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November
25

Avoid These Mistakes When Selling Your Home

Selling your home can be surprisingly time-consuming and emotionally challenging. It can feel like an invasion of privacy when strangers open your closets and poke around. They will openly criticize your home and your decorating abilities, and to top it all off, they will offer you less money than you think your home is worth.

With no experience and a complex transaction on your hands, it's easy for home sellers to mistakes. The best way to sell a house comes down to a few basics:

  • Keep your emotions in check and stay focused on the business aspect.
  • Hire an agent. It'll cost you in commission, but it takes the guesswork out of selling.
  • Set a reasonable price.
  • Keep the time of year in mind and avoid the winter months if possible.
  • Prepare for the sale. Your home must look its best to compete.
  • Take time over your listing and add lots of high-quality photographs, inside and out.

See more below on the fatal errors that can prevent you from selling your home.

KEY TAKEAWAYS

  • To sell your home, think like a salesperson, not like a homeowner.
  • Do your research and set a realistic asking price.
  • Wait until spring if you can.
  • Take time to prepare and photograph your home.

Getting Emotional

It's easy to get emotional about selling your home, especially your first one. You spent a great deal of time and effort to find the right one, saved up for your down payment and furniture, and created many memories. People generally have trouble keeping their emotions in check when it comes time to say goodbye.

Think it's impossible? It's not. When you decide to sell your home, start thinking of yourself as a businessperson and salesperson rather than just the homeowner. In fact, forget altogether that you're the homeowner. By looking at the transaction from a purely financial perspective, you'll distance yourself from the emotional aspects of selling the property.

Also, try to remember how you felt when you were shopping for that home. Most buyers will also be in an emotional state. If you can remember that you are selling a piece of property as well as an image and a lifestyle, you'll be more likely to put in the extra effort of staging and doing some minor remodeling to get top dollar for your home. These changes in appearance will not only help the sales price; they'll also help you create emotional distance because your home will look less familiar.

Not Hiring a Real Estate Agent

Although real estate agents command a hefty commission—usually 5% to 6% of the sale price of your home—it's probably not a great idea to try to sell your home on your own, especially if you haven't done it before.1 It can be tempting, especially if you've seen all those "for sale by owner" signs on people's front lawns or on the Internet. So does it pay to hire an agent?

A good agent generally has your best interests at heart. They will help you set a fair and competitive selling price for your home, increasing your odds of a quick sale. An agent can also help tone down the emotion of the process by interacting with potential buyers and eliminating tire kickers who only want to look at your property but have no intention of making an offer.

Your agent will also have more experience negotiating home sales, helping you get more money than you could on your own. If any problems crop up during the process, an experienced professional will be there to handle them for you. Finally, agents are familiar with all the paperwork and pitfalls involved in real estate transactions and can help make sure the process goes smoothly. This means there won't be any delays or unforeseen legal ramifications in the deal.

After reading all this, should you really hire an agent? Only you can decide.

What to Do If You Don't Use a Real Estate Agent

So you've decided not to hire an agent. That's fine because it's not like it can't be done. There are people who sell their own homes successfully. Remember, though, you'll need to do your research first—on recently sold properties in your area and properties currently on the market—to determine an attractive selling price. Keep in mind that most home prices have an agent's commission factored in, so you may have to discount your price as a result.

You'll be responsible for your own marketing, so make sure to get your home on the multiple listing service (MLS) in your geographic area to reach the widest number of buyers. Because you have no agent, you'll be the one showing the house and negotiating the sale with the buyer's agent, which can be time-consuming, stressful, and emotional for some people.

Because you're forgoing an agent, consider hiring a real estate attorney to help you with the finer points of the transaction and the escrow process. Even with attorney's fees, selling a home yourself can save you thousands. If the buyer has an agent, however, they'll expect to be compensated. This cost is typically covered by the seller, so you'll still need to pay 1% to 3% of the home's sale price to the buyer's agent.1

Setting an Unrealistic Price

Whether you're working with an agent or going it alone, setting the right asking price is key. Remember the comparative market analysis you or your agent did when you bought your home to determine a fair offering price? Buyers will do this for your home, too, so as a seller you should be one step ahead of them.

 

You may think your home is worth more, but remember to set a realistic price based on comparable homes in the area.

Absent a housing bubble, overpriced homes generally don't sell. In a survey conducted by the informational home sale website HomeLight.com, 70% of real estate agents said that overpricing is the top mistake that sellers make.2

Don't worry too much about setting a price that's on the low side, because in theory, this will generate multiple offers and bid the price up to the home's actual market value. In fact, underpricing your home can be a strategy to generate extra interest in your listing, and you can always refuse an offer that's too low.3

Expecting the Asking Price

Any smart buyer will negotiate, and if you want to complete the sale, you may have to play ball. Most people want to list their homes at a price that will attract buyers while still leaving some breathing room for negotiations—the opposite of the underpricing strategy described above. This may work, allowing the buyer to feel like they are getting good value while allowing you to get the amount of money you need from the sale.

