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The Pros and Cons of Selling Your House

Selling your home can be one of the best moves you’ll do. Housing is consistently in high demand, with few homeowners ready to sell.  The economy is bouncing back, and whether you sell for cash or through a real estate agent, you have several details to consider.

Selling your home can be the decision of a lifetime. You can get good value out of your home, but you need to know that it has drawbacks. Here are the pros and cons of selling your house and whether you should do it now.

Pro: You Can Get Some Equity from your Home

Whether you’re preparing to sell your home or you don’t want prep at all, one crucial detail you need to consider is your home’s equity. You want to gain some equity to buy your next home and get something more suitable than what you already have.

Selling now can be a great advantage because mortgage rates are down, and it’s a buyer-centric year. There’s also a lot of extra equity flowing, with the average borrower gaining as much as $50,000+ to $100,000+ gain in equity. Selling now can get you solid value on your home and get a good profit margin.

You’re also setting yourself up with enough equity to cover your next home. Whether you’re downsizing or going for a home fit for a larger family, you should be able to cover that and get a little extra on the side now that you’re getting started.

Con: It Can Be Hard To Find A New Home

When you’re trying to sell your home, the last thing you want is to become homeless yourself. Remember that it takes time before selling a home - from a few days to several weeks long. Some homes even take a few months before you can flip them over.

During this time, you need to make sure that you can find yourself a new home. A real estate open house can fast track your home sale by a few weeks and even net you up to an extra $15,000 in sale price. All these don’t matter if you’re worried about your next home.

If you’re still unsure where you’ll end up next, or you haven’t secured the deal yet with your next house, don’t sell just yet. It’s better to wait to ensure that you have a roof over your heads before you sell. There’s also a chance that you won’t get the price you want for the home, which can be problematic if what you get is less than the value of your next home.

Pro: You Have A Growing (Or Shrinking) Family

One pro of selling your home is accommodating your growing family’s needs. If you have a starter home with only a few bedrooms, you’re likely a family of 3 or even 4. This can be problematic if you have a growing family or you’re on your way to having teenagers that need their own space.

Selling your home now can help you find a more suitable space for your family. The same is true if you have kids moving out, which means you won’t need a bigger home anymore. Downsizing can help you have a home that works for your needs.

Sell your home and find a more suitable home to accommodate your needs. A bigger house can be great for a growing family, while a smaller home affords you a cozier space while getting some extra cash.

Con: Your Family Needs To Readjust

One of the big cons of selling a home is having the kids adjust to a new environment. Most people who buy their first homes are likely couples looking to have children or those with a growing family. If you have kids who already have friends in your area, expect some adjustment issues.

Your family would need to adjust to an entirely different environment. If you’re moving nearby, the adjustments should be easy to make. For those moving to a entirely different city or state, we’re talking about big adjustments to a new culture, new neighborhood, and even new school.

If you think your kids can adjust well, there shouldn’t be many problems, especially if relocation is a must. Selling your home means your family needs to do their best and welcome their new lives, including yourself. If your family is the type that likes being rooted in one place, consider if selling your family home is necessary at all.

Pro: You Can Get More Than Listing Price

If you have kept the value of your home, you are in an excellent place to get more money than the asking price. Many homes are selling for tens of thousands of dollars above listing, and you should get the most value from the current market.

Most homes right now are bought through intense bidding wars from buyers, together with a stronger interest from everyone. The real estate market is in a weird position where many in-demand homes sell for much higher - as much as a third of all homes sold.

If you think you’re in an advantageous position, it’s a fantastic time to sell now. With the right home, you’ll likely get to sell higher than your original home’s value. The extra money can go a long way, especially if you’re looking to build onto your next project.

Con: You’ll Miss Out On Your Home’s Value

One of the biggest issues that you can experience when selling your home is missing out on the growing value of your home. If you have all the right pieces that make for a fantastic real estate property, selling now can make you lose out on the potentially higher value you can get.

Home prices are starting to soar once again, but there is demand that is growing for them this time. If you sell out before you reach the peak value of your home, you’re losing out on potentially tens of thousands of dollars. Then again, you need to time the sale to fit your needs.

A home’s value does not matter if you lose out on the right window. If you have a second home secured and can afford to sit on it until the time is right, you should be able to grow its value. If your home’s in the right place, it should have a consistent demand for it regardless.

