Timing, timing, timing (and fresh baked cookies)
How to Sell
A broker can research comparable sales in your area, giving you a clear and accurate indication of the current market. This allows you to accurately predict your return on investment based on real data rather than being misled by “asking prices” listed in the newspaper.
An experienced broker can help you develop a realistic time frame, set up a sales promotion plan, advertise the property for you, and judge if and when it’s time for a shift in strategy. The broker can recommend possible repairs and cosmetic improvements that will effect the marketability of the apartment, as opposed to those that will simply cost you money. Your broker has access to the sales efforts of other brokers with whom they have cooperative marketing agreements. It is in the broker’s best interest to sell your property quickly, therefore he or she will utilize all outlets available to close your deal expeditiously.
Aside from the time and coordination required to arrange showings of the property, it is generally not a good idea for the owner to be present when a prospective buyer is viewing the apartment. Buyers do not ask the candid questions they need answered in the presence of the owner. They do not examine the property as thoroughly as they’d like to, for fear of imposing upon the owner. And owners do not often have the sales experience to sense which qualities of the property to highlight and which to minimize. In short, a broker provides the necessary buffer between you and each prospective buyer that will get their considerations resolved quickly and without any waste of your time. A good broker will be able to sell your home without emotional involvement.
Qualifying Prospective Buyers
A broker screens all inquiries about the property from the standpoint of how serious this prospective buyer is and how likely they are to be able to close. The broker knows what questions to ask, has the experience and confidence to obtain the necessary answers, and can run credit checks and other financial investigations about the prospective buyer on your behalf, so that you will have a purchaser who will pass the board. This is particularly useful when a successful open house results in multiple parties interested in your apartment.
If you do receive multiple offers, the broker can help you evaluate which offer is the best. It is often not the highest offer but the most qualified buyer who deserves your commitment.
Expediting the Deal
If the prospective buyer needs financing, the real estate broker can recommend a mortgage broker or a choice of banks that offer co-op or condo loans. They can also recommend real estate attorneys and coordinate access to the property by appraisers and engineers. If questions or concerns arise on the part of either the seller or buyer, the broker can also serve as a mediator or problem solver. Any of a hundred details can interfere with the smooth execution of a deal, problems that a broker can solve with their experience and creativity.
The following is some basic information on tax rules affecting buyers and sellers, from the National Association of Realtors.
Single homeowners can exclude the entire gain on the sale of a home up to $250,000. Married owners can exclude $500,000 if they file a joint return for the year, either spouse meets the ownership test, both meet the use test, and neither spouse is excluding a gain from the sale of another home after May 6,1997.
All homeowners must satisfy three tests. The Ownership test means the seller owned the home for at least two years of the five-year period before the closing date. The use test means the seller used the property as a principal residence for two years of that five-year period. And the waiting period test means the exclusion wasn’t used during the preceding two-year period. Further, sellers aren’t required to purchase a replacement residence as they were under the old law.
There’s no limit to the number of times the exclusion will apply. There’s no cumulative feature. For example, a married seller may exclude up to $500,000 of gain (250,000 if single) on each home sale over a lifetime, provided other requirements are met.
Since Jan.1, 1998, gains from all capital assets held for more than 12 months are taxed at the rate of 20% (or 10% for taxpayers in the 15% tax bracket). If sellers qualify for the exclusion, the first $250,000 or $500,000 of the gain on the sale isn’t taxable. Any gain beyond those amounts is taxed at these capital gains rates and not at the higher, ordinary income tax rates.
Can job transferees who must sell their house in less than the two-year use period exclude any of the gain? Yes! They can claim a percentage equal to the amount of the two-year requirement they have satisfied. For example, six months of used and owned property is 25% of two years, of either $250,000 or $500,000 depending on their situation.
When can owners of a rental property or a home formerly used as a principal residence qualify for the exclusion if they no longer live there on the sale date? They qualify is they meet the ownership, use and waiting period tests. Also, owners of a rental property can move into their property for two years, convert the rental into a principal residence and be eligible for the exclusion.
Consult a tax expert to find out if these exclusions or other tax laws may benefit you.