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PLANNING YOUR STRATEGY
Marketing your house effectively means first getting an overview of all the elements involved, then fitting the pieces into their
proper place. Your first step is to formulate a strategy for putting your house on the market: what services to expect from your
real estate agent, how to set your asking price, how to estimate the net proceeds from your sale, how to figure your tax benefits,
and more.
proper place. Your first step is to formulate a strategy for putting your house on the market: what services to expect from your
real estate agent, how to set your asking price, how to estimate the net proceeds from your sale, how to figure your tax benefits,
and more.
 | What are the overall steps in selling my house? | |
Essentially these:
• Meet with your agent to determine your asking price and work out your personal plan for maximum marketability of your house.
• Review all financing options, including seller financing and other acceptable terms.
• List your house for sale at a certain price.
• Make repairs or improvements that will increase the marketability of your house.
• Permit your house to be shown to prospective buyers.
• Consider offers and negotiate a sales contract.
• Have necessary inspections made.
• Stand by while your buyer applies and is approved for financing.
• Go to settlement (also know as “closing”).
• Move out of old house and into new one.
• Meet with your agent to determine your asking price and work out your personal plan for maximum marketability of your house.
• Review all financing options, including seller financing and other acceptable terms.
• List your house for sale at a certain price.
• Make repairs or improvements that will increase the marketability of your house.
• Permit your house to be shown to prospective buyers.
• Consider offers and negotiate a sales contract.
• Have necessary inspections made.
• Stand by while your buyer applies and is approved for financing.
• Go to settlement (also know as “closing”).
• Move out of old house and into new one.
| How can I determine how much cash I will walk away with from the sale? | |
That’s a good question; in fact two good questions. During your listing appointment, your agent will help you set a listing price for the
property. Based on that price your agent will be able to give you an idea of your expected expenses and your estimated proceeds – or net
“walkaway” cash.
Your agent begins with the sale price then subtracts anticipated costs, such as any mortgage payoff penalty, discount points which are
prepaid interest paid to the lender by the seller, settlement fees, taxes, broker’s commission and typically the largest of all, paying off the
old mortgage balance. Your agent may then add in any anticipated prepaid tax reimbursement or escrow reimbursement. The bottom
line is your end cash.
Remember this exercise is only a ballpark figure based on estimated costs and sales price. Any changes in the figures will affect the
bottom-line on the actual sale.
property. Based on that price your agent will be able to give you an idea of your expected expenses and your estimated proceeds – or net
“walkaway” cash.
Your agent begins with the sale price then subtracts anticipated costs, such as any mortgage payoff penalty, discount points which are
prepaid interest paid to the lender by the seller, settlement fees, taxes, broker’s commission and typically the largest of all, paying off the
old mortgage balance. Your agent may then add in any anticipated prepaid tax reimbursement or escrow reimbursement. The bottom
line is your end cash.
Remember this exercise is only a ballpark figure based on estimated costs and sales price. Any changes in the figures will affect the
bottom-line on the actual sale.
| Will I have to pay taxes on my profit? | |
As you know from the tax deductions that have flowed from owning your house, housing is probably the most tax-advantaged investment
available to most taxpayers. When you sell your house, taxes come into play in many ways. As of this writing here are several instances:
• You can defer paying tax on the profit from the sale of your house if you buy a new house of equal or greater value within two years.
Meet these guidelines and you can keep reinvesting tax-free home-sale profits time after time.
• You can reduce the tax by deducting from the sale profit:
a) the cost of improvements.
b) the cost of broker’s commission and lawyer’s fees.
c) the cost of title insurance, recording charges, transfer fees, and other closing costs.
• If you are 55 or older, you can take advantage of the $125,000 exclusion plan that permits you, once in your lifetime, to pay no tax on
up to $125,000 in profits—if you’ve occupied your house for at least three of the last five years.
• You can reduce your immediate tax burden through an installment sale where you spread your income—and taxes—over a period of
years, if you are not eligible for or prefer to by-pass the $125,000 one-time exclusion plan for sellers 55 or older, or if you simply prefer
not to buy another house.
• If your lender requires that you pay a penalty for pay-ing off your mortgage before its due date, that charge is deductible.
