We just posted a list of Seven Tips for buyerson how to make sure they meet the Home Buyer Tax Credit deadlines: April 30 to be in contract, June 30 to be closed.
We wanted, though, to make a special advisory for buyers who want to take advantage of the “step-up” tax credit, and who are selling their current home. As you know, the Home Buyer Tax Creditis available to both first-time home buyers and “step-up” buyers who are long-time homeowners. So lots of people who want to take advantage of the tax credit are selling their current home and buying a new home. For these people, attention to these deadlines is even more crucial, since they have TWO real estate transactions that they have to get finished on time.
So make sure you first read our Seven Tips for buyers,since those apply to you on your buy side. But since you’re also selling, we wanted to highlight Seven Tips for Seller/Buyers to make sure you can make the deadline on your purchase.
As we noted previously, a real estate transaction is like a business project that you and your agent have to manage proactively, and if you are both buying and selling you have TWO big projects you have to manage simultaneously. That’s a lot of moving parts. And it’s even more complicated if you need to sell your home in order to buy your new home, since you have to go through the sale before you can get through the purchase.
1. Be cooperative, not adversarial
A real estate transaction should be cooperative, not adversarial. You and your buyer are not suing each other, you’re trying to do a deal. Yes, you have to negotiate the terms of that deal, but there’s no reason for negotiation to create a combative relationship between you and the buyer. We spent about 100 hours in negotiations with the franchise people at Better Homes and Gardens Real Estatewhen we joined the network, and we never had an adversarial moment, resulting in a great agreement and a fantastic relationship now. Be cooperative with your buyer, and work together to make a deal happen. And, like we’ve said in the Seven Tips for Buyers, choose your buyer carefully and make sure your buyer knows about your deadline situation.
2. Do a lien search immediately.
One of the things that can derail your sale is a last-minute problem with title on the property you are selling. This could be anything from a missing survey to a forgotten mechanic’s lien that was put on your home by a landscaper you fired two years ago. One way to protect against those last-minute surprises is to ask your agent to contract with a title agent to do a simple lien search on your property to make sure no one has placed an adverse mark against your title. The lien search won’t check your chain of title, but it can make sure that no one has placed a lien against you without your knowledge. A lien search can cost a few hundred dollars, but it’s worth it.
3. Hire an attorney right away.
In our Seven Tips for buyers, we talked about how you should gather your team together as soon as possible. This is even more crucial for your sales side, since your attorney on your sale is going to have to draft the contracts of sale. Our advice is to hire your attorney right now, even if you don’t have a prospective buyer. Your seller can prepare a contract of sale today, leaving blank the basic terms and the buyer information, and have it ready at a moment’s notice when you finally do get a deal. Your attorney can also answer questions now that you should get resolved before you’re under the deadline crush. If you need a good real estate attorney, just let me know and I’ll hook you up with someone great.
4. Arrange with your lender for financing options if you don’t close on time.
What if you simply cannot close on your sale before April 30th, even though you can close on your purchase. Most people need the equity from their sale in order to close on their purchase, which means that a failure to close on your sale would prevent you from meeting the April 30th deadline. But your lender might be able to arrange some sort of “bridge financing”to help you through that process. The financing might cost you more money than you’ll get from the tax credit, so it might not be worth it, but it’s something you should talk about your lender immediately. If you need a good mortgage officer, just let me know and I’ll hook you up with someone great.
5. Start moving now.
Our general advice to sellers who actually want to get their homes sold, and not linger on the market to enjoy a few changes of the seasons, is to start moving right away. Start packing up all the stuff you’re not going to need for the next few months, and get it out of the house. I don’t care if you store it, give it away, or toss it in the Hudson River, but get it out of your house. Your house will look bigger, less cluttered, and more appealing to potential purchasers. For a seller with a Home Buyer Tax Credit deadline issue, it makes even more sense to follow this fundamental advice, since starting your move will not only help you get your home sold but also save time later when time may be at a premium.
6. Make your home appealing and available.
If you want to get your home sold quickly, shine it up and let people see it. We have extensive materials available regarding staging your home here on our site, but even if you don’t have the desire to stage your home you should at least “detail” it. What do I mean by detailing? It’s what you do when you’re selling your car: clear it out, clean it up, and shine it up to look it’s best. Take a weekend and clear out all the clutter from your home (i.e., #5, start moving now!), and make the house appealing to potential buyers. Also, make it available. If you want to sell your house, you have to make it available for showings whenever someone might want to see it. It’s a pain, but that’s what you need to do if you want to make your deadline.
7. Don’t give the home away, but be competitive on your pricing.
I am always leery of discussing pricing with sellers, because sellers suspect that a real estate broker just wants to underprice a listing for a quick sale and a quick commission. But here’s the bottom line: I don’t set the price for your home, your agent doesn’t set the price for your home, and even you don’t set the price for your home. The market sets the price for your home. So I’m not going to tell you a thing about pricing your home.
What I will tell you is this – take responsibility for setting the price by sitting down with your agent and actually looking at the market that exists, not the market that you wish existed. People immaturely price their homes according to criteria that have absolutely nothing to do with properly setting the price competitively to the market – they price according to what they need to buy, or what their neighbor got two years ago, or what they want in their pocket. No buyer in the world is going to meet a price based on those criteria.
Your buyer is going to price your home to the market – what comparable homes have sold for, and what competitive homes are selling for now. That’s how you and your agent should price your home. Get involved in that process, and take responsibility for setting your price to the market. If you do that, unlike most of the sellers on the market, you’ll get your home sold in time for the deadline.
We hope you found this helpful. If you have any questions, just make a comment below or email me.
The Market Intelligence blog provides real estate analysis and information about real estate throughout the Hudson Valley, in Westchester County, Putnam County, Rockland County, Orange County, Sullivan County, and Dutchess County. Feel free to comment below.
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