Sell Your Home and Get Ready to Buy

Ace your home sale and prepare for your next mortgage

How to Sell a Home

Selling a home can be more complicated than buying one. There are myriad factors to consider, and questions to answer. Should you renovate the bathroom? What are the legal and tax implications of the sale? There are several different professionals you can work with, including Realtors, lawyers and bankers.

Can you afford to take out a mortgage on a new house or should you first generate a reasonable return on your existing home? Will you rent for a while between selling the old and buying the new?

With research, planning and some professional help, a smooth transition is possible.

Get Pre-Approved

List-to-Close Time

14 to 60 days on average

Realtor Commission

6% of sale price

Other Fees

0.5% to 2% of sale price

3 Questions to Ask Before You Sell

1. How Quickly Do I Need to Sell my Home?

Identify a timeline to understand your options. A Realtor can help facilitate a quick move. Or if you’ve got some time, consider making some home improvements before you list.

2. How Much Will It Cost to Sell My Home?

There are several expenses associated with selling a house.

  •   Renovation
  •   Decor and staging
  •   Pre-listing home appraisal
  •   Realtor’s commission, if applicable
  •   Title insurance and closing costs (negotiate sharing these with the buyer)
  •   State and federal taxes
  •   Mortgage payoff (ask about prepayment penalties)

If you choose to sell your home without a Realtor, you also will need to pay for:

  •   Buyer’s agent commission of about 3 percent
  •   Cost of marketing and listing on websites
  •   Attorney and legal fees to draw up contracts

3. Can I Finance a New Home Before Selling My Current One?

Yes. There are some money matters to consider, however. Selling your existing home first may provide you with a down payment toward your next home. Conversely, buying first gives you more flexibility in moving and potentially save more money in the long run. The right decision for you depends on your short- and long-term financial picture, as well as your moving timeline.

Remember, your current mortgage is part of your debt-to-income ratio, which may give lenders pause when reviewing your application for a new home. Consider getting preapproved for a bridge loan or new mortgage to get a clearer picture of your finances and ensure a smooth transition between your home purchase and sale.

Improve Your Credit

Continually work to strengthen your credit. A high credit score will boost your chances of getting a better interest rate when you’re ready to buy a new home.

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Preparing Your Home for Sale

The home’s list price is a major factor to a successful deal. A little prep work can go a long way in bumping up the price. Do a little research and a little spring cleaning to start. Some other ideas:

Identify How Much Your Home Is Worth

  • Compare sale prices of similar homes in your immediate area, either with your Realtor or via home-listing websites. Note that neighborhood pricing can vary because of factors such as future zoning and development plans.
  • Realtors understand home values. Ask for ideas on what to highlight or renovate to improve the value.
  • Hire an appraiser for a detailed assessment of your home and ask about improvements that can increase the value.

Improve the Value of Your Home

A lived-in house can shine with a fresh coat of paint and minor repairs — work that can greatly improve the asking price of your home. Avoid trendy decor that the new owners may not appreciate. Addressing big repairs can increase its value, as well, but invest only in the essentials for a better return on the investment.

Consider your budget, how much equity you have in your home and your timeline for selling to ensure that the returns are worth the expense. If a large-scale renovation is the right move, compare financing options, such as renovation loanscash-out mortgage refinancing or home equity lines of credit.

Gather Your Documents

  • Research any outstanding taxes, debts or liens tied to the property.
  • Prepare the seller’s disclosure, found on state Real Estate Commission websites. This document varies by state, but most require sellers disclose issues with the home’s condition, neighbors and developments in the area.
  • Gather any additional paperwork on major home repairs and insurance claims that must be disclosed by law in your state.

The Right Estimate

Many websites offer rough estimates of your home’s value, but don’t take that number to the bank. Algorithms give an approximation of the market and can be thousands of dollars off the mark. Start with an online estimate, but verify the numbers through research or a professional.

Should I Use an Agent to Sell My Home?

Sellers have access to more tools and information than ever. If you have the time, market knowledge and finances, you may have success selling on your own. If not, you may be better served hiring a professional realtor or real estate agent.

Working With a Realtor

  • You will pay Realtor commission that is between 5 percent and 7 percent of the sale price, which typically includes the buyer’s agent commission.
  • The cost of listing your home and other services will be included in the Realtor fee.
  • You will get help with legal and administrative processes.
  • You will get insights about home valuations and access to listing networks and marketing resources.
  • Your agent will save you time by overseeing the listing and negotiating offers on your behalf.