• You can deduct any costs of fixing up your house for sale, as long as the repairs are not capital improvements such as insulation, a new
roof, etc., and as long as the fixing-up is done within 90 days of the sales contract date and paid within 30 days of closing.
Remember: All tax matters are subject to change and you should consult your professional tax preparer or accountant before making any
claims.
available to most taxpayers. When you sell your house, taxes come into play in many ways. As of this writing here are several instances:
• You can defer paying tax on the profit from the sale of your house if you buy a new house of equal or greater value within two years.
Meet these guidelines and you can keep reinvesting tax-free home-sale profits time after time.
• You can reduce the tax by deducting from the sale profit:
a) the cost of improvements.
b) the cost of broker’s commission and lawyer’s fees.
c) the cost of title insurance, recording charges, transfer fees, and other closing costs.
• If you are 55 or older, you can take advantage of the $125,000 exclusion plan that permits you, once in your lifetime, to pay no tax on
up to $125,000 in profits—if you’ve occupied your house for at least three of the last five years.
• You can reduce your immediate tax burden through an installment sale where you spread your income—and taxes—over a period of
years, if you are not eligible for or prefer to by-pass the $125,000 one-time exclusion plan for sellers 55 or older, or if you simply prefer
not to buy another house.
• If your lender requires that you pay a penalty for pay-ing off your mortgage before its due date, that charge is deductible.
• You can deduct any costs of fixing up your house for sale, as long as the repairs are not capital improvements such as insulation, a new
roof, etc., and as long as the fixing-up is done within 90 days of the sales contract date and paid within 30 days of closing.
Remember: All tax matters are subject to change and you should consult your professional tax preparer or accountant before making any
claims.
| In selling my house and buying a new one, what can I do to be sure I won’t get stuck with two mortgages? | |
| What’s the difference between a broker and a salesperson? | |
Many people confuse broker and salesperson; however, the salesperson is the “agent” of the broker and the broker is the “agent” of the seller.
By law only a broker, who has passed a special exam to earn the designation, can receive a brokerage commission. A salesperson is
associated with a broker. When a salesperson represents a broker in a transaction - rather than the broker working personally with the seller -
the broker splits the brokerage commission with the salesperson.
While we’re defining roles, you should also know the difference between a “listing salesperson” and a “selling salesperson.” The listing
salesperson is the individual who works with you to market your house under a “listing agreement:’ The “selling salesperson,” on the other
hand, is the individual who produces a buyer. Sometimes the salesperson who lists your house for sale also finds the buyer, but not always.
The selling salesperson’s legal obligation is also to represent the interests of the seller. Anyone with a real estate license is required by law
to treat both the seller and the buyer fairly and ethically.
Your listing salesperson does not receive all of the commission from the sale of your house. Actually this commission is frequently shared
by as many as four different parties—two brokers and two salespeople—depending on the nature of the transaction.
Although you may work personally with either a broker or a salesperson, we use the term ‘agent” interchange-ably throughout the handbook
for simplicity.
By law only a broker, who has passed a special exam to earn the designation, can receive a brokerage commission. A salesperson is
associated with a broker. When a salesperson represents a broker in a transaction - rather than the broker working personally with the seller -
the broker splits the brokerage commission with the salesperson.
While we’re defining roles, you should also know the difference between a “listing salesperson” and a “selling salesperson.” The listing
salesperson is the individual who works with you to market your house under a “listing agreement:’ The “selling salesperson,” on the other
hand, is the individual who produces a buyer. Sometimes the salesperson who lists your house for sale also finds the buyer, but not always.
The selling salesperson’s legal obligation is also to represent the interests of the seller. Anyone with a real estate license is required by law
to treat both the seller and the buyer fairly and ethically.
Your listing salesperson does not receive all of the commission from the sale of your house. Actually this commission is frequently shared
by as many as four different parties—two brokers and two salespeople—depending on the nature of the transaction.
Although you may work personally with either a broker or a salesperson, we use the term ‘agent” interchange-ably throughout the handbook
for simplicity.
| What can a real estate agent do to sell my house that I can’t do for myself? | |
Actually, facts and experience show the difficulties of trying to sell your own house usually far outweigh the benefits. Here’s what your
agent does that a homeseller can’t do or finds hard to do:
• Places your property in the Multiple Listing Service (MLS), which exposes your house to all the buyers working with cooperating member
brokers. This effectively puts every agent in town to work selling your house.
