Should You Refinance or Sell Your Home?

Homeowners can often reach a financial fork in the road when they must decide to either refinance their existing mortgage or sell their home. Each route has its respective advantages depending on your financial health, the mortgage rate market, and the future needs of your household.

Refinancing vs. Selling

When working to ease the financial burden of your existing mortgage, you have two options: refinance or sell. Refinancing your home allows you to renegotiate the terms of your loan and lower your monthly mortgage payment, while selling has the potential to put enough cash in your pocket to pay off your mortgage entirely. So, how do you decide between the two? Understanding a bit more about each option can help you determine which is best for you.

Refinancing Your Home

There are a few reasons why homeowners will typically refinance their mortgage, the most common of which being falling interest rates. Lower interest rates, after a reassessment of your mortgage, equate to lower monthly mortgage payments and significant savings over the life of the loan. If your finances have improved since you initially secured your mortgage—for example, your debt-to-income ratio has improved, or you’ve bumped up your credit score—you may be able to lock in a better rate with your lender.

Refinancing your home could also put cash in your pocket. “Cash-out refinancing” allows you to accept a mortgage for more than your principal balance and use the extra money at your discretion. Typically, homeowners will use such funds for large expenses, such as a major renovation or home improvement project.

Homeowners with Adjustable-Rate Mortgages (ARMs) will often refinance and switch to a Fixed-Rate Mortgage due to fluctuations in interest rates, locking in an established rate for the remainder of the loan term.

Refinancing in order to change the length of the loan can be beneficial as well. By switching from a 30-year mortgage to a 15-year mortgage, you could save a considerable amount of money on interest over the life of the loan. If you’re looking to lower your monthly mortgage payment, you could lengthen the loan term. For example, if you’ve been paying off your 30-year mortgage for ten years but are struggling to keep up, refinancing could lower your monthly payment. However, doing so means you’ll be paying for an additional ten years’ worth of interest.

Keep in mind that refinancing your home involves getting a new mortgage, so you’ll have to go through the qualification process again. Assess your financial health and equity before you apply. Once you’re ready to move forward, your Windermere agent can recommend a few trusted lenders or mortgage brokers to provide you with a quote.  

 

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Selling Your Home

Alternatively, you can sell your home. Your agent will conduct a Comparative Market Analysis (CMA) to determine the value of your home, accounting for the various factors that influence home prices including seasonality, location, market conditions, and your home’s features.

Although you stand to receive a lump sum of cash, selling your home comes with its own set of costs. Paying for repairs, home inspections, staging expenses, agent commissions, not to mention buying or renting your next home. This can add up, so it’s important to budget properly. Selling your home also means you’ll be uprooting the life you and your household have established there, so it’s important to have a plan for your next steps before the “For Sale” sign goes in the ground.

For more information on the selling process, connect with an experienced, local Windermere agent today:

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What Happens When a Buyer Backs Out of a Real Estate Transaction?

Yes, the dream scenario for selling a home is that the entire process goes off without a hitch. But the reality is that sometimes there will be bumps in the road, and the best thing you can do is work closely with your agent to be prepared for them. One such obstacle is when a buyer decides to terminate their contract to purchase your home after all the terms have been agreed to. So, what’s a seller to do? Here’s a quick overview of how to prepare for this situation and the important role contingencies play when selling your home.

What Happens When a Buyer Backs Out of a Real Estate Transaction?

To be clear, a buyer can back out of a real estate transaction. The outcomes of doing so vary greatly. In certain cases, the buyer walks from the table with all their money intact. In others, they will have some fiduciary responsibility to the seller. If a buyer is hesitant about purchasing a home, the best time to back out of the deal is before their offer is accepted. As things progress, the ramifications of a buyer backing out can get messier. Once the purchase agreement is signed by both parties, it becomes legally binding, and the sale of the property can proceed.

After your agent and the buyer’s agent agree on purchasing terms, the buyer will place their earnest money—a deposit of funds to indicate that the buyer is serious about their offer and intends to pay the seller—in escrow to make sure they distribute properly when the deal goes through. Whether the buyer is on the hook for the funds in escrow depends on the terms of the contract, how far along you are in the selling process, and the corresponding state laws where the home is being sold. If a buyer backs out of the deal for a reason that was not stipulated in the real estate contract, then the funds will typically go to the seller. Still, this scenario can leave sellers scratching their heads. It’s not as if they’ve done anything wrong, and they thought they had found the right buyer, only to have the carpet ripped out from under them at the last minute. So, how can you protect yourself when selling your home?

