Getting your home ready to sell

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. If you’re not in a situation where you absolutely have to sell now, you may want to wait until your financial circumstances and the real estate market improves.

Evaluate your finances. Before you sell, make sure you are ready to buy or rent. Making sure all three of your credit reports are accurate is an important part of that process.

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. Shrunken home values convinced many sellers to sell their property themselves rather than pay 5-6 percent of profit in broker commission. However, consider what a licensed real estate broker could accomplish in your specific situation. Many experienced brokers have market knowledge and negotiating skills that could potentially get a better price for your property. Deciding which route to take shouldn’t be an overnight decision. Check leading FSBO and broker sites and talk with knowledgeable friends, attorneys and real estate professionals to learn as much as you can.

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.

Don’t forget moving costs. According to the American Moving and Storage Association, a leading industry trade group, the average professional interstate move of 1,220 miles costs an average of $5,630; in state, the average moving cost is $1,170. After all the costs involved in selling a home, don’t forget how much it costs to relocate.

Bottom line: Selling your home requires planning. Before putting it on the market, get solid, qualified advice on how to sell smart in a still-recovering housing market.

More information

• https://www.annualcreditreport.com/index.action
• http://www.remodeling.hw.net/cost-vs-value/2015/

Nathaniel Sillin directs Visa’s financial education programs. To follow Practical Money Skills on Twitter: www.twitter.com/PracticalMoney