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Real Estate Agent Fees And Realtor Commissions | Bankrate

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In this do-it-yourself digital age, home sellers and buyers alike might wonder if they need Realtors — or, more precisely, to pay Realtor fees. Just how crucial are these agents to a successful real estate transaction?

Well, a good agent is really pretty useful. Especially if you’re buying a home: Agents have access to information you don’t, and it takes time and expertise to research properties, find the best ones for you and put together a strong offer. But sellers see many benefits, too, especially when figuring out the best asking price. Your home will still need to be staged, listed on the market and shown, too. Here, we’ll take an in-depth look at how real estate agent fees work and what you get for the money.

One important note first: Changes to the way commissions work went into effect on August 17, as a result of a long legal battle settled by the National Association of Realtors and several major brokerages. The commission system, and how it has changed, is outlined below.

The NAR lawsuit

In October 2023, a federal jury found that the National Association of Realtors (NAR), along with several large brokerages, conspired to inflate Realtors’ commissions. All of the brokerages settled out of court, and as of March 15, 2024, NAR did the same.

As a result, the longstanding traditional real estate commission model — that is, sellers footing the bill for both their own agent and their buyer’s, typically totaling 5 to 6 percent of the home’s sale price — is upended. Now, sellers’ agents may no longer make offers of compensation to buyers’ agents on the MLS (multiple listing service, a vast database of for-sale homes accessible only to industry pros). Home sellers might no longer need to pay the agent who represents their buyer, which could open the door to much more competition among buyer-side agents, and even more potential for fee negotiation.

How much are Realtor commissions?

Let’s recap the traditional commission model, before the rule changes took effect.

Only a very small portion of Realtors work on salary — working on commission is much more common. For years, the typical going rate was 6 percent, split down the middle between the buyer’s agent and seller’s agent. But it began to fluctuate with the advent of discount brokers and the rise of online, publicly accessible listings.

Of course, real estate commissions can be negotiated, and nowadays they typically run somewhere closer to 5 percent of a home’s sale price. That means the means the more expensive the home, the more money the agents make. The exact terms of an agent’s commission vary from sale to sale, and can depend on the region and which firm they work for.

Let’s look at an example. A 5 percent commission on a $250,000 home sale would come to $12,500. But on a $1M sale, a commission at the same rate would come to $50,000.

Assuming a 5 percent total commission under that model, here’s roughly what sellers could expect to pay based on the price their home sells for:

Home’s sale price
Seller’s agent commission (2.5%)
Buyer’s agent commission (2.5%)
Total commission (5%)

$250,000
$6,250
$6,250
$12,500

$500,000
$12,500
$12,500
$25,000

$750,000
$18,750
$18,750
$37,500

$1,000,000
$25,000
$25,000
$50,000

Seller vs. buyer commission

Sellers sign a listing agreement with a Realtor in which they agree to pay a commission fee after the transaction closes. If it’s an “exclusive right to sell” arrangement, they pay the fee even if they found the buyer on their own.

Commissions for both Realtors in the transaction have traditionally been paid by the home seller: Both the buying and selling agents are paid with proceeds from the sale of the home. These two agents typically split the total commission — so for a 6 percent commission, the selling agent would receive 3 percent and the buying agent would receive the other 3 percent. Now that the new rules have kicked in, that is changing.

It also changes in the case of dual agency, when one agent represents both the buyer and seller in a transaction. Laws about this vary by state; in some states, dual agency is not permitted. In this type of scenario, pay particular attention to the home appraisal to ensure you’re getting a fair price. While agents have a fiduciary duty to their clients, with dual agency, the lines can get blurred.

As Samantha Fish, an agent with Wesely & Associates in Grass Valley, California, points out, agents are still required to act in their clients’ best interest. “It’s in our ethics; it’s in our contract,” she says. “If someone comes into my open house and they like it, but they don’t have an agent, at that point I can say, ‘let me get you an agent from my office’ so they feel like they’re being represented 100 percent as well.” Still, buyers working directly with a listing agent may have more room for negotiation because the seller may agree to a lower selling price if the agent agrees to lower their fee.