 

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The Importance of Contingencies

This situation highlights the importance of contingencies. Contingencies exist to protect buyers and sellers from the unknowns of a real estate transaction. Buyers will typically include contingencies in their offer to specify the criteria that will allow them to walk away from the deal unscathed and the timeframes for doing so. As a seller, it’s critical that you work closely with your agent to understand the terms of the buyer’s offer. Read about Common Real Estate Contingencies to understand the ins and out of the different contingencies buyers will generally tie to their offer.

What to Do After a Home Buyer Backs Out

Backup Offers

Backup offers are made with the knowledge that an existing offer is already on the table. They stipulate that if the first offer falls through, the second buyer’s offer is accepted. Talk to your agent about the possibility of accepting backup offers when you sell your home. Whether a buyer backs out due to buyer’s remorse, something they discover in the home inspection process, or for any other reason, backup offers can act as a remedy for their indecision by keeping the line moving to the next buyer.

If a backup offer isn’t on the table, the seller is left with the decision of whether to sell again. It’s true that a relisted home may elicit questions from buyers. They will want to know why the home is being relisted and what went wrong with the previous offer. It’s important to coordinate your relisting strategy with your agent and discuss what disclosures are appropriate. It may be discouraging to deal with a buyer backing out but remember that selling a home is all about finding the right fit. A buyer walking away doesn’t mean your home isn’t worthy of a winning offer, it just means that you haven’t found the right buyer yet.

For more information on selling your home and how to navigate buyers’ offers, connect with an experienced, local Windermere agent today.

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Selling Your Home: Capital Gains Tax

When you sell your home, you stand to receive an influx of cash. Though there are several costs associated with a home sale, you can likely still bank on the fact that you’ll be depositing a lump sum in the near future. But before you start planning how you’ll use the money or start looking for a new home, you’ll want to understand whether you fall under the criteria of the capital gains tax. If so, the profit from your home sale could end up being smaller than you expected.

What is a capital gains tax?

A capital gains tax is a fee on the profits gained from the sale of an asset. This tax appears in transactions involving various assets—bonds, stocks, boats, cars, and real estate. In real estate, it’s common for homes to appreciate, often leading to a situation where the seller sells the property for more than they originally purchased it. The capital gains tax on the sale of a home is assessed on the difference between those two prices.

Avoiding Capital Gains Tax on a Home Sale

  • The 2-in-5 rule: If you have owned the home and it has been your primary residence for two of the five years leading up to the sale, you can exclude up to $250,000 of gains if you’re single, or $500,000 if you’re married and file a joint return. If the profit exceeds these amounts, then the excess is reported as a capital gain. The two years of living in the home don’t have to be consecutive, nor do they need to be the final two years leading up to the sale.
  • Two-year window: You can claim the $250k or $500k exclusion as long as you haven’t already claimed it on the sale of another home in the past two years.
  • Cost of repairs/improvements: In the context of the capital gains tax, the “cost basis” of your home includes the purchase price, certain legal fees, improvement costs, and more. Including the expenses incurred making repairs and improvements to the home will increase the home’s cost basis, thereby reducing the capital gains.

 

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Paying Capital Gains Tax on a Home Sale

Sometimes, avoiding the capital gains tax may not be possible. If these criteria fit your situation, the gains from the sale of your home may be fully taxable:

  • The home you sold is not your primary residence
  • You owned the home or lived in it for less than two years in the five years leading up to the sale
  • You purchased the property through an investment exchange (known as a 1031 exchange)
  • You are subject to expatriate taxes
  • You sold another home within the previous two years and used the capital gains exclusion on that sale

Capital Gains Tax Rates

Capital gains tax rates break down into two basic categories: short- and long-term. Short-term capital gains tax rates apply if you owned the home for less than a year. The rate is usually the same as your ordinary income. For example; if you purchase a home, home values in your area go through the roof within the first few months, and you decide to sell right away to take advantage of the competitive market, you’ll be required to pay capital gains tax on the sale. Long-term capital gains tax rates apply if you own the home for longer than a year, and are taxed at 0%, 15%, and 20% thresholds.

