Things To Do After Selling Your House

Once you close on your home sale, you can walk away and celebrate, right? Well, not exactly! After you sell your house, you certainly should celebrate, but you have more things to think about, from tax prep to buying your next house. In “House Selling for Dummies,” authors Eric Tyson and Ray Brown lay out things you can do to save money and increase your peace of mind, post-sale.

You’re going to need to do something with any proceeds you have left from the sale. Plus there are tax implications to consider, and if you haven’t already, you need to think about where you’re going to live long term.

Here are some tips from Tyson and Brown that can help guide you.

1. Keep copies of all paperwork related to the closing and settlement

Although it might be tempting to shred the paperwork or put it in storage, you’ll want to have it handy for April 15. When you file your taxes, you’ll need documentation for the expenses and proceeds of the sale. And after you file your return, you’ll want to keep the paperwork in case you’re audited.

2. Keep proof of improvements and prior purchases

This is for tax purposes, too. The IRS allows you to add the cost of improvements to your home’s cost basis during the time you own the home, which is nice if you have a sizable capital gain. But to use this tax provision, you need to keep receipts for everything you spent on home improvement.

3. Stay on top of tax laws after you sell

Because tax laws constantly change, you’ll want to keep current to avoid losing money. For example, a recent law allows you to exclude from tax a significant portion of the profits from the sale of your primary residence.

4. Put your proceeds in a money market fund

If you sell and then don’t immediately buy, you’ll need a safe place to put your money. A money market mutual fund offers safety, a reasonable rate of return, daily access to your money and check-writing privileges.

5. Choose your next home carefully

Scope out a variety of areas and housing options that meet your family’s needs.

6. Don’t feel pressured to buy

Take your time purchasing your next home; rent for awhile if you’d like extra time or want to try an area out first before buying. “Keep in mind that you have two years to defer tax on your house-sale profits,” Tyson and Brown point out.

7. Reevaluate your personal finances

If your situation changes before you buy another house — you get a promotion, have a baby, go through a divorce — you’ll need to rethink your finances and how much you can afford to pay for your new house.

8. Think about what you need from an agent to help you buy

Carefully consider whether the agent who helped sell your house can meet your needs when you’re buying. Buying and selling require different skills. And, if you’re moving to a new area, you may want someone familiar with the area.

9. Think through your next down payment

Brown and Tyson recommend putting at least 20 percent down on your next house in order to qualify for the best mortgage programs. If you can afford more than 20 percent, consider whether it’s better to put that money in the down payment or to invest the money elsewhere.

“Younger home buyers willing to take on more investment risk should lean toward a 20-percent down payment, whereas older home buyers, who tend to invest less aggressively, should opt for larger down payments,” the pair recommends.

10. Remember to send change-of-address notices

The U.S. Postal Service recommends you complete your change of address 30 days before you move.

Experts in Residential Real Estate in Orlando

If you are BUYING or SELLING real estate it’s quiet often the single most important financial decision you make. For the last 30 years we have helped clients buying and selling property in Orlando and the surrounding areas. Put simply, this means the knowledge and expertise accumulated over this time ensures our clients get the best representation possible.

Our experienced agents will help and guide you through the entire process providing valuable support every step of the way.

Reasons Home Sales Are Falling Through Today

For the past few years, anyone who wanted to sell their home was pretty much guaranteed a buyer, but that’s no longer the case.

During the height of the COVID-19 pandemic, a seller’s market reigned, where buyers would do just about anything to get a house, from offering way over the asking price to waiving contingencies. But the real estate landscape has changed a lot since then.

In fact, one recent survey by home warranty company Cinch Home Services of 1,000 Americans who tried to buy or sell a home in the past year found that 1 in 5 seller’s deals fell through.

The reasons these deals are failing run the gamut, but one common theme is economic uncertainty. According to the Cinch survey, 16% of deals fell through due to buyer’s job loss and in 23%, buyers pulled out because they were afraid of a recession.

“Consumers are feeling uneasy about the current state of housing and the economy,” says Ali Wolf, chief economist for Zonda. “Today’s market is different than it was just six months ago.”

Since selling a home today is no longer a given, sellers whose homes are on the market right now might be worried. While not all contracts can be saved, many can if sellers know how to properly vet a buyer and make sure they’re prepared for any curveballs that might hit before closing day. Here’s where those deal-killing pitfalls are hiding, as well as how to avoid them so your own contract crosses the finish line.