The brokerage’s cut

Real estate brokerages may get a cut of the commission as well. The brokerage RE/MAX, for example, has a split commission setup by which its agents receive 95 percent of the full commission from the sale, and 5 percent goes back to the company.

“The broker has to set the policy and oversee, monitor and supervise everything the agent does,” says Patrick Duffy, broker/owner of Duffy Realty in Miami. “And if the agent does something fraudulent or unprofessional, the broker gets sued.”

What do real estate agent fees cover?

You might wonder, what services does this commission fee buy me? One of the biggest ways buyers benefit from working with a Realtor is gaining access to the MLS, the database Realtors use to see and list properties for sale.

The fee compensates the agent for time spent answering questions and helping you through the process. An agent is also able to utilize their skills and contacts to negotiate, find properties and take you on tours of multiple homes.

A Realtor’s fee covers a wide range of costs for sellers as well, including marketing materials, staging and showing the property, coordinating open houses and contacting agents of potential buyers. When an offer comes in, the listing agent negotiates on behalf of the seller, often presenting one or more counteroffers. A lot goes into listing a home, such as:

Creating a comparative market analysis to establish a competitive price
Arranging for photo shoots, sometimes including aerial shots via drone
Writing descriptive listing copy to attract interest from other Realtors and potential buyers
Providing staging guidance
Showing the property multiple times to prospective buyers
Hosting open houses, often on weekends
Providing yard signage
Making sure listings are populated on all major property search websites
Helping the seller review and negotiate buyer offers

As with most of the other expenses related to real estate transactions, a Realtor’s fee isn’t paid until the sale closes.

Average real estate commissions by state

Overall, the national average Realtor commission in 2023 was 5.49 percent, according to data from Clever. In all but a few states, the average commission ranged between 5 and 6 percent.

Keep in mind, though, ​​that Realtors may accept a lower commission for high-priced homes to earn a higher amount overall: Their piece of the pie may be smaller, but it’s a richer slice. “For example, if I’m listing a $4 million home at 6 percent, that’s a lot of money,” Duffy says. “In a situation like that there is greater flexibility to negotiate the commission — if you get $100,000 or $80,000 instead of $120,000, it’s still a good payday.”

Here are the average real estate commissions by state, according to Clever:

State
Average commission rate

SOURCE: Clever

Alabama
5.45%

Alaska
6.00%

Arizona
5.44%

Arkansas
5.99%

California
5.11%

Colorado
5.62%

Connecticut
5.47%

Delaware
4.88%

District of Columbia
5.49%

Florida
5.37%

Georgia
5.81%

Hawaii
4.78%

Idaho
5.50%

Illinois
5.35%

Indiana
5.56%

Iowa
5.67%

Kansas
5.58%

Kentucky
6.00%

Louisiana
5.56%

Maine
5.17%

Maryland
5.34%

Massachusetts
5.45%

Michigan
5.92%

Minnesota
5.82%

Mississippi
6.07%

Missouri
5.58%

Montana
5.50%

Nebraska
5.25%

Nevada
5.80%

New Hampshire
5.25%

New Jersey
5.21%

New Mexico
5.90%

New York
5.39%

North Carolina
5.52%

North Dakota
5.00%

Ohio
5.99%

Oklahoma
5.95%

Oregon
5.03%

Pennsylvania
5.48%

Rhode Island
5.50%

South Carolina
5.62%

South Dakota
5.49%

Tennessee
5.58%

Texas
5.73%

Utah
4.90%

Vermont
5.49%

Virginia
5.45%

Washington
5.25%

West Virginia
6.67%

Wisconsin
5.15%

Wyoming
6.00%

How to avoid paying Realtor fees

Selling your home without the help of a real estate agent — called “for sale by owner” or FSBO for short — is certainly possible. Between July 2022 and June 2023, 7 percent of home sales were sold by owners without the help of an agent, according to NAR data. But selling without an agent’s help is a lot of work to do on your own, much of it complicated.

If you don’t want to go it alone, ask agents from the outset what their commission is and compare the terms of each person you talk to. If you think the fee is too high, talk to them about lowering it. If the transaction is being handled on both sides by agents from the same brokerage, you might have more leverage to negotiate as well.

