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Family Finances: Take some sound advice before you sell your house
Friday, April 13, 2007

If you're looking to sell your home, you're definitely not alone.

The peak selling season is spring, says Elizabeth Razzi, author of "The Fearless Home Seller" (Stewart, Tabori & Chang).

Here is some advice from Ms. Razzi's very useful book:

It's usually safer to sell your home first before buying another.

Get price estimates from three real estate agents. "Practice saying 'no thanks ?' to an inexperienced agent who just happens to be the son-in-law of your neighbor's best friend," Ms. Razzi advises. Ask how much of the task the real estate agent will delegate to assistants, and check references of the agent's three most recent clients. Find out exactly how the agent will market the home. You want your listing to be aggressively marketed, including to Web sites, Realtor.com and Craigslist.com.

When presented with a listing contract, negotiate. Aim for a low commission and short time commitment. Avoid agents who attempt to flatter you by setting the selling price too high. Also, avoid dropping the price too soon just so an agent can get a commission. Best in advance to research Web sites such as www.zillow.com or www.realestateabc.com to get an idea of what your home is worth.

Consider capital gains taxes, and round up necessary records, contracts and receipts that can help lower your capital gains. Single persons can keep $250,000 in profits, $500,000 for married couples, with no capital gains tax, provided that you've lived in the home two of the prior five years. Check IRS Publication 523 at www.irs.gov for more details as well as exceptions to this rule.

Once you decide to put your home up for sale, get out of the picture. Pack away as much as possible that represents your own sense of style. "Allow this home to become the object of someone else's desire," Ms. Razzi advises.

Make quick fix repairs and only cost-effective improvements to make your home comparable to others in the neighborhood. An extra bedroom, for example, could pay off if your home has only two bedrooms and most others have three. Kitchens and baths also are important to potential buyers.

Particularly if your home is expensive, negotiate on the real estate commission. After all, a 6 percent commission on a $1 million home is $60,000. On a $2 million home, it's $120,000.

If you use a discount service, find out how much more work it will require from you, and be sure you're up to the task. Consider that some might steer you to affiliate companies for things like title services, which may or may not be in your best interest. Also, consider whether your home will get adequate exposure, and whether you still may have to pay a buyer's agent a commission.

Selling on your own? Work carefully with a real estate attorney and don't show your home to anyone without getting good contact information upfront. An e-mail address and cell-phone number is not enough.

Any discussion of price with a potential buyer must be in writing. No verbal discussions.

Don't hide defects. Be truthful in all disclosures.

Once the home is sold, take photos before you leave -- not only for memories, but to help document any possible insurance losses.

Got an offer that's lower than your asking price? Don't split the difference in your first counteroffer, advises Michael Corbett, author of "Ready, Set, Sold! (Plume). Instead, go a bit higher. For example, if your condo is listed at $250,000 and your offer is $220,000, don't counter at $235,000. Instead, counteroffer at higher than just the split, tipping the offer in your favor.

Consider putting a "liquidated damages" clause in your contract, allowing you to keep the deposit if the buyer backs out, Mr. Corbett suggests.

Keep on the escrow company to get costs settled quickly, and question all fees. Be sure you're not saddled with fees that the buyer should pay.

First published on April 12, 2007 at 7:19 pm
Spouses Gail Liberman and Alan Lavine are syndicated columnists. Their latest book is "Quick Steps to Financial Stability (Que/Penguin)." You can contact them through www.moneycouple.com.