If you are thinking of selling your home, chances are you’re caught up in a mass of emotions. You may be looking forward to moving up to a new home or facing the uncertainty of a major move across the country. You may be reluctant to leave your memories behind or eager to start new and exciting adventures. Remember, we are here to help you with any of your needs. Call or e-mail us today!
Getting Your House Ready To Sell
Introduction: Emotion vs. Reason
De-Personalize the House
Removing Clutter, Though You May Not Think of it as Clutter
This is the hardest thing for most people to do because they are emotionally attached to everything in the house. After years of living in the same home, clutter collects in such a way that may not be evident to the homeowner. However, it does affect the way buyers see the home, even if you do not realize it. Clutter collects on shelves, countertops, drawers, closets, garages, attics, and basements.
Take a step back and pretend you are a buyer. Let a friend help point out areas of clutter, as long as you can accept their views without getting defensive. Let your agent help you, too.
The kitchen is a good place to start removing clutter because it is an easy place to start. First, get everything off the counters. Everything. Even the toaster. Put the toaster in a cabinet and take it out when you use it. Find a place where you can store everything in cabinets and drawers. Of course, you may notice that you do not have cabinet space to put everything. Clean them out. The dishes, pots, and pans that rarely get used? Put them in a box and put that box in storage, too.
You see, homebuyers will open all your cabinets and drawers, especially in the kitchen. They want to be sure there is enough room for their “stuff.” If your kitchen cabinets, pantries, and drawers look jammed full, it sends a negative message to the buyer and does not promote an image of plentiful storage space. The best way to do that is to have as much “empty space” as possible.
For that reason, if you have a “junk drawer,” get rid of the junk. If you have a rarely used crock pot, put it in storage. Do this with every cabinet and drawer. Create open space.
If you have a large amount of foodstuffs crammed into the shelves or pantry, begin using them – especially canned goods. Canned goods are heavy and you don’t want to be lugging them to a new house, anyway – or paying a mover to do so. Let what you have on the shelves determine your menus and use up as much as you can.
Beneath the sink is very critical, too. Make sure the area beneath the sink is as empty as possible, removing all extra cleaning supplies. You should scrub the area down as well, and determine if there are any tell-tale signs of water leaks that may cause a home buyer to hesitate in buying your home.
Closets are great for accumulating clutter, though you may not think of it as clutter. We are talking about extra clothes and shoes – things you rarely wear but cannot bear to be without. Do without these items for a couple of months by putting them in a box, because these items can make your closets look “crammed full.” Sometimes there are shoeboxes full of “stuff” or other accumulated personal items, too.
Many people have too much furniture in certain rooms – not too much for your own personal living needs – but too much to give the illusion of space that a homebuyer would like to see. You may want to tour some builders’ models to see how they place furniture in the model homes. Observe how they place furniture in the models so you get some ideas on what to remove and what to leave in your house.
Storage Area Clutter
Basements, garages, attics, and sheds accumulate not only clutter, but junk. These areas should be as empty as possible so that buyers can imagine what they would do with the space. Remove anything that is not essential and take it to the storage area. Or have a garage sale.
Fixing Up the House Interior
Plumbing and Fixtures
All your sink fixtures should look shiny and new. If this cannot be accomplished by cleaning, buy new ones where needed. If you don’t buy something fancy, this can be accomplished inexpensively and they are fairly easy to install. Make sure all the hot and cold water knobs are easy to turn and that the faucets do not leak. If they do, replace the washers. It is not difficult at all.
Check to make sure you have good water pressure and that there are no stains on any of the porcelain. If you have a difficult stain to remove, one trick is to hire a cleaning crew to go through and clean your home on a one-time basis. They seem to be wonderful at making stains go away.
Ceilings, Walls, and Painting
Check all the ceilings for water stains. Sometimes old leaks leave stains, even after you have repaired the leak. Of course, if you do have a leak, you will have to get it repaired, whether it is a plumbing problem or the roof leaks.
