Although you’re allowed to sell your own home, doing so is a lot of work. Before you move forward, take time to consider the pros and cons of handling things on your own.
If you’re thinking about putting your house on the market, you may be wondering whether you can sell your own home. Yes, you can, but don’t put up a For Sale sign just yet. Although you’re allowed to sell your own home, doing so is a lot of work. Before you move forward, take time to consider the pros and cons of handling things on your own.
Statistics on FSBO Homes
For sale by owner, better known as FSBO, tells buyers you’re not using a real estate agent or a broker. According to the National Association of REALTORS®, FSBO listings accounted for 10% of all home sales in 2021.
Nearly 30% of owners used word-of-mouth marketing via friends, family members, and neighbors to market their listings. Owners also used yard signs, third-party real estate aggregators, social networking sites, and other FSBO marketing methods to find buyers.
Why Sell Your Own Home?
Many people ask “Can I sell my own home?” because real estate agents receive a commission on every sale they make. The average commission is 6%, with the listing agent receiving slightly more than the buyer’s agent. If your home sells for $300,000, that’s $18,000 in commissions at the average rate.
Then, assuming the listing agent gets 3.5% and the buyer’s agent gets 2.5%, selling your own home would save you $10,500. You could use that money to buy new furniture, cover some of your closing costs, invest in the stock market, or take a vacation.
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Potential Pitfalls of Selling Your Own Home
If you decide to sell your own home, you’ll have to do all the work that a real estate agent would normally do. Some of the most important tasks include:
Setting a sale price
Preparing your home for walk-throughs and open houses
Advertising the property
Following all relevant real estate laws
Meeting with potential buyers and their agents
Learning how to do these things is time-consuming, and there’s also the risk you’ll make a serious mistake. For example, if you price your home based on emotions instead of market data, you may have trouble attracting potential buyers.
When you sell your own home, you also lose the opportunity to benefit from an agent’s extensive network of contacts. Experienced agents maintain relationships with plumbers, landscapers, home staging professionals, and other people who can help you get your home ready for the market. If you don’t have these relationships, you may have to wait weeks or even months before a home service provider can add you to their busy schedule.
One of the biggest potential drawbacks to selling your own home is that you may not get as much money as an agent would. The National Association of REALTORS reports that FSBO listings sold for an average of $225,000 in 2021. In contrast, agent-listed homes sold for an average of $330,000.
Tips for Selling Your Home Without an Agent
If you decide to sell your own home, follow these tips to maximize the sale price and reduce the amount of time it takes to find a buyer.
1. Choose the Right Sale Price
When setting a price for your home, you have to think strategically. If it’s priced too high, you’ll have trouble selling. If it’s priced too low, you’ll lose out on potential profit. The price has to be just right to attract a buyer without leaving money on the table. To find the right price, consider these factors.
Recent Sales
A comparative market analysis lists recent sales in your neighborhood, giving you valuable information about local prices. Normally, a real estate agent would provide a CMA report for you, but it’s possible to create your own. To get started, use public records or third-party listing websites to identify sold homes that are approximately the same size and age as your home.
Once you have the initial list, narrow it down by looking for homes that have features similar to yours. For example, if your home has four bedrooms and two bathrooms, you’ll want to include other four-bedroom homes in your analysis.
The market changes quickly, so limit your search to homes sold in the last three months. Once you have a workable list, note the sale price of each listing. If you’re not comfortable creating your own CMA report, consider getting a professional home appraisal.
Location
The location of your home has a big impact on the sale price. Many buyers are willing to pay a premium to move to an excellent school district or reduce the amount of time it takes to get to restaurants, salons, office buildings, and entertainment venues.
Location refers not just to what city you live in but also where your home is situated. If it’s near an airport or a busy street, you may not be able to get as much as you would if it was tucked away at the end of a quiet cul-de-sac.
Condition of the Home
The better your home’s condition, the more money you can get for it. Think top-of-the line appliances, fresh paint, and new flooring. If your home needs repairs or the appliances and flooring are a little outdated, you may have to set a lower price to attract potential buyers.
Market Conditions
Supply and demand have a big impact on home prices in your area. In a seller’s market, the demand for homes outpaces the supply, driving prices higher. Buyers may even get into bidding wars over the most desirable properties. In a buyer’s market, the supply of homes outweighs the demand, driving prices down.
2. Use Multiple Advertising Methods
It would be great if all you had to do was put your listing on social media, but it takes a little more work to sell a home. You may want to use the following marketing methods:
Newspaper advertisements
Social media posts
Yard signs
Third-party listing websites
Flyers at local businesses
Virtual home tours
3. Plan Your Open House Carefully
An open house gives potential buyers a chance to walk through your home and see if it looks just as good in person as it does in photos. Here are a few tips to help you plan a successful open house event:
Schedule it on a weekend: Many people work during the week, so holding an open house on a Wednesday at 11 a.m. isn’t the best way to attract eager buyers. If possible, schedule your open house for a Sunday afternoon.
Advertise: Yard signs are helpful, but you should use several advertising methods to make more people aware of your event. Try advertising on a third-party website or posting on social media
Clean thoroughly: You don’t want potential buyers focusing on dust bunnies, so give your home a thorough cleaning the day before your open house. Before people arrive, straighten your throw pillows, take out the garbage, and do some last-minute tidying.
Put away personal items: Potential buyers should be able to imagine themselves living in your home. They may have a tough time doing that if you have family photos and other mementos on display. To make your home more appealing, put away personal items before the open house begins.
Make arrangements for your pets: If possible, take your pets to a family member’s house before your event begins. Some buyers aren’t comfortable with animals, and you’ll have an easier time focusing if you don’t have to worry that one of your pets is going to escape.
4. Consult an Attorney
If you sell your home without an agent, you’re still responsible for following all relevant laws and regulations in your area. To ensure you don’t make a costly mistake, consult an attorney beforehand. A licensed attorney can advise you of your rights and educate you about the potential pitfalls involved in selling real estate.
It’s possible to sell your home without a real estate agent, but it takes a lot of time and effort. If you make a mistake, you can easily lose thousands of dollars in profit, making it critical to do in-depth research before you begin the process. You may also want to research other things before selling or buying a home, such as the state of your finances, your current credit health, or your loan options. Credit.com can help you work to understand these things better, so consider signing up for your free Credit Report Card today
If you spent your teenage years waiting anxiously for one of your siblings to get out of the shower, the idea of selling your spacious, multi-bathroom home and moving into a smaller house or condo may feel like a reversal of fortune.
Yet for many retirees, downsizing makes financial and practical sense. Younger baby boomers — those currently ranging in age from 57 to 66 — made up 17% of recent home buyers, while older boomers — ages 67 to 75 — accounted for 12%, according to a 2022 report from the National Association of Realtors Research Group. Boomers’ primary reasons for buying a home were to be closer to friends and family, as well as a desire to move into a smaller home, the report said. Both younger and older boomers were more likely than others to purchase a home in a small town, and younger boomers were the most likely to buy in a rural area.
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For retirees Fred and Shelby Bivins, selling their home in Green Valley, Ariz., will enable them to realize their dream of traveling in retirement. The Bivinses have put their 2,050-square-foot Arizona home on the market and plan to relocate to their 1,600-square-foot summer condo in Fish Creek, Wis., a small community about 50 miles from Green Bay. They plan to live in Wisconsin in the spring and summer and spend the winter months in a short-term rental in Arizona, where they have family.
Fred, 65, says the decision to downsize was precipitated by a two-month stay in Portugal last year, one of several countries they hope to visit while they’re still healthy enough to travel. “We’ve had Australia and New Zealand on our list for many years, even when we were working,” says Shelby, 68. The Bivinses are also considering a return visit to Portugal. Eliminating the cost of maintaining their Arizona home will free up funds for those trips.
With help from Chris Troseth, a certified financial planner based in Plano, Texas, the Bivinses plan to invest the proceeds from the sale of their home in a low-risk portfolio. Once they’re done traveling and are ready to settle down, they intend to use that money to buy a smaller home in Arizona. “Selling their primary home will generate significant funds that can be reinvested to support their lifestyle now and in the future,” Troseth says. “Downsizing for this couple will be a positive on all fronts.”
Challenges for downsizers
For all of its appeal, downsizing in today’s market is more complicated than it was in the past. With 30-year fixed interest rates on mortgages recently approaching 8%, many younger homeowners who might otherwise upgrade to a larger home are unwilling to sell, particularly if it means giving up a mortgage with a fixed rate of 3% or less. More than 80% of consumers surveyed in September by housing finance giant Fannie Mae said they believe this is a bad time to buy a home and cited mortgage rates as the top reason for their pessimism. “This indicates to us that many homeowners are probably not eager to give up their ‘locked-in’ lower mortgage rates anytime soon,” Fannie Mae said in a statement. As a result, buyers are competing for limited stock of smaller homes, says Hannah Jones, senior economic research analyst for Realtor.com.
