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There are a lot of mistakes sellers can get into when they put up their house for sale. There was a seller in Virginia who had a half bath that was originally placed at the front of his house. He thought that it would be better if it was moved to the back of the main level. All the other similar models had the powder room in the same place for the past 20 years. It cost him thousands of dollars to move it, thinking it will get his house off the market sooner, but it didn’t. It became an expensive mistake.

Sid Davis, a real estate broker and author of “A Survival Guide to Selling a Home,” points out seven costly mistakes that sellers often make with regards to selling their home. In my business, I’ve seen each one of these mistakes played out and it just makes me shake my head as to why, sellers forge ahead with unwise strategies, instead of listening to the voice of an experienced professional, he says.

Sid Davis, real estate broker and author of the book “A Survival Guide to Selling a Home,” points out seven costly mistkaes that sellers make with regards to selling their home. In my business, I’ve seen each one of these mistakes played out and it just makes me shake my head as to why, sellers forge ahead with unwise strategies, instead of listening to the voice of an experienced professional, he said.

• Mistake 1: Putting your home on the market before it’s ready. This usually happens because the seller is in a hurry to sell the house or the seller did not prepare early. And so, repainting is done while the house is shown. Or possible buyers view the house with a carpet that obviously needs to be replaced already. Presentation is vital. Prepare the home before putting it up for sale.
• Mistake 2: Over-improving the house for the neighborhood. Don’t make additions, bump-outs and upgrades that will make the house stand out from among its competition in a way that it becomes an anomaly rather than a good addition to the community.
• Mistake 3: Pricing the home based on what the seller wants to earn net. This is a bad pricing motivation. The sale price is dependent on the market climate and not on what the seller wants. Sellers can control the asking price but not the sales price.
• Mistake 4: Choosing an agent based on non-business factors. If you want to sell your house fast and with good terms, choose an agent because of their good track record, not because they’re your relative or friend.
• Mistake 5: Getting emotionallhy involved in the sale of the house. This is one of the biggest challenges that sellers face. When you decide to sell your home, you’ll need to think of your home as a commodity – prepare it as a commodity, market it as a commodity, and price it as a commodity. Many potential buyers will go to your house and scrutinize it. Don’t feel bad, they are only judging it based on their preferences.
• Mistake 6: Covering up or not disclosing problems. Most states have a property disclosure/disclaimer form. You can be sued for a leaky basement or wiring problems discovered 30 days after settlement.
• Mistake 7: Not getting your ducks lined up before you sell. This means getting your financing ready, making sure there’s no pre-payment penalties on your mortgage, monitoring your local market. If according to local market, you sell first before buying or vice vers, do the same.

Don’t fear making these mistakes. There are actually things you can do to avoid them. Learn from professionals who made resources like this for you to learn from.

When you sell your home, you can’t expect to take home all of the sale price. There are many fees to pay – commissions, taxes and miscellaneous and they can take out up to 7% of the sale price.

How do you determine your net profit? When you receive an offer, your real estate agent will give you a Seller’s Estimated Net Proceeds worksheet, which will give you an idea of all the costs that will be deducted when you close.

Here are some of the costs that could are usually deducted from the sale price. They may vary depending on yoru state.