 

For more information on the financial characteristics of a home sale, read A Guide to Understanding Escrow

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Landscaping Tips That Can Increase Your Home’s Value

When you own a home, there’s a natural desire to invest in landscaping projects that help beautify your yard. But for those who are preparing to sell, the emphasis should be on specific projects that boost your home’s curb appeal and add to its value. The following landscaping tips can help you position your home to sell at the best price. We also recommend talking with your agent about the best landscaping ideas for your home that buyers in your area are looking for.

Landscaping Tips That Can Increase Your Home’s Value

Flower Beds

Beautifying your flower beds is a matter of making improvements in two areas: the flower beds themselves and the border surrounding them. Flower-lined pathways leading toward your home’s front door help guide buyers’ eyes and create a natural aesthetic order to your front yard. Plant colorfully to inspire a vibrant look or choose fewer flowers for a more uniform consistency. Add fresh mulch or beauty bark to your flower beds to make them pop. Creating a border with stone, brick, clay, or another similar material will help delineate flower beds from grass while delivering a clean, refined aesthetic to your property.

If you’re designing new borders to your flower beds, think about the traffic patterns, the orientation of the house in relation to the rest of your neighborhood, and your front yard’s location to ultimately settle on the best sight lines. Spend time weeding the area where your border will go. To dissuade future weed growth, consider adding a thin layer of sand or gravel between the dirt and your border pavers. Finally, clean your hardscaping with an outdoor cleaner or pressure washer to get rid of built-up dirt and moss.  

 

Image Source: Getty Images – Image Credit: Elenathewise

 

Lawn Care

A fresh lawn will make a solid first impression on prospective buyers. Here are a few basic lawn care tips:

  • Fertilize at the appropriate time of year for your local climate
  • Set your lawn mower blades at the proper height to ensure you’re not cutting your grass too short
  • Water regularly to keep your lawn healthy

If you live in an arid climate, grass alternatives may be a more popular local choice. No matter where you live, once you’ve decided to sell, you can rest assured that spending time and energy on caring for your lawn will pay dividends once you’ve staked your “for sale” sign.

Landscaping Lighting

Once you’ve fixed up your garden beds and tended to your lawn, you’ve done well to ensure that your home’s landscaping will look its best—during the daylight, that is. To ensure that buyers feel the work you’ve put into your home around the clock, consider installing landscape lighting. This will help to put your home’s qualities on full display during the nighttime, while also adding a welcoming touch for potential buyers and passersby.

Front Porch

Add planters to your front porch to create flow from your front yard to your entrance. For the ultimate front porch aesthetic, think of ways that you can create symmetry with your planter boxes. Nest them along the borders of windows, select planter boxes with dimensions that compliment a seated bench, or place identical boxes on either side of your front door. This will direct attention to your home’s front entry and helps to instill that all-important first impression in buyers’ minds.

To learn more about quality landscaping projects, read our blog post on 5 Design Projects to Improve Your Backyard.

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How to Prepare for an Open House

To successfully sell your home, you need to attract buyers. This is why open houses are an integral part of the selling process: they allow buyers to experience the property for themselves and envision what life will look like in their new home. To prepare for an open house, you’ll need to work closely with your agent. They can advise you on what buyers in your area are looking for to increase your chances of selling your home.

How to Prepare for an Open House

The earlier you can begin prepping your home for an open house, the better, since getting it in prime showing condition will take time. Start by decluttering and organizing room by room. To truly get your home sparkling clean, you can’t miss those hard-to-reach areas like the baseboards, under your furniture, and your appliances.

To best position your home to sell, consider hiring a professional stager. A well-staged home helps it appeal to the widest possible array of potential buyers, not only for in-person showings, but in online photos as well. Professional staging is equal parts science and art. Stagers are experts in depersonalizing a home while maintaining its stylistic qualities to give buyers the opportunity to imagine the space for their own use. It isn’t just about psychology, though. Staging is a high-ROI expenditure that can add real value to your home.