Here, though, many retirees have an advantage, Jones says. Rising rates have priced many younger buyers out of the market and made it more difficult for others to obtain approval for a loan. That’s not an issue for retirees who can use proceeds from the sale of their primary home to make an all-cash offer, which is often more attractive to sellers.
Retirees also have the ability to cast a wider net than younger buyers, whose choice of homes is often dictated by their jobs or a desire to live in a well-rated school district. While the U.S. median home price has soared more than 40% since the beginning of the pandemic, prices have risen more slowly in parts of the Northeast and Midwest, Jones says. “We have seen the popularity of Midwest markets grow over the last few months because out of all of the regions, the Midwest tends to be the most affordable,” she says. “You can still find affordable homes in areas that offer a lot of amenities.”
Meanwhile, selling your home may be somewhat more challenging than it was during the height of the pandemic, when potential buyers made offers on homes that weren’t even on the market. The Mortgage Bankers Association reported in October that mortgage purchase applications slowed to the lowest level since 1995, as the rapid rise in mortgage rates has pushed many potential buyers out of the market. Sales of previously owned single-family homes fell a seasonably adjusted 2% in September from August and were down 15.4% from a year earlier, according to the National Association of Realtors. “As has been the case throughout this year, limited inventory and low housing affordability continue to hamper home sales,” NAR chief economist Lawrence Yun said in a statement.
However, because of tight inventories, there’s still demand for homes of all sizes, Jones says, so if your home is well maintained and move-in ready, you shouldn’t have difficulty selling it. “The market isn’t as red-hot as it was during the pandemic, but there’s still a lot to be gained by selling now,” she says.
Other costs and considerations
If you live in an area where real estate values have soared, moving to a less expensive part of the country may seem like a logical way to lower your costs in retirement. While the median home price in the U.S. was $394,300 in September, there’s wide variation in individual markets, from $1.5 million in Santa Clara, Calif., to $237,000 in Davenport, Iowa. But before you up and move to a lower-cost locale, make sure you take inventory of your short- and long-term expenses, which could be higher than you expect.
Selling your current home, even at a significant profit, means you will incur costs, including those to update, repair and stage it, as well as a real estate agent’s commission (typically 5% to 6% of the sale price). In addition, ongoing costs for your new home will include homeowners insurance, property taxes, state and local taxes, and homeowners association or condo fees.
Nicholas Bunio, a certified financial planner in Berwyn, Pa., says one of his retired clients moved to Florida and purchased a home that was $100,000 less expensive than her home in New Jersey. Florida is also one of nine states without income tax, which makes it attractive to retirees looking to relocate. Once Bunio’s client got there, however, she discovered that she needed to spend $50,000 to install hurricane-proof windows. Worse, the only home-owners insurance she could find was through Citizens Property Insurance, the state-sponsored insurer of last resort, and she’ll pay about $8,000 a year for coverage. Her property taxes were higher than she expected, too. When it comes to lowering your cost of living after you downsize, “it’s not as simple as buying a cheaper house,” Bunio says
Before moving across the country, or even across the state, you should also research the availability of medical care. “Oftentimes, those considerations are secondary to things like proximity to family or leisure activities,” says John McGlothlin, a CFP in Austin, Texas. McGlothlin says one of his clients moved to a less expensive rural area that’s nowhere near a sizable medical facility. Although that’s not a problem now, he says, it could become a problem when they’re older.
If you use original Medicare, you won’t lose coverage if you move to another state. But if you’re enrolled in Medicare Advantage, which is offered by private insurers as an alternative to original Medicare, you may have to switch plans to avoid losing coverage. To research the availability of doctors, hospitals and nursing homes in a particular zip code, go to www.medicare.gov/care-compare.
At a time when many seniors suffer from loneliness and isolation, a sense of community matters, too. Bunio recounts the experience of a client who considered moving from Philadelphia to Phoenix after her daughter accepted a job there. The cost of living in Phoenix is lower, but the client changed her mind after visiting her daughter for a few months. “She has no friends in Phoenix,” he says. “She’s going on 61 and doesn’t want to restart life and make brand-new connections all over again.”
Time is on your side
Unlike younger home buyers, who may be under pressure to buy a place before starting a new job or enrolling their kids in school, downsizers usually have plenty of time to consider their options and research potential downsizing destinations. Once you’ve settled on a community, consider renting for a few months to get a feel for the area and a better idea of how much it will cost to live there. Bunio says some of his clients who are behind on saving for retirement or have high health care costs have sold their homes, invested the proceeds and become permanent renters. This strategy frees them from property taxes, homeowners insurance, homeowners association fees and other expenses associated with homeownership
The boom in housing values has boosted rental costs, as the shortage of affordable housing increased demand for rental properties. But thanks to the construction of new rental properties in several markets, the market has softened in recent months, according to Zumper, an online marketplace for renters and landlords. A Zumper survey conducted in October found that the median rent for a one-bedroom apartment fell 0.4% from September, the most significant monthly decline this year.
In 75 of the 100 cities Zumper surveyed, the median rent for a one-bedroom apartment was flat or down from the previous month. (For more on the advantages of renting in retirement, see “8 Great Places to Retire—for Renters,” Aug.)
Aging in place
Even if you opt to age in place, you can tap your home equity by taking out a home equity line of credit, a home equity loan or a reverse mortgage. At a time when interest rates on home equity lines of credit and loans average around 9%, a reverse mortgage may be a more appealing option for retirees. With a reverse mortgage, you can convert your home equity into a lump sum, monthly payments or a line of credit. You don’t have to make principal or interest payments on the loan for as long as you remain in the home.
To be eligible for a government-insured home equity conversion mortgage (HECM), you must be at least 62 years old and have at least 50% equity in your home, and the home must be your primary residence. The maximum payout for which you’ll qualify depends on your age (the older you are, the more you’ll be eligible to borrow), interest rates and the appraised value of your home. In 2024, the maximum you could borrow was $1,149,825.
There’s no restriction on how homeowners must spend funds from a reverse mortgage, so you can use the money for a variety of purposes, including making your home more accessible, generating additional retirement income or paying for long-term care. You can estimate the value of a reverse mortgage on your home at www.reversemortgage.org/about/reverse-mortgage-calculator.
Up-front costs for a reverse mortgage are high, including up to $6,000 in fees to the lender, 2% of the mortgage amount for mortgage insurance, and other fees. You can roll these costs into the loan, but that will reduce your proceeds. For that reason, if you’re considering a move within the next five years, it’s usually not a good idea to take out a reverse mortgage.
Another drawback: When interest rates rise, the amount of money available from a reverse mortgage declines. Unless you need the money now, it may make sense to postpone taking out a reverse mortgage until the Federal Reserve cuts short-term interest rates, which is unlikely to happen until late 2024 (unless the economy falls into recession before that). Even if interest rates decline, they aren’t expected to return to the rock-bottom levels seen over the past 15 years, according to a forecast by The Kiplinger Letter. And with inflation still a concern, big rate cuts such as those seen in response to recessions and financial crises over the past two decades are unlikely.
Note: This item first appeared in Kiplinger’s Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
While many people dream of paying for a home in cash, this goal can be very challenging. Housing prices are surging all over the country, and some markets are so pricey it could take decades to save up even for a starter home. Plus, who wants to rent their whole life while they save up to buy a home?
Fortunately, you don’t have to take out a traditional thirty-year loan and make only the minimum monthly payments. Instead, you could take out a mortgage of any length and pay more than the minimum to pay off your mortgage early. This strategy gives you the best of both worlds — a home to live in and the ability to get out of debt faster, provided you can afford to pay extra toward your mortgage each month.
Before you decide to pursue the strategy of paying off your mortgage early. However, it’s essential to make sure your mortgage doesn’t charge a prepayment penalty. While it may sound preposterous, some mortgage lenders charge prepayment penalties if you pay off too much of your outstanding loan balance in any given year — even if you’re selling your home so you can move.
What is a mortgage prepayment penalty?
A mortgage prepayment penalty is a fee imposed by some lenders when a borrower pays off their mortgage loan earlier than the agreed-upon schedule. This fee can be triggered by either paying a significant portion of the loan balance or refinancing the mortgage. The rationale behind this fee is to compensate the lender for the interest payments they will miss out on due to the early repayment.
Types of Mortgage Prepayment Penalties
There are mainly two types of mortgage prepayment penalties: soft and hard.
Soft Prepayment Penalties
This penalty is applied only when you refinance your mortgage, leading to an early payoff of the original loan. However, if you sell your home, you won’t be charged this penalty. Soft penalties are generally more borrower-friendly, offering some flexibility.
Hard Prepayment Penalties
These are more stringent. A hard prepayment penalty is charged not only when you refinance, but also if you sell your home. This means that any action leading to the early payoff of the mortgage, whether it’s selling your house or refinancing it, will incur a penalty. Hard penalties can be financially significant and are a crucial factor to consider when agreeing to a mortgage.
Why do mortgage lenders charge prepayment penalties?
Lenders charge prepayment penalties for a few reasons:
Interest revenue: The most apparent reason is the loss of interest revenue. When a borrower pays off a loan early, the mortgage lender misses out on future interest payments they had counted on.
