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Articles for Sellers

Closing Costs for Sellers 
Mortgage payoff and outstanding interest. 
Prorations for real estate taxes. 
Prorations for utility bills, condo dues, and other items paid in arrears. 
Closing fees charged by closing specialist. 
Title policy fees. 
Home inspections. 
Attorney’s fees. 
Survey charge. 
Transfer tax or other government registration fees. 
Brokerage commission. 
Total: 

 

Disclaimer

This is an estimate only.
Property Taxes not included!
Costs may vary due to the nature of your transaction.
Not included in this estimate are: Unpaid Property Taxes from previous years,
Prorated Community Fees, and Mortgages or Leins on the property.

When you sell a stock, you owe taxes on your gain—the difference between what you paid for the stock and what you sold it for. The same is true with selling a home (or a second home), but there are some special considerations.

How to Calculate Gain

In real estate, capital gains are based not on what you paid for the home, but on its adjusted cost basis. To calculate this:

1. Take the purchase price of the home: This is the sale price, not the amount of money you actually contributed at closing.

2. Add Adjustments:

  • Cost of the purchase—including transfer fees, attorney fees, inspections, but not points you paid on your mortgage.
  • Cost of sale—including inspections, attorney’s fee, real estate commission, and money you spent to fix up your home just prior to sale.
  • Cost of improvements—including room additions, deck, etc. Note here that improvements do not include repairing or replacing something already there, such as putting on a new roof or buying a new furnace.

3. The total of this is the adjusted cost basis of your home.

4. Subtract this adjusted cost basis from the amount you sell your home for. This is your capital gain.

A Special Real Estate Exemption for Capital Gains

Since 1997, up to $250,000 in capital gains ($500,000 for a married couple) on the sale of a home is exempt from taxation if you meet the following criteria

You have lived in the home as your principal residence for two out of the last five years.

You have not sold or exchanged another home during the two years preceding the sale.

Also note that as of 2003, you may also qualify for this exemption if you meet what the IRS calls “unforeseen circumstances” such as job loss, divorce, or family medical emergency.

1. Give your forwarding address to the post office, usually 2-4 weeks ahead of the move.

2. Notify our charge cards, magazine subscriptions, and bank of the change of address.

3. Develop a list of friends, relatives, and business colleagues who need to be notified of the move.

4. Arrange to have utilities disconnected at your old home and connected at your new one.

5. Cancel the newspaper.

6. Check insurance coverage for moved items. Usually movers only cover what they pack.

7. Clean out appliances and prepare them for moving, if applicable.

8. Note the weight of the goods you’ll have moved, since long-distance moves are usually billed according to weight. Watch for movers that use excessive padding to add weight.

9. Check with your condo or co-op about restrictions on using the elevator or particular exits.

10. Have a “first open” box with the things you’ll need most—toilet paper, soap, trash bags, scissors, hammer, screwdriver, pencils and paper, cups and plates, water, snacks, and toothpaste.

Plus, if you’re moving out of town:

1. Get copies of medical and dental records and prescriptions for your family and your pets.

2. Get copies of children’s school records for transfer.

3. Ask friends for introductions to anyone they know in your new neighborhood.

4. Consider special car needs for pets when traveling.

5. Let a friend or relative know your route.

6. Carry traveler’s checks or an ATM card for ready cash until you can open a bank account.

7. Empty your safety deposit box.

8. Put plants in boxes with holes for air circulation if you’re moving in cold weather.

Make your home more appealing for yourself and for potential buyers with these quick and easy tips:

1. Trim bushes so they don’t block windows and cut down on light.

2. Buy a new doormat.

3. Put a pot of bright flowers (or a small evergreen in winter) on your porch.

4. Put new doorknobs on your front door.

5. Put a fresh coating on your driveway.

6. Edge the grass around walks and trees.

7. Keep your garden tools out of site.

8. Be sure kids put away their toys.

9. Buy a new mailbox.

10. Upgrade your outside lighting.

11. Use warm, incandescent light bulbs for a homey feel.

12. Polish or replace your house numbers.

13. Clean your gutters.

14. Put out potpourri or burn scented candles.

15. Buy new pillows for the sofa.

16. Buy a flowering plant and put in a window you pass by frequently.

17. Make a centerpiece for your table with fruit or artificial flowers.

18. Replace heavy curtains with sheer ones that let in more light.

19. Buy new towels.

20. Put a seasonal wreath on your door.

1. Get rid of clutter. Throw out or file stacks of newspapers and magazines. Pack away most of your small decorative items. Store out-of-season clothing to make closets seem roomier. Clean out the garage.

