5 Financial Preparation Tips Before Selling Your Home

Selling your home is a huge decision that, besides emotional implications, also comes with a range of financial implications that require careful planning. Whether you're moving to a new city, downsizing, or upgrading to a larger space, the process involves more than just finding a buyer and signing some papers.

To avoid unnecessary costs, maximize your profit, and make the whole process easier on yourself, it's important to plan well ahead. Without careful planning, it's easy to end up overwhelmed by expenses and stressed out beyond belief, or undersell your property and miss out on potential gains.

Here's everything you need to know on how to prepare yourself financially for selling your home - before putting it on the market.

Repairs and Upgrades

First, your home needs to be in top shape to attract top buyers. This often means investing in repairs and upgrades, which, depending on the condition of your house, can be quite a bit of money.

Simple fixes like patching up holes, repainting, and ensuring all appliances work can make a huge difference. Larger projects, such as replacing the roof or updating the kitchen, might also be necessary.

Real Estate Commission

A real estate agent's expertise can be invaluable, but of course, this service comes at a cost.

In California, real estate agents typically charge a commission of 5-6% of the sale price. This might seem steep, but a good agent can help you sell much faster and at a much better price, which often justifies their fee.

Closing Costs and Fees

Closing costs involve a variety of fees that accumulate by the time you finalize the sale. These can include title insurance, transfer taxes, and attorney fees.

Generally, sellers should anticipate paying about 1-5% of the sale price in closing costs, although this can be higher, too.

Workers and Contractors

If you're hiring workers to help with repairs or improvements, factor their salaries into your budget. Quality work can greatly increase your home's value, but it's essential to pay fair wages to get the job done right.

Whether it's a handyman, painter, or electrician, their contributions are vital to presenting your home in the best light. Tools like OnPay's salary calculator for California can be particularly useful for determining taxes and everything related to correct and fair pay.

• Staging: Staging can greatly impact how potential buyers perceive your home. It might involve renting furniture, decor, or hiring a professional stager. While this can be an additional expense, it often pays off by helping your home sell faster and at a better price.

• Moving Expenses: Don't forget to budget for your moving costs. Whether you're hiring movers or renting a truck, these expenses can add up. Planning for these in advance is recommended for a smoother transition to your new home.

• Legal and Administrative Costs: Depending on your location and circumstances, you might need to pay for additional legal or administrative fees. This could include anything from pre-sale inspections to administrative paperwork.

There are a few ways to determine the value of your home, including:

Comparative Market Analysis (CMA)

A comparative market analysis (CMA) is one of the most effective tools to determine your home's value. This involves looking at the prices of similar homes that have recently sold in your area. Your real estate agent can provide a CMA and give you a price range to consider.

Professional Appraisal

For a more precise valuation, you can choose to get a professional appraisal. An appraiser will carefully assess your home's condition, location, and market trends to provide an accurate value. This step can cost a few hundred dollars, but it offers a detailed and unbiased estimate that can be crucial for pricing your home accurately.

Finally, there are also numerous online tools, like Zillow's Zestimate, that offer quick home value estimates. Now, while these can provide a general idea, they should never replace a CMA or professional appraisal. So, if you want to use them, use them only as a starting point, but rely on expert evaluations for final pricing decisions.