Alternatively, you could consider working with a low-commission real estate agent, who will likely charge much less than a traditional agent would (usually 1 to 1.5 percent of your home’s sale price). However, since they’re receiving a smaller commission on each property, these agents are typically focused on volume. As a result, you might not receive as much personal attention as you would with a traditional Realtor.

There are also brokerages and agents who work on a flat-fee basis. In other words, no matter how much your home sells for, they’ll receive a set amount rather than a percentage of the sale price.

If you want to avoid Realtor fees and sell your house quickly, another option could be selling to an iBuyer or a company that buys houses for cash. Both options will allow you to finalize your home sale fast, without paying any agent commissions. But the offers from these buyers will be less than you’d likely fetch in a traditional sale, and some charge service fees that are equivalent to what you’d pay in commission anyway.

Finally, remember that even if you’re not paying Realtor fees, there are still plenty of other closing costs associated with selling your home. For instance, you may be on the hook for things like title transfer fees, attorney fees, property taxes and more. And even if you sell without an agent of your own, you may still be on the hook to pay your buyer’s agent.

FAQs

What percent commission do most real estate agents charge?

Typically, each agent involved in the transaction (one for the buyer, one for the seller) earns somewhere between 2.5 and 3 percent of the home’s sale price as their commission fee. However, the amount is negotiable — and new rules as of August 17, 2024, mean the seller may no longer be obligated to pay their buyer’s agent’s fee.

Do sellers or buyers pay fees to the real estate agent?

Traditionally, sellers have been the ones who covered real estate agent commissions — both for their own agent and for the buyer’s. That changed on August 17, 2024, as a result of the NAR lawsuit settlement. Now, buyers may (or may not) be responsible for paying their own agent directly. The details of each transaction will be different.

How much commission do you pay on a $500,000 home?

It depends on the specific terms of each agent’s commission. Commissions usually total somewhere between 5 and 6 percent of the home’s purchase price — on a $500,000 transaction, 5 percent comes out to $25,000 and 6 percent comes to $30,000.



This article was originally published by a www.bankrate.com . Read the Original article here. .

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How To Sell Your House In 2024: A Step-By-Step Guide | Bankrate

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Key takeaways

Selling a house can take several months from start to finish, so it’s crucial to plan ahead and stay organized.

Start by setting a timeline to stick to and hiring a local real estate agent who knows your market well.

Be sure to get professional-quality listing photos taken — National Association of Realtors data shows that 100 percent of homebuyers look at listings online.

Most home sellers dream of a stress-free sale in which they simply list their house, quickly find a qualified buyer, collect the cash and hand over the keys. If only it were that simple! In reality, selling a home involves many moving parts — some that you can control, and some that are out of your hands.

For example, geography might influence how long your house lingers on the market or how high of a list price you can get away with. In locations where competition is hot and inventory is low, odds are you’ll sell faster and command a higher price. Conversely, in places where home sales have cooled, you will likely have to work harder to attract the right buyer.

The real estate market has shifted significantly since the frenzied heights of the pandemic. Today, high prices are combining with high interest rates to create serious affordability challenges: The median price for a home is more than $400,000, and mortgage rates hit a 22-year high in 2023. It’s no wonder many buyers have little choice but to stay on the sidelines until either rates or prices (or both) come down.

So, as a seller, it’s smart to be prepared and control whatever factors you’re able to. Things like hiring a great real estate agent and maximizing your home’s online appeal can translate into a smoother sale — and more money in the bank. Here’s a nine-step guide to how to sell your house successfully.

Set a timeline: Start prepping your home well before you plan to list.

Hire an agent: An experienced agent who knows the market well can best position your home for local buyers.

Determine upgrades: Take on only projects your house really needs — you don’t have to upgrade everything.

Set a realistic price: Your agent can help you find the sweet spot.

List with pro photos: Buyers look at homes online first, so be sure you have a solid digital presence.

Review offers: Consider all factors, not just the highest dollar amount.

Weigh closing costs: Keep track of how much more you’ll need to pay at the closing table.

Consider an attorney: Legal expertise can help protect this significant financial transaction.

Close: Make sure you have all your documentation ready.

