Today, a guest post from Crystal –
Putting your home on the market can be a daunting experience and if you want to get the best price, it is essential that you are financially savvy throughout the house selling process. With this in mind, here are a few financial management tips to take into account when putting your property up for sale. These tips will prepare you for the sale of your home as well as making sure you save for unexpected costs.
Investigate House Prices
Selling a new home can be stressful, especially if you don’t have any accommodation lined up should you sell your home quickly. Therefore, the first step to take is to scope out the housing market for a prospective new home. This situation is financially tricky for any homeowner because if you buy a house while you are However, if you wait to sell your house first, you could end up paying a fortune in rent while you find a new home. In an ideal world, you want to get the highest price for your home while getting the lowest price for the home you wish to buy, so scoping out the house prices is essential.
Check your Credit Rating
In order to buy a home, you have to be creditworthy. Therefore, before you put your home on the market, it makes sense to check your credit rating. This will help you to understand what position you are in financially. Low credit scores can result in having to pay a higher interest rate on your mortgage and this is useful information to have before you start your search for a new home. You can get free credit reports quickly and easily online. Once you know what your credit score is you can take steps to improve it. If you are in debt, this is the time to deal with it. Eradicating credit card debt and loans can improve your credit score and put you in a better position financially.
Start Saving
Selling your home can be costly and you may have to dip into your savings to cover the costs involved. You will have to pay estate agent fees, legal fees, an exit fee as well as indemnity insurance. There could also be a whole host of unexpected costs to pay when selling your home so make sure you do your research beforehand.
If you don’t want to be left with two mortgages and a pile of estate agent fees, you could buy a new house and get a guaranteed quick sale with a property buying company like www.housebuyerbureau.co.uk.
I have a purchase agreement on my home as of a few weeks ago. I think one of the best financial steps one can take when selling one’s home is to keep one’s realtor at arm’s length. Tell the realtor nothing about your financial situation. Realtors love to say how they are acting to get their client the best price. But I think for them, they make their money more via volume and not helping nail down the maximum price the seller can get. I am astonished at the high pressure tactics my realtor used in the first three steps of the deal. At step two, and under a severe time limit to counter and without help from my realtor on the details (she was in class all day) I counteroffered. I agreed to the buyer’s offer price, but changed the closing cost yada distribution. The next day my realtor asked me if I had the liquid cash to help the buyer pay for his lender’s appraisal. Unsolicited, she told me the buyer was just getting through a divorce and custody battle and had had problems getting his earnest money back on a short sale he attempted. (Why is she telling me this? Like I do not have problems? Like we all do not have problems? Was she being sexist, banking on me being sympathetic as a woman? She was advocating for the buyer. She sort of harassed me into verbally agreeing to help the buyer with the appraisal. An hour later I emailed her a firm order: “I reconsidered. I cannot help the buyer. My counteroffer stands as written. When the buyer has sufficient resources, I welcome his making a new offer.” The next day the buyer agreed to the counteroffer, unamended. It all makes me a little sick. It is stressful as noted above. I now have the realtor on a short leash, responding yes, no or none of your business only when asked and only by email if possible. She knows from my few remarks that anymore crazy demands from the buyer post-home inspection and I will terminate the deal in a heartbeat. As the cliche goes: It’s not personal. It’s business (and to be exact, one of the largest financial transactions many will ever have).
Freakonomics had written a chapter on how real estate agents certainly don’t advocate on their customer’s behalf. Consider. You or I try to sell our $500K home. 6% is $30,000 that our realtor might be splitting with the co-broker. So, $15,000 each. A counter offer, $450K. To you or me, $50,000 is a lot of money, and it really is. It’s a year’s median income and make take a family a decade to save up. To our friendly realtor, the difference is $1500. It also means a closed deal. As a realtor, spending half the time trying to close sales can result in twice the volume. Two $13,500 checks instead of one $15,000 check. All the incentive for a realtor is toward closing deals. I’d love to tell a realtor I’d give them say, 1%, up to $500K, but 25% of what they get that’s over that. You want a fast deal? Split $5000. Find me a buyer willing to pay $600,000 and you’ll make some better money.
All that you read will tell you the realtor works for the seller, so as a buyer, beware. Nonsense, the realtor works for the realtor.
Thank you for the reinforcement, and well-said, Joe. Yes, the math points to realtors worrying more about volume than maximizing the price for the seller. Per your suggestion, I also am enjoying several articles on this at Freakonomics, including one titled “Get Rid of the Realtors.”