Selling Your House FAQ

Tips for selling your house: setting the right price, timing the sale, and hiring an agent.

What's Below:

Should I sell my house now?

How do I set the selling price for my house?

Do I need a real estate agent or attorney to sell my house?

Will I owe taxes when I sell my house?

Can I finance the sale for the buyer?

Should I sell my house now?

If you can choose when to sell, it's best to do it in a "seller's market" -- when the number of available homes is low in relation to the number of buyers. Here are some indicators that the market is good for sellers:

• Mortgage interest rates are low, allowing buyers to finance larger mortgages.
• The economic climate of your region is healthy and people feel confident about the future.
• There's a jump in housebuying activity, as often occurs in the spring.
• Your area is considered especially attractive -- because of the schools, low crime rate, weather, proximity to a major city, or other factors such as employment opportunities.

Of course, not everyone gets to choose when to sell. If you have to move immediately -- for example, because of financial reasons, a divorce, a job move, or an imperative health concern -- and you don't have any of the advantages listed above -- you may have to settle for a lower price in order to make a quick sale.

Back to top

How do I set the selling price for my house?

The key thing to setting a price is determining how much your property is actually worth -- called "appraising" a house's value. Because no two houses are alike, it's impossible to predict with absolute certainty what a buyer will pay for yours. However, the best indicator is recent sales prices of comparable properties in your neighborhood ("comps").

Real estate agents have access to local sales data and can give you a good estimate of what your house should sell for. Many real estate agents will offer this service free, in hopes that you will list your house with them. But beware that some agents may estimate a high value for your home, to try and get your listing. Make sure the agent's estimate is based on comparable sales, and ask to see the comparable listings yourself.

To get a ballpark figure on your own, use websites such as www.domania.com or www.zillow.com. By entering your address, you'll be able to pull up sales prices for recently sold homes of the same size as yours in your neighborhood. Of course, these websites can't take into account other important information that affects home values, like improvements and remodeling.

Observing the asking prices of houses still on the market can provide some guidance. Of course, asking prices are often higher than selling prices (in some areas by 10% or more), so you'll need to account for that in your calculations. To find out asking prices, go to open houses, check newspaper real estate classified ads, and look online at sites such as www.realtor.com.

Especially in a competitive market, it's important to list your house at the right price from the beginning. If your house is overpriced, some buyers might not even bother to look, thinking your expectations aren't reasonable and it's not worth it to even negotiate. And the longer your house sits on the market, the more suspicious potential buyers may become that something is "wrong" with it.

Back to top

Do I need a real estate agent or attorney to sell my house?

Except for a few states where you are required to hire a real estate attorney to do your closing, you do not have to hire an agent or attorney to help you. Beware, however, doing it yourself is a lot of work.

Hiring an agent doesn't necessarily mean that he or she handles all aspects of the transaction and is paid the traditional 5-6% commission. Instead, you might consider hiring an agent to help you out in specific ways, such as advertising your home in the local multiple listing service (MLS) and handling some of the paperwork.

Back to top

Will I owe taxes when I sell my house?

Thanks to the Taxpayer Relief Act of 1997, many home sellers no longer owe taxes on the gain they make when they sell their houses. Married taxpayers who file jointly now get to keep, tax free, up to $500,000 in gain on the sale of their home, as long as they lived in it for two of the prior five years. Single folks and married taxpayers who file separately get to keep up to $250,000. (See Tax Breaks for Selling Your Home.)

Back to top

Can I finance the sale for the buyer?

You can agree to loan part or all of the sales price to a home buyer. You may want to do this if you want to spread out your income from the sale over a number of years or if the home buyer can’t borrow enough money from a bank or commercial lender. This can be carried out in one of two ways.

The first possibility is for you to take back a mortgage on the house. The buyer signs both a promissory note (promising to repay the loan) and either a mortgage or a deed of trust (allowing you to foreclose if the buyer fails to pay). In return, you sign a deed transferring title to the buyer. The buyer holds title and can sell the house or refinance. But the buyer must keep sending you the agreed-upon payments.

The second and less popular possibility is for you to keep title to the property for as long as it takes the buyer to pay off the loan. The contract you and the buyer would sign is known by various names, including “contract for deed,” “contract of sale,” “land sale contract,” or “installment sales contract.” It works like this: The contract states that you, the seller, will keep title to the property until the buyer pays off the loan. (The buyer normally pays the loan off in a series of regular payments, similar to a standard mortgage.) After the buyer pays off the entire loan, you sign a deed transferring title to the buyer. Because you keep the title over the life of the loan, the buyer cannot sell or refinance the property until all payments are made and the title is transferred.

Back to top