1. Set a timeline for selling your home

Selling a house is a major undertaking that can take several months from start to finish — or much longer, depending on local market conditions. So it makes sense to plan ahead and stay organized.

At least two or three months before you plan to list, consider getting a pre-sale home inspection. This isn’t mandatory, but it can be wise, especially in an older home. For a few hundred dollars, you’ll get a detailed inspection report that identifies any major problems. This alerts you in advance to issues that buyers will likely flag when they do their own inspection later. By being a couple steps ahead, you might be able to speed up the selling process by doing needed repairs in tandem with other home-prep work. Then, by the time your house hits the market, it should be ready to sell, drama-free and quickly.

About a month before listing your house, start working on deep cleaning in preparation for taking listing photos. Keep clutter to a minimum, and consider moving excess items to a storage unit to show your home in its best light.

2. Hire an agent who knows the market

The internet makes it easy to delve into a real estate agent’s experience, helping you choose the right person to work with. Look up agents’ online profiles to learn how long they’ve been in the industry, how many sales they’ve closed and what professional designations they may have earned. Pay attention to how and where they market their listings, and how professional their listings’ photos look.

“Any designation they’ve earned is a huge plus, because it’s a sign they’ve taken the time to learn about a particular niche,” says Jorge Guerra, president and CEO of Real Estate Sales Force in Florida.

Some homeowners might be tempted to save on paying a commission and instead sell their home themselves, without an agent. This is known as “for sale by owner,” or FSBO. The amount sellers stand to save on that fee can be significant, usually 2.5 percent or 3 percent of the total sale price. On a $400,000 home sale, for example, 3 percent comes to $12,000.

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Keep in mind: Real estate commissions are often negotiable.

However, a listing agent does a lot to earn their fee. For example, they can expose your house to the broadest audience and negotiate on your behalf to garner the best offers possible. If you go it alone, you’ll have to personally manage prepping your home, marketing it, reviewing buyers’ offers and handling all the negotiations and closing details.

When working with an agent, keep in mind too that real estate commissions are often negotiable. As a result, you might be able to get a break at the closing table. But, depending on the deal, you may still have to pay your buyer’s agent’s fee.

3. Determine what to upgrade — and what not to

Before you spend money on costly upgrades, be sure the changes you make will have a high return on investment. It doesn’t make sense to install new granite countertops, for example, if you only stand to break even on them, or even lose money. Plus, these improvements may not be necessary, particularly if inventory levels are low in your area (which they are in most areas these days). A good real estate agent will know what local buyers expect and can help you decide what needs doing and what doesn’t.

Star

Keep in mind: Inexpensive DIY projects can also go a long way. A fresh coat of neutral paint and spruced-up landscaping are low-cost ways to make a great first impression.

Updates to the kitchen and bathrooms often provide the highest return on investment. But inexpensive DIY projects can also go a long way: A fresh coat of neutral paint and spruced-up landscaping are low-cost ways to make a great first impression.

4. Set a realistic price

Even in competitive markets, buyers don’t want to pay more than they have to, so it’s crucial to get the pricing right. Going too high can backfire, while underestimating a home’s value might leave money on the table. To price your home perfectly from the start, consult local real estate comps. This information about recently sold properties in your neighborhood gives you an idea of what comparable homes around you are selling for, thus helping you decide how much you might reasonably ask.

“A frequent mistake sellers make is pricing a home too high and then lowering it periodically,” says Grant Lopez, a Realtor at Keller Williams Heritage in Texas and the former chairman of the San Antonio Board of Realtors. “Some sellers think this practice will yield the highest return. But in reality, the opposite is often true: Homes that are priced too high will turn off potential buyers, who may not even consider looking at the property.”

In addition, homes with multiple price reductions may give buyers the impression there’s something wrong with it. So it’s best to eliminate the need for multiple reductions by pricing your home to attract the widest pool of buyers from the start.

5. Include professional listing photos

This step will likely involve your real estate agent hiring a photographer to take marketing photos of your home, and registering the listing with the local MLS (multiple listing service). Here are some tips to get your home market-ready:

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Keep in mind: You’ve probably heard of curb appeal, but pros say online appeal is now even more important.

