As a newcomer in the home selling business, there are some standard costs that you may have come across already. The commissions charged for listing and the cost of the buyer’s agent is what you may be familiar with. You should know that a commission is charged at 5-6% of your selling price). Let’s highlight some of the hidden costs, what you should/must pay, and find ways to reduce or avoid unnecessary costs altogether.
Repairs will be costly, especially if you were always in the habit of postponing scheduled repairs or you never did any at all. You need the services of a professional who will help ready your home for the highest bidder. Regardless of the nature of work, be ready to spend good money if you want real value out of your home. Many brokers will advise you to avoid cheap contractors who will do a shoddy job only for you to hire another contractor.
Draw a list of the things that need repair or replacement. Look out for ceiling, roofing, paint, leakages among others. Please remember that when you are selling, there is nothing like a minor problem, FIX It! A small issue to you will be a big issue to the buyer will reduce the number of dollars headed to your account. Some major repairs may cost a lot of money to carry out; the best way to minimize costs according to estate values is to offer the buyer some credit when closing the deal.
It does not matter how much you took care of your home, look out for the little things that need a little touch. You can save on some of these costs by trying out simple repairs and replacing parts with genuine parts to avoid disappointments.
With the increasing interest in online home buying, brokers and agents have made an effort of making their sites look professional at all times. Most buyers will not read the home details if it has bad pictures. Spend some money on a professional photographer and avoid enlisting the agent to take the photos. The money devoted to hiring a photographer will go a long way in connecting you to a potential buyer faster than you think. Just before you take a photo, get a new coat of paint. Use colors that show neutrality to give room for the new owner flexibility to change to his preference.
Some buyers are more interested in what they see outside before analyzing the home. Experts agree that an enhanced surrounding will increase the value of your home. If you have been maintaining your landscape on a regular basis, the cost of landscaping will reduce. Save on costs by doing some of the simple tasks like weeding, mowing the lawn, trimming, and pruning should not be a problem.
A buyer has to create a vision of your home and imagine living in it. Get a good interior designer to arrange the furniture and fittings. The home has to appeal even to the passive buyer. Selling a vacant home has to look presentable in its wall decorations, lighting and window glass decorations. A good number of buyers agree that presentation increases the home value. Adding some fresh flowers and new fixtures add value and will hold the attention of the buyer.
If you are on a limited budget, talk to your agent to help prioritize on what to use for presentation because they know what the buyer needs. This can be done through planning for an evaluation before the buyer sets in.
Imagine selling your home after moving to a new home, you get a buyer only to reach the property, and you have pending bills on electricity and water. Keep the utilities running and make sure their bills are up to date. Turning off some of these utilities may attract mold which will require removal at a cost which you may not have been ready to incur.
Capital Gains and Taxes
A home that appreciates has some accumulated capital gains tax on it. Capital gains tax is the difference between the buying and the selling price of your home minus the entire cost of improvements. If you have a potential of selling a home at very good price, the taxman will be somewhere waiting for his due. For couples who pay joint taxes, there is an exemption of about $500,000 and for the single guy it’s only $250,000. You need to consult a trusted financial advisor on the tax issue.
This cost is said to be the second biggest you will incur after paying the commission. Be ready to spend about 2% of the selling price in closing costs. The buyer is at liberty to choose a closing company. Closing cost may be fixed and will include that transfer fees, processing fees (in case of a mortgaged property), and escrow and notary fees. At this point, if you have any outstanding charges relating to the home, you will have to pay. This includes any mortgage balance.
The closing bit may confuse many sellers and even buyers. The best thing to do is to hire an attorney who will help in handling the fine details of the transaction. Look for a lawyer well in advance to get the best rate. Avoid the unnecessary reissue fee by making sure you have a copy of the search policy when closing the deal.
All the best,
Houston Capital Home Buyers
“We Don’t Buy Every House, But We Help Every Client”