• Exposes your property to a large pool of qualified buyers your agent spends a career generating. Without that network, a for-sale-by-owner
is reduced to a yard sign, some classified ads, and lots of luck.
• Provides solid up-to-date market information with recent sales and current listings which helps you price your house realistically. Such
pricing is crucial to the possibility of a quick sale at the best price obtainable.
• Shows your house whether you’re in or not, saving you hours of “minding the store.”
• Provides pro-qualified buyers who know what they want and how much they can afford. Screening prospects saves you from the hassle of
keeping appointments with “sightseers” and protects you from the threat of “unwelcome visitors.”
• Shows your house to its best advantage. Buyers often shy away from asking homeowners questions; homeowners are sometimes defensive
about defects in their houses. An agent can answer necessary questions objectively and guide the buyer to a purchase.
• Helps you negotiate a satisfactory sale. Without an experienced mediator to act as a buffer between the parties, many situations bog
down.
• Leads both you and the buyer through the puzzle of rates, points, fees and financing options, helping with loan placement and follow-
up, including the provision of names and telephone numbers of specific loan officers. Without expert knowledge of alternative financial
resources many sales are lost - especially in tight money markets where knowledge of buy downs, variable rate mortgages, graduated
payment mortgages, and various types of seller participation come into the picture.
• Protects your interests from contract to closing with an understanding of real estate procedures. An agent has the ability to smooth the
way toward agreements and the experience to attend to all the details that must come together before settlement can take place.
agent does that a homeseller can’t do or finds hard to do:
• Places your property in the Multiple Listing Service (MLS), which exposes your house to all the buyers working with cooperating member
brokers. This effectively puts every agent in town to work selling your house.
• Exposes your property to a large pool of qualified buyers your agent spends a career generating. Without that network, a for-sale-by-owner
is reduced to a yard sign, some classified ads, and lots of luck.
• Provides solid up-to-date market information with recent sales and current listings which helps you price your house realistically. Such
pricing is crucial to the possibility of a quick sale at the best price obtainable.
• Shows your house whether you’re in or not, saving you hours of “minding the store.”
• Provides pro-qualified buyers who know what they want and how much they can afford. Screening prospects saves you from the hassle of
keeping appointments with “sightseers” and protects you from the threat of “unwelcome visitors.”
• Shows your house to its best advantage. Buyers often shy away from asking homeowners questions; homeowners are sometimes defensive
about defects in their houses. An agent can answer necessary questions objectively and guide the buyer to a purchase.
• Helps you negotiate a satisfactory sale. Without an experienced mediator to act as a buffer between the parties, many situations bog
down.
• Leads both you and the buyer through the puzzle of rates, points, fees and financing options, helping with loan placement and follow-
up, including the provision of names and telephone numbers of specific loan officers. Without expert knowledge of alternative financial
resources many sales are lost - especially in tight money markets where knowledge of buy downs, variable rate mortgages, graduated
payment mortgages, and various types of seller participation come into the picture.
• Protects your interests from contract to closing with an understanding of real estate procedures. An agent has the ability to smooth the
way toward agreements and the experience to attend to all the details that must come together before settlement can take place.
| What does a listing agent do between the signing of a listing agreement and sale? | |
Your agent keeps tabs on the changes in the real estate market and tells you what’s new in mortgage loans, what sales have recently been
made, and what pricing fluctuations if any are in view. You’ll be kept up-to-date on activity concerning the sale of your house: what
advertising has been done, what responses have come back from people who have seen your house. You and your agent will confer
regularly so that you stay informed and can consider any changes in your marketing plan.
When a buyer makes an offer, your agent’s good closing skills play a vital part in helping you negotiate a con-tract to effect a sale at a
good price.
When you have accepted an offer, your agent helps you prepare for settlement by giving attention to details and by staying in touch with
you through the process.
made, and what pricing fluctuations if any are in view. You’ll be kept up-to-date on activity concerning the sale of your house: what
advertising has been done, what responses have come back from people who have seen your house. You and your agent will confer
regularly so that you stay informed and can consider any changes in your marketing plan.
When a buyer makes an offer, your agent’s good closing skills play a vital part in helping you negotiate a con-tract to effect a sale at a
good price.
