Selling Your Home? Get Your Financial House in Order First!
You’ve decided it’s time to sell your home. You’ve hired a real estate agent, you’re giving the kitchen a fresh coat of paint, packing up some boxes and looking at new homes for sale on line, dreaming about your next abode. Before you get too far down the road, take some time to prepare financially for selling your home, and potentially buying your next.
- Understand your credit status early. The process of selling or buying a home can reveal issues with your credit report such as outstanding bills or even errors. Thoroughly review your credit report to confirm that everything is up-to-date and accurate. This will prevent any unpleasant surprises down the road. Do this early in the process, even before you put your home on the market, as some issues can take up to a year to resolve.
- Understand your future housing budget. As you look for a new home, your options should be shaped by the down payment you can afford and your monthly housing budget Consider how much cash you will need on hand to purchase the new home, and the amount of proceeds you can expect from the sale of the current home. Likewise, whether you are upsizing due to a growing family or growing income. or a down-sizing empty-nester, consider all the ways a move can impact your housing budget A larger or newer home may seem affordable, but can come with higher property taxes, utilities, insurance, or HOA fees. A longer commute can impact your budget as well. Downsizing to a smaller space can also come with additional costs like property taxes and HOA fees.
- Avoid surprises by getting inspections and key reports early. Before putting your home on the market, consider having home, pest, and roof inspections completed (in some states this ls required). Then you can proceed through the selling process either conducting needed repairs, or offering potential buyers full disclosure of any issues. This is also a good time to acquire HOA disclosures and determine the presence of any liens on the property, another step in avoiding any
- Create a budget for selling your home. The old adage “it takes money to make money” applies to selling your home too. Whether you plan DIY projects to freshen the home and yard, need to do major repairs, or plan to hire a professional home stager, selling your home can cost anywhere from a couple of hundred dollars, to a few thousand. Set a budget for what you are willing to spend. Your real estate agent can advise you as to where to invest those dollars to get the most bang for your buck. When the home sells, you also need to plan to spend 5-6% of the purchase price to cover both real estate agents’ commissions (typically the responsibility of the seller). Consult with your agent to determine if other expenses need to be planned for, such as property transfer taxes, or paying for the buyer’s home warranty.
Selling your home is a stressful, but exciting time. These steps to will help you financially prepare for your next new address. For more financial tips and advice, contact us.