Loan pricing strategy: Some mortgage lenders offer lower initial interest rates or more favorable terms on the assumption that they’ll earn interest over a longer period. Early repayment disrupts this strategy.
Risk management: From a lender’s perspective, prepayment can introduce financial unpredictability. The penalty is a way to mitigate this risk.
Secondary market influence: Loans are often sold on the secondary market. Investors in these loans expect a certain return, calculated based on the loan’s expected life. Prepayments can disrupt these expectations, and penalties help to balance the equation.
The Problem with Prepayment Penalties
While getting a mortgage with a prepayment penalty may not be the end of the world, you may face notable disadvantages if your housing situation or your finances change. With a hard prepayment penalty, in particular, you would actually be penalized if you refinanced your home into a mortgage with a lower interest rate and better terms.
And, what if you need to relocate for a job or find yourself needing additional room for your growing family? A prepayment penalty would ding you then as well.
A soft prepayment penalty only applies if you refinance (and not if you sell), but it’s still not much better. You’ll still be stuck paying a significant prepayment penalty fee if you need to change your mortgage terms, and this fee could come at the worst possible time if you’re refinancing as a result of financial distress.
How to Avoid Prepayment Penalties
One of the most critical steps in avoiding prepayment penalties is to thoroughly read and understand your mortgage terms. Often, the details regarding prepayment penalties are buried in the fine print of the mortgage agreement.
It’s essential to review these terms carefully before signing. Look for sections titled “Prepayment,” “Prepayment Penalty,” or similar headings. Understand the conditions that trigger the penalty, the calculation method, and the duration for which the penalty applies.
If the document is complex or uses technical jargon, consider consulting a real estate attorney or a financial advisor for clarification.
Questions to Ask Your Lender
When discussing mortgage options with your lender, it’s crucial to ask direct questions about prepayment penalties. Some questions to consider include:
Does this mortgage have a prepayment penalty? – A straightforward question to start the conversation.
What are the specific terms of the prepayment penalty? – Ask for details like the amount, duration, and conditions.
Under what circumstances does the penalty apply? – Clarify if the penalty is triggered by refinancing, selling, or making large payments.
Is the prepayment penalty clause negotiable? – Find out if there’s room for negotiation on this aspect.
Can you provide a loan option without a prepayment penalty? – Express your interest in alternatives without such penalties.
Negotiating Mortgage Terms
Negotiation is a powerful tool in securing favorable mortgage terms. Here are some strategies to help negotiate out of a prepayment penalty:
Shop around: Before settling with one lender, shop around. Use offers from other lenders as leverage in your negotiations.
Highlight your creditworthiness: If you have a strong credit score and a stable financial history, use this as a bargaining chip. Lenders are more likely to offer favorable terms to low-risk borrowers.
Be upfront about your plans: If you intend to pay off your mortgage early or think you might refinance, let your lender know. This can open up discussions for more suitable mortgage products.
Ask for a trade-off: If the lender insists on a prepayment penalty, negotiate for a lower interest rate or other benefits to offset the potential penalty.
Seek professional advice: A mortgage broker or financial advisor can provide valuable insights and negotiation tactics specific to your situation.
Remember, knowledge and negotiation skills are key to avoiding prepayment penalties. By understanding your mortgage terms, asking the right questions, and effectively negotiating, you can secure a mortgage that aligns with your financial goals and offers the flexibility you need.
With all this in mind, here are some steps to consider as you shop for a new mortgage:
Check Your Credit Score
Your credit score plays a pivotal role in determining the terms of your mortgage, including interest rates and eligibility for certain loan types. Higher credit scores typically unlock lower interest rates and more favorable loan terms.
If your credit score is not in the ‘good’ or ‘excellent’ range, it’s advisable to take steps to improve it. This could include paying down debts, ensuring timely bill payments, and correcting any inaccuracies on your credit report. Even small improvements in your credit score can lead to significant savings over the life of a mortgage.
Comparing Mortgage Offers
When shopping for a mortgage, it’s essential to compare offers from multiple lenders. Look beyond just the interest rates; consider the overall loan terms, including fees, loan duration, and flexibility.
Use a mortgage calculator to understand the long-term implications of each offer, including the total interest you’ll pay over the life of the loan. It’s also crucial to compare prepayment penalties, as these can significantly impact your financial flexibility and cost you more if you decide to pay off your mortgage early or refinance.
Government-Sponsored Home Loan Programs
For those with less-than-ideal credit, or who are seeking more flexible qualification criteria, government-sponsored home loan programs like FHA (Federal Housing Administration) and USDA (United States Department of Agriculture) loans can be excellent alternatives.
These home loans often come without prepayment penalties and can be easier to qualify for compared to conventional loans. FHA loans are known for their lower down payment requirements and more lenient credit score criteria, making them suitable for first-time homebuyers.
USDA loans, targeted at rural and suburban homebuyers, offer benefits such as no down payment and competitive interest rates. However, they come with specific eligibility requirements related to the location of the property and the borrower’s income level.
Read the Fine Print
Before you make the final decision on your new mortgage, the Consumer Financial Protection Bureau (CFPB) advises reading through the details of your loan documents. If your mortgage contract has a prepayment penalty, make sure you understand how much it will cost and how long it lasts.
Bottom Line
Before you take out a mortgage, make sure you’re not setting yourself up for an unpleasant surprise. You should know how much your mortgage payment will be each month and exactly when your loan will be paid off, for example. Moreover, you should also be aware of any prepayment penalties or fees you’ll be charged if you need to refinance or move for any reason.
Generally speaking, it’s wise to avoid mortgages that charge a prepayment penalty. You may think you’ll remain in your home forever, but you never know how life could change in the next five years. By choosing a mortgage without a prepayment penalty, you’re keeping your options open and protecting yourself from expensive prepayment fees.
At the end of the day, you should try to find an affordable mortgage free of “gotchas” that can cost you big time when you least expect it. If you fail to read the loan agreement and wind up facing a big mortgage prepayment penalty, you could live to regret it.
A roof over your head is a great blessing. However, homeownership has its ups and downs. One of those low points might be shelling out thousands of dollars to replace the roof that has protected you from the elements for years.
At some point, every roof will need to be replaced. It’s one of the many joys of homeownership. But, according to Angi, the average roof replacement cost ranges from $4,900 to $14,100. With a wide range of costs, you may be wondering how you can land the best deal.
The wide range of roof replacement costs is due to various factors such as style, location, the size of your roof, and the professional you hire.
Let’s take a closer look at how you can lower your overall costs and get ready for this significant undertaking.
Factors Affecting Roof Replacement Cost
The cost of replacing your roof can vary significantly based on several key factors. Understanding these factors is crucial for managing your budget effectively. Here are the primary elements that influence roof replacement costs:
Roofing material: The type of material you choose for your new roof can have a substantial impact on the overall cost. Materials like asphalt shingles are generally more affordable, while options such as metal or slate can be considerably more expensive.
Location: Your geographical location plays a role in cost variations. Areas prone to extreme weather conditions or high wind zones may require more durable and costly roofing materials.
Roof size and complexity: Larger roofs with multiple peaks and angles, as well as varying roof pitch, will require more materials and labor, leading to higher costs.
Professional you hire: The choice of roofing contractor can affect costs. Highly experienced professionals may charge more for their expertise.
Additional accessories: Roofing accessories such as flashing, underlayment, and ventilation systems can add to the overall expense.
Types of Roofing Materials and Their Costs
When it comes to replacing your roof, one of the critical decisions you’ll face is choosing the right roofing material. The choice of material not only affects the aesthetics of your home but also significantly impacts the overall cost of the project. Let’s delve deeper into some common roofing materials, their characteristics, and how they influence the cost of roof replacement.
Asphalt Shingles
Cost: Basic asphalt shingles are often the most budget-friendly option, with prices ranging from $1.20 to $4 per square foot.
Durability: They offer reasonable durability and come in various styles and colors to match your home’s design.
Energy efficiency: Standard asphalt shingles are less energy-efficient compared to some other materials.
Metal Roofing
Cost: Metal roofing tends to be more expensive, typically starting at around $5 per square foot.
Durability: Metal roofs are known for their longevity and resistance to harsh weather conditions.
Energy efficiency: They are highly reflective and can help reduce energy costs.
Slate Tiles
Cost: Slate tiles are among the costliest roofing materials, often exceeding $10 per square foot.
Durability: They are incredibly durable and can last for a century or more if properly maintained.
Energy efficiency: Slate tiles provide excellent insulation, contributing to energy efficiency.
Wood Shingles
Cost: Wood shingles fall in the mid-range of roofing material costs, typically starting at $5 per square foot.
Durability: They offer a charming, rustic look but may require more maintenance.
Energy efficiency: Wood shingles provide decent insulation but may not be as energy-efficient as some other options.
Solar Panels
Cost: Solar roofing can be expensive, considering both the cost of the panels and installation.