• Mortgage payoff balance.
  They can include your own home loan, second mortgages and home equity lines of credit.  
• Loan payoff fee.
  Some lenders charge an administrative fee to pay off your loan.
• Lien release document.
  If you need to pay for a contractor, court judgments or for property taxes, you’ll need to settle them first before you could close the sale.
• Prepayment penalty.
  Ask your lender if you’ll need to pay for a prepayment penalty if you pay for your loan early.
• Recording fees.
  If you previously loaned on the house, you’ll need to pay this fee to show that you’ve paid for it already.
• Commissions for agents.
  This is the fee you pay to both your agent’s brokerage and your agent’s brokerage. Usually this takes off 6% from the sale price. This amount is split by the two brokerage and they are in charge of paying each agent.
• Notary fees.
  You pay a notary to confirm your identity and verify the documents.
• Escrow fees.
  The escrow serves as a third party. An escrow ensures that the money is protected while negotiations and processing of necessary documents are still ongoing. You could split the escrow fee with the buyer.
• Title search fees.
  Before the sale of a home could be finalized, a title company does a search on public records to verify if the property is free from any issue and can be sold.
• Seller concession. 
  You and the buyer might agree to the price of a house but the buyer asks for a 3 percent closing cost concession.  3% is given back to the seller to pay for the closing costs.
• Repairs.
  If repairs are necessary, you’ll need to set aside a portion of the sale to spend for it. Sometimes it’s the buyer who requires it and sometimes, the lender.
• Home warranty.
  There are times when the buyer asks the seller to pay for a home warranty which offers protection for the buyer’s first year in the house.
• Termite letter. 
  Some states require this. It indicates that the house is free from termites.

There may be more costs not mentioned here. It’s best to ask your real estate agent so you can anticipate and prepare for it.

Buyers in general are more attracted to houses with fireplaces. They give a warm and cozy feel. They usually become the centerpiece of a room. Fireplaces add to the aesthetic appeal of a house.

They also keep houses warm during cold times. Even though there are already other possible sources for heat, it can still come in handy when there is no power during storms.

There are other states like California where a house a house needs to have a fireplace in order to be sold. But Gopal Ahluwalia, director of research for the National Association of Home Builders, says, “you probably don’t need one more than three days a year.” He says, “lifestyle is guided by the conditions of the economy. When you have money left over, you want to spend it on things you don’t need.”

Now that houses have become expensive and people are looking for ways to be cost-effective, are houses with fireplaces still popular? Is it worth the investment? According to experts, a fireplace can be paid for over time in a 30-year mortgage. And there are lower interest rates available.

Kira McCarron, marketing director of Toll Bros, which builds luxury houses in almost 20 states says, “The concept of fireplaces has changed. The shift from masonry to prefab designer boxes has put fireplaces in bathrooms, dining rooms and bedrooms, as well as living rooms and family rooms.” You can even find fireplaces on walls of entertainment rooms, below big-screen televisions, “so that you have your choice of what you want to see,” she says.

This is all made possible by technology. Now we have gas fireplaces because it is already possible to vent gas outside through a wall without a traditional chimney. Flexible pipes allow gas to go to the units. Usually houses have both – a wood fireplace in the living room and gas on the other rooms.

Burning wood can cause health and environmental problems. According to the U.S. Department of Energy, wood-burning appliances and fireplaces can release large quantities of air pollutants like nitrogen oxides, carbon monoxide, organic gases, and particulate matter. They can cause serious health problems particularly to children, pregnant women and those with respiratory problems. These chemicals have properties similar to cigarette smoking that are associated with cancer. Many areas consider smoke from wood burning as one of the major cause of air pollution.

Because of the availability of vent-free fireplaces, homes can now enjoy having several units instead of just one. However, vent-free appliances also come with safety concerns. In fact some states ban the use of vent-free fireplaces. And even in states where it can be used, some county government prohibit its use.

According to the U.S. Department of Health and Human Services the key to reducing health risks linked to vented and unvented heating appliances is proper maintenance.

Contractor John Burke puts a priority on safety when he installed a vent-free fireplace in his house. “There had to be a constant supply of fresh air in that house to guarantee safe operation,” Burke says. “Fortunately, the house was old and drafty, and there was never an issue.” The unit he bought came with a carbon monoxide monitor and an oxygen-depletion sensor. Once the level of oxygen in the room reaches a dangerous level, the fire turns off immediately.”Never leave a gas fireplace running when you aren’t in the room,” Burke says. “And make certain that you shut it off when you go to sleep for the night.”

Usually a gas fireplace costs between $600 to $3,000, excluding installation. Electric fireplaces usually cost between $1,200 to $1,500, but you can expect it to generate enough heat to take the edge off one or two rooms.

