By Colin R. O'Leary
October 30th, 2018
The decisions a seller makes when preparing the sale of a property will have major consequences on the outcome. The most important thing on most sellers mind is usually the net or the amount of money the will walk away with after paying taxes and fees at closing. The decisions a seller makes before listing a property will determine whether or not the experience is a positive or negative one. When selling property in today's market, knowledge is power. Making the wrong decisions can be costly and time consuming. Here are a few common questions that I usually hear from my seller clients, and my responses.
How much is my home worth in today's market?
Answer: This is usually the question that sellers are most eager to learn. Websites such as Zillow can give you an idea of what the home may be worth, but this number is often misleading and sometimes can be way off. The true value of any property is ultimately determined by the market, and what a buyer is willing to pay for the property at a given time. It's best for a seller to contact an experienced listing agent who can provide an accurate real-time CMA or comparative market analysis before you list the property. The comparative market analysis will provide detailed information such as recent sales, current listings (competition), and listings that are in-contract. This information will help determine the current retail value of the property.
How long will it take to sell my home?
Answer: Most sellers are unaware of the lengthy process it can take to sell a home. The average time a house sits on the market before entering contract varies depending on the market and property type. The key to selling a property quickly is not just great marketing, but the pricing strategy. The amount of time a property sits on the market can be directly related to its price. If a property is listed near the actual retail value of the property, based on the competitive market analysis, there should be a contract on the property within a few weeks or days depending on the strength of the market.
Even with the greatest marketing in the world, if a property is overpriced, it could take months or even years to sell. Even worse, it might not sell at all. If the property is under-priced, it might sell quickly, but a seller could be leaving a lot of money on the table. Determining the proper retail value of a home when first listing the property is crucial to help avoiding these mistakes.
Are Open Houses important?
Answer: Yes Open Houses are important. First and foremost, it's in the best interest of any seller to expose the property to as many people as possible. This will help net the highest price possible for the property. Open Houses help create excitement and demand for a new listing.
What do I need to do to prepare my property for the market?
Answer: It's always in the best interest of the seller to prepare the property as best they can before putting the home on the market. Neglecting this can have a major impact on the sales price received for the home. First and foremost, hiring an experienced brokerage to handle the sale of the property is important. You want to put out the best possible image of the property. This means professional photography and floor-plans at the bare minimum.
Simple fixes like painting, cleaning, and sprucing up the curb appeal of the home can go a long way. It's best to remove as much clutter as possible from the interior of the property. It's helpful to remove any family photos so potential buyers can imagine the property as their own. Before Open Houses or showings, make sure not to smoke inside of the house for at least one day, and again to remove pets and any other potential distractions. Simple things like music and candles can help create a positive ambiance when the property is shown.
What closing costs should I expect?
Answer: Realtor commissions usually make up the lion’s share of the closing costs. Typical commissions range from 5-6% of the apartment/building price in NYC. Transfer taxes are another closing cost. Transfer taxes are usually paid by the seller (unless it’s a new development). The New York City Real Property Transfer Tax is 1% of the price if the value is $500,000 or less, or 1.425% if it is more. Unfortunately, New York State also has a transfer tax. New York State charges you an additional 0.40% transfer tax on the purchase price.
Another closing cost to keep in mind is attorney fees. Most real estate attorney fees will generally range anywhere from $2,000-$5,000 for the transaction. Real estate attorneys in NYC typically charge you a flat fee upon the closing of the real estate transaction.
Finally, you could be on the hook for capital gains taxes, especially if the property has risen significantly in value since it was purchased. While this isn’t technically a closing cost, it is certainly something you should consider. If you are selling your primary residence, you have lived there for 2 years or more, and are married, you can typically exclude the first $500,000 in capital gains. If you are single, it would be approximately half of that or $250,000.