Selling A House: Everything You Need To Know

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Whether you’re looking to downsize, upsize or relocate, you might be thinking about selling your house because you need to, or maybe to take advantage of this hot market. But selling a house isn’t as easy as sticking a “for sale” sign in the yard. Being aware of everything that’s involved in selling a house will ensure you’re prepared for the smoothest process possible.

The Cost Of Selling A House

While you eventually hope to make a nice chunk of change when selling a house, there will be some financial outlay that goes along with the process. Here’s what to expect.

Closing Costs

While the buyer will have to come to the table with a down payment and some closing costs of their own, sellers often shoulder many closing costs themselves. Here are some of the typical closing costs a seller will have to pay. Your real estate agent will help you learn more about which ones will be your responsibility and the amount to be prepared for.

• Real estate commissions: The seller traditionally pays the agent’s commissions to not only their own real estate agent, but the buyer’s too. The agent’s commission is typically 6% of the total purchase price, half of which half goes to each agent.
• Title insurance: The seller often covers the owner’s title policy, which is an add-on to the lender’s policy that the buyer pays. This insurance guards against any conflicting ownership claims. Costs vary, but can run an average of $500 and up.
• Property taxes/homeowners association fees: If these haven’t yet been paid for the year, the seller will pay the amount that’s owed up until the property closes.
• Seller concessions: Sometimes the seller agrees to cover part of the closing costs for the buyer. This typically takes place when the seller is anxious to get a deal complete, such as in a buyer’s market or if the property has been languishing because it wasn’t priced correctly or is in poor condition and harder to sell.

Note that there are limits on sellers’ concession that are set by Fannie Mae and Freddie Mac. These are typically based on how much of a down payment the buyer brings. For example, with the purchase of a primary residence or second home and a down payment of less than 10%, seller’s concessions are limited to 3%, while they rise to 6% with a down payment between 10% and 25%. For an investment property, they are capped at 2% no matter how much the down payment is.

• Requested repairs: If your home buyer conducts an inspection and finds issues that need to be addressed, you might need to pay for those, or lower the price of the home commensurate with that amount. All of these can be negotiated, so work with your real estate agent to determine what and how much you need to pay.

Costs Of Moving Out

Of course, you’ll need to cover the costs of moving, which can range from a mere $200 or so for a small truck handling a local move to thousands of dollars for movers across a longer distance.

Capital Gains Taxes

Anytime you sell an investment for a profit, you’ll need to pay capital gains taxes. These will vary based on how long you’ve owned the house and your income. (Rates for 2022 are currently in flux.) If you have owned the home at least a year, it’s called a “long-term” capital gain and has a lower rate. It’s good to note that you are exempt from capital gains on your primary residence up to $250,000 if you are filing your taxes as a single person and $500,000 if you are married. You may also be able to avoid them by rolling these profits into an investment property. Always check with a professional for tax advice.

Preparing To Sell Your House: What To Do Before Your Property Hits The Market

The newest listings attract the most attention so you want to make sure your home is in top-tier condition right off the bat to attract a line of potential buyers, who hopefully are prepared to offer you asking price or above. Here’s how to prime your house for the best possible sale.

Conduct Local Market Research

Pricing your home correctly is probably the No. 1 way to ensure a satisfactory sale. Price it too high, and it could discourage people from looking at it. When a house is on the market for a long time, other buyers might hesitate to tour it because they might fear there’s something wrong with it. But if you price it too low, you could miss out on additional money.

The best way to accurately price a home is to familiarize yourself with your local real estate market and research comparable sales – in other words, what other properties similar to yours have sold for recently. That can help you determine a realistic asking price and get a clearer sense of how much potential buyers might be willing to pay for your property. Working with a real estate agent who’s familiar with the area can be an excellent way to make sure you are pricing your home logically.

Complete A Pre-Listing Home Inspection

You might decide to put off an inspection and let the buyer handle it, but there’s value in getting your home inspected before putting it up for sale. The results give you insight into any underlying issues so you’re able to address them in advance. Buyers might be more interested in the home if you have already taken care of problems they might otherwise have faced, which can often lead to higher offers. And it can potentially speed up the selling process once your property gets listed because you won’t have to then undertake repairs after the buyer’s inspection.

Declutter Your Living Space

Clutter makes rooms look smaller and can turn people off when they come in the door, so devote time to decluttering so that your cupboards and closets look more spacious. You don’t want potential buyers wondering if all their stuff will fit, which they might if your storage areas are bursting. Removing excess furniture can also make rooms look larger. And since you’re going to have to pack up your belongings anyway, this gets you one step ahead.

You can move items to the basement or garage, or better yet, consider renting a storage space so the items are completely out of the way, and you can also show off your basement and garage to their full effect.