You should do the same for walls, looking for not only stains but also areas where dirt has accumulated and you just may not have noticed. Plus, you may have an outdated color scheme.
Painting can be your best investment when selling your home. It is not a very expensive operation and often you can do it yourself. Do not choose colors based on your own preferences, but based on what would appeal to the widest possible number of buyers. You should almost always choose an off-white color because white helps your rooms appear bright and spacious.
Carpet and Flooring
Unless your carpet appears old and worn, or it is definitely an outdated style or color, you probably should do nothing more than hire a good carpet cleaner. If you do choose to replace it, do so with something inexpensive in a fairly neutral color.
Repair or replace broken floor tiles, but do not spend a lot of money on anything. Remember, you are not fixing up the place for yourself. You want to move. Your goal is simply to have as few negative impressions upon those who may want to purchase your property.
Windows and Doors
Check all of your windows to make sure they open and close easily. If not, a spray of WD40 often helps. Make sure there are no cracked or broken windowpanes. If there are, replace them before you begin showing your home.
Do the same things with the doors – make sure they open and close properly, without creaking. If they do, a shot of WD40 on the hinges usually makes the creak go away. Be sure the doorknobs turn easily, and that they are cleaned and polished to look sharp. As buyers go from room to room, someone opens each door and you want to do everything necessary to create a positive impression.
For those who smoke, you might want to minimize smoking indoors while trying to sell your home. You could also purchase an ozone spray that helps to remove odors without creating a masking odor.
Pets of all kinds create odors that you may have become used to, but are immediately noticeable to those with more finely tuned olfactory senses. For those with cats, be sure to empty kitty litter boxes daily. There are also products that you can sprinkle in a layer below the kitty litter that helps to control odor. For those with dogs, keep the dog outdoors as much as possible. You might also try sprinkling carpet freshener on the carpet on a periodic basis.
Costs of Repairs
Do not do anything expensive, such as remodeling. If possible, use savings to pay for any repairs and improvements – do not go charging up credit cards or obtaining new loans. Remember that part of selling a house is also preparing to buy your next home. You do not want to do anything that will affect your credit scores or hurt your ability to qualify for your next mortgage.
Fixing Up Outside the House
Most real estate advice tells you to work on the outside of the house first, but unless there is a major project involved, we believe it is best to do it last. There are two main reasons for this. First, the first steps in preparing the interior of the house are easier. They also help develop the proper mindset required for selling – beginning to think of your “home” as a marketable commodity. Second, the exterior is the most important. A homebuyer’s first impression is based on his or her view of the house from the real estate agent’s car.
So take a walk across the street and take a good look at your house. Look at nearby houses, too, and see how yours compares.
Is your landscaping at least average for the neighborhood? If it is not, buy a few bushes and plant them. Do not put in trees. Mature trees are expensive, and you will not get back your investment. Also, immature trees do not really add much to the appearance value of the home.
If you have an area for flowers, buy mature colorful flowers and plant them. They add a splash of vibrancy and color, creating a favorable first impression. Do not buy bulbs or seeds and plant them. They will not mature fast enough to create the desired effect and you certainly don’t want a patch of brown earth for homebuyers to view.
Your lawn should be evenly cut, freshly edged, well-watered, and free of brown spots. If there are problems with your lawn, you should probably take care of them before working on the inside of your home. This is because certain areas may need re-soding, and you want to give it a chance to grow so that re-sod areas are not immediately apparent. Plus, you might want to give fertilizer enough time to be effective.
Always rake up loose leaves and grass cuttings.
The big decision is whether to paint or not to paint. When you look at your house from across the street, does it look tired and faded? If so, a paint job may be in order. It is often a very good investment and really spruces up the appearance of a house, adding dollars to offers from potential homebuyers.
