The housing market crash of 2007 and 2008 left many homeowners facing a home worth less than what they owed on it. Refinancing became difficult, if not impossible to do, and selling these homes was difficult as well. Now that the market is improving, many homeowners want to sell and still want to break even – not lose money on their investment. How can you accomplish this?
#1: Determine your home’s market value
Keep in mind this may differ from what you owe on the home. The most accurate method for doing this is to use a local appraiser. For a basic idea of your home’s worth, you can use a site like Zillow.com. This gives you a starting point.
#2: Determine your break-even point
This sounds more difficult then what it really is. You’ll need your monthly mortgage payment paperwork and a calculator. Once you’ve determined the principle owed then you’ll need to determine the value of the home. Don’t worry you kind find a rough estimate on Redfin or Zillow.
Take the market value and subtract it from the principle owed. Once you’ve determined the difference you’ll need to factor in all of the real estate fees; 6% commission, closing costs, and you might have to fix or repair a few items.
If you don’t have enough equity in the home then you should consider working with a real estate investor. They can offer some alternative methods to selling your home which costs you nothing.
#3: Price your home for sale
To break even, you need to sell your home for at least what you owe plus any fees to sell the home, such as real estate agent fees. However, your home is only worth what someone else will pay for it. In other words, you’ll need a comparative market analysis report, usually completed by a real estate agent, to help you gauge what the current market within your local area is most likely to give you for your home.
#4: Be careful with upgrades
Very few home improvement projects yield 100 percent value added. That is, if it costs $5,000 to upgrade the kitchen, you may only add 50 to 70 percent of that onto the home’s sale value. Only make upgrades that give you as close to 100 percent value added.
#5: Beware of closing costs
Traditionally, the buyer pays closing costs. However, during negotiations, you may have a buyer wanting you to split the closing costs with them. If you have not done so, factor this into your home sale price as well. These costs can amount to 5 to 6 percent of the home’s sale price.
#6: Consider renting for a while
In many areas, home values are rising (which increases what you may be able to sell for). If you can, consider renting the home out for a while – for at least what your monthly mortgage, insurance, and tax costs are – until you can sell at a higher value.
#7: Talk about the short sale
Short sales are complex and difficult to get approved. They require the lender to agree to take less than what is owed to sell the home to a new buyer. Not all agree to them, but if you want to sell your home and break even in a tough market, this may be the only option.
To break even, you need to sell your home for what you owe on it now. However, many home sellers need to work with a highly skilled agent to help them sell the home at its top value. Your area, the home’s condition, and what you owe will also play a role in your success.