Downsizing Strategies For A Successful Home Sale
Downsizing Strategies For A Successful Home Sale
For many Americans (especially younger), home equity may be the largest asset on their personal net worth statement. Whether you are relocating for work, moving to a more desirable neighborhood, making room for a growing family, or downsizing- there are some things you can consider before you list to give yourself the best chance for a fast, profitable and successful home sale.
Spring time is typically the highest time of year for property sales, however, don’t worry, there are strategies that can be utilized to help sell your home regardless of the season! 2 Here are some tips and suggestions to help you get ready to sell your home or investment property:
Helping Your Parents Downsize
Downsizing from the 35+ year family home can be quite the task. Start the conversation early, before they are in a place where they HAVE to move. You don’t want to do it for them; you want to do it with them. Be mindful of the emotional impact on the person being downsized by encouraging not forcing decisions.
An easy place to start is a laundry room or medicine cabinet, not the stacks of photos or the cedar chest of family heirlooms. If an estate sale is in the plan, prepare your expectations for profits. Maybe the family china that you are considering selling holds more sentimental than cash value. Gifting items to a friend or relative with the memory or story might be more satisfying than profits from an estate sale.
Approach the downsize as a positive step to start over with less stress; no lawn mowing, broken furnace or extra bathrooms to clean!
Improve Your Home’s Curb Appeal
First impressions are everything, and that includes real estate too. Making sure the exterior of your home looks nice and kept-up can make all the difference when potential buyers are viewing your home. A simple landscape job is an inexpensive way to make your home look maintained, which may give the buyer the impression that the interior of the home was also well taken care of. The home’s exterior serves as a sneak peak of what is to come when potential buyers tour your home.
It’s the little things that bring the home together for a nice, warm and inviting appearance. To start, paint the front door and shutters to match, which will create an overall theme for your home. Next upgrading the mailbox, installing new porch lights and upgrading your house numbers can change the look from outdated to all around modern. For some final touches, add in some shrubs or flowers to make your home look fresh and welcoming.
There are many DIY projects that work perfectly for adding curb appeal to your home that are inexpensive, simple, and fun!
Real Estate Agent vs. For Sale By Owner
A major decision in putting your home on the market, is if you are going to use a real estate agent or sell it by owner. Which will help your family have a successful home sale? If you decide to use an agent, interview potential agents to see how motivated the individual is and making sure they are a good fit for you.
Be sure the agent will work on your behalf to get the best deal on the sale. Review their references and agree on brokerage fees and sale expectations/ timelines before you list. What specific marketing approaches will be used to sell your home? How long should the sale take in the current market conditions? A helpful guide with questions to ask can be found here.
If you are interested in skipping broker fees, research for sale by owner. You can hire a title company for the legal stuff and show your home yourself, if you feel like that option is a good fit for you.
Examine The Potential Profit (or Loss)
With selling your home comes selling costs. Sometimes these costs can outweigh your profits, resulting in a loss, so be sure that you understand what costs would be associated with selling your home, and who would be taking on the responsibility of those costs. Some of the costs associated with selling your home might include:
- Real estate agent commissions
- Closing costs
- Existing mortgage debt
- Repairs to the home
- Preparation work to get your house ready for the market such as landscaping, painting, etc.
With all the excitement that comes with an successful home sale, a lot of these costs can be forgotten. While it would be nice to be able to forget about these costs, they have to be factored into the offer to realistically see what you would be making on the sale.
Educate Yourself On Current Tax Laws
Since the Taxpayer Relief Act of 1997, capital gains taxes are exempt in most home sales, but in order for the sale to be exempt, the home must be considered a primary residency based on IRS rules1.
The current capital gains exclusion amount is $250,000 for single taxpayers and $500,000 for married couples that file jointly. The most important factor is that you generally must have used the house as your primary residence for 2 out of the previous 5 years.
Whether you are planning to put your home on the market next week, or twenty years from now, it’s always good to know the ins and outs of prepping to put it on the market. Be sure to consult with a professional mortgage lender or broker to help decide what’s best for your unique situation.
Sources:
- https://www.investopedia.com/ask/answers/06/capitalgainhomesale.asp
- https://www.forbes.com/sites/financialfinesse/2016/12/01/what-you-need-to-know-before-selling-your-home/#7b7ae32fa560
We are not permitted to offer, and no statement contained herein shall constitute, tax or legal advice. Individuals are encouraged to consult with a qualified professional before making any decisions about their personal situation. Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and The Resource Center are not affiliated companies. 565926