Take professional photos: With the ubiquity of online house-hunting these days, high-quality photos are critical. A pro photographer knows how to make rooms appear bigger, brighter and more attractive. The same goes for the property’s exterior and outdoor areas.

Focus on online appeal: You’ve probably heard of curb appeal, but professionals say online appeal is now even more important. In fact, 100 percent of homebuyers use the internet to search for a home, according to the National Association of Realtors, so online listings are crucial. “Your home’s first showing is online,” Guerra says. “The quality of your web presentation will determine whether someone calls and makes an appointment or clicks on the next listing.”

Stage it and keep it clean: Staging a home entails removing excess furniture, personal belongings and unsightly items from the home and arranging rooms for optimal flow and purpose. If you’re in a slower market or selling a luxury home, investing in a professional stager could help you stand out. Nationally, professional home staging costs an average of around $1,808, according to HomeAdvisor, but prices range between $792 and $2,840.

Clear out for showings: Make yourself scarce when potential buyers come to view your home. Let them imagine themselves in the space, free from distraction. “Seeing the current homeowner lurking can cause buyers to be hesitant to express their opinions,” says Lopez. “It could keep them from really considering your home as an option.” Generally, buyers are accompanied by their real estate agent to view your home. You can also ask your own agent to be present at showings.

6. Review and negotiate offers

Once buyers have seen your home, offers will ideally start rolling in. (Keep in mind, though, that with mortgage rates currently high, the number of buyers who can still afford to buy might be smaller than you’d like.) This is where a real estate agent is your best advocate and go-to source for advice. If your local market favors sellers, buyers will likely offer close to asking price, or possibly even above. On the other hand, if sales are slow in your area, you may have to be open to negotiating.

When you do receive an offer, you’ll have a few choices: accept it, make a counter-offer or reject the offer. A counter-offer is a response to an offer in which you negotiate on terms and/or price. You can offer a credit for fresh paint and carpet, for example, but insist on keeping your original asking price in place. Counters should always be made in writing and provide a short time frame (ideally 48 hours or less) for the buyer to respond.

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Keep in mind: You might be tempted to simply go with the highest bid, but look closely at other aspects of the offer, too.

If you’re lucky enough to get multiple offers, you might be tempted to simply go with the highest bid. But look closely at other aspects of the offer, too, such as:

Form of payment (cash versus financing)
Type of financing
Down payment amount
Contingencies
Concession requests
Proposed closing date

Be mindful that if a buyer is relying on lender financing, the property will have to be appraised. If there’s any shortfall between the purchase price and appraised value, that gap will have to be made up somehow, or the deal could fall apart.

7. Weigh closing costs and tax implications

In any real estate transaction, both parties must pay at least some closing costs. It has long been the custom that the seller pays the real estate agents’ commissions, which usually total between 5 and 6 percent of the home’s sale price. This can be a big chunk of change: For example, on a $400,000 home, 5 percent comes to $20,000. However, that may soon change due to a federal lawsuit, and as of late summer, homebuyers may pay their own agent’s commission.

Some other closing costs commonly paid by the seller include transfer taxes and recording fees. Additionally, if the buyer has negotiated any credits to be paid at closing — to cover repairs, for example — the seller will pay those, too. Your real estate agent or the closing agent should provide you with a complete list of costs you’ll be responsible for at the closing table.

The good news is that you may not owe the IRS taxes on your profits from the sale. It depends on whether it was your primary residence, how long you lived there and how much you make on the sale. If you’ve owned and lived in your home for at least two out of the previous five years before selling it, then you will not have to pay taxes on any profit up to $250,000. For married couples, the amount you can exclude from taxes increases to $500,000. If your profit from the home sale is greater than that, though, you’ll need to report it to the IRS as a capital gain.

8. Consider hiring a real estate attorney

Some states require sellers to have a real estate attorney to close on a home sale, but many don’t. Regardless of your state’s laws, the expense is worth it to protect such a large financial transaction. It may cost you a couple thousand dollars, but there’s a lot more money than that at stake, and it’s always smart to have a legal expert give everything the OK.

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Keep in mind: Even if your state doesn’t require you to hire a real estate attorney, it’s worth the expense to protect such a large financial transaction.

