How do I figure out what my home is worth and what to price it at?
What’s involved in getting my home ready for sale?
What are my options for marketing my home?
What are the tax implications of my sale?
What’s the best time of year to sell?
Can I buy another home while selling my current home?
How long will it take to sell my house?
What will it cost for me to sell my home?
To figure out what your home is worth, it’s most useful to look at sales of similar properties (if available) in your immediate area/neighborhood within the last 6 months. If you’re working with an agent, that agent will use MLS data to produce a Comparative Market Analysis (CMA) that looks at active, under agreement, and sold properties to arrive at a recommended listing price for your home as well as an estimated sale price range. Most agents will also do a CMA for you for free (in the hopes of one day getting a listing) but agent opinions may vary tremendously, depending on familiarity with the local market and, to a certain extent, on individual approaches.
If you’d like to do some of this legwork yourself, the simplest way is to go to a website like Zillow.com to pull up information on recent sales of properties in your area and then choose the relevant properties to do your own CMA. Zillow offers a no-strings-attached search with relatively rich data (though it’s a far cry from the MLS). Zillow will give you a “zestimate” (an estimate of your property’s value based on comparable sales) but I have not personaly found this to be accurate. If you’d like to look up the sale information for a specific property, you can do this using your local assessor’s database. (Here are links to Cambridge and Somerville databases. You can also get sales data by searching the Middlesex South Registry of Deeds or the registry for other counties in Massachusetts. In addition, The Warren Group (the publisher of Banker and Tradesman the leading new england real estate journal), provides sales and mortgage data to consumers and real estate professionals for a fee.
Another option is to hire an appraiser (for roughly $300 – $400) to do a formal appraisal of your property, just as the buyer’s bank will do when they evaluate your property for a loan. If you’ve recently refinanced, you may already have completed this step.
This being said, pricing is an art. Certain times of year (the Spring and early Fall) show much more activity in the market and demand may be stronger, supporting higher prices. A shortage of inventory of similar type will have the same impact. As everyone is well aware, the abundance (or shortage) of credit available to buyers will also impact prices. And then there’s an individual property, especially one that is out of the ordinary.
To get your home ready for sale, there are three things that will help:
- Declutter To the extent possible, removed excess (and/or unsightly) furniture and knick-knacks from the rooms. Neaten the closets. If you’d like to store some of your belonging offsite, look into self storage, or companies like Store to Door that deliver a container to your home for loading them ship it away to a storage facility. They can also move this container to your new address, saving you several trips to the self-storage locker. Freeing your home of clutter will make it look larger and removing personal effects will make it easier for a buyer to imagine themselves in your home.
- Clean (inside and outside) Keep your home, and particularly the bathrooms, kitchen, and floors clean. Wash the windows (inside and out) and clear off and clean the kitchen counters. This makes home buyers (and others) feel more comfortable and makes everything look better. On the outside, if applicable . . . mow the lawn, sweep the walk and driveway, paint or touch up porches, and make sure your home gives a good first impression. If it’s the season, consider adding potted flowers or landscaping to the front yard. Attention to these details will make the home feel cared for.
- Minor Repairs Make sure everything in your home is in working order. Repair leaks, paint where walls/trim are scuffed or chipped, refinish floors (if badly damaged), re-caulk in the bath. A buyer should feel that there’s “nothing here to do”. Even small items can cast your home into a different (and less desirable) category for a busy buyer who has no time to do work on a house (and these buyers form the large majority in this market). This being said, if you own an older home that has a considerable amount of deferred maintenance, it might fall into the category of an “as is” sale. In this case, you might still want to declutter and clean up the yard, but don’t start making small (and larger) repairs if your likely buyer is going to gut renovate the place anyway.
- Staging If your home is empty or decor needs some updating, consider staging the home (or having it staged by a professional). Staging can range from accents (carpets, art work) to a full house of furniture and helps a buyer picture him/herself in the space.
- Pre-Inspection If you’re not already well versed in the nuts and bolts of home systems and components and/or if you own a larger or older home, you might consider having a pre-inspection: hiring a home inspector or contractor to review the home with you and point out any major issues of which you might not be aware. This way, you can decide up front whether you’d like to take care of a particular item, or can at least be prepared if it comes up at an inspection.
- Documents Finally, and especially if own a condominium, pull together all of your documents. If you own a condo, get copy of your master deed and condo trust, and make copies of any floor plans or site plans. Electronic copies of these documents are available at the registry online, with a bit of digging.
If you’d like to read more on this topic, local professional organizer and stager Helane Blinn has put together a document on the benefits of staging and a presentation on staging and decluttering.
Once you’ve got your home ready for sale, there are three categories of things that you’ll need to do for marketing:
- Create marketing materials
- Identifying/implement advertising/marketing outlets
- Conduct Showings and Open Houses
Marketing materials can include:
- A “feature sheet” with vital property information and pictures that you can pass out at showing an open houses and/or mail to prospective buyer or selling agents.
- Postcards to send out to neighbors or a targeted list of potential buyers
- A Web page (and/or .pdf of feature sheet) describing the property
- Property Floorplans
- Additional marketing materials can include: artist’s rendings of your property, virtual tour (e.g. iPix), information on local amenities, schools, etc.
