Selling Your House For Dummies Cheat Sheet

If you’re like most people, your biggest investment is your house. Sell your house wisely and you not only save yourself loads of time, but you could also pocket thousands — if not tens of thousands — of dollars more than you would otherwise.

Although you are likely to hire some professionals to help you, here are 20 tips you can use to get informed and get a jump on the process:

1. Determine whether you want to sell.

   Your most important house-selling decision is whether to sell. Take the time to research your options and the personal financial ramifications of each option before you sell.

2. Consider the expenses and transaction costs.

   The expenses of selling your current house and buying another gobble a large chunk of your house’s equity (that is, the market value of your property minus the outstanding mortgage balance). Before you sell your house, weigh the expected benefits of buying a new home against these transaction costs. Be sure to estimate your proceeds of sale and relocation costs before selling.

3. Review your mortgage options.

   Before you commit to selling your house, assess the mortgage options for your next purchase, especially if you’re trading up to a more costly property. Remember, mortgage lenders and real estate agents can’t tell you how much you can afford to borrow; they can only tell you the maximum amount that you’re eligible to borrow. To determine the price you can afford to pay for your next home, you must also consider your financial goals and objectives.

4. Do your homework if you consider providing financing to the buyer of your property.

   Do what a good mortgage lender does — conduct a rigorous background investigation to determine the creditworthiness of the buyer.

5. Time the marketing of your house to coincide with a strong selling season in your area.

   Timing is critically important. Try to time the sale of your house so that it closes simultaneously with the purchase of your next home. Unless you’re wealthy enough to afford the luxury of owning two properties at the same time, don’t close on the purchase of your next home before your current one sells.

6. Weigh the pros and cons of selling your house yourself.

   Be realistic about the amount of money you can actually save by selling without an agent and the amount of additional time and effort that you must invest. If you want to sell without a real estate agent, be sure to hire a good real estate lawyer and read this entire book so you do the best that you can.

7. Field a great team.

   Selling your house usually requires that you hire and work with various real estate professionals (such as real estate agents, property inspectors, escrow officers, and, possibly, tax, legal, or financial advisors). If you put the right players on your team, you maximize your chances of a successful sale. To increase your chances of an efficient, top-dollar sale, obtain a good house inspection to discover problems before they become deal killers.

8. Spend the time to find the best real estate agent.

   If you’re going to have a real estate agent list your house for sale, invest the time to find the best possible agent. An agent who doesn’t know property values in your area or doesn’t understand the best way to market your house can be a liability. A knowledgeable, market-savvy agent can help you obtain a higher sale price and quicker sale.

9. Thoroughly review and negotiate the real estate broker’s listing contract.

   For most sellers, a 90-day listing that puts your house in the local multiple listing service is best. Remember that commissions and other terms of the listing agreement are negotiable. If you have any doubts as to whether to disclose a defect or problem with your house, err on the side of disclosure. Otherwise, you greatly increase your (and your real estate broker’s) chances of being sued by disgruntled buyers.

10. Do the right corrective and cosmetic work before putting your property on the market.

    Preparing your house for sale involves much more than just sticking a For Sale sign in your front yard. Avoid wasting money on major improvements that don’t give you a good return on your investment.

11. Check out other houses in your area. “What’s it worth?” is the most critical question you’ll ask when selling your house.

    To get the answer, examine sales of houses comparable to yours in size, age, condition, and location (a good agent can assist you). Price your house right, and it will sell, because informed buyers recognize the value after seeing other houses with unrealistically high asking prices.

12. Don’t ignore generations of conditioning when pricing your property.

    In addition to smart pricing, use buyer incentives to help you sell faster and get a higher sale price. But be careful; don’t use gimmicks that waste valuable time and money and end up stigmatizing your property.

13. Get the word out.

    To create the most interest in and competition for your house, you must develop a comprehensive, well-coordinated marketing and advertising campaign plan.

14. Use your computer.

    The house-selling process requires both advertising and number crunching. Your computer can help you more with the financial analysis if you use good tools and use them wisely. The Internet is one of many ways to advertise your house for sale.

15. Remember that everything is negotiable.

    Real estate negotiation has no absolutes. You and your agent, if you’re using one, can maximize the price and terms of sale if you understand the needs and motivations of prospective buyers. You must also be able to spot the warning signs of fake buyers.

16. Follow through.

    You still have a lot to do after you accept an offer to sell your house. Don’t let your deal fall apart because you didn’t follow through properly.

17. File the required federal and state tax forms to report the sale of your house.

    Understand and adhere to the tax laws for sheltering your sale profits; otherwise, you could get whacked with thousands or tens of thousands of dollars in unnecessary taxes.

18. Don’t be hasty.

    After selling your house, don’t rush into your next purchase if you’re unsure about it. If you hastily buy another property and realize that you’re unhappy with your choice, you may end up moving again in a few years. Your hurried decision can cost you big bucks in unnecessary real estate transaction costs.

19. Play by and know all the rules.

    You have to adhere to different rules when selling rental property. Be especially careful to evaluate the rental-specific tax ramifications, the zoning of the property, and the rental property sales experience of the real estate agents and others you hire to help sell the property.

20. Anticipate tough questions.

    Buyers may ask very awkward questions while probing your motivation to sell or looking for property flaws. The best defense is a good offense. Make sure you’re prepared.