In addition, an attorney can help fill out paperwork correctly, review contracts and documents, identify potential issues and ensure the sale goes as smoothly as possible. If you’re not sure where to find one, your real estate agent can probably recommend someone.

9. Gather paperwork and close

Lots of paperwork is needed to properly document a home sale, so keep it organized all in one place to help things go more quickly. Your agent can help you make sure you’ve got everything you need. Some of the main documents you’ll need to compile include:

Original purchase contract
Property survey, certificate of occupancy and certificates of compliance with local codes
Mortgage documents
Tax records
Appraisal from your home purchase
Homeowners insurance
Home inspection report, if you had one
Seller’s disclosure statement

Finally, bring all that paperwork — plus payment of any fees and the keys to give the new owners — to the closing. Once everything is signed and handed over, your house is sold!

FAQs

What should I do first when selling my house?

Putting your home on the market is a major step, and like most big life decisions, it’s best to get organized before you dive in. The process can take several months, so once you decide you want to sell, the best thing to do first is to consider your timeline. When do you need to move? What date do you hope to be closed by? Make sure you give yourself enough time to prep the property for showings and find a real estate agent you trust before actually putting the home on the market.

What is the fastest way to sell my house?

If you’re wondering how to sell your house in a hurry, consider foregoing a traditional agent-assisted sale in favor of selling to a cash homebuyer or iBuyer. These companies make quick cash offers and close home sales very quickly — in a matter of a few weeks, or even less. But you likely won’t get as high of an offer as you’d get if you sold on the open market.

Do I need a lawyer to sell my house?

That depends on what state you live in. Some states require a real estate attorney to manage any sale transaction, some don’t. Even if it’s not a legal requirement, though, consider hiring one anyway — real estate contracts can be very complicated, and there is a lot of paperwork involved and a lot of money at stake. It’s worth the cost to have legal expertise looking out for your interests.

Do I need a Realtor to sell my house?

No. It’s perfectly possible to sell a home on your own with what’s called a for sale by owner (FSBO) listing. However, going without a real estate agent means all the work an agent would normally do — researching comps, determining the best list price, coordinating showings, negotiating with potential buyers — is up to you to do yourself. It’s a lot of work, and a big time commitment.



This article was originally published by a www.bankrate.com . Read the Original article here. .

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Should I Sell My House Now Or Wait? A Guide | Bankrate

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Key takeaways

Late spring and early summer are generally considered the best times to sell a house.

Traditionally, low mortgage rates and short supply make it a good time to sell.

While today’s rates are relatively high, low inventory is still keeping sellers in the driver’s seat in most markets.

If you’re considering selling your home, it’s critical to understand the current real estate market dynamics. The volatility that dominated the market amid pandemic-related pressures may have eased, but there are still serious challenges.

For one thing, mortgage interest rates shot up recently, reaching highs not seen in more than 20 years. While they have backed down from the 8 percent threshold seen in October 2023, Bankrate’s weekly survey of large national lenders shows that, as of late May, the average 30-year fixed mortgage rate was 7.17 percent. That still-high reality makes mortgage payments more expensive and is driving more than a few potential buyers to the sidelines — certainly not ideal if you’re on the selling side of the equation.

Complicating things further, home prices are very high as well. April 2024’s nationwide median sale price was $407,600, a record high for the month of April and very close to the National Association of Realtors’ highest-ever monthly median of $413,800, recorded in June 2022. While high prices are typically good news for sellers, they obviously require buyers who can afford the purchase, and the high interest rates are making that harder. Regardless of pricing trends, though, with housing inventory still at a low 3.5-month supply, the nation overall is still solidly a seller’s market.

However, if you were wary of a home sale last year, that may have been wise. ATTOM Data Solutions’ 2023 U.S. Home Sales Report shows that, while prices did rise throughout last year, they did so at the slowest pace in more than a decade.

So, amid all these mixed signals, is now a good time to sell your house? Here are some insights to help you sort through the question.

Should I sell my house now?

There are numerous important questions to consider, both financial and lifestyle-based, before putting your home on the market. If popular opinion is any guide, now may still be a good time to sell despite the evolving market. According to Fannie Mae’s April 2024 Home Purchase Sentiment Index, about two-thirds of respondents — 67 percent — feel it is a good time to sell.