2. Wash your windows and screens to let more light into the interior.

3. Keep everything extra clean. Wash fingerprints from light switch plates. Mop and wax floors. Clean the stove and refrigerator. A clean house makes a better first impression and convinces buyers that the home has been well cared for.

4. Get rid of smells. Clean carpeting and drapes to eliminate cooking odors, smoke, and pet smells. Open the windows.

5. Put higher wattage bulbs in light sockets to make rooms seem brighter, especially basements and other dark rooms. Replace any burnt-out bulbs.

6. Make minor repairs that can create a bad impression. Small problems such as sticky doors, torn screens, cracked caulking, or a dripping faucet may seem trivial, but they’ll give buyers the impression that the house isn’t well maintained.

7. Tidy your yard. Cut the grass, rake the leaves, trim the bushes, and edge the walks. Put a pot or two of bright flowers near the entryway.

8. Patch holes in your driveway and reapply sealant, if applicable.

9. Clean your gutters.

10. Polish your front doorknob and door numbers.

1. Price it right. Set a price at the lower end of your property’s realistic price range.

2. Get your house market ready for at least two weeks before you begin showing it.

3. Be flexible about showings. It’s often disruptive to have a house ready to show on the spur of the moment, but the more often someone can see your home, the sooner you’ll find a seller.

4. Be ready for the offers. Decide in advance what price and terms you’ll find acceptable.

5. Don’t refuse to drop the price. If your home has been on the market for more than 30 days without an offer, be prepared to lower your asking price.

1. The closing date. See if the date the buyer wants to take title is reasonable for you.

2. Date of possession. See if the date the buyer wants to move in is reasonable for you.

3. The earnest money. Look for the largest earnest money deposit possible; since it is forfeited if the buyer backs out, a large deposit is usually a good indication of a sincere buyer.

4. Fixtures and personal property. Check the list of items that the buyer expects to remain with the property and be sure it’s acceptable.

5. Repairs. Determine what the requested repairs will cost and whether you’re willing to do the work or would rather lower the price by that amount.

6. Contingencies. See what other factors the buyer wants met before the contract is final—inspections, selling a home, obtaining a mortgage, review of the contract by an attorney. Set time limits on contingencies so that they won’t drag on and keep your sale from becoming final.

7. The contract expiration date. See how long you have to make a decision on the offer.

By Elizabeth Weintraub, About.com Guide

A short sale in real estate is not always a pleasant transaction.

There are many ways to lose a home but signing away ownership in a manner that destroys credit, embarrasses the family and strips an owner of dignity is one of the hardest. For owners who can no longer afford to keep mortgage payments current, there are alternatives to bankruptcy or foreclosure proceedings. One of those options is called a “short sale.”

When lenders agree to do a short sale in real estate, it means the lender is accepting less than the total amount due. Not all lenders will accept short sales or discounted payoffs, especially if it would make more financial sense to foreclose; moreover, not all sellers nor all properties qualify for short sales.

Except for certain conditions pursuant to the Mortgage Forgiveness Debt Relief Act of 2007, be aware the I.R.S. could consider debt forgiveness as income, and there is no guarantee that a lender who accepts a short sale will not legally pursue a borrower for the difference between the amount owed and the amount paid. In some states, this amount is known as a deficiency. A lawyer can determine whether your loan qualifies for a deficiency judgment or claim.

Although all lenders have varying requirements and may demand that a borrower submit a wide array of documentation, the following steps will give you a pretty good idea of what to expect.

Call the Lender

You may need to make a half dozen phone calls before you find the person responsible for handling short sales. You do not want to talk to the “real estate short sale” or “work out” department, you want the supervisor’s name, the name of the individual capable of making a decision.

Submit Letter of Authorization

Lenders typically do not want to disclose any of your personal information without written authorization to do so. If you are working with a real estate agent, closing agent, title company or lawyer, you will receive better cooperation if you write a letter to the lender giving the lender permission to talk with those specific interested parties about your loan. The letter should include the following:

  • Property Address
  • Loan Reference Number
  • Your Name
  • The Date
  • Your Agent’s Name & Contact Information
Preliminary Net Sheet

This is an estimated closing statement that shows the sales price you expect to receive and all the costs of sale, unpaid loan balances, outstanding payments due and late fees, including real estate commissions, if any. Your closing agent or lawyer should be able to prepare this for you, if you do not know how to calculate any of these fees. If the bottom line shows cash to the seller, you will probably not need a short sale.