Durability: Solar panels have a long lifespan and generate renewable energy.
Energy efficiency: Solar panels are highly energy-efficient, potentially reducing your utility bills.
Clay Tiles
Cost: Clay tiles are often on the higher end of the cost spectrum, starting at around $10 per square foot.
Durability: They are incredibly durable and can withstand severe weather conditions.
Energy efficiency: Clay tiles provide good insulation, contributing to energy efficiency.
It’s important to note that the roofing costs mentioned here are approximate and can vary based on factors such as your location, the complexity of the project, and the specific product you choose. When selecting a roofing material, consider not only the initial cost but also its longevity and energy efficiency, as these factors can impact your long-term savings and the value of your home.
By understanding the characteristics and costs associated with different roofing materials, you can make an informed decision that aligns with your budget and aesthetic preferences. Keep in mind that the choice of material is a significant factor in determining the overall cost of your roof replacement project.
When Should You Replace Your Roof
The first thing you need to do is determine whether you really need a new roof. A visible hole in your ceiling is not the sign you should be waiting for. If you get your roof replaced before it reaches the final stop of its useful life, then you could be avoiding potentially bigger problems down the road.
A few signs that your roof is ready to be replaced include:
Water leaking into the house
Cracked shingles
Missing shingles
Shingles that are curling on the edges.
“Bald spots” on your roof where granules are missing.
Overall signs of age on your roof.
Another tip is to be mindful of your neighbors. If your homes were built in the same time period, then you may notice many new roofs in the area. It could be a sign that the inevitable demise is coming to your roof soon.
As soon as you spot any of these signs, you should start considering a new roof. The longer you wait, the more damage might be done to the value of your home.
If you are considering selling your home, do not assume that you can pass along the failing roof to the new owner. Many buyers will shy away from aging roofs because it is an added cost that they can easily avoid by choosing another home to buy.
Make sure to regularly take a closer look at what is happening on your roof. You can help prolong the life of your roof by taking care of it. For example, removing moss and algae growing in your shingles can prevent damage to the shingles can help prevent damage to your roof’s shingles.
How much does a roof replacement cost?
As with all things in life, you have choices for your roof replacement. The total roof replacement cost will vary considerably based on your choices.
The costs stem from the materials, labor, and disposal of your old roofing material.
In terms of material, you’ll need to choose between numerous shingles such as wood, clay, asphalt, solar, slate tiles, metal, and more. The material you choose may be based on cosmetic preference or necessary toughness to combat the elements of different locales. For example, in high wind areas of hurricane-prone Florida, homeowners are required to upgrade their roofing materials in hopes of withstanding potential hurricanes.
Asphalt shingles will most likely be your least expensive choice. An asphalt shingle roof costs about $1.20 to $4 per square foot to remove and replace an entire roof. Other materials, such as metal roofing, will generally cost at least twice as much per square foot. However, a new metal roof will likely save you money on homeowners insurance.
The cost to install 30-year architectural shingles is typically around $350 to $500 per square foot. And 50-year architectural shingles are even more expensive. Of course, they are stronger and last longer.
For labor, the size and construct of your roof will be a significant factor. If you have many peaks and ledges, expect your labor costs to be higher.
Assessing the Condition of the Current Roof
Before diving into a roof replacement project, it’s essential to assess the condition of your existing roof thoroughly. This step can significantly impact your overall cost and project planning. Here’s how to evaluate your roof’s condition:
Look for signs of damage: Check for water leaks, cracked or missing shingles, curling edges, bald spots, and any visible signs of aging.
Neighborhood trends: Pay attention to neighboring homes; if many have recently replaced their roofs, it might be a sign that your roof is due for replacement soon.
Preventive maintenance: Regular maintenance, such as removing moss and algae, can extend your roof’s lifespan and help you avoid costly roof repairs.
When evaluating the condition of your current roof, you might find that not all areas require a full roof replacement. In some cases, a partial roof replacement can be a viable option. This approach is typically chosen when the damage is localized to specific sections of the roof or when budget constraints are a concern.
Estimating the Size and Complexity of the Project
Understanding the size and complexity of your roof replacement project is vital for accurate cost estimation. Here’s how to estimate the scope of your project:
Measure your roof: Determine the square footage of your roof to calculate the amount of materials needed.
Consider roof design: Roofs with many peaks and angles may require more labor and materials, leading to higher costs.
Roofing layers: If your existing roof has multiple layers, removal and disposal costs will increase.
Roof features: Any additional features like chimneys, skylights, or roof vents can affect the complexity of the project.
Labor and Installation Costs
The cost of labor and installation is a significant part of your roof replacement budget. Several factors influence these costs:
Roof size: Larger roofs require more labor hours, leading to higher installation costs.
Roof complexity: Roofs with unique designs or many angles may demand more skilled labor, increasing costs.
Contractor expertise: Experienced contractors may charge higher labor fees, but their quality of work can be worth the investment.
Location: Labor costs can vary by region due to local labor rates and demand.
Additional Costs for Roofing Accessories
In addition to the primary roofing material and labor, there are other accessories and components that can impact your roof replacement cost. These include:
Flashing: Necessary for sealing roof joints and preventing leaks.
Underlayment: Provides an extra layer of protection beneath the roofing material.
Ventilation systems: Ensures proper airflow in the attic, which can affect the longevity of your roof.
Gutters and downspouts: Proper drainage is essential to protect your home’s foundation.
Removal and Disposal of the Old Roofing Materials
Before installing a new roof, the old roof must be removed and properly disposed of. This is a necessary step in the replacement process and can add to your project cost. Key points to consider:
The number of existing layers: Removing multiple layers of old roofing can be more labor-intensive and costly.
Disposal fees: Depending on your location, there may be fees associated with disposing of old roofing materials.
Potential Hidden Costs and Unexpected Expenses
While you plan your roof replacement budget, it’s essential to be prepared for potential hidden costs and unexpected expenses that may arise during the project. Some factors to be aware of include:
Structural damage: If hidden structural issues are discovered during the replacement, repairs can be costly.
Unforeseen leaks: Roofing projects can reveal additional leaks that were not visible before, requiring immediate attention.
Weather delays: Adverse weather conditions can cause project delays, potentially leading to increased labor costs.
Comparing Quotes from Different Contractors
To make an informed decision, it’s crucial to obtain multiple quotes from different roofing contractors. Here’s how to effectively compare these quotes:
Ensure each quote includes warranty information for both materials and installation.
Beware of significantly low bids, as they may indicate lower quality work.
Check online reviews to gauge the reputation of the roofing company.
Verify that the contractor is licensed by contacting your state consumer protection office.
How to Reduce Your Roof Replacement Costs
You should expect to pay thousands of dollars for your roof repair. However, there are methods to lower your overall roof replacement cost.
1. Hire a Professional Roof Inspector
If you’ve noticed that your roof is looking a bit worse for wear, then you should call in an inspector. Although it can cost a few hundred dollars to hire an inspector, it might be well worth the cost.
An inspector will be able to tell you whether you really need a new roof. They might recommend a patch or suggest that you wait a few years before replacing the whole roof. Either way, it will give you a better understanding of the problem at hand.
2. Replace or Repair?
After receiving the inspection report recommendations, you’ll need to decide whether you will replace or repair the roof. It is a good idea to go with the guidance of the inspector. However, as the owner, you have the final say in this decision.
3. Check the Home Warranty
When was your roof last replaced? If the answer is recently, then the replacement might be under warranty.
If you recently bought the home, you should check through the closing paperwork. Home warranty information is often available in that fine print. If you can’t find the information, consider contacting the previous owners to see if they can provide you with that paperwork.
The home warranty may cover your replacement costs, so it is an option you should look into.
4. Decide What You Want
Before talking to a roofing contractor or salesman, make sure you know exactly what you want on your new roof. Take the time to research the different materials and options and choose the one that will work well for your area and your budget.
Build an understanding of the features of your roof. Is it huge? Does it have many peaks and ridges that will increase labor costs?
With this level of research, you’ll be able to discuss the details of contractor bids coherently. Doing this homework helps ensure that you are not being taken advantage of. You might not need the latest and greatest product that the salesman attempts to sell you.
5. Compare Bids
Once you have a good understanding of what you need, then it is time to call in the contractors. Obtain estimates from various roofing contractors. Each bid should include roof warranty information on both the materials and the installation.
Do not automatically jump for the lowest bid. If the bid is significantly lower, do more research before accepting that bid. Sometimes very low bids translate into lower quality work. Online reviews of a roofing company may help you find out if the company is worth doing business with.
Make sure to confirm that the bid is from a licensed contractor. You can contact your state consumer protection office to confirm this.
Trust your instincts when choosing a roofer. You want a roof that will last for years to come at an affordable price. Cutting corners now will only cause more problems down the line.
6. Go the DIY Route
In the world of homeownership, there is always the option to fix the problem yourself. Although the roof is a high stake home repair, you may be able to do part of it yourself for a fraction of the cost.
