When it comes to buying and selling real estate, timing is of the utmost importance. Unfortunately, it’s also a topic few people truly understand. The following are some tips to keep in mind when speaking with your real estate agent.
Sell before buying or buy before selling?
It’s an age-old question, but asking a few strategic questions might enable you to narrow your decision down to the right choice for your individual situation.
Is selling or buying a necessity or do you have some flexibility?
Job relocation, change of marital status or other life situations often require a relocation within a specified period of time. Equally important are the needs of the other party. Work with your agent to understand the opportunities and limitations of both sides in order to create a win-win situation.
Buying before selling typically benefits those who simply must move or relocate within a specified period of time and who are unable or unwilling to lease or rent. It is also a popular option for those seeking an exchange of property under Section 1031 of the U.S. Internal Revenue Code or for those who are attempting to minimize taxation via other deals.
Can you obtain financing or afford to carry both mortgages for any period of time?
If so, you may have a little more flexibility at your disposal. Speak to your agent about a leaseback or other temporary term. It’s often possible to use these when negotiating terms.
Selling before buying can benefit those who are unable to obtain financing with an existing mortgage in place or who wish to use cash proceeds from the prior sale to fund repairs, renovations or an entire purchase.
In many instances, it is possible to arrange a simultaneous closing for both the home purchased and the home sold with contingencies that reflect this situation on both transactions.
Matters of the heart tend to hurt rather than help the negotiation process when it comes to buying and selling real estate. The following tips will help you manage the emotional ties that bind buyers and sellers to bad decisions.
Use an Agent: Agents do more than just show a home. They provide an impartial and objective opinion about the condition of a property, pricing and comparable real estate on the market.
Establish a Priority List Then Stick to It: Every stakeholder in the buying and selling process should have a priority list that includes needs and wants. Creating such a list helps you stay organized and reduces the risk of becoming emotionally entangled in a bidding war or falling in love with unnecessary yet expensive features that won’t add to the functionality of the home. Ask your agent to focus on finding buyers or homes that meet the main needs on your priority list, and move to the wants later.
Get a Second Opinion: Ask a friend or family member for his or her opinion, especially if you aren’t certain. But be prepared to listen to constructive criticism. Appraisers, inspectors and agents are also vital sources of expert information.
Document: Take plenty of photographs when buying or selling so you can share them with others. Sellers can assist buyers by providing a fact sheet that includes room dimensions, existing warranties, upgrades and other important features of the property. Or buyers can bring along a tape measure and a notebook to jot down important details.
Deciding whether to purchase a fixer-upper or go with a home in need of fewer repairs isn’t always simple.
The following information can help you calculate the true cost of purchasing a fixer:
Supplies, Labor and Time: Whether you do the job yourself or hire outside labor, repairs and renovations are notorious for costing more than you planned. If the home can’t be lived in while repairs are made, the additional cost of covering the mortgage, taxes and insurance while the home is vacant can also substantially add to the total cost.
Taxes and Insurance: Improvements often add to the cost of property taxes and insurance, so be sure to consider the long-term consequences. Properly performed repairs and renovations may help or hurt property tax values and homeowner insurance costs. It’s a good idea to get an estimate in advance. On the other hand, hiring outside crews to perform needed repairs can result in a tax write-off for investment properties.
Long-Term Profit Potential: Repairs and renovations can make your home more valuable, but only if the surrounding area is desirable. Whether investing for long-term appreciation or cash flow, carefully evaluate the desirability of the neighbourhood.
Financing: Lenders often have different rates and requirements for properties in need of repair. Find out in advance if you are eligible for special funding, grants or tax incentives, especially when working with affordable housing options or first-time homebuyer programs.
Building Codes and Zoning: It is imperative to understand local building codes and zoning regulations before purchasing a fixer-upper. Never assume you can modify a structure without considering the building code. Likewise, zoning may dramatically alter the ability to use a property in a specific manner or make certain changes or additions. It’s just one more reason it’s more important than ever to work closely with your agent when purchasing a fixer-upper.
Communicating with your real estate agent is the key to developing a winning strategy to show your property in the best possible light.
The following tips might help you avoid frustration and increase the odds of a successful showing:
Be Honest: The first step is to be completely honest with your agent. Make sure the agent knows about the benefits and pitfalls of the property in advance, including needed repairs and deferred maintenance.
Get Organized: The more information about the property you can provide, the better. Make a list of all past repairs, warranties that may still be in effect, improvements made to the property, and what is included or excluded in the sale. Copies of receipts, warranty documents and other paperwork give your agent a great headstart.
Set a Schedule: Let the agent know the appropriate times for showing the home, as well as any other instructions. Notify agents of special situations well in advance, especially concerning pets or other important matters.
Knowledge and Network: Your agent is an expert in the local real estate community, so use him or her to your advantage. Allow the agent to develop a marketing plan and use local resources that maximize the appeal of your property. Likewise, ask the agent’s opinion about service providers and other vendors who may assist in the process of selling or purchasing property.