Selling your house can be a traumatic experience, especially if you have lived in it for many years. But selling your house can also be the most profitable experience in your life, if you do things right.
To maximize your profit, plan the property sale. For example, try to avoid having to sell your house during the “dead period” between Thanksgiving and New Years when only the most motivated home sellers have their houses listed for sale. However, if you are a home buyer, the holiday season is the best time to buy because you will have little competition since most people are enjoying holiday parties and not thinking about buying a home.
Incidentally, the best time to sell your house is usually in the spring, between March and June. That is when most prospective buyers come out of winter hibernation. The summer and fall months are also a good time to sell. But more important than the season are the physical and financial aspects of the sale, which can make the difference between success and failure.
Here are some tips on how to sell a house and maximize your net profit while avoiding costly mistakes.
• Get your home into tip-top physical condition. The most costly mistake home sellers make is failing to clean, paint and repair their property before putting it on the market for sale. A property in first class condition can often overcome other drawbacks such as poor location or unfavorable financing. “Spend money to make money” should be every house seller’s motto. If you don’t fix up your residence, each prospective buyer will discount their purchase offer by more than the repair cost.
Fresh paint, inside and outside, is the most profitable improvement you can make. Other value-adding improvements include trimming and cleaning the landscaping, repairing defective items such as leaky faucets, discarding trash or junk, and thoroughly cleaning everything. The cheapest improvement is to wash the windows. Remember, “a clean window is a happy window.”
• Consult your tax adviser before you sell your house. Many home sellers make costly tax mistakes when selling their principal residence. Spending an hour or two consulting your tax adviser before the sale can be very profitable tune well spent.
• Select the best real estate agent. The next-most costly mistake home sellers make is selecting the wrong real estate agent. Before selling your house, interview at least three local realty agents. Select them on the basis of recommendations from friends but also include agents who are active selling houses in your neighborhood.
Each agent should prepare a written “comparative market analysis” form showing (a) recent sales prices of neighborhood homes, (b) similar nearby houses currently for sale (your competition), and (c) comparable houses which did not sell within 90 days due to overpricing, poor location, and/or seller inflexibility.
Don’t make the mistake of overpricing your house. Listen to each agent’s recommendations about setting the asking price. But be wary of real estate agents who estimate a very high sales price. This is called “high balling” to get the listing. After you have asked each agent all the questions you wish, ask each to give you the names and phone numbers of their three most recent home sellers. Then phone these former clients to ask “Were you in any way unhappy with the agent and would you list your house for sale with the same agent again?” You will soon know which agent should receive your listing.
• Obtain the necessary and customary inspections. If termite or pest control inspections are customary in your area, the best time to obtain one is at the time of listing your house for sale. By knowing in advance what repairs are necessary, if any, you can either have the work done or give the buyer a credit for the cost of the essential work. Many home sellers wait for these inspections until a purchase offer is obtained but this is a major mistake because the repair cost may be far more than expected.
It is also a good idea to have a professional property inspection made at the time of listing. This report can be shown to prospective buyers to assure them that all known defects are being disclosed.
• Anticipate financing for the buyer. Although you will probably need to negotiate on price and terms with the buyer, have a suggested finance package for buyers. If you only want to sell a house to a buyer who will pay you all cash you are limiting your home sale opportunities. For example, if your home has an assumable FHA or VA mortgage and you need a $50,000 down payment to pay the sales expenses and make a down payment on your next home, your proposal to carry back a second mortgage for the difference can (a) make your house sell quickly for top dollar and (b) give you extra income from the interest payments you will receive from the buyer.
If you want to learn how to sell a house, try to avoid the most costly home sale mistakes. This way you can ease the sale of your house and maximize your net profit. By anticipating and avoiding problems, selling your house can be both an enjoyable and profitable experience.