell,
do the "little things"
that make your house look better
from the outside and show better
inside. Read on for several
specific ideas for making low-cost
improvements.
What is "curb
appeal," and how do I create
it?
"Curb
appeal" is a
common real
estate term for
everything prospective buyers can
see from the street that might
make them want to turn in and take
a look. Improving curb appeal is
critical to generating traffic.
While it does take time, it
needn't be difficult or expensive,
provided you keep two key words in
mind: neat and neutral.
Neatness sells. New paint, an
immaculate lawn, picture-perfect
shrubbery, a newly sealed
driveway, potted plants at the
front door — put them all
together, and drive-by shoppers
will probably want to see the rest
of the house.
Then, for both the inside and
outside of your house, if you're
going to repaint, choose neutral
colors, and keep clutter and
personal knick-knacks, photos,
etc. to a minimum. Remember, when
a family looks at a house, they're
trying to paint a picture of what
it would be like as their home.
You want to give them as clean a
canvas as possible.
What should I do to make the
house show better?
First, make your house look as
clean and spacious as possible.
Remember, people may look behind
your doors — closet and
crawlspace doors, as well as those
to the bedrooms and bathrooms. So
get rid of all the clutter; rent a
storage space if you need to, hold
a garage sale or call a local
charity.
After you've cleaned, try to
correct any cosmetic flaws you've
noticed. Paint rooms that need it,
re-grout tile walls and floors,
remove or replace any worn-out
carpets. Replace dated faucets,
light fixtures, and the handles
and knobs on your kitchen drawers
and cabinets if needed.
Finally, as with the outside of
your house, try to make it easy
for prospective buyers to imagine
your house as their home. Clear as
much from your walls, shelves, and
countertops as you can. Give your
prospects plenty of room to dream.
|
|
HOME INSPECTION
A normal part of the home sale process
involves the inspection of a home by an
inspection professional. Such inspections are
routinely performed on homes of all ages and
quality and should not be viewed as a negative
reflection upon your home, or as a sign that the
prospective buyer necessarily suspects any
problems with your home. The main reason for the
increase in home inspections in the home
purchase process today is due to the greater
cost and complexity of today's residences. These
inspection reports usually conclude in the
successful transaction and purchase of the
property, and are used by the purchaser in the
maintaining of the newly purchased home.
The Pre-Listing
Inspection
Many home sellers contract for an inspection
report prior to the listing of a home. Such an
inspection report will determine if any easily
remedied defects can be repaired prior to the
listing of the property; thus improving the
quality of the listing. It can also be used as a
potential tool in the sale of the house.
However, by having the home
inspected prior to listing the home, the seller
may become aware of new information about
defects in the home. Such new information may
have to be disclosed to any potential buyer.
Sellers are advised to consult with their
attorneys about locally applicable disclosure
laws, and how these laws apply to the
information gained from a pre-listing
inspection.
A pre-listing inspection may also not
eliminate the desire of the prospective buyer of
the property to have an independent inspection
performed. The prospective buyer may decide that
their own inspection is less likely to be biased
on behalf of the seller. More importantly, the
prospective buyer may decide that their
inspection is needed in order to make
preliminary determinations regarding their
proposed use and modifications of the structure
in question. For example, the prospective buyer
may want to know if the electrical system is
adequate for its existing use, and for any
planned additions of a bathroom, hot tub, or the
use of various power tools.
Capital
gains home-sale tax break a boon for owners
By Kay
Bell • Bankrate.com
What's the
best tax break available to Jane and John Q.
Public? If they're homeowners, it's selling
their house.
Homeowners already know the many
tax
breaks that Uncle Sam offers, most notably
mortgage interest and property tax deductions.
Well, he also has good tax news for home
sellers: Most of them won't owe the Internal
Revenue Service a single dime.
When you sell your primary
residence, you can make up to $250,000 in profit
if you're a single owner, twice that if you're
married, and not owe any capital gains taxes.
"Most people are not going
to have a tax obligation unless their gain is
huge," says Bob Trinz, a senior tax analyst
at RIA, which provides tax information and
software to tax professionals.
Some sellers are surprised by
this break, especially if they've been in their
homes for a while. That's because before May 7,
1997, the only way you could avoid paying taxes
on your home-sale profit was to use the money to
buy another, more-expensive house within two
years. Sellers age 55 or older had one other
option. They could take a once-in-a-lifetime tax
exemption of up to $125,000 in profits. And in
all instances, there was tax paperwork (Form
2119) to fill out to show that you followed the
rules.
But when the Taxpayer Relief Act
of 1997 became law, the home-sale tax burden
eased for millions of residential taxpayers. The
rollover or once-in-a-lifetime options were
replaced with the current per-sale exclusion
amounts.
"There is some logic to
this law change because most people under the
prior rules didn't recognize a taxable gain
because they rolled it over into another
residence," says Trinz. "The change
essentially makes it easier to dispose of your
residence."
Still some requirements to
meet
If you used pre-1997 rules for residential
sales, don't worry. That doesn't disqualify you
from claiming the exclusion on any residential
sales now. The law change applies to all sales
since it took effect.
Another bonus of the new rules:
You don't have to buy another home with your
sale proceeds. You can use the money to travel
to Europe in style, buy an RV and drive across
the country or get all those designer shoes you
never could afford before.
Even better, there's no limit on
the number of times you can use the home-sale
exemption. In most cases, you can make tax-free
profits of $250,000 (or $500,000 depending on
your filing status) every time you sell a home.
Ah, but we are talking taxes
here. You did notice that phrase "in most
cases," didn't you? Before you put a
"For Sale" sign in the yard, you need
to make sure your house-sale situation is one of
those "most cases."
First, the property you're
selling must be your principal residence. That
means you live in it. This tax break doesn't
apply to a house or other property that you have
solely for investment purposes. In those cases,
the usual capital
gains rules apply.
You can, however, turn a rental
house into your primary residence, making the
sale of it eligible for the exclusion. This is
accomplished when you meet the IRS use and
ownership tests: You own and live in the home
for two out of the five years before the sale.
And your actual habitation of
the home doesn't have to be sequential, notes
Mark Luscombe, lawyer, accountant and principal
tax analyst at CCH Inc., a Riverwoods,
Ill.-based provider of tax law information and
software. The IRS lets you aggregate your time
living in the house to meet the two-year
residency requirement.
"Generally, if you owned
and used the home as your main home for periods
totaling at least two years within five years
ending on the date of these sale, you're
eligible for the exclusion," says RIA's
Trinz. "You look back at the last five
years. Ownership and use may be at two different
times. This would apply if you owned a home for
five years, but didn't use it as your primary
residence for that full period. For the first
three years, you rented it and then moved into
it as your main home for the final two before
you sold it."
But you don't even have to live
in the house at the date of sale. The
flexibility of the use test means you could live
in your house for a year, rent it for two, move
back in for another year and rent it again the
year before you sell. Since during those five
years you owned and lived in the property for
two years, you meet the use and ownership tests.
Finally, while technically
there's no limit on the number of homes you can
sell and reap tax-free gain, each sale must be
at least two years apart. That still leaves you
room to make some money on several properties.
You can sell your residence this year, pocket
any gain within the tax limits and buy a new
residence. Two years later, you can do the same
thing, again and again every two years.
|