Of course, whether you end up with more or less than your asking price will likely depend not just on your pricing strategy but also on whether you're in a buyer's market or a seller's market and how well you have staged and modernized your home.

Selling During Winter Months

Believe it or not, there really is a right time to sell during the year. Winter, especially around the holidays, is typically a slow time of year for home sales. People are busy with social engagements, and the cold weather across much of the country makes it more appealing just to stay home.

Because fewer buyers are likely to be looking, it may take longer to sell your home, and you may not get as much money. However, you can take some consolation in knowing that while there may not be as many active buyers, there also won't be as many competing sellers, which can sometimes work to your advantage.

You may be better off waiting. Barring any mitigating circumstances that may force you to sell during the winter or holidays, consider listing when the weather begins to warm up. People are usually ready and willing to purchase a home when it's warmer.4

Skimping on Listing Photos

Because so many buyers look for homes online these days, and so many of those homes have photos, you'll be doing yourself a real disservice if you don't have high-quality visuals of your home. At the same time, there are so many poor photos of homes for sale that if you do a good job, it will set your listing apart and help generate extra interest.

Good photos should be crisp and clear and taken during the day when there is plenty of natural light available. They should showcase your home's best attributes. Consider using a wide-angle lens if possible—this allows you to give potential buyers a better idea of what entire rooms look like. Ideally, hire a professional real estate photographer to get top-quality results instead of just letting your agent take snapshots on a phone.

Consider adding a video tour or 360-degree view to further enhance your listing. This can be easily done with any smartphone. You can certainly entice more potential buyers into walking through your doors for showings. You may even get more offers if you give them an introductory walk-through of your property.

Not Carrying Proper Insurance

Your lender may have required you to acquire a homeowners insurance policy. If not, you'll want to make sure you're insured in case a viewer has an accident on the premises and tries to sue you for damages. You also want to make sure there are no obvious hazards at the property or that you take steps to mitigate them (keeping the children of potential buyers away from your pool and getting your dog out of the house during showings, for example).

Hiding Major Problems

Think you can get away with hiding major problems with your property? Any problem will be uncovered during the buyer's inspection. You have three options for dealing with any issues. Either fix the problem ahead of time, price the property below market value to account for it, or list the property at a normal price and offer the buyer a credit to fix the problem.

Remember: if you don't fix the problem in advance, you may eliminate a fair number of buyers who want a turnkey home. Having your home inspected before listing is a good idea if you want to avoid costly surprises after the home is under contract.

Further, many states have disclosure rules.5 Some require sellers to disclose known problems about their homes if buyers ask directly, while others decree that sellers must voluntarily disclose certain issues.

Not Preparing for the Sale 

Sellers who do not clean and stage their homes throw money down the drain. Don't worry if you can't afford to hire a professional. There are many things you can do on your own. Failing to do these things can reduce your sales price and may also prevent you from getting a sale at all. If you haven't attended to minor issues, such as a broken doorknob or dripping faucet, a potential buyer may wonder whether the house has larger, costlier issues that haven't been addressed either.

Have a friend or an agent (someone with a fresh pair of eyes) point out areas of your home that need work. Because of your familiarity with the home, you may be immune to its trouble spots. Decluttering, cleaning thoroughly, putting a fresh coat of paint on the walls, and getting rid of any odors will also help you make a good impression on buyers.

Not Accommodating Buyers

If someone wants to view your house, you need to accommodate them, even if it inconveniences you. Clean and tidy the house before every single visit. A buyer won't know or care if your house was clean last week. It's a lot of work, but stay focused on the prize.

Selling to Unqualified Buyers

It's more than reasonable to expect a buyer to bring a pre-approval letter from a mortgage lender or proof of funds (POF) for cash purchases to show that they have the money to buy the home. Signing a contract with a buyer may be contingent on the sale of their own property, which may put you in a serious bind if you need to close by a particular date.

Frequently Asked Questions

Can You Sell a House With a Mortgage?

Yes, you can sell a house with a mortgage. During the escrow process, you will get a mortgage payoff statement (sometimes called a payoff quote) from the lender holding your mortgage that lists the exact remaining balance. When your loan closes, the escrow agent will send the balance of your mortgage to your lender, paying off your mortgage.

Should I Stage My House?

Staging a home can lead to quicker sales and higher home prices.6 However, not everyone needs to hire a professional staging service. Just taking a few steps like cleaning and decluttering can have a significant impact on a home's sale and will need to be done before moving regardless of the sale.

How Much Will I Make Selling My House?