The labor costs of a DIY roof replacement can account for the bulk of the expense. Sometimes, a contractor will allow you to remove the old roofing material yourself to cut the total cost. However, you should only pursue this option if you have the proper tools and knowledge.
7. Check Your Insurance Policy
If you are like most Americans, you carry a homeowner’s insurance policy on your home. In that case, the policy might cover roof damages.
Most insurance policies will help cover some or all of your roof replacement. However, if the need for replacement is due to neglect, then it is unlikely they will assist you. Call your insurance provider to find out how much they might be willing to cover.
8. Ask for a Discount
Most roofers are at the whim of seasonal work. In the winter, work can dry up in some places. Whereas in the summer, they can’t work through the jobs fast enough.
If you are willing to wait for a convenient time for the roofing company, then ask if they will give you an off-season discount. For example, you could request a 10% discount to wait until they have a slow month for your roof repair.
It never hurts to ask; the worst thing they can say is ‘no.’
Financing Options for Roof Replacements
Replacing a roof can be a significant financial undertaking. If you’re concerned about the upfront cost, consider these financing options:
Home improvement loans: Home improvement loans are tailored for renovation projects like roof replacement. They typically offer competitive interest rates and flexible terms, available from banks or online lenders.
Home equity loans or lines of credit: Leverage your home’s equity to finance your roof replacement. Home equity loans provide a lump sum upfront, while home equity lines of credit (HELOCs) offer flexibility in accessing funds.
Insurance coverage: Review your homeowner’s insurance policy to check if it covers roof replacement, especially for damage caused by specific covered perils like severe storms or hail.
Contractor financing: Many roofing companies offer financing options to help you manage the cost of roof replacement. When considering this option, inquire about terms, interest rates, and the company’s reputation to ensure transparency and fairness in their financing offerings.
Bottom Line
Understanding the cost of roof replacement is a crucial step for homeowners. It’s not merely an expense but an investment in the protection and value of your home. By taking the time to assess your roof’s condition, research materials, budget wisely, and seek multiple quotes, you can make informed decisions that align with your financial situation.
Roof replacement can be a substantial undertaking, but with careful planning and consideration, you can ensure the longevity and safety of your home. Remember that each roof is unique, and roofing costs can vary based on several factors. Whether you’re facing an imminent replacement or planning for the future, being well-informed is the key to making cost-effective choices for your roofing needs.
Frequently Asked Questions
How much does a roof cost?
The cost of a roof varies widely based on factors like size, materials, and geographic location. For standard materials like asphalt shingles, prices can range from $7,000 to $12,000 for an average-sized home. More premium materials like metal, slate, or tile can significantly increase the cost. Additional factors like roof design complexity, labor rates, and regional costs also play a crucial role in determining the final price.
What is the average cost of replacing a roof?
The average cost of replacing a roof in the United States is around $10,000, but pricing can vary widely depending on factors like the size of the roof, materials used, and geographic location. High-end materials or complex roof designs can push costs significantly higher.
How do different types of roofs affect the replacement cost?
The type of roof has a major impact on replacement costs. Asphalt shingles are generally the most affordable, while materials like metal, tile, or slate are more expensive. The complexity of the roof design, such as the presence of skylights or multiple levels, also affects the cost.
Are there any additional expenses associated with roof replacement?
Yes, there can be additional expenses beyond the basic cost of materials and labor. These might include costs for permits, structural repairs, gutter replacement, or disposal of the old roofing materials. These costs should be considered when budgeting for a roof replacement.
Does the size of the roof influence the cost?
Absolutely. The larger the roof, the more materials and labor will be needed, which increases the overall cost. Roofing costs are often calculated by the square foot, so a larger roof area will result in a higher total cost.
What factors can affect the overall cost of a roof replacement?
Several factors can affect the total cost, including the type of roofing material, the complexity of the roof’s design, the need for structural repairs, local labor rates, and whether the old roof needs to be removed first. Weather conditions and seasonal demand can also play a role.
Is roof removal included in the replacement cost?
In many cases, the cost of removing the old roof is included in the roof replacement quote. However, this is not always the case, so it’s important to clarify this with the contractor. The cost of removal can vary depending on the size and material of the existing roof.
Do I need permits for a roof replacement?
Yes, most local governments require permits for a roof replacement. The cost and requirements for these permits vary by location. It’s important to factor in these costs and ensure that your contractor handles the permit process.
Are there any financing options available for roof replacement costs?
Many roofing contractors offer financing options to help manage the cost of roof replacement. Additionally, some banks and credit unions offer home improvement loans. It’s advisable to compare rates and terms to find the best financing solution.
What are some signs that indicate a need for a roof replacement?
Signs that you may need a roof replacement include missing or damaged shingles, frequent leaks, sagging, and daylight visible through the roof boards. If the roof is more than 20 years old, it might also be time to consider replacement.
How long does a typical roof replacement take?
The time required for a roof replacement can vary, but most projects are completed within a few days to a week. Factors that influence the timeline include the size of the roof, weather conditions, and the complexity of the job. More complex projects or unforeseen issues can extend this timeline.
How much can I save by replacing my roof myself?
DIY roof replacement can lead to significant savings, primarily by eliminating professional labor costs. You may also reduce expenses by sourcing materials and handling waste disposal yourself.
However, while DIY can cut initial costs, it’s crucial to consider the value of professional workmanship, which often ensures quality and adherence to safety standards. Inexperienced DIY attempts might lead to costly future repairs, potentially offsetting the initial savings.
Home appraisals play a crucial role in the real estate process, influencing everything from property financing to sales transactions. Whether you’re a first-time homebuyer or a seasoned real estate investor, understanding the basics of home appraisals is essential. In this guide, we’ll delve into the fundamentals of property valuation, demystifying the appraisal process and shedding light on its significance.
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A home appraisal is an unbiased assessment of a property’s market value conducted by a certified appraiser. The goal is to determine the fair market value—the price a willing buyer would pay and a willing seller would accept in a competitive market. Home appraisals cost anywhere between $300 to $500 and can take as long as a few hours to a few days depending on the condition of your home and the appraiser’s schedule.
Property Inspection:
The appraiser visits the property to assess its condition, size, layout, and overall appeal. They consider both the interior and exterior features, noting any upgrades or repairs.
Comparable Sales Analysis:
Appraisers research recent sales of comparable properties in the neighborhood. They compare factors such as size, age, condition, and location to determine the property’s value.
Market Trends and Conditions:
Appraisers analyze current market trends, considering factors like supply and demand, interest rates, and economic conditions.
Property Condition:
Well-maintained homes generally receive higher appraisals. In other words, if your home has nice curb appeal, updated features, and modern amenities then it’s likely it will get a higher appraisal. On the other side, structural issues or deferred maintenance can negatively impact the valuation.
Location:
Proximity to amenities, schools, and public services can influence and increase your property value. If your home is located in a desirable neighbourhood, within walking distance to shopping and parks then it will generally receiver a higher appraisal.
Comparable Sales:
Recent sales of similar properties in the area are a key factor. Appraisers consider the selling prices, conditions, and features of these comparable homes. The age of your home will also factor into its value.
Upgrades and Renovations:
Upgrades that enhance a property’s functionality and appeal can positively impact its appraisal value. Recent renovations should be accurately documented and communicated to the appraiser such as a finished basement, replaced doors and windows, the addition of a fire pit or outdoor fireplace, and a kitchen or bathroom remodel.
Mortgage Approval: Lenders use appraisals to ensure the property’s value aligns with the loan amount requested by the buyer.
Selling a Home: Sellers benefit from appraisals to set a realistic listing price. An accurate appraisal can facilitate a smoother selling process.
Estate Planning: Homeowners may need appraisals for estate planning, tax purposes, or division of assets.
Real Estate Investments: Investors rely on appraisals to assess the potential return on investment and make informed decisions.
Home appraisals are a critical component of the real estate landscape, providing a fair and impartial evaluation of a property’s value. Whether you’re buying, selling, or investing, understanding the appraisal process empowers you to make informed decisions and navigate the real estate market with confidence.
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With its constant ebbs and flows, real estate demands impeccable timing. There is an intricate art of balancing property transactions, especially in a buyer’s market where there are many opportunities, but with that comes significant risks. Buyers find themselves hesitant, fearing the financial burden of potentially owning two properties, if they can’t sell their current property quickly enough. However, there exists a little-known yet powerful tool: the Sale of Purchaser Property clause, the ace up your sleeve as a buyer in today’s market.
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This strategic provision offers a safeguard against the dual-ownership dilemma, allowing buyers to seize the advantages of a buyer’s market without being shackled by the burden of holding two properties simultaneously. By understanding and effectively utilizing this clause, savvy buyers can navigate the real estate landscape with peace of mind, capitalizing on current market conditions and a favorable upside when playing the long game.
The Power of the Sale of Purchaser Property Clause
A Sale of Purchaser Property clause is a condition the buyer agent includes in the purchase and sale agreement when putting an offer on a home. This clause makes the sale of the new property contingent upon the successful sale of the buyer’s current property.