When choosing a color, it should not be something garish and unusual, but a color that fits well in your neighborhood. Of course, the color also depends on the style of your house, too. For some reason, different shades of yellow seem to illicit the best response in homebuyers, whether it is in the trim or the basic color of the house.
As for the roof, if you know your house has an old leaky roof, replace it. If you do not replace a leaky roof, you are going to have to disclose it and the buyer will want a new roof, anyway. Otherwise, wait and see what the home inspector says. Why spend money unnecessarily?
The Back Yard
The backyard should be tidy. If you have a pool or spa, keep it freshly maintained and constantly cleaned. For those that have dogs, be sure to constantly keep the area clear of “debris.” If you have swing sets or anything elaborate for your kids, it probably makes more sense to remove them than to leave them in place. They take up room, and you want your backyard to appear as spacious as possible, especially in newer homes where the yards are not as large.
The Front Door & Entryway
The front door should be especially sharp since it is the entryway into the house. Polish the door fixture so it gleams. If the door needs refinishing or repainting, make sure to get that done.
If you have a cute little plaque or shingle with your family name on it, remove it. Even if it is just on the mailbox. You can always put it up again once you move. Get a new plush door mat, too. This is something else you can take with you once you move.
Make sure the lock works easily and the key fits properly. When a homebuyer comes to visit your home, the agent uses the key from the lockbox to unlock the door. If there is trouble working the lock while everyone else stands around twiddling their thumbs, this sends a negative first impression to prospective homebuyers.
Want To Start Off With a High Sales Price? Beware!
Meeting With REALTORS®
Which REALTOR® Do You Choose?
If you’re like many people, you pick REALTOR® number three. This is an agent who seems willing to listen to your input and work with you. This is an agent that cares about putting the most money in your pocket. This is an agent that is willing to start out at your price and if you need to drop the price later, you can do that easily, right? After all, everyone else does it!The truth is that you may have just met an agent engaging in a questionable sales practice called “buying a listing.” He “bought” the listing by suggesting you might be able to get a higher sales price than the other agents recommended. Most likely, he is quite doubtful that your home will actually sell at that price. The intention from the beginning is to eventually talk you into lowering the price.
Why do agents “buy” listings? There are basically two reasons. A well-meaning and hard-working agent can feel pressure from a homeowner who has an inflated perception of his home’s value. On the other hand, there are some agents who engage in this sales practice routinely.
What Happened Behind the Scenes?
Whichever the case, if you start out with too high a price on your home, you may have just added to your stress level, and selling a home is stressful enough. There will be a lot of “behind the scenes” action taking place that you don’t know about.
Contrary to popular opinion, the listing agent does not usually attempt to sell your home to a homebuyer. That isn’t very efficient. Listing agents market and promote your home to the hordes of other local agents who do work with homebuyers, dramatically increasing your personal sales force. During the first couple of weeks, your home should be a flurry of activity with buyer’s agents coming to preview your home so they can sell it to their clients…if the price is right.
If the price is right.
If you and your agent have overpriced, fewer agents will preview your home. After all, they are Realtors, and it is their job to know local market conditions and home values. If your house is dramatically above market, why waste time? Their time is better spent previewing homes that are priced realistically.
Dropping Your Price…Too Late?
Types of Listings Contracts
Exclusive Agency Listings
An “exclusive agency” listing allows an agent to list and market your home, guaranteeing them a commission if the house sells through any real estate agent or company. It also allows sellers to seek out buyers on their own.This is not a popular type of listing agreement. The reason is that there is not much incentive for agents to spend money marketing your home. If you come up with your own buyer, they have spent money they cannot earn back through the real estate commission. Plus, it is too easy for a greedy buyer to go around the agent and negotiate directly with the seller.
If you find an agent willing to accept such a listing, do not expect too much from them. They will probably just place it in the Multiple Listing Service and sit around to see if something happens. A good agent would never accept such a listing, and you probably want a good agent.