It may feel counterintuitive, but your absence can be your greatest asset in making your open houses successful. Buyers will often feel uneasy in the presence of the seller as they tour, which will limit their ability to envision their own lives in the home and get excited about the prospect of ownership. Accordingly, you may need to arrange for temporary accommodations during the times your home is being shown. It’s helpful to solidify these plans several weeks in advance to avoid an eleventh-hour scramble.

 

Put buyers in a feel-good mood with Windermere’s “Open House” playlist on Spotify. Click the image above to listen.

 

Working with Your Agent

Your agent will be your greatest asset in preparing for open houses. They are experts in understanding how to effectively market your home and how the local market conditions will impact their marketing plan. Once you know it’s time to sell, they’ll analyze data to accurately price the property and keep it competitive in the current market. They’ll also work with you to schedule open houses at the times when buyers are maximally available and actively searching for listings.

Your agent will also help you to stay safe while selling your home. The reality of open houses is that you’re opening your doors to an influx of unfamiliar faces, and it’s worth it to take a few safety precautions beforehand. Perform a thorough walkthrough of your home with your agent to make sure all valuable belongings, medications, family heirlooms, and other important items have been properly secured and/or removed. Once you’ve given your home a clean sweep, discuss your process for screening potential buyers.

For more resources on preparing to sell your home, our Home Selling Guide has everything you need: selling tips, moving checklists, our Home Worth Calculator, and info on how an agent can help.

Seller Essentials – Home Selling Guide

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Common Real Estate Contingencies

Contingencies help to spell out the specifics of a real estate transaction by dictating what must happen so the contract becomes legally binding. If certain conditions aren’t met, the applicable contingency gives the buyer and the seller the right to back out of the contract per their agreed-upon terms. When selling your home, a buyer may make their offer with contingencies attached. Here are some common contingencies you might see in a buyer’s offer and what they mean for you.

Common Real Estate Contingencies

Home Inspection Contingency

A home inspection contingency allows the buyer to have the home professionally inspected within a certain window of time. If the buyer finds outstanding repairs that need to be made, they can negotiate them into their offer. If the seller chooses not to make the repairs outlined in the buyer’s home inspection report, the buyer can cancel the contract.

As a seller, it’s important to be transparent in listing any issues with the home. This is why many sellers find a pre-listing inspection to be beneficial: it provides transparency about the home’s condition ahead of time and can help to streamline the buying process, which can be especially helpful when selling in competitive markets.

Financing Contingency

Also known as a “mortgage contingency,” a financing contingency gives the buyer a specified period of time to secure adequate financing to purchase the home. Even if a buyer is pre-approved for their mortgage, they may not be able to obtain the right loan for the home. If they are unable to finance the purchase, the buyer can back out of the contract and recover their earnest money, and the seller can re-list the home.

The seller won’t be on the hook if the buyer fails to cancel the contract. Even if the buyer is not able to secure financing by the agreed-upon date, they are still responsible for purchasing the home if they do not terminate the contract.

 

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Appraisal Contingency

An appraisal contingency states that the home must appraise for, at minimum, the sales price. It protects the buyer in that it allows them to walk away from the deal if the property’s appraised value is lower than the sales price, and typically guarantees that their earnest money will be returned. This can be an issue in certain markets where demand is driving prices up to numbers that appraisals don’t reflect. Depending on the agreement you make with the buyer, you may be able to lower the price of your home to the appraised amount and sell it at that price. When selling your home, remember that there is a difference between appraised value and market value. An appraiser’s value of a property is based on several factors using comparative market analyses, whereas market value is what buyers are willing to pay for a home.

Home Sale Contingency

If a contract includes a home sale contingency, it means that the buyer is tying their purchase of a home to the sale of their existing one. Though it is common for homeowners to buy and sell a house at the same time, attaching a home sale contingency to an offer does create some added variability in a real estate transaction that sellers should be aware of before accepting such an offer. This contingency allows buyers to sell their current home and use the proceeds to finance the purchase of their new one. Although you will have the right to cancel the contract if your buyer’s home is not sold within a specified time, you’re still waiting on them for the deal to go through, which means you could potentially miss out on other offers while you wait.