When you have an older house, you’ll have a problem with chimney lining, says developer Mark Wade. He rehabs older city homes. Home inspectors suggest that stainless-steel liners be installed in old chimneys. However, it will cost a lot. A stainless steel installed from fourth floor to the basement typically cost $3,000 for about 1 1/2 hours’ work.

Determining the price of your home is crucial to the sale. Wrong pricing could either cause your house to stay longer in the market or could mean getting less from the actual value of your home. This is why sellers opt to pay $300 to $400 to have their homes appraised before putting it on the market, says Alan Hummel, past president of the Appraisal Institute and chief appraiser for St. Paul, Minn.-based Forsythe Appraisals LLC. He said presale consultations in their firm increased in the first quarter while the real estate market for residential properties slowed down and properties in the market increased.

Real estate agents can also do the appraisal for you. But going to an appraiser will give a more accurate and unbiased assessment. Usually, agents also turn to appraisers or suggest this to this clients especially if the house has stayed in the market for quite some time.

The appreciation for a more accurate pricing came just a few years ago. Gone are the days when you can just quote a price and see how it goes. “Now you’ve got to be competitive and you have to know that the offers coming in are reasonable,” Hummel said.

He adds, if a property spends too much time on the market, the price it will be able to command often decreases, some buyers will question the reasons for the property’s inability to sell.

An appraiser will assess your home from a objective view, based on several factors like its location and the condition of the house. “We’re trying to react the way a typical purchaser would,” he said. The appraisal also will analyze the health of the local real estate market, giving homeowners more personalized expectations for selling their home—a feature especially important with the plethora of national news stories generalizing the real estate market, Hummel pointed out.

Appraisers sometimes use a cost approach where they determine the price of the house by comparing it to a new house with similar specifications. This approach is beneficial to sellers with newer homes because this gives them an idea of where their home stands in the new-construction front.

It will also be a good idead to look for the appraisal report before you bought your home, says Michael H. Evans, president of Evans Appraisal Service Inc. in Chico, Calif., and a fellow of the American Society of Appraisers. According to him, only a few people actually take time to review the paperwork when it’s done. Most buyers are just focused on buying the house. “They don’t go back and review that paperwork unless there’s a significant issue that needs to be addressed,” says Evans.

But reading through the report can actually save you from problems. It’s also a good idea for sellers to address this before putting the house in the market.The American Society of Appraisers shares with us some things you should know about home appraisals.

The appraisal report includes the following information

• The appraisal. It will give details about the house, a description of the neighborhood and comparison with other similar properties in the area.
• Evaluation of the area’s real-estate market;
• Major damage or possible problems that will affect the value of the house;
• An estimate of the length of time that the house will stay in the market

An appraisal report versus a home inspection

An appraisal is an opinion of the value of the house. It compares your house with similar houses that were sold. A home inspection report on the other hand, is on the lookout for flaws and damages in the structure.

Securing a copy of the appraisal

It is your right under federal law to have a copy. When you bought your home you paid for an appraisal. If you don’t have a copy, you can ask for it from your lender.

What to look for in the report

Pay attention to items on the report that have a negative adjustment. Those are the things you’ll need to change or replace to get a good offer. It could be an outdated kitchen or bathroom; adding another bathroom; or adding more space in the garage to fit another car.

The value of getting an appraisal before entering the market

The appraisal will help you pruce your house more accurately. If a seller’s askig price is more than the actual value of the house, it will cause the house to stay long in the market, which will eventually force the seller to sell their home at a very low cost just so they could already sell it.  

If you’re thinking of selling your home, prep up your kitchen. Homebuyers put a premium on the kitchen. Families do a lot of things in the kitchen – preparing meals, sharing meals, sorting through bills, and just hanging out.

According to a recent survey by SieMatic Corp., 85% respondents said that the condition of a home’s kitchen is a major consideration when making a purchasing decision.

You don’t have to give your kitchen a major overhaul. There are other things you can do to make your kitchen look attractive without tearing it down.

Give it a fresh paint. Painting your kitchen new is one, inexpensive way to prep it up. Choose a neutral color since potential buyers have different preferences.