Stage And Photograph Your Home’s Interior And Exterior

“Staging” allows you to make your home look its very best, so that people want to just move on in. It starts with decluttering, and then you can move on to adding special touches that make your house look magazine-worthy, such as new rugs, throw pillows, or curtains. You also can “stage” the rooms so that potential buyers can see themselves using them; for example, putting a weight set in an extra nook to show a home gym or setting the table for an elegant dinner party so visitors can picture themselves entertaining.

You should do the same for the outdoors by making small changes that can have a big impact on the “curb appeal,” which gives the home a great first impression. Consider touches like painting your front door, planting new flowers, and adding a cheery doormat. Pay special attention to your landscaping throughout the selling process.

Once you have the interior and exterior open-house ready, invest in high-quality photography. While you can take your own photos with your smartphone, it might show better if you have a professional who knows how to showcase rooms to their best advantage. Almost all buyers start their research online before they decide what houses to visit, so you want your photos to entice them to come over and give it a look in real life.

How To Sell A House: Four Steps For Success

Now that your house is ready, it’s show time. Here are the steps sellers can expect to take for a successful home selling process.

Step 1: Find The Right Real Estate Agent

Finding the right real estate agent is a key part of selling your home quickly and for maximum value. Someone with extensive knowledge of the local area can help you price your property right to bring in the most potential buyers possible. A good real estate agent will also help you prep and stage the house and will staff the open houses and follow up with prospective buyers. Someone who is well-respected in the agent community also usually has connections to potential buyers and will be able to get feedback on any flaws buyers are mentioning so that you can correct them and have a smooth sales process. 

Step 2: List And Market Your Property

Now you need to get the word out about your property. The best way to attract the most potential buyers is through the Multiple Listing Service (MLS), which is where Realtors cooperately share listings. If you do “for sale by owner” as a private party, you won’t have access to listing on the MLS although often you can pay a small flat fee to have a real estate agent post your listing. Aside from the MLS, other strategies to get people through your front door are holding open houses, spreading the word among your neighbors, and making social media posts. When the market is tight, you never know when a friend of a friend might be looking for a property just like yours.

Step 3: Carefully Consider Your Offers

Once you’ve marketed your home successfully, hopefully the offers will come flowing in. While you might be tempted to jump at the first offer, it’s worth it to bide your time and take additional offers into serious consideration since they might have different beneficial factors. For example, some offers might be higher, but also come with contingencies, which means that it might be harder to actually close if that buyer is waiting for their own house to sell. Sometimes you might get a bounty of offers to choose from, which lets you be more confident in making sure your needs are met. In other markets, you might need to negotiate with potential buyers and strike a balance between accommodating their needs and your own. For example, you might receive a high offer but they want to move in right away. You have to decide if you are able to move out sooner than you had expected to meet their request.

Remember that having a real estate agent can be highly beneficial in all these steps. That’s because they can help you determine what factors of an offer you should pay the most attention to as you negotiate. For example, a high offer that comes with a list of repairs might be less appealing than a lower offer with a buyer who is happy to take the property “as-is.”

Step 4: Close With Your Chosen Buyer

Closing day is when you’ll complete all the paperwork and hand over the keys. First, make one last walk through your house to soak up the memories. Then it’s time to get financial. If you used a real estate agent, they will help you through all the ins and outs of what to expect. But in general, you’ll want to make sure you have documentation of everything you promised the buyer, such as evidence that you performed required repairs and proof of taxes and homeowners association dues payments.

Your closing will likely take place at the escrow office or another agreed-upon location, and you can have your attorney present if you choose. Note that different states have different rules. In some cases, you may choose to give your real estate agent or attorney “power of attorney” to sign the documents for you. You’ll be reviewing and signing a number of papers, including a closing statement that shows all the fees and credits involved in the transaction, the title, deed to the house, and if applicable, a list of items you are leaving with the house, like window coverings and appliances. You’ll be signing a disclosure so make sure you have been upfront with any issues with the house that you know of, such as a leaky roof.

Once the buyer has signed all the papers, the house is no longer yours. You’ll need to relinquish garage door openers, keys, codes, etc. at this time.

You’ll also need a cashier’s check for any closing costs you are responsible for (see above). Again, your real estate agent should give you an itemized list so you are clear on what you owe. And of course, you’ll need your government-issued identification.

Make sure you keep copies of all the signed paperwork for tax and financial purposes.

If you have any questions along the way, it’s imperative to talk with a real estate agent or attorney who can confirm that the process you are following conforms to the letter of the law. With a transaction that has so many financial implications, you want to a make sure you have followed everything by the book.

The Bottom Line

And just like that, the house is someone else’s to make their own memories. While the selling process can be emotional, the better prepared you are, the more smoothly it will go. Relying on a real state agent can often make selling a home far easier. And once you’ve sold your home, it’s time to look to the future – and the new place where you will be living.

Are you ready to buy a house now? Check out the articles on Rocket HQ^SM to learn all about the home buying process.