SayHomeSell.com

Making a Career or Life-Change Move

Issues to Consider

Timing the sale of your existing home with the purchase of a new home

First analyze whether you are in a "buyer" or "seller" housing market. If in a seller's market, timing-the-sale of your home is on your side.

If you are in a buyer's market, timing is less controlled. Understanding your market will determine how fast you need to move and how much room you have to negotiate.

 

What is a Seller's Market?

You can act fast in a seller's market. Home prices are firm and homes sell quickly even before reaching the MLS listing. Many homes can sell within hours and multiple contracts may be submitted. Buyers will compete for the top price, giving you room to negotiate for best price and closing terms.

 

What is a Buyer's Market?

In a buyer's market, there are many homes on the market compared to the number of buyers. You may need to negotiate favorable terms and contingency clauses to sell your home.

 

Working the ideal situation

The ideal situation is to sell your existing home and move into your new home all within the same day. But markets often don't work that way.

You may not be able to sell your existing home quickly if you are in a "buyers market".

Likewise, the new market you are moving to may be in a "Sellers Market", forcing you to buy quickly for the home you want.

Under this scenario, you may have to rent in your new market while you wait the sale of your existing home to avoid holding two mortgages.

• search our Relocation Center for temporary housing
  links to our SayRelocate.com unit for information
• Another option is getting a "bridge" or "piggyback" loan, which allows you to borrow the equity in your second home to pay part of the mortgage on your new home.
  click for more information about "bridge" loans

 

What to do with your furniture

Ideally, you should try to negotiate a closing date that allows timing of your move from your existing home into your new home.

But if you sell and close your existing home quickly, you may need to store your belongings for a period while you await the purchase or construction of a new home.

• see our Relocation Center for storage moves
  links to our SayRelocate.com unit for information

 

Temporary housing:

If you find yourself having to relocate quickly while your await the sale of your existing home, you may need to find corporate or temporary housing.

• search our Relocation Center for temporary housing
  links to our SayRelocate.com unit for information

 

Renting your existing home:

Some career moves are "temporary", meaning that you expect to return to the existing area.

You may also face a situation where the home values in your current area are appreciating must faster in value than the housing market where you will be relocating.

You might consider renting your existing home for the time you are away or when you can demand a better price:

Step2: complete a neighborhood analysis to determine value

Moving Up or Down the Housing Scale

Moving up?

Are you moving up the housing scale for more space? You might consider remodeling your existing home for added space.

If you like your existing neighborhood, schools, locations, etc.; adding a new room or renovating an existing area can often be much less expensive than paying selling and closing costs for a new home.

Note: you need to analyze whether the home improvement fits the look n' feel within your neighborhood. You may not recover the cost of renovation if you had to sell your home in a neighborhood where homes do not reflect the value of your existing home with the added renovation.

• Cost vs. Value Analysis by region:
  see our home remodeling estimator in the tool set
  
  For home renovation ideas and building tips,
  link to our home improvement gallery

 

Moving down?

Some people move "down" the housing scale, especially empty-nesters whose children have left home.

Again, depending on the market conditions, you may want to consider renting your home if the home values in your area are increasing.

Step2: complete a neighborhood analysis to determine value

Other Selling Reasons

Moving to a Better or More Convenient Area —

items to consider:

Some people sell to move to a better or more convenient location.

Review our "home location" issues before purchasing your new home. You want to avoid buying into a deteriorating neighborhood.

Tools: view location issues

 

Moving Because You Want To —

items to consider:

One, should you rent your existing home if home values are increasing?

Two, understand the potential costs of moving. You don't want to financially strapped yourself if your can delay your move.

Costs to consider:

• home selling costs: explained in Step 2
  
• home buying costs: link to our Home Buying Center to estimate
  
• home moving costs: link to our Relocation Center to estimate

Selling Alternatives: Remodeling Your Home

Remodeling your existing home

Issue: getting a return on your remodeling investment.

First analyze your current neighborhood home values — determine whether your neighborhood is increasing in value.