Give your countertops a fresh look. Take a good look at your countertop. Does it need new tiles? Find inexpensive ways to improve it. It won’t cost much especially if your counter is not big. In terms of the color, again, keep it neutral.

Update the faucets. Nowadays, there are so many faucets to choose from. You can pick a stylish faucet to add a pretty and modern touch to your kitchen.

If you sell your house looking like a model home, chances are you’ll sell it for a good price. This technique is called home staging. Sellers acknowledge the importance of home staging that it has become a fast-growing profession.

“Staging is not decorating. Decorating is optional, staging is mandatory in order to sell the house for the most possible money in the shortest amount of time,” says home staging instructor Joanne O’Donnell. She has been teaching home staging courses for several years.

The concept was started by Barb Schwarz in 1972 who was then a realtor. She realized that houses that were prepared to be sold prior to putting it up in the market, sold better than those that were not. Today thousands of real estate professionals understand the importance of home staging.

“When we put your home on the market it is no longer your home; it is a product and we’re marketing it,” O’Donnell tells her students.

Home stagers start by taking a close look at the house inside and out. O’Donnell encourages her students to go around the house with the seller. As they go through the house, they should take notes of the things that need to be moved or taken out.

Even though home staging is about improving the appearance of the house, O’Donnell emphasizes that it’s different from interior decorating. “You can’t go out and buy new things for every problem that you have with a house,” she says. Home staging is about decluttering in a way that it looks attractive to the masses. “Clutter eats up equity”, O’Donnell often reminds her students. “The whole idea of staging is that you want to market to the largest number of people to get as many offers as possible,” says O’Donnell.

There are five important points to remember in home staging. O’Donnell refers to them as the Five C’s of staging – clean, clutter-free, color, creatively staged, compromise with the sellers.

Gerin Canin, a lawyer from New York is transitioning into a home stager. She says, “People don’t see that a lot of things that are in their houses are part of themselves and when you try to sell a house you want to make it as neutral as possible, not necessarily in the colors, but in the way it’s presented.”

“I think that when people sell their homes they don’t necessarily see their house as a potential buyer would see their house. They become attached to things. [The seller] doesn’t notice things that other people would notice. So I do think it’s important to have an opinion from someone else,” explains Canin.

Here are some tips from professional home stagers:

Inside the house :

• Clear the clutter
• Remove from sight extra appliances and wirings
• Put away family pictures
• Do what you can to give a lot of open space

Outside the house:

• Paint/Power wash
• Put shutters
• Plants, high, medium, low — with lots of color
• Add decks to improve the look

When you decide to sell your home, one of the things you’ll need to do is to determine an asking price. This can be difficult because you need to find a balance between attracting good offers and getting a high profit.

As you figure it out, you’ll learn about fair market value, which means the amount that you and the buyer can agree on (can be subject to some conditions). It is different from an asking price. 

If you work with a real estate agent, they usually begin by conducting a competitive market analysis of your home and giving you an estimate of the fair market value of your home which is based on the housing market in your area and how much similar houses in your area were selling for.

In areas like California and much of the West where the market is hot, you’re at an advantage. “The market has been gaining steam, and the seller is taking control,” said Nashat Benyamein, a broker in Long Beach, Calif. “Our average number of days on the market went from 30 days to 7 days or less.”

Overpricing sometimes also works to your advantage, but be careful; it might cost you more in the end. There may be several factors that can prompt you to set a high asking price –

• If you’ve made some improvements/additions. Don’t expect to get a full return for what you’ve spent on these projects. Some additions made that seem to suit your personal preference (like a new paint of your favorite color; custom-made fixtures; a sunroom) can actually work against you.
• Need for a lot of money;
• You’ll move to a more expensive house.
• You originally bought the house for an overpriced amount.
• You don’t have much knowledge with regards to factual comparable sales.
• You want bargaining room.
• The move isn’t necessary.

However if you’re in a neutral market like Minneapolis, you need to be careful in setting the selling price.