Local market dynamics also play a large part in whether it’s a good or bad time to sell, says Katie Severance, a Realtor with Douglas Elliman in Palm Beach, Florida, and author of “The Brilliant Home Buyer.” Some markets may be riding high, while others remain sluggish. “In some areas, selling now is the right thing to do because prices are still climbing,” Severance says. “In other markets, it might be best to wait to sell until interest rates come down and stay down, which will spur sales once again.”

When is a good time to sell a house?

Historically, spring and summer are usually the best times of year to sell a house. But beyond seasonality, there are many factors that might make selling your home a wise decision. Often the reasons are based on financial calculations, cost of living expenses and other considerations, but there may also be other factors that make selling your home the right choice. These include:

If rates are low
This is not the case currently, but low interest rates entice more prospective buyers to enter the market, which is advantageous for sellers. An increased number of buyers shopping for homes often leads to bidding wars and drives up home prices, meaning you can likely sell your home for a solid profit.

If supply is short
A shortage of housing inventory — which is the case currently — also drives up demand and prices for available homes. What’s more, when housing supply is low, homes on the market tend to sell faster.

If you’re ready to downsize
Downsizing may be a more budget-friendly choice than continuing to maintain a larger, costlier home. For older homeowners, downsizing may even be a necessity: “If you can’t handle the stairs anymore, or if there are more repairs than you can manage, it may be a good time to sell,” says Rick Albert, a broker and director of business development for Lamerica Real Estate in Los Angeles.

If you need to relocate
If you’re relocating to a new state for a job or want to enjoy your retirement in a new area, and you need the profits from the sale to put toward your next place, selling may be unavoidable. “The time to sell is when you need to sell,” says Severance. “It’s a no-brainer to sell if you have somewhere to go.”

When is a good time to wait?

Here are some common factors that might make prospective sellers hold off on listing their home for sale:

If rates are rising
Rising mortgage interest rates often mean a smaller pool of buyers who can afford the price you want. Selling a home isn’t free, so if you can’t maximize your price, you might want to wait.

If you’ve recently refinanced
If you recently refinanced your mortgage, it may not make financial sense to sell just yet. You may actually lose money by doing so, when considering the closing costs and other fees typically paid as part of the refinancing process.

If you’re upsizing
The cost to purchase a new, bigger home may be unaffordable, particularly in a hot market. Don’t get in over your head — take the time to be sure your finances can accommodate the type of home you want. Bankrate’s home-affordability calculator can help you crunch the numbers.

If your home is in poor condition
Got a long list of repairs waiting to be completed around your home? You may want to postpone selling until some of the work can be done. It’s important to show your home in its best light in order to land the most favorable offer possible. If the home is in disrepair or there’s unfinished work, you are less likely to get a good price.

If you have no game plan
If you’re simply trying to time the market to make a profit and have no plan for after your home is sold, it may be best to wait. “It doesn’t make sense to sell if you don’t know what your next play is,” says Albert. “Where are you going? Where is that money going to be spent? If you don’t have a plan, then you shouldn’t sell.”

What about the NAR lawsuit?

There are also upcoming commission changes to consider when deciding whether to sell now or wait. New rules are set to take effect at the end of the summer as a result of a federal lawsuit settlement involving the National Association of Realtors and several large brokerages.

Longstanding tradition has held that a home seller paid the commission fees for both real estate agents in the transaction, their own and their buyer’s. But under the new rules, a buyer might be responsible for paying their own agent, which could save the seller money. However, these changes have not yet received final court approval, and waiting for them to take effect could be risky — and would mean missing out on prime selling season.

What if there’s a recession?

According to Bankrate’s most recent Economic Indicator Survey, the U.S. economy has a 33 percent chance of entering a recession by early 2025. While that is very far from a sure thing, it’s worth asking: Should you sell your house during a recession? Or even just before one?

The answer really depends on your personal circumstances. “If you’re concerned a recession is coming, it’s generally better to sell now instead of waiting,” says Jade Lee-Duffy, a San Diego–based broker. However, “selling during a recession might be beneficial if you’re looking to downsize or rent. This could cut your overall costs, and you could put the proceeds into a retirement account, go on vacation or invest.”