Hardship Letter

The sadder, the better. This statement of facts describes how you got into this financial bind and makes a plea to the lender to accept less than full payment. Lenders are not inhumane and can understand if you lost your job, were hospitalized or a truck ran over your entire family, but lenders are not particularly empathetic to situations involving dishonesty or criminal behavior.

Proof of Income and Assets

It is best to be truthful and honest about your financial situation and disclose assets. Lenders will want to know if you have savings accounts, money market accounts, stocks or bonds, negotiable instruments, cash or other real estate or anything of tangible value. Lenders are not in the charity business and often require assurance that the debtor cannot pay back any of the debt that it is forgiving.

Copies of Bank Statements

If your bank statements reflect unaccountable deposits, large cash withdrawals or an unusual number of checks, it’s probably a good idea to explain each of those line items to the lender. In addition, the lender might want you to account for each and every deposit so it can determine whether deposits will continue.

Comparative Market Analysis

Sometimes markets decline and property values fall. If this is part of the reason that you cannot sell your home for enough to pay off the lender, this fact should be substantiated for the lender through a comparative market analysis (CMA). Your real estate agent can prepare a CMA for you, which will show prices of similar homes:

Purchase Agreement & Listing Agreement

When you reach an agreement to sell with a prospective purchaser, the lender will want a copy of the offer, along with a copy of your listing agreement. Be prepared for the lender to renegotiate commissions and to refuse to pay for certain items such as home protection plans or termite inspections.

Now, if everything goes well, the lender will approve your short sale. As part of the negotiation, you might ask that the lender not report adverse credit to the credit reporting agencies, but realize that the lender is under no obligation to accommodate this request. Credit report status is not always negotiable.

A Comparative Market Analysis (CMA) is essential to determine the value of residential property.  Location and characteristics of the property are the key elements in determining value. Therefore, the basis for valuation is similar properties in your area.  The market analysis takes into account the amount
received from recent sales of comparable properties and the quantity and quality of comparable
properties currently on the market. The desired end result is to find a price that will attract a willing and
able buyer in a reasonable time.

Once the value of your home has been determined, you can decide on an offering price that will achieve your goals. Generally, the price should not exceed the value by more than 5% or potential buyers may not even make offers. Naturally, if you want to sell quickly your asking price should be very near the value. The following are a few things to keep in mind about pricing:

  • Realistic pricing will achieve maximum price in a reasonable time.
  • Your cost or profit desire is irrelevant; the market determines the price.
  • The cost of improvements are almost always more than the added value.
  • Houses that remain on the market for a long time do not get shown.
  • A house that is priced right from the beginning achieves the highest proceeds

Your home has just one chance to make a great impression with each potential buyer. And it can! The following “tricks of the trade” will help you keep track of what needs to be done. The whole idea is to present a clean, spacious clutter-free home—the kind of place you’d like to buy. Accomplish a little every day, and before long your home will be ready to make the impression that can make the sale.