“While a few select neighborhoods are experiencing good activity, the market generally is favoring buyers,” said Mary Jo Oren, a Realtor in Minneapolis, Minn. “Price reductions are becoming more common and sellers are having a tough time adjusting to fewer offers, fewer multiple offers and increased market time to sell. Buyers are less emotional and not afraid to offer significantly less than list price plus ask for additional seller participation.”

Usually, the asking price is 1 – 3% higher than the market value. You should expect negotiations to take place until you and the buyer reach a price you can both agree on. If your asking price is a lot higher than the market value, you won’t have much offer and your house will stay long in the market, reducing its value eventually. Some buyers wait until sellers reach a point where they seem desperate to sell their home.

Think about the outcome you want. Do you want to sell quickly or you prefer to get as much profit as you can? Is the amount being suggested by your agent fair enough for you? If you were the buyer, would you buy it with the price you set?

You, as owner of the house will have a hard time assessing your house in an objective manner. Bring in some friends and relatives who can help you on this. A third party can help you see your house with all positive and negative points. This is essential in determining the selling price for your home. You should also compare it to the price of comparable houses in your area.

Before you put up that “For Sale” sign, make sure that your house is ready for showing. First impressions are very important. You need to attract the buyers at first sight so you can catch their interest.

You may think your effort won’t be necessary especially if you’re in a hot market. But a good first impression will get your house off the market sooner and will allow you to sell your home at your desired amount.

Here are some things you can do to make a good first impression:

• Maintain or improve your front landscaping.
• Put a new and colorful welcome mat at the front door.
• Add a nice, big potted plant to the side of the front door.
• Give your door a fresh coat.
• Put away toys, bicycles, and scooters from the front of the house.
• Wipe the windows clean and make them sparkle.
• Change the doorknob and locks to give it a new and stylish look. It will also impress a sense of security.
• Polish your house numbers or if necessary, change them, so they shine and stand out.
• Put on a beautiful foliage or floral arrangement on your door.
• If there are loose shingles on the roof, fix them before showing your house.
• Fix and repaint the gutters.

If you’ve won the buyer’s attention with your house’s facade, you need to keep their interest. You can start by:

• Remove all the clutter especially in the kitchen and bathroom countertops. Keep toys, photo frames, personal items hidden in drawers and storage bins.
• Hang new bathroom towels.
• Retouch paint in your walls.
• Have the carpet cleaned before opening your house to potential buyers. Vacuum the floors every morning.
• Check your faucets to make sure they are not dripping.
• Inspect all your lights. Replace bulbs that are not working.
• Clean your appliances, not just the outside but the inside as well, especially the oven and microwave.
• Put a pretty centerpiece in the dining table.
• Make the house and bathrooms smell pleasant by putting a deodorizer or potpurri or spraying air freshener. This is especially necessary if someone smokes inside the house or if pets stay inside the house.
• Allow the light to come in all the rooms of the house. In areas where natural light can’t reach, turn on the lights when you’re expecting potential buyers to go to your house.
• Clean the fireplace.
• Remove unnecessary furniture from the room.
• Add final touches like adding a pretty flower arrangement or potted plant.

 When you prepare the home, keep in mind that people’s taste and preferrences differ. Just aim to make the house look clean, spacious, flexible and pleasing to anyone.

When you sell your home, especially at a time when your taxes are due, you could get financial shelter. Thanks to The Taxpayer Relief Act of 1997, the real estate sector can receive what is considered the best tax shelter through their homes.

According to the federal tax law, when you sell your home, you can keep, tax free, capital gains of up to $500,000 if you are married filing jointly or $250,000 for single taxpayers, or married taxpayers who file separately.

To qualify for the $250,000/$500,000 exclusion, you must have lived in the house (as your primary residence) for at least two of the prior five years. The best part is, it’s not a one-time benefit. You can use this benefit as often as you qualify – every two years, to fulfill the owner-occupied-two-out-of-five-years requirement.