Title Contingency

Before the sale of a home goes final, a search will be performed to ensure that any liens or judgements made against the property have been resolved. A title contingency allows a buyer to raise any issues they may have with the title status of the property and stipulates that the seller must clear these issues up before the transfer of title can be complete. If an unpaid lien or unpaid taxes turn up in the home’s title search, this contingency also allows the buyer to back out of the deal and look for another home. A majority of sellers will pull a pre-title report to provide transparency for a smooth transaction.

These are just some of the contingencies you may encounter in a buyer’s offer. Work closely with your agent to understand the terms of these contingencies and how they impact the sale of your home as you go about finding the right buyer. For more information on the process of selling your home, read our blog post on common mistakes to avoid:

7 Mistakes to Avoid When Selling a Home

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Working with a Real Estate Agent to Sell Your Home

A real estate agent is an invaluable asset. They will work with you to get your home sold for the best price and in a timely manner. Before you find the right agent to sell your home, it’s important to understand how you can work together toward a successful sale. The following information will help you prepare for your discussions with your agent.

Working with a Real Estate Agent to Sell Your Home

Before you choose a real estate agent, determine your wants and needs and create realistic goals. Even though your agent is the one with the expertise, the tools, and the know-how, no one knows your home like you do, and the clearer you can communicate your aspirations, questions, and concerns to your agent, the more you’ll inform their decision-making process. Even something seemingly small, like sharing your preferred method of communication, can help them understand how you can best work together.

A great first step is to determine your pricing goals for your home. Your agent will conduct a comparative market analysis (CMA) to determine the value of your home, which will allow them to price it accurately. If there is a large discrepancy between what you were hoping your home would sell for and its actual value, your agent will be able to explain the factors that influence home prices and clarify whether it’s the right time to sell.

Prepare a list of all remodels and renovations you’ve completed on the home so your agent can understand how much you’ve invested in the property and the scope of work it took to get it in its current condition.

You should also set expectations for open houses and showings. Your agent will go to great lengths to effectively market your home, but by understanding your schedule ahead of time, you’ll be able to better communicate your availability when it comes time to engage with buyers. Talk to your agent about how to prepare your home for open houses and tours, the process for screening potential buyers, and which safety precautions to take before conducting walkthroughs.

Once you’ve found a buyer for your home, your agent will work with you through the purchase and sale agreement. This contract will outline the terms of the agreement between you and the buyer, spelling out the finer points of the transaction, such as the receipt of earnest money, any addendums and/or contingencies, inspection terms, etc. Your agent will also negotiate with the buyer’s agent to determine a closing date and will communicate which settlement fees you may incur, if any.  

 

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Benefits of Working with a Real Estate Agent

Working with an agent is the best way to ensure that your home is accurately priced. Incorrect pricing can be one of the costliest mistakes in selling a home. Beyond their talent for number crunching, your agent will be there to hear your ideas, answer your questions, and allay your fears. Selling a home can be an emotional roller coaster but having an agent by your side through it all can make it a much smoother ride.

Not only are real estate agents licensed professionals who possess a wealth of knowledge about the process of selling a home and how to navigate your local market conditions, but they are also well-connected. Selling a home requires looping in multiple professionals from a variety of disciplines. Whether it’s a lawyer, home inspector, appraiser, remodeling contractor, etc., your agent can help you find the professionals you need throughout your home selling journey.

Now that you know what to expect when working with your agent, learn more about how you can identify the right agent for you.

Ten Qualities to Look for in Your Real Estate Agent

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What Is a Bridge Loan?

With so much in flux during the period between selling a home and buying a new one, short-term financing can provide some calm among the storm. With the fate of two properties up in the air, those who are selling a home will often look to secure a bridge loan to bridge the gap between the sale of their existing home and the purchase of a new one. So, is a bridge loan right for you? The following information is meant to help you decide whether it is a fitting solution.

What is a bridge loan?

Bridge loans have shorter terms—generally up to one year—than mortgages and often come with higher interest rates. Bridge loans allow buyers to borrow a portion of the equity in real estate they already own (usually their current primary residence) to use as a down payment on the purchase of a new residence. Borrowers will commonly package the two loans together, in which they borrow the difference between the amount they owe on their current home and a percentage of the home’s value (often 75% or 80%). Just like a home equity loan, a home equity line of credit (HELOC), or a mortgage, bridge loans are secured by your current home as collateral.