Your Home’s Curb Appeal
  • Mow lawn
  • Trim shrubs
  • Edge gardens and walkways
  • Weed and mulch
  • Sweep walkways and driveway, remove branches, litter or toys
  • Add color and fill in bare spots with plantings
  • Remove mildew or moss from walls or walks with bleach and water or other cleaner
  • Take stains off your driveway with cleanser or kitty litter
  • Stack woodpile neatly
  • Clean and repair patio and deck area
  • Remove any outdoor furniture which is not in good repair
  • Make sure pool or spa sparkles
  • Replace old storm doors
  • Check for flat-fitting roof shingles
  • Repair broken windows and shutters, replace torn screens, make sure frames and seams have solid caulking
  • Hose off exterior wood and trim, replace damaged bricks or wood
  • Touch up exterior paint, repair gutters and eaves
  • Paint the front door and mailbox
  • Add a new front door mat and consider a seasonal door decoration
  • Shine brass hardware on front door, outside lighting fixtures, etc.
  • Make sure doorbell is in good working order
General Interior Tips
  • Add a fresh coat of interior paint in light, neutral colors
  • Shampoo carpeting, replace if necessary
  • Clean and wax hardwood floors, refinish if necessary
  • Clean and wash kitchen and bathroom floors
  • Wash all windows, vacuum blinds, wash window sills
  • Clean the fireplace
  • Clean out and organize closets, add extra space by packing clothes and items you won’t need again until after you’ve moved
  • Remove extra furniture, worn rugs, and items you don’t use; keep papers, toys, etc. picked up–especially on stairways
  • Repair problems such as loose door knobs, cracked molding, leaking taps and toilets, squeaky doors, closets or screen doors which are off their tracks
  • Add dishes of potpourri, or drop of vanilla or bath oil on light bulbs for scent
  • Secure jewelry, cash and other valuables
The Living Room
  • Make it cozy and inviting, discard chipped or worn furniture and frayed or worn rugs
The Dining Room
  • Polish any visible silver and crystal
  • Set the table for a formal dinner to help viewers imagine entertaining here
The Kitchen
  • Make sure appliances are spotless inside and out (try baking soda for cleaning Formica stains)
  • Make sure all appliances are in perfect working order
  • Clean often forgotten spots on top of refrigerator and under sink
  • Wax or sponge floor to brilliant shine,clean baseboards
  • Unclutter all counter space, remove countertop appliances
  • Organize items inside cabinets, pre-pack anything you won’t be using before you move
Bathrooms
  • Remove all rust and mildew
  • Make sure tile, fixtures, shower doors, etc. are immaculate and shining
  • Make sure all fixtures are in good repair
  • Replace loose caulking or grout
  • Make sure lighting is bright, but soft
The Master Bedroom
  • Organize furnishings to create a spacious look with well-defined sitting, sleeping, and dressing areas
The Garage
  • Sell, give away, or throw out unnecessary items
  • Clean oily cement floor
  • Provide strong overhead light
  • Tidy storage or work areas
The Attic
  • Tidy up by discarding or pre-packing
  • Make sure energy-saving insulation is apparent
  • Make sure air vent is in working order
  • Provide strong overhead lighting
When It’s Time To Show
  • Make sure your property profile folder, utility bills, MLS profile, house location survey, etc. are available
  • Open all draperies and shades, turn on all lights
  • Pick up toys and other clutter, check to make sure beds are made and clothes are put away
  • Give the carpets a quick vacuuming
  • Add some strategically placed fresh flowers
  • Open bathroom windows for fresh air
  • Pop a spicy dessert or just a pan of cinnamon in the oven for aroma
  • Turn off the television and turn on the radio music at a low volume
  • Make a fire in the fireplace if appropriate
  • Put pets in the backyard or arrange for a friend to keep them
  • Make sure pet areas are clean and odor-free
  • Make sure all trash is disposed of in neatly covered bins

Agents from many real estate firms will want to show your home. Please allow any agent who calls to show your home at the suggested time. If you are not frequently available, it is suggested that you allow a lockbox to be installed on your door. You will increase your odds for a sale by allowing more qualified buyers to see your home. You do not want to miss an out-of-town transferee because your home was not able to be shown.

During a showing:
  • Open all draperies and window shades during daylight hours.
  • The kitchen & bathroom should sparkle.
  • Open windows one half hour before showing to circulate fresh air.
  • Open all the doors between rooms to give an inviting feeling.
  • Place fresh flowers on kitchen table and/or in the living room.
  • If possible, bake cookies or bread to add an inviting aroma.
  • Turn on all lights and replace bulbs with high wattage bulbs where needed.
  • Pets should be confined or restricted from view. Eliminate pet odors. Not everyone may share your love of animals. Some people may be allergic to them.
  • All jewelry and small valuables should be stored in a safety deposit box or in a locked closet.
  • Replace any items not included in the sale, or tag them appropriately with “to be replaced with…”or “not included” signs.
  • Beds should be made & clothes picked up. Bathrooms should be clean, with towels folded and toilet lid down.
  • When you leave the house, please leave it as if you know it is going to be shown. You never know when the right person is going to look at it!

When selling your home, your REALTOR® can give you up-to-date information on what is happening in the marketplace including price, financing and terms of competing properties. These are key factors in a successful sale of your property at the best price in the least amount of time.

Only real estate licensees who are members of the NATIONAL ASSOCIATION OF REALTORS® are properly called REALTORS®. REALTORS® subscribe to a strict code of ethics and are expected to maintain a higher level of knowledge of the process of buying and selling real estate. They are committed to treat all parties to a transaction honestly. REALTOR® business practices are monitored at local board levels. Arbitration and disciplinary systems are in place to address complaints from the public or other board members.

Your REALTOR® can help you objectively evaluate every buyer’s proposal and then help write an appropriate legally binding sale agreement. Between the initial sales agreement and settlement, questions may arise. For example, unexpected repairs may be required to obtain financing or a problem with the title is discovered. Your REALTOR® is the best person to help you resolve those issues and move the transaction to settlement.