Selling on Your Own

  • You won’t pay commission to your Realtor, but you may pay 3 percent of the sale price to the buyer’s agent.
  • You also will pay for listings, various fees and services.
  • You must arrange legal support for contract reviews.
  • You will do your own research, marketing, etc.
  • You will invest more time in overseeing listings, viewings and negotiating offers.

Questions to Ask When Interviewing a Realtor

  • Do you work with buyers in my home's price range and property type?
  • Would you represent both the seller and the buyer?
  • How will you market my home?
  • How connected are you with lenders?
  • What is your list-to-price ratio?
  • On average, how long do your listings stay on the market?
  • What commission do you charge?

How Long Will It Take to Sell My Home?

Time on the market could be days or months, depending on a host of factors, many out of your or your Realtor’s control. If you want to sell your home faster, keep the following points in mind.

  • Location. Location matters. Ask about average days on market in your neighborhood.
  • Price. Ensure your home is reasonably priced in the initial listing.
  • Season. Homes sell faster in the spring. If possible, avoid selling during the holidays and popular vacation times.
  • Condition. Ensure major repairs are completed and the house looks nice inside and out.
  • Competition. Differentiate your home from others on the market in your neighborhood.
  • Alternative Buyers. Consider selling to a home flipper or developer. They often purchase homes quickly, albeit at lower prices.

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Show and Sell: Get Offers on Your Home

Tips for Staging and Showing

  • Set a fair selling price early. Overpriced homes stay on the market longer and often end up selling for less than value after price negotiations.
  • Ensure the house is cleaned, decluttered and has “curb appeal” — a well-manicured exterior.
  • Work with your Realtor, if applicable, to market your home through a variety of print, social media and web listings — the most popular being the Multiple Listing Service.
  • Be flexible with home viewing schedules. Consider hosting an open house.

What is the MLS?

The Multiple Listing Service is a nationwide database Realtors use list homes for sale and to suggest homes for buyers to view. Only Realtors or For Sale by Owner (FSBO) services may post home listings here. MLS listings feed into dozens of home listing websites. There are free online sites accessible for the general public to list a home, but these sites reach fewer Realtors and buyers.

Tips for Evaluating Purchase Offers

  • Know your lowest acceptable price based on the equity you have in your home and the additional costs associated with the sale.
  • Review any contingencies, such as a buyer’s requirement to sell an existing home before closing on yours.
  • Assess the buyer’s earnest money deposit. A higher deposit demonstrates a more serious offer, as a buyer has pledged the deposit to the sale price unless the seller rejects it.
  • Ask for a mortgage preapproval letter or proof of funds from the buyer.

Borrow Wisely Tip

Should I Care About a Buyer’s Mortgage Type?

No. It is essential to know the buyer is preapproved for a mortgage and has sufficient funds to purchase your home. The type of loan isn’t relevant to the seller, however.

Pre-Close and Closing

After an agreement on the purchase price is made, several important administrative steps follow.

  •  Review carefully all contracts before signing. Your Realtor will work on your behalf. If you don’t have a Realtor, hire a real estate attorney to draw up and oversee the contract, as well as any administrative and legal processes. This is an important step: legal hiccups could jeopardize the sale, and can cost you thousands of dollars in revisions or penalties.
  •  Open an escrow account. You or your Realtor can do so as outlined in the purchase agreement, and the buyer’s earnest money deposit is transferred to the account.
  •  Check if a title policy is required. You may be required to pay for a title policy insuring the buyer in the event that you do not have full rights to the property. You may negotiate with the buyer on who will assume this cost.
  •  Look out for the appraisal. The buyer’s lender arranges a home appraisal. If the appraisal value is less than the home’s purchase price, the contract may be cancelled.
  •  Have inspection reports ready.  The buyer’s lender also may request a copy of the home inspection to make sure there’s no significant damage to the property. The home inspection will likely already be a contingency in your purchase agreement.
  •  Prepare disclosures. Be ready with all federal, state and material disclosures on the condition of the house and area developments.
  •  Make payments. Settle all agreed closing costs, taxes and outstanding mortgage payments.

Final Steps

Once all relevant paperwork is in order, the buyer will release any contingencies, you sign over the property title, and the escrow is closed. Realtors collect commissions at this point. Depending on whether the sale is made in a “wet” or “dry” close state, you may receive funds as quickly as the closing day.

Wet or Dry State?

If the home sale is made in a “dry close” state, you receive payment only after the lender assesses all closing documents, typically up to 48 hours later. This includes Alaska, Arizona, California, Hawaii, Idaho, Nevada, New Mexico, Oregon and Washington. All other states are “wet close” states, where you receive mortgage funds the day of the closing.

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Learn More About Selling a Home