Marketing/Advertising Outlets can include:
- The MLS (and syndicated websites)
- The Boston Globe Print Real Estate Section (and Boston.com)
- Local residential mailing lists
- Mailing lists for local real estate agents
Showings and Open Houses:
Once you have your property on the market, you’ll have to deal with showings. If you’re working with an agent, you can specify if you’d like accompanied showings or not. If you’re selling on your own, you can also accompany showing or put your home on a “lockbox”. The important thing is to make showing your property as easy as possible. There are also services like MAPass that help agents or owners to schedule appointments and gather feedback for either accompanied or unaccompanied showings.
Open Houses (usually held on Sunday sometime between 11 and 5) are useful ways to get potential buyers in to see your property. If you’re working with an agent, they will host these open houses.
Broker’s Open Houses — These are open houses (in Cambridge they usually fall on Tuesday and Thursday mornings) when sales agents can tour properties (usually properties that are new to market).
The first thing you should know (and many are aware of this already) is that, when you sell your primary residence, and if you have been living in that residence for 2 of the last 5 years, you are tax exempt on $250,000 of the profit from the sale. For married couples filing jointly, the exemption is $500,000. Unmarried couples who own property in common and meet certain criteria can also each take a $250,000 exemption.
To determine you profit, you must take the proceeds of your sale and subtract from that your tax basis. To calculate your basis, you take the price you paid, and add to it any qualifying closing costs and any capital expenditures you’ve made on the home. Capital expenditures are items that add value to the home (renovations, additional, replacements of systems) as opposed to repairs. Note that if you’ve used your residence as a rental property for any period of time, you will need to pay tax on depreciation that you’ve taken on the rental property. In addition, if you’ve taken a tax deduction on part of your property for home office use, you will also have to pay tax on the depreciation taken on that use.
Read more about the tax implications of your sale on the NOLO website.
There are essentially two main seasons in the real estate market in these parts: Spring and Fall. Spring begins as early as January or February and lasts until the end of June. Fall begins in September (after Labor Day) and last until the beginning of November. The entire month of August and the time between Thanksgiving and the New Year tend to be a real estate dead zone — a time when people are too busy relaxing or celebrating to be doing much buying. The best time to sell is in the Spring market, and the second best is in the Fall market. Bringing your home on the market in one of the dead times will not by definition make it impossible to sell, but won’t necessarily give you the best results. Here a chart I’ve done up to show market activity by season.
There are a bunch of answers to this question, and it depends on your situation.
If you have enough cash for a downpayment on a new home and enough income to carry the mortgage on your current home and on your desired home then you’re all set.
If you have enough income to support two mortgages, but not enough cash, they you might consider taking out a Home Equity Line of Credit (HELOC) on your current home in order to get cash for your downpayment. Make sure to do this before you put your home on the market, however, as no bank will want to grant you a HELOC once they know that it will likely be paid off in a short period.
If you have neither the money nor the income to make a purchase before selling, then you have a few other options:
- Lease Back: Ask your buyers to lease your place back to you for a few months (or weeks) following the closing. In this situation, you often pay the buyer’s mortgage for them during the lease term and/or pay a market (or mutually agreed upon rent). Fact is, a buyer is taking on a certain amount of risk in letting your rent back from them, so one should feel grateful if they agree to this at all. If you get the opportunity to rent back, then hopefully you can find (and close on) a new place in the rental period.
- Extended Closing Period: Ask the buyers for an extended closing period (2-3 months instead of 6-8 weeks, for example) in hopes that you’ll be able to find a suitable property in time and coordinate the closings on the two properties. In this case, make sure to obtain the loan commitment from your buyers in a timely fashion (w/ in 3 weeks of Purchase and Sale).
- Sale subject to seller’s finding suitable housing: Occasionally, you’ll see a house listed with a contingency “subject to seller finding suitable housing.” As a buyer’s agent and buyer I tended to avoid these listings because of the uncertainty and open-ended nature of such a contingency, but I understand that it’s possible to put parameters around this contingency, thus minimizing the uncertainty for both parties.
The length of time it will take to sell your house is hard to determine. Pricing your home accurately and getting it ready certainly help. That being said, the easiest way to get a general sense of the time it might take to sell your property is to look at average days on market for properties that have sold over the last six months in a given price range. Here’s a spreadsheet I’ve made up with this information by property type for Cambridge. Another more esoteric and forward-looking way to think about time on market is to look at absorption rates.
There are three to four main costs that may be involved in the sale of your home: marketing costs, selling costs, closing costs, and taxes.
Marketing costs are the costs involved in marketing your home, as described above: producing marketing materials, advertising the home through various outlets, conducting showings, etc. If you’re working with an agent, the agent’s commission will include marketing costs. If you’re doing it on your own (or doing something in between) costs can vary greatly by the marketing you choose to do and the time it takes to sell your home.
Selling Cost is the cost paid to the agent (if any) who procures a buyer for your home. Frequently, the list (or marketing) agent is not the one who bring your ultimate buyer. Our local real estate is set up to maximize exposure for properties by offering compensation to most agents working with buyers. If you’re working with an agent, then that agent’s commission typically includes compensation for a buyer’s agent, which again is typically half of the total commission. If you’re marketing the property yourself, you may want to consider offering compensation to selling agents.
Closing costs include your attorney’s fees, any outstanding tax or water bills or other liens on your property, and “tax stamps”, paid to the commonwealth of massachusetts and equal to $4.56 per thousand in selling price. Tax stamps are a significant expense ($2280 on a $500,000 sale) that is often overlooked.
See above for tax implications of a sale.