As a buyer, you essentially get to say: “I’ll buy your property, but only if I can sell my current one first.” The deal may fall through if the buyer’s property doesn’t sell within a specified period, making the new property conditional until the other sale has a firm contract in place. If the buyer successfully sells their property during the conditional period, the condition is waived, and the new home is now also considered legally sold with a binding contract. If you’ve exhausted all options trying to sell your property during that time period, the deal on the property is now void, and the buyer gets their deposit back.
Many buyers and sellers might be more familiar with the terminology of an escape clause; is this any different? An escape clause is included in a purchase agreement so that a seller can continue to market their property and accept new offers from potential buyers even after accepting an offer from a primary buyer. It provides the seller a way to “escape” from the contract if a better offer comes along within a specified time frame. The key difference is that an escape clause primarily benefits the seller. A Sale of Purchaser Property clause benefits the buyer, making their purchase contingent on successfully selling their own property.
Tips for Sellers
Talk to your real estate agent about the escape clause. This allows you to continue to market the property and be aware of further changes in the market (price, interest rates). It’s best to have a short conditional period allowing the buyer to sell their home.
Tips for Buyers
If the inclusion of this clause still keeps you up at night with the concern of owning two properties, you can always consider selling your home first. Typically, in a seller’s market, it takes many unsuccessful offers before firming up on the right home, sometimes taking weeks or even months. However, you can always take your time and work at a pace that is best for you. Take the time to find the right buyer for your property, and include a longer closing period so you have the time you need to find your next home.
With many properties sitting on the market and inventory building up, sellers are feeling the pressure and are eagerly waiting for any offer to be presented. Some stand-out properties are still moving quickly, while others are taking much longer to sell, creating circumstances that favour buyers.
Knowing this condition exists, buyers shouldn’t be afraid to make an offer. If you’re on the fence about a property, the SPP clause gives you security that your purchase can only firm up if you sell your current home. Give us a call today to speak to a real estate agent in your area.
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Whether you’re selling your home to begin a new adventure or refinancing your existing home, getting an appraisal with the value you want is an important hurdle to clear. You may feel that the appraisal process is out of your control, but there are many easy and inexpensive ways to get both yourself and your home ready.
We put together a checklist of our top tips below. But first, let’s quickly cover the basics of home appraisals.
What Is a Home Appraisal and Why Is It Important?
A home appraisal is an unbiased report on the value of your home performed by a trained and state-licensed individual. Appraisals are an essential part of the home financing process, ensuring the homebuyer, seller and mortgage lender each have an impartial, consistent and accurate assessment of the value of the property under consideration.
The lender is responsible for ensuring that your home provides adequate collateral for the mortgage. For most loans, the lender obtains a signed and completed appraisal report that accurately reflects the market value, condition and marketability of the property.
It’s the appraiser’s job to provide a factual, unbiased and detailed description of the property and the neighborhood. They must take into account all factors that influence a home’s value when developing the market value opinion in the appraisal report.
Home Appraisal Cost
While home appraisal costs can vary by state and property size, the fee can range between $300 and $1,200. Most fall somewhere around $600-$1,000, with costs based primarily on the geographical area of the home.
How Long Does a Home Appraisal Take?
From start to finish, the home appraisal process usually takes approximately 7-10 days to complete.
The required in-person visit by a home appraiser can take over an hour, depending on the size of your home. However, several other steps are involved in making an unbiased and professional assessment of your home’s value. Your appraiser will research trends, local county records and recently closed comparable homes in your area, known in the industry as “comps.”
Once your appraiser compiles and analyzes all the information and data, they will present a final report of your home’s value.
What Do Home Appraisers Look For?
A home appraiser uses several sources of information to determine a property’s value. As part of the assessment, the appraiser will visit the property in person and review recently completed sales of comparable homes. Common factors examined during home appraisals include:
Property size. In real estate appraisals, size significantly affects the final number. In general, the higher the square footage of a home, the higher its value. An appraiser will also look at the kitchen, number of bedrooms, bathrooms and closets.
Exterior condition. When assigning a value to your property, the appraiser will consider not only the exterior appearance of your home but also its condition. They will check the following:
The condition of the roof, foundation, siding, gutters, chimney and walls, looking for signs of leaks, mold and other safety hazards
Lot size, including front and backyard square footage
Pool, outdoor kitchen, deck, porch and other amenities
Interior condition. Again, this refers not only to the appearance of the interior but also to the working condition of standard household assets such as:
Plumbing
Electrical and HVAC systems
Doors and windows
Light fixtures
Any kitchen appliances to be included in the sale
Attic, basement and foundation. A finished basement or attic may impact a home’s value, but these areas must meet specific requirements to be considered part of the Gross Living Area (GLA). An appraiser will also evaluate your home’s foundation and its condition.
Home improvements and renovations. Tell your appraiser about any work or upgrades you have done to spruce up your home. This can include anything from the central air system you installed 10 years ago to the kitchen flooring and countertops you just renovated (along with the new oven and fridge to match, of course).
What Hurts a Home Appraisal?
If an appraisal is in your future, it’s essential to understand the factors that could negatively impact it, such as the following:
Low-value comps and decreasing neighborhood property values
Poorly maintained interior or exterior
Age of the home
Location, such as a flood zone or busy road
Signs of mold, insect infestation, leaks or other safety concerns
Issues with the home’s systems, such as plumbing, electric or HVAC
Lack of parking
Hazardous construction materials like lead paint or asbestos tile
Outdated or faulty plumbing, electrical and heating systems
Some issues are in your control and some may not be. Whether you choose to address the correctable concerns or not, being aware of crucial appraisal criteria can help you avoid the potential unwelcome surprise of a lower-than-expected home value.
Top 7 Tips Home Appraisal Checklist
How does one best prepare for a home appraisal? We put together a checklist of common (and not-so-common) tips to help you get a high valuation from your appraiser.
1. Do Your Own Appraisal
Imagine that you are the appraiser. Walk around your home’s interior and exterior and really scrutinize it as if you were going to complete the appraisal report yourself. Take note of any obvious damage or deferred maintenance that needs your attention. Leaks, broken systems and damaged surfaces should all go on your list of things to repair.
Thoroughly inspect safety equipment like smoke alarms, carbon monoxide alarms and home security systems. Are they all functioning, or do parts or entire systems need to be replaced? Make a plan to repair these issues and clean up any cosmetic issues that may have occurred as a result.
2. Investigate Comps
Check out recent home sales in your neighborhood. What has the price range been for homes with features and updates similar to yours? The values of these comparable homes should be similar to what your home will appraise for. This information can help you know where to focus your time, efforts and funds.
If you know a neighbor (or real estate agent) who recently sold a home in your area, contact them to find out if there were any appraisal issues or insights that they can share.
If you’re working with a real estate agent, you can request that they collect some comps for you and your appraiser to review. Particularly if your home has unique or uncommon features, your agent may need to get creative while staying within the guidelines for selecting comps.
A quick way to get a rough idea of how much your home is worth is to use a home value estimator calculator. Add some basic information to gauge your home’s current value and view recent home sales in your area.
3. Get Superficial
Clean your house from top to bottom and remove extra clutter. Once you’ve scrubbed and straightened up everything possible, consider making some easy, low-cost cosmetic updates that can have a big impact, like the following:
Paint or touch up existing paint
Hang updated window treatments
Replace worn faucets, doorknobs and cabinet hardware
If you’ve been planning to update your decor after you move, consider bringing in a few of the newer pieces to make the old house look fresh and modern. Downsizing or packing for a long-distance move? Ask your real estate agent if they have staging furnishings you can borrow or recommendations for a service you can use.
4. Make Your Outdoor Areas Truly Great
Now that your home’s interior looks fantastic, it’s time to pay attention to the exterior. Make sure that your landscaping is looking its best by doing the following:
Mow your lawn, trim your trees and bushes
Remove weeds and dead vegetation
Add color with inexpensive, seasonal flowers in the spring, summer or fall, and ensure that snow removal is neat and tidy in the winter
You’ll also want to:
Remove outdoor clutter, like yard tools and stray toys, from everywhere on the property
Consider staging any outdoor living spaces with new furniture or accessories
Power wash your home’s exterior, as well as your driveway and any deck or patio surfaces
Ensure your pool is well-maintained and in safe operating condition
Most of this can be accomplished in a weekend, and the increased curb appeal will be worth it.
Check out expert tips for outdoor home renovations — you may find just the right improvement to increase your value!
5. Be Sure To Share Your Upgrades
Tell your home appraiser about the improvements you’ve made to your home. Inform them of upgrades like the following that will positively impact your appraisal value:
New features that you have added, like a security system
Updated HVAC units
Exterior improvements like siding, gutters or a new roof
High-value room remodels like kitchens and bathrooms
An easy way to make sure that your appraiser remembers all of these improvements is to create and share a short, one-page list detailing each. You should have this list ready in advance and include any applicable permit information.
