First Time Selling? What you need to know: Answering your Questions

My third request for an article is here!  According to the U.S. Census Bureau and as reported by Reference.com, the average American moves 12 times during his or her lifetime.  That is approximately every 8 years or so.  For some, it could be people who purchased their first home, and now are looking to sell and move on to the next.  That brings us to a Social Media request:

I feel like there’s a ton of info out there on first-time buying, but not second-time buying and first-time selling. I really have no idea what that process looks like from a financial and legal perspective.

Now although I cannot provide financial, legal, or tax advice, and every state is different, there are a few things to keep in mind when selling:

1. The tax implications: If it is your primary residence of 2 of the last 5 years, the first $250,000 (or first $500,000 if married) of profit made on the home is tax free.  This is what makes real estate such a great wealth building generator.  All you have to do is live there! If this is a rental property, you can explore a 1031 Exchange, where you must reinvest the money into another rental.
2. The money implications: Keep in mind when you sell it isn’t just the total sales price minus the loan amount.  You must pay your Realtor® compensation, as well as what is known as “closing costs.”  These costs differ from when you purchase a property, so the best thing to do is ask your Realtor® for a “Net Sheet.”  This way, all expenses of selling are included.
3. Disclosures are one of the most important documents you will fill out: These forms go over what you factually know about the home.  Is the chimney in bad shape?  Is there mold in the home?  Are there noisy streets or parks that need to be disclosed?  These forms are important as some buyers rely heavily on them.  This also includes if you have any reports.  In most states, whatever report you have must be passed on to the next buyer, even if they are a few years old.  This is where Sellers often get sued.
4. Contingent sales happen all the time, but it can still be tricky: A contingent sale is when you purchase another home with the understanding that it is subject to you selling your home.  Some sellers are not fans of contingent offers, and understandably.  Talk with your Realtor® about the different strategies when submitting offers.

It may seem like a scary thought to try to sell and buy, but people do it.  Think about timing and what is mentioned above.  Good luck on the move!