How much you will make depends on the sale price, agent commissions, closing costs, and the remaining mortgage balance. If working with a real estate agent, you should receive a seller's net sheet before you even list your property, which details what you can estimate to make.7 When you have accepted an offer and are in escrow, you will get a closing disclosure from your lender that details exactly how much you will receive after your loan closes.

Should You Sell Your Home for Cash?

Selling a home for cash is a quick way to avoid the hassle and stress of staging a house, showing it, making repairs, and juggling competing offers. However, most cash buyers won't buy a home for more than 75% of the home's value, minus any anticipated fixing-up expenses.8 Selling a home for cash is easier, but at a significant financial cost that should be considered.

The Bottom Line

Learning how to sell a house is crucial. Make sure you prepare mentally and financially for less-than-ideal scenarios, even if you don't make any of these mistakes. The house may sit on the market for far longer than you expect, especially in a declining market.

If you can't find a buyer in time, you may end up trying to pay two mortgages, having to rent your home out until you can find a buyer, or, in dire situations, in foreclosure. However, if you avoid the costly mistakes listed here, you'll be a long way toward putting your best foot forward and achieving that seamless, lucrative sale for which every home seller hopes. 

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November
14

Tips for First-Time Home Buyers

Like any big project, a successful homebuying experience is all about getting the details right from start to finish. These tips for first-time home buyers will help you navigate the process, save money and close the deal. We organized them into four categories:

  • Preparing to buy tips.

  • Mortgage selection tips.

  • Home shopping tips.

  • Home purchasing tips.

Preparing to buy tips

1. Start saving early

Here are the main costs to consider when saving for a home:

  • Down payment: Your down payment requirement will depend on the type of mortgage you choose and the lender. Some conventional loans aimed at first-time home buyers with excellent credit require as little as 3% down. But even a small down payment can be challenging to save. For example, a 3% down payment on a $300,000 home is $9,000. Use a down payment calculator to decide on a goal, and then set up automatic transfers from checking to savings to get started.

  • Closing costs: These are the fees and expenses you pay to finalize your mortgage, and they typically range from 2% to 5% of the loan amount. If you were making a 3% down payment on that $300,000 home, your closing costs could be between $5,820 and $14,550. That's additional money you'd have to pay, on top of your down payment. In a buyer's market, you can often ask the seller to pay a portion of your closing costs, and you can save on some expenses, such as home inspections, by shopping around.

  • Move-in expenses: You'll need some cash after the home purchase. Set some money aside for immediate home repairs, upgrades, and furnishings.

2. Decide how much home you can afford

Figure out how much you can safely spend on a house before starting to shop. NerdWallet's home affordability calculator can help with setting a price range based on your income, debt, down payment, credit score and where you plan to live.

3. Check and strengthen your credit

Your credit score will determine whether you qualify for a mortgage and affect the interest rate lenders will offer. Having a higher score will generally get you a lower interest rate, so take these steps to strengthen your credit score to buy a house:

  • Get free copies of your credit reports from each of the three credit bureaus — Experian, Equifax and TransUnion — and dispute any errors that could hurt your score.

  • Pay all your bills on time, and keep credit card balances as low as possible.

  • Keep current credit cards open. Closing a card will increase the portion of available credit you use, which can lower your score.

Mortgage selection tips

4. Explore mortgage options

A variety of mortgages are available with varying down payment and eligibility requirements. Here are the main categories:

  • Conventional mortgages are not guaranteed by the government. Some conventional loans targeted at first-time buyers require as little as 3% down.

  • FHA loans are insured by the Federal Housing Administration and allow down payments as low as 3.5%.

  • USDA loans are guaranteed by the U.S. Department of Agriculture. They are for rural home buyers and usually require no down payment.

  • VA loans are guaranteed by the Department of Veterans Affairs. They are for current and veteran military service members and usually require no down payment.

You also have options when it comes to the mortgage term. Most home buyers opt for a 30-year fixed-rate mortgage, which is paid off in 30 years and has an interest rate that stays the same. A 15-year loan typically has a lower interest rate than a 30-year mortgage, but the monthly payments are larger.

When interest rates are increasing, you might consider an adjustable-rate mortgage, or ARM. ARM rates are often lower than fixed rates, enabling you to buy a more expensive home for the same monthly payment, but they can also increase (or decrease) over time.

5. Research first-time home buyer assistance programs

Many states and some cities and counties offer first-time home buyer programs, which often combine low-interest-rate mortgages with down payment assistance and closing cost assistance. Tax credits are also available through some first-time home buyer programs.

6. Compare mortgage rates and fees

The Consumer Financial Protection Bureau recommends requesting loan estimates for the same type of mortgage from multiple lenders to compare the costs, including interest rates and possible origination fees.

Lenders may offer the opportunity to buy discount points, which are fees the borrower pays upfront to lower the interest rate. Buying points can make sense if you have the money on hand and plan to stay in the home for a long time. Use a discount points calculator to decide.

