Lots to consider before making the move to sell your house
Retirees often seek to downsize, but have to be aware of possible capital gains taxes, and that the cost of a smaller but newer house or condo could be more than the sale proceeds from the old, larger home. Credit: iStock
As the real estate market continues to heal and prices rise, more Americans are considering a home sale this spring. Before you jump in, there are several factors to consider.
Beyond the obvious question of where you will live next, it is important to consider the tax implications of a sale — you may be on the hook for capital gains taxes on home sale profits that exceed $500,000 for couples and $250,000 for individuals.
If you are hoping to downsize, you should carefully research your options. Many retirees have found that the purchase price of a smaller but newer house or condo with desirable amenities costs more than the proceeds from the sale of their larger homes.
If you are ready to take the plunge and list your home, the most important thing to know is that setting the right price is essential. A home’s first three weeks on the market are the most critical for creating interest and attracting buyers.
Realtors note that buyers often dismiss a listing that is “old and stale” — so the longer the home stays on the market, the less you’re likely going to get for it. The corollary to overpricing is not recognizing when you need to reduce the price. Generally speaking, if there hasn’t been a bite for three to four weeks, it’s probably time for a price cut.
In both instances, it’s a good idea to lean on your real estate agent. That’s why engaging a good one is so important. In addition to asking friends and family for referrals, invite three agents to create a comparative marketing analysis. Be sure to find an agent who has experience with your neighborhood and price range.
During the interview process, you will see which of these professionals has leapt into the digital age, with a variety of ways to reach potential buyers. You may want to ask for the marketing plan in writing, so that the agent is on the hook.
Your agent will also help you prepare the house for sale. First impressions matter, so identify the important home improvements that must be done before the open house. If you haven’t done so in a while, you will probably need to have the house painted, broken windows replaced, and old carpets cleaned or replaced. Also, cut the lawn, plant flowers and tend to the garden.
Even the small stuff counts, so make sure all light bulbs in the house are working, remove clutter from closets and surface areas, fix leaky faucets, caulk the showers and tubs. If all of this prep sounds like too much work, you can hire someone to “stage” your home, which takes the process to a more professional level.
Some sellers, especially those with older homes, are choosing to schedule a pre-inspection for their own benefit. While this also increases the costs associated with the sale, it may identify a potential problem earlier in the process.
As potential customers show interest, don’t thwart their progress by making it hard for them to see your house. Avoid putting too many restrictions on showing times that may encourage potential buyers to move on to the next home in their price range. If you are fortunate enough to get a bid, trust your real estate agent to skillfully and calmly handle the negotiations. Your reactive or emotional responses can impede the process or, worse, kill a deal.
Jill Schlesinger, a certified financial planner, is a CBS News business analyst. She welcomes emailed comments and questions.