6. Know Your Neighborhood
Make your appraiser aware of any recent improvements in your overall neighborhood. It’s worth mentioning things like:
New or highly rated schools
Parks
Transportation enhancements
Shopping
Other beneficial amenities
These kinds of changes can add significant value to your home, and if your appraiser is not a local resident, they may not be aware of them. Appraisers are often familiar with the general area, but you probably know your specific neighborhood better than they do.
7. Stay Focused
While you are working your way through the tasks and updates listed above, it’s important to remember not to go overboard and take on too many projects. Invest your time, money and effort only on issues that clearly need attention. If you’re getting an appraisal for a home you’re selling, you most likely already have a buyer who liked your home enough in its current state to make an offer on it. Making unnecessary major changes could end up being a waste of your time and resources.
Your home’s selling price is affected by much more than just the appraisal! Find out how the time of year can increase your sale price.
Although it’s not possible to change your bungalow into a country estate overnight, taking the time to tackle a few strategic projects before your appraisal can help put you in a better position to get the outcome you want. If you’re ready to move or refinance the home you love living in, get a custom mortgage rate quote from Pennymac today. Our Loan Experts can answer your questions and help guide you through the mortgage loan process.
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Selling a house amid a divorce can make an already-complicated situation even more complex. The need to manage a real estate transaction while also managing your interpersonal conflict is stressful, but sometimes financially necessary. Every couple’s situation will be a little bit different, of course, but if you need to sell the marital house due to a divorce, here are answers to some common questions and other things to consider during this difficult process.
Should I sell the house before getting divorced?
You can sell a property before, after or during a divorce, and the best option may be different for each couple. A number of factors can impact the best timing, including housing market conditions, how amicable your split is and the financial needs of each spouse.
One thing that can be useful is to work with a real estate agent who has experience in divorce transactions. “The common denominator for a divorce sale is that the divorcing parties must mutually agree to sell the marital property,” says Lou Rodriguez, an agent with United Realty Consultants in South Florida and author of “Selling Your Home During Divorce: How Everyone Can Win.”
An additional consideration for the timeline of your home sale is the potential profit you stand to make. If the value of the property has gone up significantly since you purchased it, you may have to pay capital gains tax, and the amount is very different depending on whether your taxes are filed jointly or as single individuals. For single tax filing status, you must pay taxes on anything over $250,000 in capital gains. That number doubles to anything over $500,000 if you file jointly as a married couple.
If you sell before the divorce is finalized, be sure you have a plan for what will happen with the earnings. “You’ll want to be careful how you handle the proceeds of the sale so that those proceeds are divided fairly during the divorce process,” says Randi Dukes, an agent with Repeat Realty in Dallas–Fort Worth and a divorce real estate specialist who has earned the RCS-D (Real Estate Collaboration Specialist–Divorce) designation. “It’s often recommended that those proceeds go into a separate account that can be divided upon divorce, rather than mixing the proceeds into other joint accounts.”
What are the options?
When you are going through a divorce, there are several different ways you could decide to sell the family home. Here are some common options.
Sell the house outright
“Often, selling the house makes the most sense because it provides both parties with a lump sum of money to establish a new home and a fresh start,” says Dukes. Selling the property outright means the proceeds can be more easily divided between two people. It also gives both partners the opportunity to establish the next phase of their lives.
Sell it to your spouse
Sometimes it makes more sense for one partner to continue owning the house. This can happen when one partner will have primary custody of the children, for example, as it eliminates the need for the children to move out of their home and be uprooted.
However, this option only works if the partner buying the home can make it work financially. “The spouse keeping the house needs to do their due diligence to make sure keeping it is a sound decision,” Dukes says. “A real estate agent can look at the title to see if there are any liens or second mortgages that one spouse may not know about, and the spouse can talk to a lender or financial advisor to see if they can actually afford to keep the house.”
If this is your plan, make sure you get all your legal ducks in a row. The partner selling the house will likely need to sign a quitclaim deed giving up their rights to the property and transferring them to the other partner — have a real estate attorney manage this process.
Co-own it
You could decide to hang on to the property and continue to own it together. Co-owning might allow you to rent out the property and both gain rental income, for example. Or, you could make the property work for both of you to live there with a renovation that divides it into two units. This can be a viable option for parents who both want to stay near the children.
Give it to your kids or family members
If you’d rather keep the home in the family than sell it, you could consider gifting the property to your adult children or another relative. This option eliminates the need to prepare the property for a sale and could be a way for both partners to put the property in the hands of someone they love. Again, be sure to have a real estate attorney handle the deal for you to ensure that ownership is properly transferred — and it’s a good idea to talk to a tax professional as well, to understand any tax or estate planning implications.
Community property states vs. equitable distribution states
There are two main legal approaches to how property is divided after a divorce. It all depends on whether you’re in a community property state or an equitable distribution state.
The majority of states fall into the category of equitable distribution, which means if one party earns or purchases certain assets, those assets are considered theirs individually. The assets don’t become shared property unless both parties agree to share them. “I live and work in Florida, an equitable distribution state, which simply means Florida courts will divide marital property in a manner which it considers fair, but not necessarily equal,” says Rodriguez.
Community property states, on the other hand, consider all assets acquired during a marriage to be jointly owned by both parties, and they are divided equally in the event of a divorce. Only nine of the 50 states are community property states, according to the IRS: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.
How to sell a house during a divorce
Selling a house can be stressful and time-intensive no matter what. Follow these steps if you decide to sell your house during your divorce proceedings.
1. Hire an experienced real estate agent and lawyer
Not every real estate agent or attorney knows how to navigate the conflict and tension that can come with selling a house during a divorce. It’s important to work with someone who has experience in sales like this, or even specializes in them.
“I would recommend that you work with someone who knows how to work in high-conflict situations and has experience in getting people moving in one direction to accomplish shared goals,” says Rodriguez. “Because whatever happens during the sale — accepting an offer, countering an offer, all the way to signing closing documents — requires that both parties agree each step of the way. It makes a difference having a transactionally experienced listing agent who has worked with other divorcing clients.”
2. Get a home estimate and agree on a sale price
It’s important that both parties come together on pricing. There are various ways to determine how much your home is worth, from online estimators to a thorough analysis of your local market prepared by a real estate agent. But a professional home appraisal, which will cost several hundred dollars, is probably the most accurate assessment of a home’s market value.
3. Sell the home and split up the net proceeds
Once you agree on the terms and price for selling the home, your agent will guide you through the home-selling process. This will involve preparing the home for the market, taking professional photos for the listing, listing and marketing the property, coordinating showings, reviewing offers and preparing all the closing paperwork. Once the sale is closed and complete, the proceeds will be shared as required by your state and established by your attorney.
Next steps
Ready to sell? It’s important to find a local real estate agent both of you feel you can trust. “Look for someone with additional training in divorce real estate, and ask them about their experience,” says Dukes. This type of agent will be skilled in handling not only the home sale but also any interpersonal conflict that may arise.
FAQs
The best time to sell a house will be different for different couples. “If both spouses agree, then selling your house before filing for divorce is an option — if you’re trying to take advantage of a strong seller’s market, this might be a good idea,” says Randi Dukes, a Dallas–Fort Worth Realtor who specializes in divorce real estate. However, selling the house after the divorce may be the right choice for other couples. Whichever timeline you choose, it’s important that both partners agree on the process.
In some cases, if both parties can’t come to an agreement on how to sell the property, yes, a court may intervene to force the sale. The laws will differ depending on your state and your specific circumstances, so be sure to consult both your divorce lawyer and a real estate attorney in your area.
If you’re putting your home on the market, you may be wondering how to style it. Home staging is a popular house-selling strategy that presents your home in its best light.
Staging a house is meant to show off your home’s features, create a move-in-ready look and help potential buyers see themselves living in the space. From tidying up your space to redecorating, home staging can give your home a clean and inviting ambiance that welcomes buyers — and may even entice them to pay more.
When preparing a home for sale, many sellers hire professional home stagers to create a warm, inviting place that buyers will want to call home. But, there are many changes you can make on your own.
Declutter Your Space
Declutter, declutter, declutter. Staged homes shouldn’t have piles of paper on the countertops. Take a moment to reassess your space and ask yourself, “Do I need this?” Determine which books, loose mail and magazines can be stored elsewhere to create a more spacious look.
Getting rid of clutter shows that your home is organized. Potential buyers may also infer that you take good care of your home and that it’s well-maintained.
Focus on a Neutral Color Palette
Home stagers always prefer neutral palettes to make a room look balanced and timeless. Colors such as beige, white or light gray are good choices. Then, add aesthetically pleasing decor, such as a black or green pillow for the couch. Try to create a fun look that’s not too matchy-matchy.
Find Long-Term Storage for Everything on the Counters
In the bathroom, find a long-term storage solution for items like cotton swabs and hair brushes so they’re not littering countertops. Add mirrors to walls to increase light in a small or dark bathroom. Even consider a new set of white, solid brown or light gray towels to give your bathroom a clean, seamless look.
