Articles from Mair Law Offices

There are plenty of reasons you might be considering selling your home – you might need a bigger house with new arrivals on the way, a smaller house with kids off to college, starting retirement or relocating, or traveling for an extended period.

Rental properties aren’t always held indefinitely either. Perhaps it started with plans to use it once in a while and rent part-time, but now it’s rented full time, and the cash flow just barely covers the mortgage and expenses. Sound familiar? It’s time to sell!

The decision to sell something as important and personal as your home or vacation home certainly isn’t easy. Once you get over the emotional hurdle, there is a lot to consider. Where are you going to live? How much money are you going to have to spend? If you have a desirable home, you may sell it faster than you find a place to live. Then what? You need to have a plan.

Buying and selling is very exciting, but before you get carried away look carefully at the finances associated with selling your home. It’s possible that you may think your house is worth more than others do. You know the local market, but you haven’t been inside many comparable houses. You can compare the number of bedrooms and bathrooms, but do you know how the rooms are finished, the type of flooring in the house, whether the basement is finished, when upgrades were last done, the age of the roof, town water/sewer, etc. These are all factors in determining an accurate estimate. If you decide to use a real estate agent, they can help you determine a reasonable listing price.

Should you use a real estate agent? Doing so certainly makes the process easier, as they bring expert knowledge of the area and direct experience working with recent buyers and sellers. It’s still vital to interview at least a few and check their references to ensure you’re working with the right agent for you. Of course, there is a cost associated with using a real estate agent and it’s not small. Their commissions are usually calculated at 5% of the purchase price. That ties back into finances because the agent is paid out of the proceeds of the sale.

Check out this example: You have lived in your house for 10 years and you accept an offer for $425,000. Assuming you paid $400,000 for the house when you bought it and put down 20% at the time of purchase, the balance owed on a 30-year $320,000 mortgage at 4% interest after 10 years is approximately $252,000. If you put down less than 20% or if you lived in the house for less than 10 years, the proceeds from the sale will likely be considerably less.

Keep in mind that you don’t receive all of the proceeds from the sale. For this example, let’s work with a mortgage payoff of $252,000. In Massachusetts, the seller pays the tax stamp ($1,938), the real estate commission ($21,250), the septic inspection (and possibly repairs), maybe there is a home equity loan for renovations, the pool or the addition, don’t forget the credit for repairs the buyer wants to make (roof, driveway, etc.), other closing costs (recording fees, attorney fees, etc.) and finally your moving costs. Now, with proceeds much lower than you were expecting, you might have to scale back the initial plans you were making about what to do after the sale.

Before you list your house for sale – it’s imperative to take all your costs into consideration! Otherwise, you might find yourself struggling to find a way to afford the next house you had your eye on.

If you’re interested in reading about other finance and real estate related topics or questions that you can’t find answers to just let me know!
You’re also invited to schedule a free consultation. You can also email me at glen@gmairlaw.com or call me at (508) 250-0797.

This article is intended to inform you of developments in the law and to provide information of general interest. It is not intended to constitute legal advice regarding a client’s specific legal issues and should not be relied upon as such. This article may be considered advertising under the rules of the Massachusetts Supreme Judicial Court.