The process of selling a home is typically filled with questions, especially if it’s your first time as a seller. Finding answers to your home-selling questions and taking the right steps can help you complete the sale and walk away with as much cash as possible.
To help you manage this process with minimal stress, here are some of my best answers to three of the most common home-selling questions posed by potential sellers.
1. What are the pros and cons of selling your home yourself (for sale by owner or FSBO) vs. using an agent?
When getting ready to sell your home, you may think you can avoid agent fees and save money if you tackle the process yourself. While this is certainly an option, the process can be fraught with complications that may trip you up. So watch the details before you jump in and begin acting as your own real estate agent.
First, when you sell on your own, you have to act as the seller and the agent. As the seller, you’re responsible for keeping your home looking its best for every showing. At the same time, everything an agent would have handled is now your responsibility, including marketing the home, researching pricing, and conducting showings. Agents often bring experience and knowledge of the local market to your sale, and they typically know what both the seller (you) and potential buyers want out of the process.
Avoiding the fees paid to a real estate agent may not mean you will automatically save a great deal of money. Even if, in the end, you sell your home yourself, you’ll likely spend more to advertise or market the property, including setting up a website, taking professional-level photos of your home, printing brochures, and hosting open houses.
You’ll also want to make sure you price the home correctly. Sellers who are FSBOs often underprice their properties, because they don’t know exactly where homes will sell. Take time to research your local market so you understand exactly how to price your home.
Finally, if you really believe you can sell your own home, you should try. But if you don’t get any offers over a month or two, you might want to find a real estate agent to manage the process for you. Aside from handling many of the more stressful activities for you, an agent may be able to generate far more interest in your property.
2. Should I provide closing cost assistance to the buyer? How could this affect my taxes?
Some buyers, but particularly those buying a first home, often have trouble putting together enough cash for a down payment. Scraping together additional cash for closing costs is even tougher.
That’s why providing cash to help a buyer pay his or her closing costs can be one of a seller’s best tools for getting the property sold. Closing costs do add up, and the cash required can be overwhelming for buyers. Offering to pay some, or all, of the buyer’s closing costs can be a relatively inexpensive way to bring more prospective buyers to the table.
Generally, seller contributions toward closing costs affect the seller’s taxes in only one way: They can be added as part of the “costs of sale” to the cost basis of the home, and help reduce any capital gains tax a seller may owe.
How much can you contribute to the sale? Depending on the buyer’s loan type, there may be a limit to how much you can contribute, so be sure to consult with your real estate attorney or the buyer’s agent before you throw out a number for discussion.
Finally, if your property has been listed for a while without any offers, and you’re deciding whether (or how much) to lower the price, consider advertising that the seller will contribute to the buyer’s closing costs into the notes section of the listing. Buyers’ agents will see that and can use that to get their buyers more interested in your property.
3. In a multiple-offer situation that includes a cash offer, how do I decide which offer to take? Is cash always the best choice?
The best offer for you will depend on your particular situation: For example, some sellers want the most money possible out of the deal, and others are more interested in closing on their own timetable.
Typically, offers that have a mortgage may take longer and be more complicated to close, especially if there is a financing contingency attached to the contract. In that case, a cash deal, as it is often referred to, can translate into a faster, easier closing. This does not mean that you should accept a cash offer as soon as you receive it, though.
The amount of the cash offer is also important. If you need to get out of the house quickly, cash may be the fastest way to do so. But if you receive a better non-cash offer and you aren’t in a hurry to move immediately, you may prefer to pursue that offer instead. Also, if the buyer provides you with a contract that does not include a financing contingency – even if the buyer winds up getting a mortgage to purchase the property – you should treat the offer as a cash deal, since the buyer has forgone the right to cancel the deal if the financing falls through.
For more detailed answers to these questions and any others you might have about selling your home, be sure to do your research. A little knowledge and some planning may help you find the best options well before you receive any offers. And if you need help making decisions, don’t be afraid to seek out the help of real estate professionals.
Ilyce Glink is a best-selling author, real estate columnist, and web series host. She is the managing editor of the Equifax Finance Blog and CEO of Think Glink Media. Follow her on Twitter: @Glink