Clear off your kitchen countertops by storing away small appliances, kitchen tools and knick-knacks. You want to accentuate the positives — cabinets for storage and plenty of countertop space for food prep. What can you keep on the table? A bowl of fresh fruit, like lemons or oranges, to add a pop of color and style.
Professionally Organize Your Closet
Show off your generous closet space by making each one neat and tidy. Remove everything from your closets and sort it into piles: keep, donate, sell and recycle.
If there are items you’d like to keep that you’re not currently using, store them away until you’re ready to move. You want potential homebuyers to see uncluttered closets with plenty of space. A bonus? Paring down your belongings means you’ll have less to pack.
Make Your Bedrooms Feel Hotel-Like and Inviting
Stick with one neutral color in the bedroom, perhaps all white, gray or beige, for example. To make your room hotel-like, tuck your comforter into the end of your mattress. Place two pillows on the bed, then add another three to five on top for a luxurious feel. For an attractive touch above the headboard, hang either one large piece of artwork or a set of three smaller ones.
Look to Odd Numbers
Group items in odd numbers, such as three or five. This classic design rule helps create visual interest and calming, naturally appealing displays. It’s a trick that makes a room look more luxurious versus symmetrical. On the dresser or bedside table, arrange a small vase of flowers with two books.
Use Glass for Small Dining Spaces
Make a tiny dining room’s layout appear larger with a glass-topped table. The more solid the furniture, the smaller a place looks.
Add a rug to “anchor” the room, even if you have an open-plan house. But keep in mind the room’s scale — in grander rooms, go big, and in smaller spaces, use a more petite rug that fits under the table. Place a generously sized centerpiece to draw the eye upward toward the room’s ceiling light.
Take Window Treatments to the Ceiling
To create height (even in small rooms), take window treatments as high to the ceiling as possible. Window treatments make the room look taller. And there’s no need to splurge on fancy panels; drapes are one way to use fun patterns in an otherwise neutral room.
Hang a Mirror in the Entryway
At the entryway, set up a sofa table or console with a lamp and accessories in sets of three. Above the console, hang a mirror or a larger piece of artwork to create a welcoming feel whether you’re coming or going.
Don’t Forget About the Curb Appeal
Curb appeal is all about making that beautiful first impression. Fortunately, it doesn’t take much to make a big impact. Fresh paint, a new mailbox, a healthy manicured lawn, a clean walkway and flower-filled containers are easy ways to improve your home’s exterior appearance. You may also want to consider investing in outdoor lighting to enhance both safety and aesthetic appeal and, potentially, even your appraisal.
Remove Bulky Furniture
When staging a home for sale, put oversized furniture in storage. Furniture that is too large for a space can make a room feel cramped. Rent or purchase some inexpensive pieces better scaled to the room to make the area appear more airy and comfortable.
Depersonalize Your Home
Your home may be filled with years of special memories, but you’ll want to remove personal photos, collectibles and keepsakes when selling. The goal is to eliminate distractions and help prospective buyers envision themselves living in the space. You want them to concentrate on your home’s unique features, not your personal memories.
Have a Pleasant Scent in the Home for Tours
A gentle, refreshing scent creates a cozy feel and can trigger pleasant emotions. When it’s time to show your home, think about spraying a dash of essential oils throughout your rooms or using a diffuser.
You’ll also want to make sure to remove any bad smells. Open the windows to let fresh air in and thoroughly clean your carpets, sinks, trash cans, bathrooms and pet areas.
With this advice, your home’s spacious, balanced and livable look will be ready to list and show off to potential buyers.
And if you’re selling your home and purchasing a new one, let Pennymac guide you in the mortgage loan process. Get a custom instant rate quote from Pennymac today.
The Empire State’s real estate market is a bit of a mixed bag. On the one hand, parts of New York City and the Hamptons are among the priciest housing markets in the entire country. But the rest of the state, which is quite large, is full of cities like Buffalo, Rochester and Syracuse, all of which have median home prices of just $200,000 or less (according to July Redfin data).
Whether you’re buying in Long Island or selling in Lake Placid, there’s one part of the real estate transaction that you can’t avoid: closing costs. Here’s what to expect when it comes to closing costs in New York.
How much are closing costs in New York?
Closing costs vary by state, and New York is on the high side with an average rate of 3.1 percent of a home’s sale price, according to CoreLogic’s ClosingCorp. By comparison, Connecticut’s rate is 2.1 percent and New Jersey’s is 1.7 percent.
Data from the New York State Association of Realtors shows that July 2023’s median sale price for the state was an even $400,000. Applying the rate of 3.1 percent, that means closing costs of $12,400.
That number will vary greatly depending on home prices in your local market, though, and prices tend to get higher the closer you get to New York City. According to Redfin, the July median in Westchester County, just north of the city, was $770,000, which would result in closing costs of $23,870. But in Potsdam, not far from the Canadian border, the median is just $175,000, meaning closing costs of $5,425.
Who pays closing costs in New York, buyers or sellers?
Whether you’re buying or selling in the New York housing market, You will be responsible for some amount of closing costs.
Closing costs for buyers
As a homebuyer, most of your closing costs will relate to your mortgage loan. Here are some of the most common closing costs for buyers:
Loan-related fees: Many lenders charge borrowers loan application and origination fees, as well as a fee to check your credit history. If you are paying points on your mortgage, which typically bumps down your interest rate by 0.25 percent for every 1 percent of your loan amount, that fee will be part of your closing costs as well.
Appraisal and inspection fees: Your lender will likely require a professional home appraisal to confirm the home’s value (and make sure it’s worth at least the amount you’re borrowing). It’s smart, but not required, to get a professional home inspection as well. This will alert you to any problems with the home and property before they become your problem. If a major problem is discovered, you may be able to use it as a negotiation point. Expect each to run a few hundred dollars.
Title-related fees: Similar to a background check, a title search is conducted to confirm ownership and make sure that there are no liens or claims on the property. Title insurance protects you (as the new owner) and the lender if any issues arise after the deed is transferred. In some states, the seller pays for title insurance, but in New York, it’s typically the buyer. The cost will depend on your loan amount.
Taxes: At closing, you’ll likely need to prepay a portion of the year’s property taxes as determined by your local jurisdiction. These funds will be held in escrow and distributed on your behalf. Sellers pay for the base transfer tax in New York, but if you’re buying a home for over $1,000,000, you’ll be on the hook for an additional fee in the form of the state’s mansion tax, which starts at 1 percent of the sale price and gets higher the more expensive a home gets.
Attorney fees: The state of New York requires both homebuyers and sellers to be represented by an attorney at closing, so add legal fees to the list.
Closing costs for sellers
Sellers aren’t off the hook just because they’re not taking out a mortgage. Here are some of the most common closing costs for sellers:
Agent commissions: Realtor fees will be your largest expense when selling your home. Commissions typically run between 5 and 6 percent of a home’s sale price, which means the amount can be steep. On a median-priced $400,000 home, 5 percent comes to $20,000.
Transfer taxes: As the seller, you’ll need to pay New York’s real estate transfer tax, which is $2 for every $500 in home value. On a median priced $400,000 home, that’s $1,600. In New York City, an additional city tax applies.
Attorney fees: The state of New York requires both homebuyers and sellers to be represented by an attorney at closing.
Seller concessions: If you made any concessions to the buyer, such as offering to pay for a repair, they’ll be settled at closing time and taken out of the sale price.
Wire transfer fee: If there’s a balance left on your mortgage, it will be taken out of your sale proceeds and wired to your lender. There may be a fee for this.
Lowering your closing costs in New York
You might be surprised to learn that many closing costs are negotiable (except for government-assessed fees like property and transfer taxes, of course).
For home sellers, your most expensive cost is also one of the most commonly negotiated: the Realtor commission. If your agent is willing to lower their commission by even a little, it could save you a lot. For example, a 5.5 percent commission on a median-priced $400,000 home, rather than the full 6 percent, will save you $2,000.
Buyers can explore down payment assistance programs, which help cover closing expenses for qualified buyers via low- or no-interest loans, grants and more. There are options specifically for first-time homebuyers in New York as well. And remember that different lenders may offer different rates, terms and fee structures, so be sure to shop around for the best deal. Don’t be afraid to ask the seller for concessions, either. They might not agree to pay for that plumbing repair (for example), but it doesn’t hurt to ask.
Find a local real estate agent
New York’s real estate market is unique and complex, and the best way to navigate it is with the help of an experienced local real estate agent. If you don’t have one, a great place to start is by asking for referrals from friends and family. Do some online research, too. Interview a few different candidates to find someone who’s a good fit — and if you can find someone who knows your specific area very well, or even your specific neighborhood, all the better.
FAQs
According to data from ClosingCorp, closing costs in New York average 3.1 percent of a home’s sale price (not including agent commissions). The median price in the state was $400,000 as of July, per the New York State Association of Realtors, so the closing costs on a median-priced home would come to $12,400.
Real estate agent commissions, typically paid by the seller, are the most expensive part of closing costs, typically totaling between 5 and 6 percent of a home’s sale price. For a median-priced $400,000 New York home, 5 percent comes to $20,000.