 

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Bridge Loans: Pros

  • Once your home sells, you can use the proceeds to pay off the bridge loan, leaving you with only the mortgage for your new home.
  • Bridge loans can get you cash quickly to expedite the transition from one house to another.
  • With a bridge loan, you can expect a shorter application and loan-approval process than a typical mortgage.
  • A bridge loan offers you the opportunity to buy a new house before your current one sells. As a buyer, this allows you to make a contingency-free offer on a new house, meaning you can still make the purchase without having to sell your current home first. This can be a useful resource in a seller’s market, where sellers may view an offer without contingencies as favorable amongst the competition.

Bridge Loans: Cons

  • If your home doesn’t sell in the allotted term, you’ll be left with making payments on your current home’s mortgage, your new home’s mortgage, and the bridge loan.
  • Bridge loans usually come with higher interest rates than a typical mortgage and come with their own set of costs, including interest, as well as legal and administrative fees.
  • Having a low debt-to-income ratio, a solid credit score, and a considerable amount of equity in your current home are all required to secure a bridge loan, so qualifying may be out of reach for some homeowners.

Alternatives to Bridge Loans

Home equity loans, home equity lines of credit (HELOCs), and personal loans are all viable alternatives to bridge loans that can still create a pathway to purchasing your new home. Be sure to compare the costs associated with each line of financing before making your decision.

For more information on how to handle the transitory period between selling your current home and buying a new one, connect with a local Windermere Real Estate agent today:

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What are Closing Costs?

The closing process in a real estate transaction finalizes the terms of an agreement between the buyer and seller, leading to the transfer of the property’s title. This step of the buying/selling process comes with its own set of costs. Before a buyer can hold the keys to their new home, and before a seller can celebrate the sale of their property, closing costs must be paid.

What are closing costs?

The term “closing costs” refers to the various expenses, taxes, and fees paid by both the buyer and the seller to finalize a real estate transaction. The purchase agreement—signed by both parties—will dictate the terms of how the closing costs are paid, but there are some standards about who pays what.

In general, buyers can expect to pay about 2-5% of the total purchase price in closing costs, while sellers’ costs can range anywhere from about 6-10%; the difference being that buyers are using extra cash to pay for their closing costs while the amount sellers owe is typically deducted from the proceeds of the sale of their home. Note—these percentages may vary depending on property taxes, insurance rates, and other factors involved in the transaction.

Closing Costs for Buyers

Typical mortgage-related closing costs for buyers include an application fee, an underwriting fee, and prepaid interest (the accrued interest cost between your settlement date and first monthly payment). If you make less that a 20% down payment on the home, you can expect to pay your lender for private mortgage insurance (PMI), as well.

Two main property-related closing costs for buyers are the appraisal and the home inspection. Lenders will require an appraisal to double-check that the value of the property matches your mortgage loan amount, which will typically cost you a few hundred dollars. A home inspection provides the buyer with a clear understanding of the home’s condition and what repairs need to be made, either in the future or before closing. In competitive markets (a seller’s market), it’s more common for sellers to conduct pre-listing inspections and for buyers to waive the inspection contingency to make their offer more appealing. Buyers will also pay a variety of title, insurance, attorney, escrow, and property tax fees to finalize the home purchase. Usually, your lender will require you to purchase homeowners insurance before settlement to protect against insured disasters that may occur on the property.

These are just some of the costs inherent in the closing process for buyers, which are a fraction of the total costs of buying a home. Working with a Buyer’s Agent will help you stay organized as you navigate through these crucial final steps of your home purchase.

 

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Closing Costs for Sellers

The seller will pay the agent commissions on the sale, typically to both the buyer’s agent and the listing agent. Agent commissions usually come in at around 4-6% of the sale price of the home. Other closing costs for sellers may include attorney fees, title insurance, a transfer tax, and the home’s property taxes for the current year if they have not yet been paid. The terms of the agreement will spell out what the seller is additionally responsible for, including HOA fees if applicable and any escrow money promised to the buyer.

