From my extensive experience selling real estate, I know that the stress and work can be substantial when all is said and done. And you might actually lose money in the end. Instead, follow the example of the owners of the Serene Spanish-Style Montecito Home pictured in this blog post who are working with me and find the right real estate agent to work with.
Find the Right Real Estate Agent
Working with a certified agent is key in maximizing profits when selling a home. Think about it. You need to stay focused on your job. You don’t need to take on the added burden of becoming a real estate expert. Find someone who loves selling real estate, lives it every day, and is eager to help you sell quickly for optimum return on your investment. Besides bringing a wealth of knowledge and possible buyers to the table, an agent has no bias or emotional attachment to the property.
Both timing and price are of the utmost importance, and a mistake in either can set you down the wrong path with your home, causing you to lose both time and money. The right agent will know how to time your sale correctly, bearing in mind the local market conditions. They will also consider your personal needs and find a balance between your busy calendar and the local market's ebbs and flows.
Your agent will also be able to price your home right to ensure a smooth and quick sales process. A home listed too high is likely to push potential buyers away. Setting the price too low won’t get the property seen by the right buyers.
A good agent will be able to negotiate the best price. They know that just because someone is offering a higher price, they may not be the best buyer for your home. An agent will take care of multiple offers, negotiate on your behalf, vet all the buyers and present you with the information needed to make the best possible choice.
3 Ways to Maximize Your Profit
Even with the right realtor, there are a few sensible ways you, as a savvy seller, can maximize your profit when selling a home. Here are the top 3:
1) Closing Adjustments
As a seller, you can be repaid at closing for several things, including any service or supply contracts you have prepaid. All you have to do as a seller is identify each contract, create a per diem cost allocation for each one, then multiply that cost by using the days remaining on the contract at the closing date.
Here are some examples of what can be included in closing adjustments:
- Propane, oil, or any fuel contracts
- Real estate town and village taxes
- Condominium / cooperative common / maintenance charges
- Pool Service
- Pest control
You can recoup thousands of dollars in prepayments when you add up the amount you paid for all your contracts after the closing date. All you need is the documents along with the adjustments.
2) IRC §1031
Wondering how to avoid capital gains taxes? Ever consider exchanging your home for another? For sellers subject to California income tax, state tax law follows federal law for purposes of deferral under Section 1031. Advanced planning is key to success in any exchange, regardless of state. Sellers must pay particular attention to the timing of the sale of their relinquished property. You must also estimate your equity and debt replacement objectives and retain an expert, qualified intermediary.
Keep in mind that the IRS will not honor the exchange if either the 45-day identification period is missed, or your replacement property is not acquired within a 180-day exchange period. While the deferred capital gain will continue on the property acquired as a tax attribute. But, if you use section 1031, you can defer the capital gains tax owed indefinitely. That means sellers can compound their real estate purchasing power by including the unpaid tax into their available purchasing monies for their next transaction. (Make sure you talk to your accountant or tax attorney before you put IRC §1031 into action.)
3) Mortgage Interest/Real Estate Tax Deductions
As all wealthy individuals know, it takes proper planning to make money while limiting the taxable amount. That means savvy home sellers look for legal ways to take deductions from their taxable gross income. But, again, ensure you work with your accountant or tax attorney and follow the new tax laws. As I understand it, however, most homeowners can still deduct all of their mortgage interest, which is one of the most popular and lucrative tax breaks for wealthy individuals.
If you’re looking to sell in Montecito, Hope Ranch, or any of Santa Barbara's upscale communities, do yourself a favor and call me at (805) 886-9378 or email me at Cristal@montecito-estate.com and book a complimentary consultation. Let me show you have to maximize profits when it comes time to sell! Of course, I can also help you find a new home.