The Bottom Line

Selling your home can be a blessing or a challenge, depending on many factors. The best-case scenario is to have a backup home that will give you time to improve your property value and even get an agent to sell it. Weigh out the pros and cons of selling your home and make sure it’s worth it for you.


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By: Kat Sarmiento

Kat writes articles with the hopes of reaching out to more people. Her writing is focused on lifestyle, science, and smart hacks, that will definitely (well, hopefully) be useful to her readers.

What are Prepaid Costs When Buying a Home? [Real Estate Insider]

Buying a home is more expensive than you might think. The largest cost you hear about is the down payment, but there are several other expenses that add up to quite a bit more. From taxes to insurance and fees, here are some of the prepaid costs you can expect to owe at or before closing day. 

Pre-Paid Costs for Buying a Home

Homeowner's Insurance

A mortgage originator will typically require a year's worth of mortgage insurance paid at closing. The premium is determined at a yearly rate, but most lenders will allow you to incorporate that payment into your monthly mortgage bill. 

Mortgage Interest

The creditor adds on the interest between the closing date and the amount due at your first payment at the end of the first full month. For example, if you close on the 15th of the month, you pre-pay the interest through the 30th (or 31st) at closing. Then, your next payment will include an entire month's worth of interest. Most people try to close at the end of the month to reduce the amount spent on interest at closing. However, there are some benefits to closing near the beginning of a month. Most lenders are busy at the end of the month, so if you close in the beginning and something goes wrong, the lenders might have more time and resources to solve the issue. 

Property Taxes

The buyer typically pays the remainder of the property taxes due that year at closing. So, a purchase earlier in the year may have to front more cash to cover the gap. Vice versa for a late-year purchase. However, this portion is negotiable depending on how the market is responding. Some sellers will offer to cover a percentage of the taxes to attract a potential buyer. 

Earnest Money

Someone will need to collect money when you make an offer on the house to prove you're serious about buying the home. Some real estate brokerages collect the earnest money shortly after you make the offer. Sometimes, they'll have you send it directly to the title company to hold in escrow. Regardless, your real estate agent should know where to take the money and how much you'll need send. 

The amount of earnest money typically depends on the size of the purchase. Most contracts require 1%-3% of the total value. For example, if you make an offer for $200,000, you can expect the earnest money due to be around $2,000. This check will be contributed to your down payment at closing, but it's helpful to know that you'll need to have this money accounted for when you make an offer. 

Down Payment

The biggest expense when buying a house is the down payment. Most lenders require at least 3.5% of the total loan up-front. This would be the case for an FHA mortgage. A conventional mortgage usually requires close to 5% with a good credit score. Some speciality loans, such as VA or USDA loans, might have 0% down options, but you typically have to pay a small percentage of the mortgage at closing. 

There are down payment assistance programs available to most home buyers who make less than the median income in their area. If you think you might struggle to save enough money for the required down payment, talk to your trusted lender to see what programs they offer. 

Mortgage Fees and Closing Costs

Mortgage Origination Fees

The mortgage originator charges a fee for processing the loan. All of the work they put into collecting paperwork and setting up the mortgage goes into the total costs due at closing. 

Title Fees and Insurance

The title company is responsible for providing information on the property and making sure there aren't any legal issues before the transaction occurs. Most title companies require the buyer to purchase title insurance to protect the buyer and the title company from legal action if an issue is discovered after the deal closes.

Sales Taxes and Fees

Federal, state, and local governments play a role in such a large exchange of property. As a result, there are sales taxes involved because the transaction is taking place between two parties. For example, most states charge between 2-5% at the state level, and local governments can add to that if desired. There may also be a local ordinance that a city or county employee inspects the property prior to change in ownership.

Other Expenses

Appraisal

Most mortgage companies will require an appraisal for the property for a few reasons. First, they want to make sure the amount of the loan would be protected and they could resell the property for a similar price if the loan is defaulted. Also, it provides valuable information about the property for the buyer, so they have a full understanding of the property they're purchasing. 

The average appraisal costs around $500. Depending on the area and demand for appraisals, it can range from $300 to $800 in the very expensive areas. The buyer is responsible for purchasing the appraisal, and the results will be available for review before the closing date. 