Exclusive Right to Sell
Details of a Listing Contract
Price and Terms of Sale
When setting the terms of sale, the main thing you are concerned with is the price. You should have a basic idea of what your home is worth by keeping track of other sales in the neighborhood. Plus, you have probably interviewed at least two real estate agents and they have given you their own ideas. Exercise great care in determining your asking price, making sure not to set it too high or too low.
In addition to the price, you will disclose what personal property, if any, goes with the house when you sell it. Personal property is anything that is not attached or fixed to the home, such as washers, dryers, refrigerators, and so on.
There may be some item that is considered “real property” that you do not intend to include in the sale. Real property is anything that is attached to the home. For example, you may have a chandelier that has been in your family for generations and you take it from home to home when you move. Since the chandelier is attached to the house, it is considered “real property” and a reasonable buyer would normally expect it to go with the house.
Lockbox – Yes or No?
A lockbox is basically a padlock with a cavity inside where a key to your home can be placed. Only someone with an electronic key or the combination can get into the lockbox and access the key. Having a lockbox available at your house makes it easy for other agents to get access to your house.
Without the lockbox, agents representing buyers would have to set appointments to meet you or your agent at the house so they could gain access and view the home. This would be inconvenient. Since almost every other house does have a lockbox available, if you do not allow one most agents will simply not show your property. You will miss out on lots of potential buyers.
The listing contract specifies whether you allow a lockbox or not. It is locked into place, usually on the front door, and cannot be removed. Only other agents can access the key that is located within the lockbox.
Real Estate Commission
Multiple Listing Service
Agency Duties of a Listing Agent
The listing contract will specify that your agent is acting as a “seller’s agent.” This means that, in the sale of your house, they are working for you and only you. However, there may be times when your listing agent has a client who wants to buy your home. For that reason, there is a little “wiggle room” in the listing contract. If your agent also represents the buyer, the listing contract should specify that they provide an additional disclosure that details their duties as a dual agent.
The contract also provides permission for your listing agent to act as an agent for others on other transactions. They can continue to list other properties, and represent buyers looking at other homes.
Resolution of Disputes
There are times when you and your agent have a disagreement that you cannot resolve by yourselves. Maybe the agent did a poor job or misrepresented something. Maybe your agent was really doing their job correctly, but you did not understand. Perhaps the agent will have a dispute with you.
The listing contract specifies what methods will be used to settle such disputes. You can choose to accept binding arbitration, which is usually cheaper than hiring a lawyer and going to court. Usually, matters that can be dealt with in a small claims court are excluded from having to go to binding arbitration.
You are not required to sign or initial the binding arbitration clause. This would leave you free to hire an attorney and pursue disputes in civil court instead of binding arbitration. Consult your attorney for advice on this legal matter.
Listing Commissions and Related Issues
Are Commissions Negotiable?
How and When the Commission is Earned
Your listing contract specifies a listing price. Your agent’s job is to bring a “ready, willing and able” buyer to present an offer. If you reach an agreement with the buyer, then the agent has done his job and earned the commission. Once the sale has closed, the real estate broker gets paid from the proceeds of the sale.
If the buyer proves unable or unwilling to conclude the sale, the house is placed back on the market and the agent has to begin earning his or her commission all over again.
However, if the seller backs out or does not accept an offer that meets the price and terms of the listing agreement, the listing broker has still earned the commission. They may want to be paid, even though you did not actually sell your home. Therefore, it is very important to carefully consider every detail when completing your listing contract and accepting an offer to buy your property.
Hot Market Under-Pricing Strategy – Commission Issues
During a “hot market” there is a certain marketing technique which, though very effective, could cause trouble because of the way the contract is written. This is the practice of “under-pricing” the home. In a hot market, a home that is under-priced gets a lot of attention from other Realtors, and they all start showing your home to their clients. Often, you get into a situation where multiple offers are presented and the price starts going up because of the frenzy. You end up selling the house above your asking price and perhaps above what you could have received if you had priced it traditionally.
