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 to buying and selling your house.
The first thing to remember is that buying a house costs money.
Therefore, the only way to minimize financial losses and maximize profits is by making sure you get more money for your house when you sell it than you paid for when you bought it. However, this simple principle is often quite difficult for most people to put into practice. This is often because many home sellers lose track of all of the various costs that went into buying their houses in the first place.Not only does a property cost the money you owe on the mortgage, but it also costs the down payment you made plus a variety of other costs that need to be covered in order for you to minimize your losses in a sale.
Two of the most often overlooked house buying and selling costs are the closing costs of the mortgage 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 us at the offices of Jeff Barchi. It would be our pleasure to help you out in your time of need!