Estimating your home's value
What's it worth? order your personal home and neighborhood valuation report
sample property reports: complete property valuation recent sales report comparable sales subject property report view sample reports: enter address-zip

You need to analyze whether your remodeling investment will return its value. If the remodeling project greatly exceeds the home values in your neighborhood, you may not recover your investment if you need to sell.

As a general rule, your remodeling investment added to your current home value should equal the approximate home values in your surrounding neighborhood.

• Cost vs. Value Analysis by region:
  see our home remodeling estimator in the tool set

 

Issue: will your remodeling project be allowed under current zoning and

You must first check with your housing jurisdiction:

• find county / local information:
  www.statelocalgov.net

Also check with any home associations that may manage your neighborhood. Some home associations restrict certain home additions or improvements.

• Issue: finding the right home renovation project:
  see our Home Improvement Gallery for ideas

Alternatives to Selling: Renting Your Home

Renting your Existing Home

• Pros:
  
  — your home is available to reoccupy whenever you like
  — your home may be increasing in value
  — the rental income may be additional income
  
  
  
• Cons:
  
  — maintenance and administrative expense and work
  — finding and maintaining good tenants
  

Listing Your Home for Rent:
www.rentals.com
www.vacancynet.com



• Run the numbers:

Existing Mortgage Payment:
Estimated Maintenance Costs:
Advertising / Management Costs:
Other:
Monthly Rental Income:
Monthly Tax Savings:
Other Rental Fees:
Cash Flow:
* These calculations are based upon the assumptions you entered. Please note that rounding error may make a small difference in calculations.

• Question:
  if you decide to rent your existing home instead of selling it, where is purchase money for your new home?
  
  Answer:
  you may be able to use the equity in your existing home as your down payment
  

 

Calculate your equity value?

Enter the estimated market value of your home. For an neighborhood market valuation report: click here Enter the amount that you still owe on your home plus any 2nd or 3rd mortgages, if any: * Percentage LTV Percentage of Market Value Amount You Can Borrow 70% LTV 80% LTV 90% LTV 100% LTV * Calculations are based upon the assumptions you entered. Please note that rounding errors can make a small difference in calculations.

Tax Issues of Home Sales

Tax Issues of Home Sales

You need to understand the implication of home sales and how it may impact your taxes, if any.

The sale of a home, like any asset, is subject to capital gain tax.

 

To figure your capital gain:

Purchase Price of your existing home:
Add-in any closing costs:
Add-in any home improvements made:
Minus depreciation costs taken:
Minus casualty losses taken:
Net selling price of your existing home:
Cost of Selling (including commissions):
Capital Gain:
* These calculations are based upon the assumptions you entered. Please note that rounding error may make a small difference in calculations.

 

IRS rules enacted in 1997 exempted from taxes capital gains on home sales for the following amounts:

$500,000 exemption for married taxpayers filing joint returns

$250,000 exemption for single taxpayers

In order to meet this exemption, you must meet the following three standards:

• Ownership:
  you must have owned your home for at least two years out of the five years proceeding the sale of your home.
  
  
• Use:
  you must have used the home as your place of principal residence for at least two years out of the five years proceeding the sale of your home.
  
  
• Time Period:
  the exclusion can be taken only once every two years.

 

There are exceptions to the two-year rule:

if your sale of residence is due to change of employment, health reasons, or other unforeseen circumstances (as defined by the IRS)

your total exemption will be prorated.

 

Special situations:

if your spouse dies, you may claim the full $500,000 exclusion if you sell your home within one year of your spouse's death.

if you don't sale within one year of the your spouse's death, you are entitled to the $225,000 exclusion (unless you remarry and file jointly).

 

The IRS has examples and illustrations:

• Publication 523: Selling Your Home:
  www.irs.gov/formspubs
  

  Download Publication 523:
  www.irs.gov/pub/irs-pdf

See your tax advisor for further information:
need a financial advice from a CPA:
search yellow page for CPAs

Complete and file your own taxes using your PC:
www.turbotax.com