SELLERS
CHECKLIST
If
you were to ask someone who just sold their home, you will notice that most of
them gets annoyed as they describe how the profits that they assumed they will
get after the sale were upstaged by unforeseeable expenses. It won’t be too appalling if you plan ahead. In fact, if you start planning ahead of time,
you may find ways to reduce some of the costs, perhaps by handling some tasks
yourself or getting lots of competing bids for work.
EXPENSES
BEFORE SALE
Here are the typical upfront expenses. Some are a matter of choice, yet may be important investments in making sure your house sells for the highest amount possible -- or sells at all. (Save those receipts! If you might owe capital gains tax, your prep costs will be important in reducing your "gains," as discussed below.)
Here are the typical upfront expenses. Some are a matter of choice, yet may be important investments in making sure your house sells for the highest amount possible -- or sells at all. (Save those receipts! If you might owe capital gains tax, your prep costs will be important in reducing your "gains," as discussed below.)
- Painting. A new
paint job is one of most cost-effective ways of freshening your house up,
inside and out. If you've recently painted, this is less important --
though if your color choices were bold or unique, you might want to tone
them down with some crowd-pleasing neutrals. Your stager, if you hire one
(see below) can help advise on the best colors.
- Window washing. When
did you last wash them -- especially on the outside panes of upper floors?
Sparkling windows make a surprisingly large difference to buyer
perceptions. Hiring someone will cost a few hundred dollars, depending on
the size and height of your home.
- Fixups. Which
fixups are necessary (such as replacing cracked windows or stained
carpeting) and which (such as major remodels) should be left for the buyer
to handle is a separate discussion in itself. But there's practically no
house that couldn't use some quick maintenance to make sure it looks
well-cared for and leaves fewer items for a home inspector to comment on.
- Staging. It's
de rigeur in some parts of the United States, and less known in others --
but staging your home, or having a decorator help declutter, reorganize, and
in some cases refurnish it after you've moved your stuff out, can help
impress buyers in a big way. In fact, studies show that buyers pay more
for staged homes. Expect to pay a professional stager a few thousand
dollars for their services (a bit less if some of your own furniture is
usable
- Adding decorative or new
items to your home (if you're not hiring a stager). Even if you
decide to save money by staging your own home, you're almost guaranteed to
have to buy things like a new doormat, new plush towels for the bathroom,
flowers for the showings, and more, depending on what your house needs.
Other likely possibilities include new couch cushions, area rugs, a nice
table runner, and artwork to replace your wall of kids' photos.
- Landscaping. Buyers
are increasingly interested in the state of your garden. If it's already
fully planted, you'll want to hire someone (or put in some sweat equity)
to get it raked, pruned, and otherwise tidied up. If the area hasn't
already been landscaped, plan to add some new greenery and flowering
plants. (By the way, if you plant in containers, you can take the
containers with you when you move -- unless they're so big or incorporated
into the property as to be considered "fixtures.") Many sellers
simply put in new sod -- but do the buyers a favor and don't leave the
plastic mesh backing on it, in case the buyers want to replace it with
something more interesting and environmentally friendly.
- Pre-inspection reports. Having
a professional inspect your house for either termite/pest damage or other
structural matters isn't required , nor expected in most parts of the
United States. Buyers expect to pay for their own inspectors, and in fact
will probably want to hire ones they know and trust regardless of whether
you've had the property inspected first. Yet there are situations where
you might want to have the house inspected before letting buyers in -- for
example, if you've owned the property for many years and wonder whether
any problems have arisen "below the hood" that you're oblivious
to, and would perhaps prefer to fix before buyers have a chance to get
upset about them. Inspections will run you upwards of $200.
- Lights and heat while
the house sits empty. If you'll be moving out before putting your
house on the market, expect to pay double utilities for a while. You'll
want to leave the lights and heat on in the house for sale, or program
them to stay on during any hours that potential buyers and their agents
may be stopping by the place. No one likes to enter a cold, dark house and
fumble around for the light switches.
- Extra homeowners'
insurance for the vacancy period. Check with your homeowners'
carrier. Your insurance may not apply when the home is "vacant,"
which term will be defined in your policy. You can ask for a rider to
cover any period of vacancy. (In the current down market, many houses take
months to sell.)
EXPENSES AT
CLOSING
The
good news is, most of what you'll be paying out at closing will come out of the
sale proceeds. The bad news is, you'll be saying goodbye to some big dollars.
- Real estate agent
commissions. You, as the seller, will likely be paying the entire
5% - 6% commission, to be split between the buyer's agent and yours.
- Other closing costs or credits to the
buyer. You might have agreed -- based on local tradition or buyer
negotiation -- to pay various of the standard costs associated with
closing the deal, such as fees for the escrow company; the mortgage and
home appraisal; recording and transfer of the property; homeowners' and
title insurance; and more. With the market down, some buyers are asking
sellers to pay all of the closing costs, which typically add up to 2% to
4% of the selling price.
- Transfer tax. Your
city or state may require you to pay transfer taxes, as a small percentage
of the sale price.
- Home warranty for the
buyer. Whether because the buyer requests it or to make the buyer
feel secure about the home purchase, many sellers buy a home warranty on
the buyer's behalf. This is a service contract that covers repairs to
appliances and certain systems within the house for the first year of
ownership. It will cost about $500.
- Capital gains tax. If
you earn less than $250,000 on your home sale (or $500,000 if you're
married and filing jointly), don't worry -- you won't owe a thing in the
way of capital gains taxes. But if you earn more than that, you'll want to
look further into the matter. Once you've subtracted things like the costs
of preparing the property for sale from the supposed gains, you may not
owe the tax.
- Moving costs. Asking your
friends with pickup trucks to help can save you some dough -- but will
take a lot more time. Sometimes it's worth paying for the deluxe
treatment, where the company packs your boxes for you, transports them to
the new location, and unpacks at the other end.
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