When you have accepted an offer, your agent helps you prepare for settlement by giving attention to details and by staying in touch with
you through the process.
| Why and how does my agent “pre-qualify” buyers? | |
Since it could be a waste of your time to negotiate with an interested buyer who could not afford to buy your house, your agent is trained
to politely ask buyers the right questions about their finances—a far easier task for an agent than for a homeowner.
Factors that determine a buyer’s qualifying situation include:
• The buyer’s employment, including job title, length and stability of employment.
• Income and general financial position.
• Debts.
• Cash for down payment and closing costs.
• Maximum affordable monthly payments.
• The existence - or not - of another house to sell.
• The time period during which the buyer must reach settlement, and the buyer’s urgency to buy.
• Other houses the buyer may be interested in and the primary reason for buying
The sum of this information makes it possible for you to negotiate effectively, should the buyer make an offer.
to politely ask buyers the right questions about their finances—a far easier task for an agent than for a homeowner.
Factors that determine a buyer’s qualifying situation include:
• The buyer’s employment, including job title, length and stability of employment.
• Income and general financial position.
• Debts.
• Cash for down payment and closing costs.
• Maximum affordable monthly payments.
• The existence - or not - of another house to sell.
• The time period during which the buyer must reach settlement, and the buyer’s urgency to buy.
• Other houses the buyer may be interested in and the primary reason for buying
The sum of this information makes it possible for you to negotiate effectively, should the buyer make an offer.
| What does my agent do to put my house on the market? | |
Once you decide on the terms of a “listing agreement,” your agent will:
• Enter a description of your house and your terms in the Multiple Listing Service of houses on the market in your area.
• Show your house to prospective buyers.
• Advertise your house as appropriate.
• Possibly hold an open house.
• Promote the sale of your house in every way possible.
Once you and your agent have a solid marketing strategy formed and your agent is actively promoting your house, you’re well on your way
to a sale.
• Enter a description of your house and your terms in the Multiple Listing Service of houses on the market in your area.
• Show your house to prospective buyers.
• Advertise your house as appropriate.
• Possibly hold an open house.
• Promote the sale of your house in every way possible.
Once you and your agent have a solid marketing strategy formed and your agent is actively promoting your house, you’re well on your way
to a sale.
| Time for Action | |
Now that you've gotten an overview of the home selling process and have sorted out a few of the benefits and pit-falls of
making your sale, your next step is to put your strategy into action - and your house on the market.
making your sale, your next step is to put your strategy into action - and your house on the market.
| 827 Willow Street, Lebanon, PA 17042 (717) 273-8861 ~ dick@reichrealty.com |
| Are there any other costs of selling my house that I should know about? | |
Besides the above costs of mortgage payoff, fees, commissions and settlement costs, you’ll probably have the following expenses:
• Fix-up costs
• Housebuying costs, including down payment (if you buy another house).
• Moving costs.
• Costs of equipment and/or furnishing your new house. Your gain from the sale will probably cover your additional costs, but if it's close,
be sure to maintain a cash or credit reserve for unexpected expenses.
• Fix-up costs
• Housebuying costs, including down payment (if you buy another house).
• Moving costs.
• Costs of equipment and/or furnishing your new house. Your gain from the sale will probably cover your additional costs, but if it's close,
be sure to maintain a cash or credit reserve for unexpected expenses.
Your best strategy is to place your house on the market far enough in advance to attract a buyer, negotiate a contract with an acceptable
settlement date, then go house hunting.
If you find a new house before you've sold your old one, you have several options:
• You may be able to arrange a bridge loan (also “swing” loan) secured by the equity in either your old or new house to cover your
expenses until the closing on your old house. Lenders of bridge loans sometimes require you to have a purchase contract on your old
house. But bridge loans can sometimes be found if your house is not yet sold.
• If your move is job-related, but no home-purchase relocation program is in effect, you might persuade your employer to either provide a
bridge loan or pick up some of your relocating expenses.
Whatever your specific circumstances, your agent can help you decide how to shift your strategy to fit the situation.
settlement date, then go house hunting.