Inspection

Another expense that is meant to protect the buyer is a buyer's inspection. Private inspection companies will send out a professional to examine the property and look for any obvious or potential issues. The price of an inspection depends on the size of the property since the inspector is responsible for examining every inch. A standard inspection will cost $300-$400, and there are add-ons based on the situation. Most inspectors will recommend having a sewer professional examine the plumbing, which will cost a bit more. You can also request special inspections/treatments for termites, mold, and radon. Any of these additional services will cost more, and your inspector will tell you if they think it is necessary. 

Survey

Most real estate agents will recommend the buyer have a survey done on the property after making an offer. Surveys mark off the property lines and tell you if there are any potential encroachments or easements on the property. For example, most utility companies have an easement to enter your property to "read the meter" or perform routine maintenance.

A survey will also map out any unusual or unique attributes on the property. For example, some people own the road in front of their property and are responsible for maintenance. It could also reveal improvements done on the property over time and give dimension of different structures. A survey can cost anywhere from $150 for a basic drawing, or closer to $500 for a full-fledged service where they mark the boundaries and examine the structures. Talk to your real estate agent about what they think is necessary for your circumstances. 

Pre-Purchase repairs**

In rare circumstances, your lender might require repairs on the property before they fund the loan. If there are structural issues or hazardous conditions such as mold or radon, they can withhold the mortgage until the problems are resolved. Any repairs will fall on the responsibility of the buyer unless they can negotiate it into the contract with the seller. Beware of possible warning signs and ask your inspector to emphasize any structural or hazardous problems when they're examining the home. 

Remodeling Projects With the Highest ROI

With the housing market booming as it is right now, it’s important to consider investing in property to turn around and sell for profit. One way you can do that is by purchasing homes that can use some updates but utilizing the remodeling options that will have the best return on your investment. 

That is exactly what you’ll find here. The list below goes into detail about several remodeling options that are not only great for homes but also for your ROI. When you purchase a home to sell, make sure to consider these options below to help you get the most out of your purchase and resell. You’ll be glad you did when you see how well it works out and how it attracts buyers to the home.

Siding Options

There are numerous house siding options to choose from that offer low maintenance, durability, and appeal to the potential buyer. When you’re considering options to redo the outside, take a moment to look at the house from a variety of angles. The street view, in the driveway, and even the back of the home help you to get the full picture. You want to choose something that is not only durable and low-maintenance but also offers curb appeal and value. 

Some of those options that do just that include:

  • Stucco 
  • Wood
  • Fiber cement siding
  • Stone Veneer
  • Brick
  • Metal

One of the most popular options is fiber cement siding. Not only is this a low-maintenance option, it also gives you the most variety in the way the home looks as well. It’s a great choice to get a huge ROI.

New Garage Door

One vital part of the home is the garage area. When the door doesn’t work properly or looks run down, it can be a detriment to the resale value. It’s easy to add a new door and get a great ROI. People want the garage of the home to work properly and protect their items that are stored there. When it comes to the cost of a garage door, this is actually a great way to invest into the home and get a return. You can easily add a new door to update the look of the residence and offer security to the new buyers.

Basement

One item in the home that may need to receive some TLC is the basement area. Is the basement in the property heated or closed in for use? By taking time to remodel the basement into a climate-controlled space, you can increase the square footage that the home provides. Providing heating for basements is easy to do with radiant floor heating. This allows you to heat the area without having to change anything in the current HVAC system you may already have. 

This type of heating allows efficiency, durability, and comfort all at the same time. You’re sure to love the ROI you’ll receive from this addition and the increase in space.

The Flooring

Take a look at the flooring in the home. Does it look worn out or old? Consider replacing it with faux wood flooring to help with the ROI of the property. There are so many faux wood options out there that provide a classic elegance to the home without all the maintenance needed in real wood flooring. You can choose from a variety of styles and types, such as laminate wood, to help update the inside of the home. This is a huge appeal to those who are looking to buy which will help you to sell the home quicker once completed.

These seemingly simple updates can help make a huge difference in the return you receive on your property investments. By installing these along the way, you can turn around and resale the home for a profit larger than you might have first thought. These durable renovation options help you to add value and appeal to potential buyers down the road.

Andrea Erickson is a contributor to Innovative Building Materials. She is a blogger and content writer for the real estate industry. Andrea is focused on helping fellow homeowners, contractors, and architects discover materials and methods of construction that increase property value, maximize energy savings, and turn houses into homes. 

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