10 Things You Can Do to Save Money When Selling a Home
People often ask us, “How can we save money when selling a home?” No matter where you live, here are 10 things you can do to help minimize the costs associated with selling a home. We’re going to presume that you’ll be using an agent to assist you. And when we mention an agent, we mean a licensed broker that is also a Realtor®. Not all agents are Realtors. Because of the fees and training required for being a Realtor®, you are less likely to encounter a freelancing, part-time agent that may not offer the same level of experience, resources and professionalism. Below are ten things you can do to save money when you sell your home.
1. Interview with 2 or more Realtors®
Interviewing agents is the best way to evaluate what exactly each will do to earn their fees. It’s a good idea to let them know beforehand that you are interviewing other agents. Some agents treat listing interviews as a numbers game. They don’t attempt to earn your business, and instead seek home sellers that are less inclined to do their due diligence. These are the agents you want to avoid because they are likely to quote high commissions or charge additional fees like Regulatory Compliance or Transaction Fees, both of which are unnecessary and considered ‘junk fees’ in the industry. It’s not uncommon to see settlement statements where sellers are paying up to 7% commission when they could have paid much less. For a median priced home, that equates to over $10,000 in unnecessary fees!
2. If Upgrades are Needed, Shop for Them in Advance
Time is your friend whenever you plan an improvement to your home. Regardless of whether it involves a carpentry item like hardwood refinishing, a mechanical update like a new air conditioner compressor, or something else, the more time you have the better. Time affords you the luxury of shopping for estimates, reading reviews from past customers, and time to save up for the payment. Waiting until the last minute or, worse yet, until your house is under contract to take care of something is the sure way to paying more than necessary. Not to mention all the stress involved with taking care of something in a crunch. Instead, take your time and do it at your pace before you list. Your wallet will thank you for it.
3. Get the Timing Right
As with most things in life, timing is everything. If you sell a home too soon, you could end up paying a substantial amount in capital gains taxes. Sell a home at the wrong time of year, and you could be leaving money on the table. But take a strategic approach to selling your home and you could walk away with more than you expected and end up paying nothing in Capital Gains. If you’re not sure how to do it, have a talk with one of our real estate professionals. They’ll need to ask you a couple of questions and the consultation is free and with no obligation.
4. Leverage Your FHA or VA Mortgage
If you bought or refinanced your home with an FHA or VA mortgage during or just before Covid, did you know that your low-interest loan can be assumed by your buyer? Do you think that someone will be willing (and able) to pay you more money for a home that is much more affordable for them? You bet they will! But how can you do it? If your mortgage is an FHA or VA mortgage, that loan is assumable. Assumable means that a new buyer can take over the loan, and you essentially transfer the balance over to them with the same low rate that you were paying on it. Now, there are some specifics that would need to be addresses, such as novation, but that’s something you can discuss with your agent. Involving a loan assumption will certainly make the transaction more complex, but some properties it could make all the difference between a quick sale and one that languishes.
5. Take Care of Minor Repairs and Upgrades Before Listing
The worst time to shop for repair estimates is when you have limited time. Your agent should be able to recommend whether any minor repairs or upgrades will net you a higher sales price. It’s important to look at things from the Buyer’s perspective and not your own. Consider if you were the one shopping for a home and found that it needed a repair. Would you estimate on the low end of the scale, or would you budget for a worst-case scenario? That’s exactly what your buyer will do, so it pays to get rid of the inexpensive repairs while they remain so. Otherwise, the Buyer will request that you do them or, more likely, provide them with a credit to do it themselves which will end up costing you more.
6. Set the Right Price
We know this is a touchy subject. And we realize that we are not the exactly the best messenger for this. After all, what would we think of a lower suggested asking price from a salesperson that was only paid when the item sold? That’s a reasonable doubt. But we believe that you are reading this because you trust us to some extent. Either that, or books have become far too expensive. No matter the reason, it’s important to consider what price it is that we suggest: the price for which the house can appraise. Any higher than that, and you run a very real chance of your deal falling apart short of the finish line. And believe us, nothing can be worse than putting a home back on the market a second time. Inevitably, subsequent buyers will question what happened and whether something else was involved. Just as nervous pets don’t make the best play mates, neither do skittish buyers make the strongest offers.
7. Don’t Pay Your Agent More Than Necessary
This goes along with the first suggestion of interviewing multiple agents. Be sure to ask agents how much they charge, whether there are any additional fees, and whether they provide you with a written estimate, or Seller Net Sheet. There are basically three types of agents. Those that charge too much, those that charge just enough, and those that don’t charge enough. The agents that charge too much typically work with fewer clients. That translates into fewer closings which results in less experience and weaker knowledge of the market. Agents that charge too little, have more customers than they can handle. Their performance suffers as a result, as does their focus on your transaction. Daymark Realty agents are right in the middle. We offer more services than most agents, charge a fair and reasonable fee, and are well aware of market dynamics to give you the best possible experience. Like the tale of Goldilocks and the Three Bears, our clients feel that our fees are just right.
8. Look Into Home Warranties
One way of saving money when selling your home is to consider offering a home warranty. We talked earlier about how buyers tend to overestimate the cost of repairing something. Why not eliminate that concern entirely? By using a home warranty, you provide assurance to the buyer that everything will be alright. And if something does break during their first year of ownership, someone will step in make it right. Home warranties aren’t ideal for every situation, but they can be a useful strategy to offset buyer concern and avoid the cost and stress of making repairs.
9. Offer a Repair Credit Instead of Doing Repairs
Many home sellers do not know that you can offer the buyer a credit for repairs at closing instead of actually doing the repairs. Few things are as stressful as trying to arrange repair estimates from unreliable contractors and trying to complete everything in a very compressed timeframe. That’s why we suggest that you offer buyers a repair credit instead of doing the repairs yourself. This approach may not save you much money, but it will save you a great deal of time and frustration and well, that’s worth its weight in gold. Wouldn’t you agree? Let’s not even mention the fact that some repairs reveal additional repairs that are more costly than the original issue. Oh boy, let’s move on.
10. Check Your Settlement Prorations
Okay, here is where the rubber meets the proverbial road. Just before closing, each party to a transaction will have the opportunity to review their settlement statement. Whatever you do, don’t skip this step! First, you want to make sure that the charges and credits all match what you expected. Second, make sure the allocation of shared expenses are properly divided. Some attorneys use funny math with prorations, such as simplifying prorations to a 30 day month even though the month in which you are closing has 31 days. Also, don’t simply accept closing costs at face value. Be sure to read the Seller Engagement Agreement that the closing attorney will likely ask you to sign before they begin work. Remember, the closing attorney in North Carolina in most cases is selected by the buyer. You, the seller, had no say in picking them and you likely have no idea what they charge for a routine paperwork. We’ve seen some attorneys charge twice the cost of our preferred attorneys, Willard and Willard and City of Oaks Law. As a seller, you don’t have to accept unreasonably high fees. Dispute them with the attorney. After all, the last thing the attorney wants to do is jeopardize the transaction, and his clients’ satisfaction, over a few (hundred) dollars.
If you are thinking of selling your home, Daymark Realty offers the most affordable solution in the Triangle without charging more than necessary. Work with experienced agents, from a name that you trust, Coastal Credit Union, and stop paying more than you have to. Visit our page, Save Money When You Sell a Home. And for a brief comparison of our services, please visit Service Comparison with Traditional Brokers.
Verify the agent is a Realtor®:
You can use this link to verify that the agent you plan to hire is a member of the State and National Association of Realtors®: https://www.ncrealtors.org/find-an-nc-realtor/