Remember, recessions typically bring with them job losses and general belt tightening, which can severely limit the number of house-hunters looking to buy. More buyers will be able to afford a home, and qualify for a mortgage, before a recession than after.

Tips to sell your home

If your answer to “should I sell my house now?” is yes, here are some steps you can take to get the best deal possible.

Find a good local agent: Advice and guidance from a professional real estate agent can be invaluable, particularly amid a hot or unpredictable housing market. Take the time to interview several candidates in your area, and ask friends or family members to recommend agents they’ve had a good experience with. “A Realtor can help you create a game plan to get your home organized and in shape to present it in the most favorable light,” says Jen Horner, a Realtor with Masters Utah Real Estate.

Make repairs if needed: To land the best offer for your home, know what needs fixing first. “Sellers need to understand that they only have one chance to make a first impression,” Horner says. “Your Realtor can walk the property with you and make suggestions for preparing your home to hit the market.”

Declutter and stage the interior: You should also make an effort to tidy your home, allowing prospective buyers to see the spaces clearly. “Less is always more,” she says. “The fewer items in a room, the larger it will feel. Remove any personal items and unnecessary furniture.” If tidying is not enough, consider hiring a home stager. “Staging can help show the buyer how to optimize the space.”

Add curb appeal outside: Your home’s exterior is another part of making a good first impression, and it’s worth freshening up the curb appeal before buyers see it. That can include upgrading landscaping and walkways, or even something as simple as a fresh coat of paint on the front door.

Alternative ways to sell

If you need to sell your home quickly and don’t have time for the often-lengthy process of a traditional sale, iBuyers and cash homebuying companies may be worth considering.

An iBuyer — Opendoor and Offerpad are two of the biggest — typically makes an offer on homes within 24 to 48 hours. If you accept it, the entire process can often be completed within a few weeks or less. Cash homebuyers also allow you to sell a home remarkably fast, sometimes in as little as one week, and they usually buy as-is, meaning there’s no need to make repairs at all.

Before proceeding with either method, though, it’s important to understand one major downside: While you gain speed and convenience when you sell to these companies, you sacrifice profit. They usually offer much less money for your home than you could get through a traditional sale. And iBuyers may charge steep fees as well, so be sure to read the fine print before signing anything.

Bottom line

Deciding to sell your home, whether now or later, is a major decision that requires careful consideration. Your future plans and goals should be a significant part of the equation, as well as your financial needs and the realities of the local market in your area. If you decide to proceed with listing your home, working with an experienced real estate agent who knows your community well can increase your chances of a smooth (and lucrative) sale.

FAQs

Is it a good time to sell a house?

Deciding whether to sell your house depends on your personal circumstances and the specific dynamics of the market in your area. “It depends on where you are selling,” says Katie Severance, a Florida Realtor. “Interest rates are up, causing prices in some markets to go down, and yet in other areas, prices are still climbing. It’s all geographically driven.” If you need to sell now, whether it’s a good time or not, an experienced local agent can guide you through the process.

What are the hardest months to sell a house?

Typically, spring and summer are considered the best times to sell, when there’s the most activity from buyers and the most listings entering the market. The worst times to sell are typically the dead of winter, when bad weather keeps people off the roads and holiday planning occupies their minds. December, January and February are probably the hardest months for home sellers — but activity picks up again in the spring.

Should I sell my house now, before there’s a recession?

Recessions mean belt tightening and potential layoffs. If your area is hard-hit by job losses, the number of qualified buyers will be severely limited — if you’re concerned, it might be best to sell before that (potentially) happens. However Bankrate’s most recent Economic Indicator Survey shows only a 33 percent chance of a recession.

Do I pay taxes when I sell my house?

If you make a very substantial amount of money on the sale of your home, you may be subject to capital gains taxes. The exact tax rate you’ll pay is impacted by various factors, including how much of a profit you make, how long you’ve owned the home, your marital status and more. You’ll also have to pay any outstanding property taxes still owed at the time of sale, and many states have a real estate transfer tax that may be owed as well.



This article was originally published by a www.bankrate.com . Read the Original article here. .

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