If you own a house, you can sell a house… right?!  Well, technically yes. But if you want to minimize your financial losses and maximize your profits, there are a few principles that you want to keep in mind that can help steer you towards a better decision when it comes investing into a residential property in Arizona.

Your Investment into Real Estate Costs  

Down payment

The best method to limit real estate investment losses and increase profits is to sell your home for more than you paid for it. However, most individuals struggle to put this simple notion into practice. Most common costs to buying a residential property include but are not limited to:

  • Mortgage Down Payment
  • Commission paid to Real Estate Agent
  • Moving Expenses
  • Home Upgrades

Not only does a property cost the amount of the mortgage, but it also costs the down payment and a range of additional charges that must be addressed in order to limit your losses in a sale.

Two of the most frequently neglected expenditures associated with purchasing and selling a home are the mortgage closing charges and the real estate agent’s commission.

However, these costs can add up to be quite exorbitant. For example, in 2009, the average closing rate for a mortgage for a $200,000 house was $2,732.  On top of that, it is the industry standard for a real estate agent to collect a 6 percent commission on a sale of a property from the selling party. That means that if you are selling a $200,000 property, you will likely be owing an extra $12,000 commission to your real estate agent.

These extra costs need to be covered for in order to minimize any financial loss you may take, and you also should take note that you may have to pay capital gains taxes on any profit you make during the sale.  Under current tax laws, if you sell your primary residence within two years of buying it, you WILL have to pay taxes on your capital gains. However, if you wait over two years to sell your primary residence, you can get an exclusion from paying some or all capital gains taxes.

If you need any more help with figuring out if now is the right time for you to buy and/or sell your house, feel free to contact Jeff Barchi for professional recommendations. Jeff Barchi can help you find a property for your next real estate investment project in Scottsdale.