However, the technique does have the potential to backfire, so you should build safeguards to prevent having to pay a commission “just in case.”
You see, the listing contract usually states that if an offer is received that meets the terms presented in the contract (including price), the real estate agent has earned his or her commission – even if you decide not to sell. A reputable agent would never attempt to collect a commission if they were using the “under-pricing” technique and it backfired, even if they are technically entitled to one. For that reason, in the “additional terms” space on the listing contract, you should specify your true target price – when the agent has really earned the commission.
The Listing Agent – Marketing Your House
The Real Role of a Listing Agent
When you bought your home, you probably used the services of a real estate agent. You found that agent through a referral from a friend or family member, or through some sort of advertising or marketing. The agent helped you in many ways and eventually you found the house of your dreams, made an offer, closed the deal, and moved in.
For whatever reason, now it is time to sell your home and you need a real estate agent again. Many home sellers, especially those selling their first home, tend to think all agents are similar to the one that helped them buy their home.
Although real estate agents can (and do) work with both buyers and sellers, most tend to concentrate more on one than the other. They specialize. When you bought your home, you probably worked with a “selling agent” – an agent that works mostly with buyers. Because of the nature of real estate advertising and marketing, the public’s main image of the real estate profession is that of the selling agent.
As a result, many homeowners expect their listing agent to do the same things that a selling agent does – find someone to buy their home. After all, they do the things you would expect if they were searching for buyers. A sign goes up in the front yard. Ads are placed in the local newspaper and real estate magazines. Your agent holds an open house on the weekend. Your house is proudly displayed on the Internet.
But this is only “surface” marketing. More important activity occurs behind the scenes. After the “for sale” sign goes up and flyers are printed, your agent’s main job is to market your home to other agents, not to homebuyers.
The “For Sale” Sign
It seems fairly obvious that when you put your house up for sale that your agent will put a “for sale” sign in the front yard. The sign will identify the agent’s company, the agent, and have a phone number so prospective buyers can call and get information.
Signs are great at generating phone calls, even if very few actually purchase the home they call about. However, you might be one of the lucky ones. For that reason, you should determine what happens when someone calls the number on the sign. Does a live person answer the phone or does the call go to a voicemail or recorder?
You want someone to answer the phone while the caller is “hot.” When buyers call the number on the sign, the call should go to a live person who can answer questions immediately. A potential buyer may be on the street outside your home, placing the call using a cell phone.
Flyers and a Brochure Box
Your agent should prepare a flyer that displays a photo and provides details about your house. There should also be a phone number so buyers can contact your agent to get additional information. The flyers should be displayed in a prominent location in your home and also in a brochure box attached to the “for sale” sign.
The brochure box is convenient for those buyers who drive by and just happen to see the “for sale” sign in front of your house. It provides enough information so they can determine if they want to follow up with a phone call or inform their own agent they are interested in your house.
The Listing Agent – Marketing Your House to Other Agents
The Multiple Listing Service
Even before the sign is up and the brochures are ready, your agent should list your property with the local MLS (Multiple Listing Service). The MLS is a database of all the homes listed by local real estate agents who are members of the service, which is practically all of the local agents.
Important information about your property is listed here, from general data such as square footage and the number of rooms to such details as whether you have central air conditioning or hardwood flooring. There should also be a photo and a short verbal description of what makes your house “special.”
Agents search the database for homes that fit the price range and needs of their clients. They pay special attention to homes that have been recently placed on the market, which is one reason you get a lot of attention when your house is first listed. Many agents will want to preview the home before they show it to their clients.
The main point about having your house listed in the MLS is that you expand your sales force by the number of local MLS members. Instead of having just one agent working for you, now you may have hundreds or more, depending on the size of your community.
The listing agent’s main job is to make sure that the other MLS members know about your house. This is accomplished through listing your house in the Multiple Listing Service, broker previews, and advertising targeted toward other agents, not homebuyers.
