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As the classic saying goes, ‘you have to spend money to make money,’ and real estate is no different. Whenever you are getting ready to sell a property, you need to make sure that you are ready to take on the costs associated with getting a property ready for sale and following through on the transaction.
Unlike buying a property which often lets you wait until the very end of the process to start spending money, selling your property frequently requires gradual payments throughout the process that you need to keep track of.
So, if you are planning to sell your property, here is everything you need to know about the cost of selling your property investments and where you can save money on the sale.
Before we dive in, if the property you are selling still has a mortgage, let us show you how to take care of it. Just click the link below for a free strategy call today.
Why Are You Selling Your Property?
Before you can start breaking down the cost of selling your property, you should take a look at your reason for selling. After all, selling your property is not a decision to be made lightly, especially if your goals could be achieved without selling at all.
For example, if you are selling your property to buy a new investment property, consider how much you expect to make from the sale and how much you need for your next investment. You might be able to get the funds you need through a HELOC (Home Equity Line of Credit), or by refinancing the old investment property instead of selling it entirely.
However, if your goals can only be met by selling your property, then go ahead and get started.
Getting the Property Market Ready
The first set of expenses you will need to worry about when it comes to selling your property are the costs involved in making sure that the property is market ready.
Repairs and Updates
If you are selling a property that is in need of repairs and/or updates in order to maximize its value, you are going to want to take care of that prior to selling your property so that you get the best deal on the sale. However, you should always make sure the work is cost-effective and does not shrink your profit margin.
Start by walking through the property and noting down all of the work that the property needs. With this list you can then start getting estimates and quotes for how much it would cost to have all of the work done. Then, look at comparable properties that have been recently updated and try to figure out the maximum value of the property with all work completed.
Once you have done this, compare the final value with the cost of repairs in order to determine if the repairs are worth completing. Just remember, the final cost and value will vary depending on the specifics of the property.
Staging and Design
Once the property is in the condition you want it in, it is time to start staging the property and adjusting the interior design in order to attract buyers.
The easiest way to do this is to hire a staging company who can come in and set everything up for you using their own supply of furniture and décor. However, this can be quite costly. Alternatively, if you have good enough furniture and décor on the property already, you may be able to save money by having them use what is already on site.
If you cannot afford or do not want to pay for a staging service, you can try to do this yourself, but remember that not everyone has an eye for interior design and your personal preferences may not suit the general public.
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Marketing the Property
Once you have the property ready to go onto the market, it is time to start advertising. Here are some of the costs you need to consider.
Photography and Marketing Materials
When you are getting ready to market a property, you need to make you are showing it to people in the best light. This means having professionally taken photos that capture the property from all of its best angles.
These photos can be used for the listing itself as well as additional marketing materials if you choose to use them as a part of your marketing strategy.
One popular marketing strategy when selling a property is holding an open house. However, if you decide to host one, you need to factor in potential costs associated with it such as cleaning the house before and after the open house as well as providing any snacks or beverages you may choose to have for buyers to enjoy during the open house.
Finally, once you have secure the buyer, there are certain fees you will have to pay out at the end of the process in order to finalize the deal and satisfy all parties.
First, as the seller the duty of paying out both your realtor and the buyer’s realtor falls to you. The exact amount you pay is typically a certain percentage of the final sale price, so it may be worth shopping around for a realtor who asks for a lower commission provided they perform the same high-quality work. On top of their commissions, it is your responsibility to pay the tax on their commissions or provide them with additional funds from the sale to pay the tax themselves.
Finally, you will need to pay your lawyer for their work making sure that everything is filed correctly as well as any hours they spent assisting you in negotiations.
Remember: Sellers Often Become Buyers
If you are selling a property with the intention of buying a larger property, let us help you secure any remaining finances you need in order to close the deal.
Our team at LendCity is here to help you obtain any necessary bridge loans or mortgage solutions to suit your investments every single day at the best available rates.