Oahu Home Sales

Step #3: Calculate The NET Proceeds From The Sale Of Your Home.

Here’s a fact you need to understand up front:

Never attempt to price your home based on what you “want or need” to net out of the proceeds.

If you spent $40,000 on a remodeling job that will only increase your homes value $30,000, you will lose $10,000. If you paid too much when you bought your home, and need to sell it within a year or two of buying it, chances are you will lose money on your net proceeds.

I’ve seen these sad situations, but there’s little anyone can do about it.

Never Confuse The Difference Between Cost And VALUE

That said, however, you DO need to understand what your net proceeds will be from a sale of your home. And to calculate them, you need to consider five factors.

1. Take the gross listing price of your home.
2. Subtract the amount buyers will discount to arrive at sales price (Step #2 above).
3. Subtract your estimated real estate commission.
4. Subtract contingency costs and repairs/personal property stipulated in a contract.
5. Subtract closing costs: appraisals, attorney’s fees, escrow and title fees, etc.

In many cases, the net proceeds can be as much as 10% or more off your listing price. And interestingly, this amount does NOT change even when sellers attempt to sell their homes WITHOUT a REALTOR®.

Guess what the first thing any buyer is going to do with a “For Sale By Owner?” They’re going to knock off the equivalent of the real estate commission you would normally pay anyhow. They hate the fact that you’re trying to pocket that money…and they’re going to fight over it.

Then they’re going to keep discounting based on other home and market criteria.

Before you know it, you’re back at the same place as if you used a professional. Only now, you’ve lost the resources a REALTOR® could have brought to the transaction…negotiation power, important home value information, market power, marketing resources…and much more!

So be careful. There’s a reason why 94% of all For Sale By Owners end up using a professional to market their home…It pays off in the net proceeds!

This entry was posted on Saturday, November 15th, 2008 at 11:52 pm and is filed under For Sellers, Updates. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.