The Listing Agent – Marketing Your House to Home Buyers
The Purpose of Advertising in General
Every home seller likes to be assured that their listing agent or the real estate company will run ads featuring their home.
Agents and companies will run ads featuring your house, but not for the reasons you expect.
You see, the main job of advertising is not to sell your house directly. Advertising creates phone calls and some of those callers become clients of the agents answering the calls. This builds up a pool of homebuyers looking for property in general, all represented by selling agents. Multiply this by all the agents and companies who also advertise homes, and there is a large pool of homebuyers in the market at any given time – all of whom are represented by selling agents.
The agents representing those homebuyers know about your home because it is listed in the Multiple Listing Service, has been on office and broker preview, and because your agent may have also sent flyers to all the local real estate offices.
The agents match up their clients with available homes, one of which may be yours. Then they show the homes to their clients, who eventually make an offer on one. That is how your house gets sold. Ads create a pool of clients, one of which buys your home. Ads do not usually sell your house directly.
Real Estate Office Advertising
As mentioned previously, advertising your home in newspapers and magazines rarely sells your home directly. More likely than not, the buyer who eventually purchases your home will have called on a totally different house. The same thing happens with buyers who call on your house. They will probably buy something else.
You still want to be certain the real estate company selling your house runs ads in the local and major newspapers, whether they feature your house or not. The ads generate phone calls to the real estate office, and if those agents viewed your house on the office preview, they will be familiar with it. This is how your property is sold.
Or you could be one of the lucky ones – someone calling on your house may actually end up buying it.
You should also realize that when a company advertises the homes they have for sale, there is more than one objective. Sure, the real estate office wants to generate phone calls and sell houses, but the advertising also shows home sellers how effectively they market properties. This impresses not only you but others who may be thinking of selling their home.
The advertising brings in more listings, which generates more ad calls, which produces more buyers….and that is how real estate advertising really works.
When you first list your home many agents send “announcements” to all of the other houses in your neighborhood. This can be done in the form of postcards, a letter, or flyers left hanging on the front door. These are important because your neighbors might have friends who are looking to buy a house.
The announcements create “word of mouth” advertising, which is the best kind.
An open house when your property is first placed on the market can be very important, but not for the reasons most homeowners think. Just like with advertising, most visitors to open houses rarely buy the house they come to look at. They may not even know the price of your home when they stop by to visit – they probably just followed an “Open House” sign to your door.
An open house performs a similar function to the neighborhood announcements – it lets all of your neighbors know that your house is for sale, and it practically invites them to come “take a look.” Being generally nosy, a lot of your neighbors will take advantage of the invitation.
And they may tell their friends about your house, creating more “word of mouth” advertising.
Of course, there are other reasons for holding open houses, too. Listing agents who “farm” a particular neighborhood use them as an opportunity to meet with other local homeowners who will someday be selling their home. Your agent may hope to list their homes in the future.
Open houses held after your home has been on the market a while do not usually serve a useful purpose in selling your home. Most of the neighbors already know your house is for sale and open house visitors rarely buy the homes they visit.
However, if you really want more open houses, your listing agent may allow other agents to hold them open. Open houses attract prospective homebuyers and agents hope to convince some of those homebuyers to become their clients.
Showing Your House to Home Buyers
Convenience and Availability
Your house should always be available for show, even though it may occasionally be inconvenient for you. Let your listing agent put a lockbox in a convenient place, to make it easy for other agents to show your home to homebuyers. Otherwise, agents will have to schedule appointments, which is an inconvenience. Most will just skip your home to show the house of someone else who is more cooperative.
Most agents will call and give you at least a couple of hours’ notice before showing your property.
