selling real estate

Pricing your house to sellWhen trying to sell a home, correct pricing of that home is crucial, and the psychology that goes into determining a price can leave your stomach doing backflips.

Should you start out high and see if you can get top dollar? Should you start low knowing the competition out there is tough? If you just drop your price later, how many buyers did you miss out on at the start?

The decision to price your home is extremely important. Pricing your home not only dictates how much money you will make, it also dictates how many people will see your home. Here are a few things to consider before you set the price of your home.

Change Your Mindset

Emotional attachment to a home can end up costing a home seller thousands of dollars. Sellers tend to price their homes too high because they are stuck in the mindset of: My home is worth more because it’s mine.

This is called the “endowment effect” and is a psychological human emotion. We tend to think, even with something of little value, since we own it, the item is worth more than it really is.

Buyer’s don’t really care how much you paid for your home when you bought it. They care about what comparable homes are selling for today. This is a large step for home sellers to overcome.

You can’t price your home to sell for what you owe if the market says it’s worth less. Once you understand this and overcome the emotions of pricing your home, you’re on your way to a successful sale.

Identify your homes true value and price it just below.

For example; if your market analysis comes in at $250k, pricing your home at $245k will give you a lot more activity.

Even though you’re priced slightly below market value, with the amount of activity that price will bring, you may end up getting multiple offers which will drive the price back up. If you don’t get multiple offers, you will at least get an offer close to asking price.

How fast do you need to sell?

What’s more important to your situation: Time or money? If you need to sell within 30 days, price your home lower than if you could hold out for 60-90 days. You may get less with the 30 day sale, but you will get rid of the home faster. If you price for 90 days, you may get more money, but you’ll lose out on time.

If you sell within the first 90 days, you’ll be okay. If you’re home sits longer, you could end up losing a lot more money and time than anticipated with your original list price. Pricing your home too high will end up netting you less money in the long run during a declining market. You will end up chasing lower prices, and you should try to avoid that situation if at all possible.

If your home sits too long, don’t be afraid to get aggressive.

The longer your home sits on the market the more stale it becomes to buyers in that price range. Obviously, after sitting for an extended amount of time, your home isn’t worth what your asking.

To get out of that “stale” market, take decisive action and drop your price a substantial amount. By doing this, you will attract new buyers in new price ranges. If you drop the price in small increments, it’s like dying a slow death by torture.

Buyers can see all your price reductions, and it shows you’re getting more desperate the more you cut the price. A quick, substantial cut in price is going to give buyers a real incentive to take another look at your property.

If, after all of this, you still can’t get your home sold, it may be time to take it off the market or consider a short sale.

If you can’t afford to price a home at a price that will allow it to sell, talk to your agent about the possibilities of a short sale if you feel you need to go that route.

Home and Commercial Inspections in the Columbia SC area is our specialty! Every year we help hundreds of clients save tens of thousands of dollars, by responsibly finding and exposing conditions that threaten property, value and safety. To learn how we may be able to serve you, please click and read, or call 803-261-5810.

Tax Tips If You Are Selling Your HomeSelling your home and moving can be expensive, but many of the costs may be deductible. The IRS offers 10 tax tips on deducting some of those selling expenses or profits.

  1. In general, you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale.
  2. If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).
  3. You are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.
  4. If you can exclude all of the gain, you do not need to report the sale on your tax return.
  5. If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses.
  6. You cannot deduct a loss from the sale of your main home.
  7. Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude.
  8. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.
  9. If you received the first-time homebuyer credit and within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full credit is due with the income tax return for the year the home ceased to be your principal residence, using Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. The full amount of the credit is reflected as additional tax on that year’s tax return.
  10. When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.

For more information about selling your home, see IRS Publication 523, Selling Your Home. This publication is available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

Home and Commercial Inspections in the Columbia SC area is our specialty! Every year we help hundreds of clients save tens of thousands of dollars, by responsibly finding and exposing conditions that threaten property, value and safety. To learn how we may be able to serve you, please click and read, or call 803-261-5810.

When you decide to sell your home, you need to know what the cost basis of the home is, because it needs to be noted on your income tax return for the year you sell your home.

When you are considering selling your home, taxes are probably not the first thing on your mind. Taxes are involved in some way, whether you gain or lose money from a real estate transaction. Enter the term ‘cost basis.’

In the United States, cost basis is a tax law term. The original price you paid for your home is what the basis is considered. Factors such as a home’s appreciation or depreciation is where the cost portion of the calculation is taken into account and also adjusted for.

You, as a taxpayer, will end up paying taxes on a capital gain when you sell your property and your home has appreciated in value. Subtracting the money paid for the property’s original value or basis, this is equal to the amount of money you gained on the sale. You, as a taxpayer, will end up saving on taxes from any loss you may have suffered if, when you sell your property, your home has depreciated in value. With the property’s original basis factored in, this is again equal to the amount of money you lost on the sale.

It does not matter if the property is encumbered by a debt in this equation. The home’s original cost, plus or minus any profit or loss realized at its sale, is all that matters. Any costs associated with the selling of your home can also be subtracted. The calculation has the possibility of being a little confusing, even if the figures seem relatively straightforward, especially if you don’t have the strongest math skills. Contacting a tax specialist is the best way to ensure you understand your tax obligations.

You may qualify for a one time exemption on any gains when you sell your home, so again, consult with a CPA or tax professional for details on how your particular tax situation needs to be handled when you sell your home.

Home and Commercial Inspections in the Columbia SC area is our specialty! Every year we help hundreds of clients save tens of thousands of dollars, by responsibly finding and exposing conditions that threaten property, value and safety. To learn how we may be able to serve you, please click and read, or call 803-261-5810.