By Nathaniel Sillin
As the economy improves, today’s sellers are facing a very different environment than they were before the housing market stumbled in 2006.
Today’s housing market features new procedures and standards, not the least of which are continuing borrowing hurdles for prospective buyers. If you are thinking about a home sale in the coming months, it pays to do a thorough overview of your personal finances and local real estate environment before you put up the “for sale” sign. Here are some general issues to consider:
Make sure you’re not underwater. You may want to buy a new home, but can you afford to sell? The term “underwater” refers to the amount of money a seller owes on a house in excess of final sales proceeds. If what you owe on the home – including all selling costs due at closing – exceeds the agreed-upon sale price, then you will have to pay the difference out of pocket.
Consider “for sale by owner” vs. “for sale by broker.” “For Sale by Owner” (FSBO) signs were a common sight in many neighborhoods during the housing crisis. Many tried to sell their property themselves rather than pay 5-6 percent in commission. However, consider what a licensed real estate broker could accomplish in your specific situation. Many experienced brokers have the potential to get a better price for your property. Also, be sure to consider the time investment it will take to do it all yourself!
Think twice before spending on improvements. Not every home construction project pays off at sale time. Remodeling magazine’s annual Cost vs. Value Report tracks both pricing and cost recovery for leading remodeling projects. Before fixing up a bathroom, kitchen or any other area of your home, research whether the work will actually pay for itself at sale. For many sellers, it might be advantageous to hire a licensed home inspector to identify any structural, mechanical or major appliance repair issues that could delay or compromise a sale.