Why You Should Not Be Home
Lighting, Fragrances, Pet Control and More
When you know someone is coming by to tour your home, turn on all the indoor and outdoor lights – even during the day. At night, a lit house gives a “homey” impression when viewed from the street. During the daytime, turning on the lights prevents harsh shadows from sunlight and brightens up any dim areas. Your house looks more homey and cheerful with the lights on.
Do not use scented sprays to prepare for visitors. It is too obvious and many people find the smells of those sprays offensive, not to mention that some may be allergic. If you want to have a pleasant aroma in your house, have a potpourri pot or something natural. Or turn on a stove burner for a moment and put a drop of vanilla extract on it. It will smell like you have been cooking.
If you have pets, make sure your listing agent puts a notice with your listing in the multiple listing service. The last thing you want is to have your pet running out the front door and getting lost. If you know someone is coming, it would be best to try to take the pets with you while the homebuyers tour your home. If you cannot do that, It is best to keep dogs in a penned area in the backyard. Try to keep indoor cats in a specific room when you expect visitors, and put a sign on the door. Most of the time, an indoor cat will hide when buyers come to view your property, but they may panic and try to escape.
The Kitchen Trash
Especially if your kitchen trash can does not have a lid, make sure you empty it every time someone comes to look at your home – even if your trash can is kept under the kitchen sink. Remember that you want to send a positive image about every aspect of your home. Kitchen trash does not send a positive message. You may go through more plastic bags than usual, but it will be worth it.
Keeping the House Tidy and Neat
Handle With Care!
Many people rank moving as one of the top five causes of stress. How you handle your children before and during the sale of your home can reduce some of their stress – and yours!
Experts recommend the following to make this a smooth transition:
- Children should only be told of a planned move once the decision has been made. Discussing the possibility of a move beforehand only causes unnecessary anxiety, according to many child psychologists.
- Minimize the stress your children feel when moving by getting them involved in their favorite activities – sports, academic or artistic – BEFORE the move actually occurs. Children can use the Internet to find out about their favorite activities, events, or teams, as well as other interesting facts about their new area.
- Another way to help children adjust to a new environment is to allow them to become familiar with the area before the move occurs. Take a vacation, or short trip to your new location to allow them to get to know the area. That way, it will seem familiar and reassuring once they’ve moved.
- And finally, let your children stay with relatives or friends during the actual packing and loading process. That will relieve the stress of seeing their possessions packed into boxes and taken away.
Is a 1031 Exchange Right For You?
You may have heard of people “exchanging” their investment property to avoid huge tax bites out of their sale proceeds. An exchange of real property can be a valuable tool to defer or avoid capital gains tax on real estate transactions.
Section 1031 of the IRS Code offers real estate investors a great investment opportunity to build wealth and save taxes. By completing a 1031 exchange, you can dispose of investment property, use all of the equity to acquire replacement investment property, defer the capital gains tax that would ordinarily be paid, and leverage all of your equity into a replacement property.
Replacement property acquired in an exchange must be of “like-kind” or similar to the property being sold. The following are examples of properties that could be eligible for a 1031 exchange:
- Single-Family Rental
- Multi-Family Rentals
- Raw Land
- Retail Offices
- Golf Course
- Leases of 30 years or more
- Properties NOT eligible under 1031 include foreign property and primary residences.
1031 exchanges are primarily designed for people interested in investment properties, not for typical home sellers and buyers looking to purchase a residence.
After the SOLD Sign
You’ve probably spent so much time and effort on making sure your home sells for the best price possible that you may not realize there’s more to do! Now that the SOLD sign is in your yard, here are some things you can do to get ready for the move.
Stop by your local post office to pick up a change of address form so your mail will be forwarded to your new home. If you’re not sure of your next permanent address, consider renting a post office box for a few months to guarantee your mail delivery will not be interrupted.
Be sure to notify anyone who provides you with service at your home that you are moving – landscapers, home cleaners, or window washers. If you are moving out of the area, ask for recommendations of service providers you could use at your new home.