In a buyers' market, some motivated sellers may offer to pay some or all of the buyer's points to close the deal.

7. Get a preapproval letter

A mortgage preapproval is a lender's offer to loan you a certain amount under specific terms. Having a preapproval letter shows home sellers and real estate agents that you're a serious buyer and can give you an edge over home shoppers who haven't taken this step yet.

Apply for preapproval when you're ready to start home shopping. A lender will pull your credit and review documents to verify your income, assets and debt. Applying for preapproval from more than one lender to shop rates shouldn't hurt your credit score as long as you apply for them within a limited time frame, such as 30 days.

Home shopping tips

8. Choose a real estate agent carefully

A good real estate agent will scour the market for homes that meet your needs and guide you through the negotiation and closing process. Get agent referrals from other recent home buyers. Interview at least a few agents, and request references. When speaking with potential agents, ask about their experience helping first-time home buyers in your market and how they plan to help you find a home. You might also ask how they find homes that aren't yet on the market, which can be a handy skill when buyer competition is fierce.

9. Pick the right type of house and neighborhood

Weigh the pros and cons of different types of homes, given your lifestyle and budget. A condominium or townhome may be more affordable than a single-family home, but shared walls with neighbors will mean less privacy. Don't forget to budget for homeowners association fees when shopping for condos and townhomes, or houses in planned or gated communities.

Another option to consider is buying a fixer-upper — a single-family home in need of updates or repairs. Fixer-uppers usually sell for less per square foot than move-in ready homes. However, you may need to budget extra for repairs and remodeling. Renovation mortgages finance both the home price and the cost of improvements in one loan.

Think about your long-term needs and whether a starter home or forever home will meet them best. If you plan to start or expand your family, it may make sense to buy a home with extra room to grow.

Research potential neighborhoods thoroughly. Choose one with amenities that are important to you, including schools and entertainment options, and test out the commute to work during rush hour.

10. Stick to your budget

A lender may offer to loan you more than what is comfortably affordable, or you may feel pressure to spend outside your comfort zone to beat another buyer's offer. To avoid financial stress down the road, set a price range based on your budget, and then stick to it.

In a competitive market, consider looking at properties below your price limit to give some wiggle room for bidding. In a buyer's market, you may be able to view homes a bit above your limit. Your real estate agent can suggest a range for your offering price.

11. Make the most of open houses

Online 3D home tours have become more popular as technology improves. These tours let shoppers virtually walk through a home at any hour and observe details that regular photos don't catch. They don't supply all the information in-person visits do — like how the carpets smell — but they can help you narrow the list of properties to visit.

Open your senses when touring homes in person. Listen for noise, pay attention to any odors and look at the overall condition of the home inside and out. Ask about the type and age of the electrical and plumbing systems and the roof.

Home purchasing tips

12. Pay for home inspections

A home inspection is a thorough assessment of the structure and mechanical systems. Professional inspectors look for potential problems, so you can make an informed decision about buying the property. Here are some things to keep in mind:

  • Standard inspections don't test for things like radon, mold or pests. Understand what's included in the inspection and ask your agent what other inspections you might need.

  • Make sure the inspectors can get to every part of the house, such as the roof and any crawl spaces.

  • It's usually helpful if the buyer attends any inspections. By following the inspectors around you can get a better understanding of the home and ask questions on the spot. If you can't attend the inspections, review the reports carefully and ask about anything that's unclear.

13. Negotiate with the seller

You may be able to save money by asking the seller to pay for repairs in advance or lower the price to cover the cost of repairs you'll have to make later. You may also ask the seller to pay some of the closing costs. But keep in mind that lenders may limit the portion of closing costs the seller can pay.

Your negotiating power will depend on the local market. It's tougher to drive a hard bargain when there are more buyers than homes for sale. Work with your real estate agent to understand the local market and strategize accordingly.

14. Buy adequate home insurance

Your lender will require you to buy homeowners insurance before closing the deal. Home insurance covers the cost to repair or replace your home and belongings if they're damaged by an incident covered in the policy. It also provides liability insurance if you're held responsible for an injury or accident. Buy enough home insurance to cover the cost of rebuilding the home if it's destroyed.

It may be worth buying an umbrella policy if you need to cover your home, cars and other major assets.

August
1

Before making an offer on your dream home, make sure you cross these tasks off your list.

Shopping for a new home can be an emotional rollercoaster, and the process often takes several weeks or months. Once you discover that perfect home, it's normal to feel a mix of excitement and anxiety, which often leads buyers to act with a sense of urgency. However, before you have your agent draw up an offer, it's important to take some time to thoroughly evaluate the property and consider your terms.

Our real estate agents always encourage clients to take these steps before submitting an offer:

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