Expenses to Prepare for When Selling Your Home
While preparing to sell your home can be an exciting process, it can also prove to weigh a bit heavy on the purse strings. To avoid getting blindsided by expenses, keep the following home selling tips in mind before you put your home on the market.
Before you put your house on the market, go through the property and take note of any small repairs that need to be made. Make sure all the outlets are working, all the windows are opening and shutting with ease, and that there aren’t any holes in the walls. While these small repairs may not seem that important in the grand scheme of things, they can deter potential buyers from purchasing the house by giving them reason to assume there may be more problems with the house than meet the eye.
Curb appeal is a huge part of the first impression your home gives to buyers; so making sure your front yard looks nice is very important. Since landscaping services can get expensive, consider putting your own green thumb to work. Planting a few flower beds and making sure the grass is healthy can really help your home look its best.
In most cases, buyers pay for a home inspection before closing on a house to ensure it has no major problems. Although it’s not necessary, some sellers pay for a pre-inspection report to air on the side of caution. If you’ve lived in your home for many years, a pre-inspection can find things beneath the surface that you were completely oblivious to, like termites, or major pest damage. In some cases, it’s better to fix these things before they could potentially deter buyers from moving forward in the buying process after running their own inspection.
According to the National Association of Realtors®, 4 out of 10 buyers start home-shopping by looking at pictures online. To make sure your home looks appealing online, having its picture taken by a professional could make a huge difference in how long your home sits on the market. Some real estate agents offer this service, or have a reputable contact to refer their clients to. While getting your home’s picture taken by a professional photographer isn’t necessary, it may be worth it in the end.
During the time you move into your new home, and are still in the process of selling your old one, the home for sale will be vacant. Just because there is no one currently living in the home for sale, doesn’t mean it doesn’t still need electricity and running water. If people are still coming through the home, they need to be able to turn on the lights and use the restroom; and if it’s during summer months, the air conditioning will be in use during showings. Because the home is still in your name, you’ll have to continue paying the utility bill until the keys are handed over to the buyers.
Closing Costs and Commission
One of the biggest expenses to prepare for when selling your home are the closing costs and commission to your real estate agent. While it can vary, sellers owe 6% of their home’s purchasing price to their real estate agents as commission. Closing costs can typically consist of 2% of the purchasing price, and cover anything from mortgage processing fees, escrow fees and notary fees. You should also expect to pay whatever is left of your mortgage, and any outstanding property taxes. Some sellers opt to hire a real estate attorney to help them shop for the best closing rates.
Capital Gains Taxes
While it’s a good thing to have your home highly increase in value from the time you bought it, don’t be surprised if you’re faced with Capital Gains Taxes. The tax is calculated by the difference between your home’s purchasing and selling price, minus the cost of any major home improvements or additional costs. While these taxes sound overwhelming, there are ways to get partially exempt from them. For married couples selling their home, they can potentially hack off $500,000 of their profit from tax; and sellers who are single can oftentimes cut off $250,000. Remember, these numbers depend on each seller’s specific financial situation, so it’s advised to consult with your accountant to get an accurate tax break estimate.
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