It’s time to decide now which belongings have sentimental value, and which you can part with. Set a weekend aside to have a moving sale and arrange for a local charity to come by and pick up whatever doesn’t sell. This will make it much easier to pack and will also save you money, since movers generally charge by the pound.
Getting started on these activities will ensure that you and your family experience a smooth transition to your next property.
17 Simple Things to Make Your Home More Marketable
- Make sure your entranceway says “Hey, look at me!”
- Paint (or touch up) exterior, and repair screens and windows.
- Check A/C and heating systems.
- Fix leaky faucets, toilets, and faulty lights.
- Repair wall cracks, re-caulk bathrooms, and kitchen.
- Mow lawn, edge driveway and walkways.
- Throw out junk from the garage and storage areas.
- Prune dead limbs from trees.
- Clean your windows.
- Vacuum drapes and carpets.
- Clear out closets.
- Remove excess furniture.
- Ensure windows, doors, and locks work smoothly.
- Weed flowerbeds and trim shrubs.
- If you have a pool, make it crystal clear.
- Clean lawn furniture.
- Keep cats and dogs out of visitors’ way.
Choosing a REALTOR®
Buying or selling a home is a major decision in your life. Before you begin, find a professional you can trust. Your REALTOR® will be an important advisor during one of the most personal and exciting experiences of your life. It is OK to be very careful about choosing someone you feel comfortable with.
Look for the word “REALTOR®”
The first factor to understand is the difference between a REALTOR® and a real estate agent. The word “REALTOR®” can only be used by professionals who are members of the National Association of REALTOR®s (and, your local Association of REALTOR®s).
In order to be a member, an agent must agree to abide by a strict code of ethics based on values of competency, fairness, and high integrity. Among other strict standards, REALTOR®s can not be parties to any plan or agreement to discriminate against a person or persons on the basis of race, color, religion, sex, handicap, familial status, or national origin.
An agent who has become a REALTOR® has committed to a higher standard of service and professionalism.
Interview potential REALTOR®s
When you meet a potential REALTOR®, be ready to interview him or her just as you would interview any person you might be hiring for a job. Here are some good questions to ask:
1. How long have you worked in real estate? Is real estate your full-time job? Real estate is a complex business. Experience and commitment definitely count.
2. Are you a licensed REALTOR®? Are you a member of the local MLS? Agents who cannot actually call themselves REALTOR®s have not sworn to uphold the profession’s code of ethics. REALTOR® members of your local MLS have access to all of the most current information and training on the real estate business. Members of the local MLS (Multiple Listing Service) can search through thousands of properties in your area to find a list of those that meet your specific needs.
3. How many buyers and sellers have you worked with this year? How many of them have “closed a deal” with you? “Closing” on a home means seeing the process through to the final details of the contract and the transaction. The average agent closes 10 to 15 transactions a year. A REALTOR® who closes on a lot of homes may be able to help you buy or sell a property much quicker than others. On the other hand, a REALTOR® who only closes a few transactions a year may have more time to spend with you. The choice is yours.
4. Do you have any assistants who work with you? What do they do? Some REALTOR®s have a team of staff people to help meet customers’ needs faster and more efficiently. If your REALTOR® does enough business to have assistants, make sure that the REALTOR® personally handles any negotiations including the contract and closing. It is perfectly OK for an assistant to handle paperwork and home tours.
5. Do you have any designations, certifications, or special training? REALTOR®s learn as much as they can about the real estate business with continuing education. Some kinds of education result in special designations for the REALTOR®. For example, if you are interested in a historic home, there are agents who have special designations and understand the unique market conditions of the older home.
6. How do you stay in touch with your clients? If your REALTOR® prefers to send e-mail, but you want to be called on the telephone, the two of you will need to work out an agreeable communication plan.
Choose your REALTOR® carefully, but once you have chosen, stay with that person. Do not sign a buyer’s agreement at your first meeting with a REALTOR®. Wait until you are certain you have made the best choice.