Typically, escrow fees are shared between the buyer and seller, which cover the costs of distributing the funds involved in the transaction. In buyer’s markets, it’s more common for sellers to agree to pay for a portion of the closing costs—what is known as “seller concessions.” A common example of a seller concession is when the seller agrees to pay for repairs discovered during the buyer’s home inspection. 

 

So, whether you’re buying or selling a home, it’s important to remember that a series of fees and payments must be completed to finalize the transaction. Learn more about the costs of buying and selling a home here:

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Should I Remodel or Sell My Home As Is?

Homeowners who are preparing to sell are often faced with a dilemma about whether to remodel or sell their home in its current state. Each approach has its respective advantages and disadvantages. If you decide to remodel your home, it will likely sell for more; but the increased selling price will come at the cost of financing the remodeling projects. If you decide to sell without remodeling, you won’t spend as much money putting your home on the market, but the concern is whether you’re leaving money on the table.

Should I Remodel or Sell My Home As Is?

To answer this question, it’s important to understand the factors that could influence your decision and to work closely with your agent throughout the process.

Cost Analysis: Home Remodel vs. Selling Your Home As Is

Home Remodel

When you remodel your home before selling, you’re basically making a commitment to spend money to make money. So, it’s important to consider the kind of ROI you can expect from different remodeling projects and how much money you’re willing to spend. Start by discussing these questions with your agent. They can provide you with information on what kinds of remodels other sellers in your area are making and the returns they’re seeing as a result of those upgrades. This will help you determine the price of your home once your remodel is complete.

Then, there’s the question of whether you can complete you remodeling projects DIY or if you’ll need to hire a contractor. If hiring a contractor seems expensive, know that those costs come with the assurance that they will perform quality work and that they have the skill required to complete highly technical projects. 

According to the Remodeling 2021 Cost vs. Value Report (www.costvsvalue.com1), on average, homeowners paid roughly $24,000 for a midrange bathroom remodel and about $26,000 for a minor kitchen remodel nationwide, with a 60.1% and 72.2% ROI respectively. This data shows that, for these projects, you can recoup a chunk of your costs, but they may not be the most cost-effective for you. A more budget-friendly approach to upgrading these spaces may look like repainting your kitchen cabinets, swapping out your old kitchen backsplash for a new one, refinishing your bathroom tub, or installing a new showerhead. Other high-ROI remodeling projects may allow you to get more bang for your buck, such as a garage door replacement or installing stone veneer. To appeal to sustainable-minded buyers, consider these 5 Green Upgrades that Increase Your Home Value

 

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Selling Your Home As Is

Deciding not to remodel your home will come with its own pros and cons. By selling as is, you may sell your home for less, but you also won’t incur the cost and headache of dealing with a remodel. And since you’ve decided to sell, you won’t be able to enjoy the fruits of the remodel, anyway. If you sell your home without remodeling, you may forego the ability to pay down the costs of buying a new home with the extra money you would have made from making those upgrades.

Market Conditions: Home Remodel vs. Selling Your Home As Is

Local market conditions may influence your decision of whether to remodel before selling your home. If you live in a seller’s market, there will be high competition amongst buyers due to a lack of inventory. You may want to capitalize on the status of the market by selling before investing time in a remodel since prices are being driven up, anyway. If you take this approach, you’ll want to strategize with your agent, since your home may lack certain features that buyers can find in comparable listings. In a seller’s market, it is still important to make necessary repairs and to stage your home.

In a buyer’s market, there are more homes on the market than active buyers. If you live in a buyer’s market, you may be more inclined to remodel your home before selling to help it stand out amongst the competition.

Timing: Home Remodel vs. Selling Your Home As Is

Don’t forget that there is a third option: to wait. For all the number crunching and market analysis, it simply may not be the right time to sell your home. Knowing that you’ll sell your home at some point in the future—but not right now—will allow you to plan your remodeling projects with more time on your hands which could make it more financially feasible to complete them.

For more information on how you can prepare to sell your home, connect with a local Windermere Real Estate agent below:

 

  1. “© 2021 Hanley Wood, Complete data from the Remodeling 2021 Cost vs. Value Report can be downloaded free at www.costvsvalue.com.”

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