Author Topic: New house- tips?  (Read 2258 times)

teamzissou00

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New house- tips?
« on: April 29, 2013, 09:19:19 AM »
Hi!  My wife and I have lived in our current house for 2.5 years and it is worth approx 22k more than when we bought it.  We love our neighborhood, but don't want stairs- we want a one story house.  We are looking at 1500 sq ft homes.  Looks like the cost of the new will be the same as our current value.

I figured we would prep our house and list hoping to find a seller by the time we find a new house in the same general area. 

Any tips?  Sell before we buy a good idea? 

Hamster

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Re: New house- tips?
« Reply #1 on: April 29, 2013, 10:02:48 AM »
Remember that there are transaction costs, so if your current house is worth $250k, and you sell it to buy a new one at $250k, you are probably losing $25k after paying for real estate agents, excise tax, etc, etc.

If you can afford (cost and hassle) to sell your current home first and rent while you wait, it will give you more options and allow you to be more picky and have a stronger offer. Your offer on the new home is more likely to be accepted if it's not contingent on sale of your current home. If you walk away from that sale with cash, you will have more strength in terms of your financing, etc. If you have enough to make a cash offer, even better, and you can often get a better price since sellers like someone who can close quickly without worrying about financing contingencies.

Are you planning on listing it yourself as For Sale by Owner, or using an agent? Being married to an agent, I'd recommend the latter (I can give reasons if anyone cares, but don't want to derail the thread).

teamzissou00

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Re: New house- tips?
« Reply #2 on: April 30, 2013, 02:04:02 PM »
Should I expect to pay 10% of sale price in selling costs?  We are using an agent.

Another Reader

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Re: New house- tips?
« Reply #3 on: April 30, 2013, 02:42:51 PM »
Real estate commissions are negotiable.  In California, the going rate seems to average 6 percent, but they are negotiable.  That's especially true when there are two simultaneous transactions involved.

You will have to pay your side of the transaction costs, and you may be asked by the buyer to contribute to their closing costs.  You will also have to pay for any repair work the buyer, and more important, the buyer's lender, requires to be done as a condition of the sale. 

All in all, 10 percent is a good rule of thumb.

Hamster

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Re: New house- tips?
« Reply #4 on: April 30, 2013, 03:26:21 PM »
Should I expect to pay 10% of sale price in selling costs?  We are using an agent.

Generally 3% commission to buyers agent and 3% to sellers agent (then a portion of that -usually half - goes to the broker they work for, etc). As AR said, they are negotiable, and ease of negotiation depends on your real estate market and various other factors. Around here (NW Washington), they general decrease to 2.5% per agent for properties over about $500k or $750k - I forget since I don't have anything that valuable... Generally the seller pays all commissions, while fees like advertising, photos, etc typically come out of the listing agent's pocket. Around here, if you stage the house, they might make you pay for that, but for more expensive houses, the agent may pay part/all of the cost of staging. Generally, the more commission they are looking at, the more the agents are willing to contribute toward marketing the house.

You can have your agent outline what else to expect in terms of costs. Excise taxes are location-dependent. Assuming your "-WA" in your name means Washington State, here is a table of excise taxes for different communities in the state.  That brings it up to 7.3-7.8% so far.

After that, there are all the various things AR referred to. Here in WA, closing is generally handled by an escrow/title company who charges an additional fee which is traditionally split between buyer and seller.

Whether or not you pay any concessions to the buyer in terms of their closing costs, repairs, etc is entirely up to you, but there is no standard assumption that you have to do so. Every home inspection will find something that needs to be fixed. My wife had one buyer that insisted the seller replace 2 burned out light bulbs... If they want repairs done (or their lender demands that they are done as a condition of the mortgage), you could pay yourself, split costs with the buyer, or just tell them "take it or leave it". It just depends on how strong a negotiating position you have and how badly you need to sell.