For example, if you have two homes and you live in one of them for two years, sell it and live in the other one for another two years and sell them both, both qualify for the exclusion. If due to some unforeseen reasons like a job change, illness, death of a spouse, divorce, disaster, war or some other hardship, you are forced to sell before you meet the two-year residency requirement, there are special provisions. In these cases, the $500,000/$250,000 exclusion (not your specific gain) will be prorated. For example, if after only a year of living in your house you are forced to sell it because of a qualified unforeseen reason, you can exclude from taxes up to $250,000 (half the exclusion) in capital gains if you are married and file jointly or $125,000 for separate and single filers.

One unforeseen event where homeowners were able to use the provision was during the September 11, 2001 acts of terrorism in New York, Pennsylvania and Washington, D.C.. Sellers were able to prorate the exclusions given these conditions:

• A spouse, home co-owner, or person living with the taxpayer was killed by the attacks.
• The taxpayer’s principal residence was damaged.
• The taxpayer or a person listed in (1) became eligible for unemployment compensation, or
• The taxpayer or a person listed in (1) had a change in employment or self-employment that resulted in the taxpayer’s inability to pay reasonable basic living expenses for the household.

Selling costs
If later, after you sell, you realize there’s still a taxable profit after the exclusion, you can bring down your gain with selling costs. Your gain refers to your home’s selling price, minus deductible closing costs, minus your basis. Your basis is the original purchase price, plus capital improvements, minus any depreciation.

Selling costs also include real estate broker’s commissions, title insurance, legal fees, administrative costs and inspection fees. It can also include repairs or additions completed within 90 days of your sale to make the house more marketable.

Moving costs
If you need to move and sell your home because of a new job, you can deduct part of the moving costs. These are the requirements that need to be met:

• Your new job must be at least 50 miles from the old;
• you must work full time at the new work place for 39 of the 52 weeks after the move;

The exclusion could also include costs for travel, transportation, lodging and storage.

If you are self-employed, you can be eligible for tax deductions if you work full-time for at least 39 weeks during the first 12 months and a total of 78 weeks during the first 24 months after arriving at the new job location.

To get more information about home selling-related tax benefits, get in touch with tax professional and state and local tax authorities in your area.

During the holiday season we think about a lot of things – family, food, decors, parties, shopping. Selling your house is probably not on the top of your list at this time. But the holidays actually be a good oppotunity to show your home to potential buyers. A home adorned with Christmas decors and lights add to its appeal.
 

Here are some important things to keep in mind as you prepare your home:

• The first things that buyers will see is the exterior of your house. This is why curb appeal is vital. If it’s snowing in your area, clear the walkway, path and stairs.
• Put holiday lights outside. They exude holiday cheer and show pride in ownership. But don’t overdo it because they can only be enjoyed at night. Unless potential buyers visit your home at night, they won’t be able to see it.
• Trim trees outside your home. You wouldn’t want to risk having someone get hurt or the house damaged because a branch fell because of strong winds.
• Put a pretty holiday welcome mat outside the frnt door.
• Clear the outdoor area. Put away bicycles, scooters, toys etc.
• Hang a cheerful wreath on the front door.
• Play holiday music softly to add to the effect.
• Set a cozy and warm feel. Adjust the thermostat to a comfortable level.
• Light the fireplace. But never levae it unattended.
• The holiday decor won’t be complete without a tree. Pick the tree carefully. Make sure it’s the right size for your house or living room. If you pick a tree too big, the living room will look small or crammed if you put it wth other furniture.
• Don’t overdo the decors. Potential buyers might be overwhelmed if you put too many that the house might look cluttered. Remember, your goal is to sell the house, not the decors.
• If you’re expecting buyers for viewing in the evening, make sure your agent knows which decors and lights to turn on. And if you don’t plan to be back home soon after the viewing, make sure the agent turns everything off to avoid untoward incidents.
• Bake holiday treats often. It will leave an enticing smell.
• Don’t forget your security. Remind your agent to turn back on your home security after your house had been shown.

Remember that the holiday decors should just accent your home and not overpower it. What’s important is that you’ll create a sense of love, joy and warmth.