If you find a new house before you've sold your old one, you have several options:
• You may be able to arrange a bridge loan (also “swing” loan) secured by the equity in either your old or new house to cover your
expenses until the closing on your old house. Lenders of bridge loans sometimes require you to have a purchase contract on your old
house. But bridge loans can sometimes be found if your house is not yet sold.
• If your move is job-related, but no home-purchase relocation program is in effect, you might persuade your employer to either provide a
bridge loan or pick up some of your relocating expenses.
Whatever your specific circumstances, your agent can help you decide how to shift your strategy to fit the situation.
| Point A one-time charge required by the lender which is paid by buyer and/or seller at settlement. Each point is one percent of the new loan amount. Example: one point on a $78,000 loan is $780; $78,000 x 10/0 = $780. Points are charged by lenders to increase yield on their loans, and thus attract money into the housing market. Sellers sometimes pay some or all points to attract more buyers. |
| How do I develop the best possible “selling strategy?” | |
Planning a selling strategy means looking at all the elements of selling your house and putting them in their proper places. Then you can
move easily from one step to the next.
Your first step is a meeting with your agent at your house to go over the property and discuss your needs. Your agent will go over every part
of your house, noting its floor plan and special features. You’ll discuss how to show your house most appealingly. You’ll discuss any repairs
and improvements which might increase the marketability of your house. These repairs may bring you back more than they cost. Your
agent will compare your house with other houses for sale in your area and with those previously sold. That helps you arrive at a
competitive asking price.
Your agent will discuss different financing possibilities that may be useful to buyers who look at your house. Your agent will also go over
financing costs to both you and a buyer, and help you estimate your net proceeds from the sale in each case.
move easily from one step to the next.
Your first step is a meeting with your agent at your house to go over the property and discuss your needs. Your agent will go over every part
of your house, noting its floor plan and special features. You’ll discuss how to show your house most appealingly. You’ll discuss any repairs
and improvements which might increase the marketability of your house. These repairs may bring you back more than they cost. Your
agent will compare your house with other houses for sale in your area and with those previously sold. That helps you arrive at a
competitive asking price.
Your agent will discuss different financing possibilities that may be useful to buyers who look at your house. Your agent will also go over
financing costs to both you and a buyer, and help you estimate your net proceeds from the sale in each case.
| How and where do agents find buyers? | |
Your agent is constantly in contact with the largest number of potential buyers possible to generate a steady flow of prospects specifically
interested in your property. Typically, 6% of all buyers come through these referrals and on-going marketing, about 20% come from “for
sale” yard signs and general company reputation, and less than 20% come from promotions and advertising. These percentages vary by
area and company. It’s not uncommon for less than 6% of sales to come from classified advertising, for example.
By far the largest number of buyers come from referrals sent by satisfied past customers, corporate contacts, friends, acquaintances,
relocation networks, the Multiple Listing Service, and cooperating local brokers. Regular sales meetings and listing tours in your agent’s
office also promote your house to agents throughout the company. Agents and companies continually work to maintain a "pool" of buyers
through an extensive network of contacts and sources. That’s why agents and real estate companies frequently have buyers on hand, just
waiting for the right house to come on the market.
Other buyers come from open house signs or call in after seeing the phone number on a yard sign. These “sign calls” often produce
excellent prospects for that house because callers have already shown an interest in the neighborhood by driving through.
Still other buyers come from extensive advertising placed by real estate companies and agents.
interested in your property. Typically, 6% of all buyers come through these referrals and on-going marketing, about 20% come from “for
sale” yard signs and general company reputation, and less than 20% come from promotions and advertising. These percentages vary by
area and company. It’s not uncommon for less than 6% of sales to come from classified advertising, for example.
By far the largest number of buyers come from referrals sent by satisfied past customers, corporate contacts, friends, acquaintances,
relocation networks, the Multiple Listing Service, and cooperating local brokers. Regular sales meetings and listing tours in your agent’s
office also promote your house to agents throughout the company. Agents and companies continually work to maintain a "pool" of buyers
through an extensive network of contacts and sources. That’s why agents and real estate companies frequently have buyers on hand, just
waiting for the right house to come on the market.
Other buyers come from open house signs or call in after seeing the phone number on a yard sign. These “sign calls” often produce
excellent prospects for that house because callers have already shown an interest in the neighborhood by driving through.
Still other buyers come from extensive advertising placed by real estate companies and agents.