1. Higher interest rates interfere with buyer financing

Back when the market was booming and mortgage interest rates were low, many buyers could finance a home purchase without a problem. But now that interest rates have essentially doubled in the past year (from the 3% to 6% range), buyers can’t afford what they used to. In fact, the Cinch survey found that of the real estate contracts that didn’t close, 42% was due to the mortgage application being denied and 31% was due to higher interest rates.

How to save the deal: “The best bet for sellers is to require a recent pre-approval letter from the lender, written within the last 30 days,” says Elizabeth Sugar Boese. “This helps the seller by preventing a contract termination based on the loan’s monthly payments.”

And whenever interest rates are rising fast, sellers should ask if their buyers have a lock on their interest rate, which makes them immune to fluctuations within a certain time period.

“Buyers that have a mortgage rate lock are more likely to close the purchase versus those that still need a rate lock,” says Wolf.

“Home sellers should also be aware of some signs that a homebuyer is at higher risk for not closing on the deal,” says Jason Gelios, author of “How to Think Like a Realtor”.. “These signs are a smaller down payment, a need for concessions or seller credits, and/or a pre-approval from an unknown lender.”

2. Homes aren’t appraising for what buyers offered

Another problem with loans today is that even if the buyer is solid, the property itself can throw a wrench in things if the appraisal falls short of what the buyers offered to pay. This is known as an appraisal gap, and it’s a huge problem for sellers—and buyers—right now.

According to the Cinch survey, 35% of deals that fell through during the past year were because a home appraised for significantly lower than the purchase price.

“Home sales are falling through because sellers are still pricing their homes as if it was six months ago, thinking they are going to be getting lots of offers over asking price,” says Nathaniel Hovsepian, co-founder of the Expert Home Buyers in Augusta, GA.

Even if sellers luck out and get a sky-high offer, a lower appraisal means the homebuyer has to figure out how to make up the difference. If the buyer can’t, or doesn’t want to, the deal is off.

How to save the deal: When you’re looking to price your home, make sure you’re on target with what similar homes in your area have appraised for within the past three months. In general, you want to price your home within 10% of those numbers.

But then also consider that the market is cooling.

“A seller reluctant to price their property at the lower market price may find themselves chasing a declining market,” says real estate agent and lawyer Bruce Ailion, of Re/Max Town & Country in Atlanta. “And that can become extremely costly.”

3. Buyers are driving a harder bargain

When the market was red-hot, buyers were willing to give up a lot to win the bid. In many cases, that meant giving up contingencies for appraisals, financing, and home inspections.

But now that buyers have a bit more leverage with negotiations, contingencies are back—particularly home inspections. And if your own home’s inspection uncovers termites or a leaky roof, know that buyers will dig in their heels today.

According to the Cinch survey, 38% of home purchase deals that didn’t close in the past year was due to something found during a home inspection.

How to save the deal: As a seller today, you just have to accept that buyers will no longer throw caution to the wind and waive all contingencies. They have the leverage today to do their due diligence—and if a home inspection turns up problems, you may have to make repairs or other compromises to keep the buyer happy.

Gelios had a deal almost go awry recently when, upon inspection, it was discovered that the shower in the primary bathroom would not be operable until it was remodeled by the new owner.

“After the inspection was completed, I reached out to the listing agent and stated that we needed to adjust the offer price to reflect a newly remodeled walk-in shower,” says Gelios.

Fortunately, Gelios says, the seller agreed to renegotiate a lower price and the deal was saved. And that is what is needed by sellers who don’t want the contract to fall apart.

“One of the most common ways to save a deal from dying is to renegotiate fairly for both buyer and seller,” says Gelios. “Whatever the buyer is looking to renegotiate should also be fair to the seller—avoiding any overabundant requests or higher price adjustments that are way out of whack.”

As a seller right now, you’ve got to be willing to give a little.

“Sellers that want the contract to move forward should be willing to work with the buyer,” says Wolf. “Consider helping with the closing costs or addressing many of the items on the home inspection list.”

Experts in Residential Real Estate in Orlando

If you are buying or selling real estate it’s quiet often the single most important financial decision you make. For the last 30 years we have helped clients buying and selling property in Orlando and the surrounding areas. Put simply, this means the knowledge and expertise accumulated over this time ensures our clients get the best representation possible.

Our experienced agents will help and guide you through the entire process providing valuable support every step of the way.