The First Things to Do When Buying or Selling a Home

When you prepare to buy or sell a home there are certain steps you should take so the journey goes smoothly. From financial decisions to the fun step of making a list of must-haves in your dream home, these steps will set you up for success when you’re ready to buy or sell Castle Rock real estate.

When you consider selling your Castle Rock real estate, start by determining the actual value of your home. There are three ways to get an accurate home valuation.

First determine the fair market value of your home by comparing it to others in the area. Fair market value will ensure that you price your home competitively. Get assistance from a professional real estate agent who’s knowledgeable of the local market and has the proper tools at their disposal to determine the value of your home.

You might also choose to get your home’s appraised value with the help of a professional appraiser. They will look at items like location, size, condition, and any renovations when calculating the value. Mortgage lenders use this valuation to determine how much they will loan a potential buyer.

The third type of valuation is assessed value. Local tax assessors use this valuation for property tax purposes. While important, this valuation will be the least helpful when selling your home, as it is often lower than the fair market value of your home and does not necessarily determine the final price of your home.

After you have determined the value of your home, you need to consider making any upgrades and renovations to the property. If your home valuation comes in lower compared to other homes in the area, you may consider renovations to bring your home to a competitive price.

There are many spaces you can renovate and many upgrades you can complete. Research the best renovations for a higher return on investment (ROI) and start there. A real estate agent can use their market knowledge to help you determine what renovations will bring the most ROI.

As a general starting point, projects with a high return on investment often include kitchen and bathroom upgrades. Make sure that your appliances are high-efficiency and up-to-date models. Consider upgrading the hardware in both rooms, and ensure that all of your plumbing and electrical fixtures are in good repair. Many other projects can bring you a high ROI, so research those that will be best for your situation.

You need to have a firm grasp of the costs associated with selling a home before listing because the seller is often responsible for several costs. These costs could include realtor commissions, closing fees, HOA dues, property taxes, and escrow fees. You may also be responsible for paying a capital gains tax if you have lived in your home for less than 2 of the last 5 years and your home increased in value by more than $250,000 from your initial purchase ($500,000 per couple). Work with your accountant to determine whether you are exempt from this tax.

Additional costs that are often not considered when preparing to sell a home are moving costs. Also, if you sell your home before buying a new one, consider any costs associated with securing a temporary place to live and store your belongings.

Before you start looking for your Castle Rock luxury home, get a solid understanding of your finances and how much home you can afford. Start by setting a budget for your home purchase. Whether you are looking for a home that costs $600,000 or $5 million, calculate the amount of home you can reasonably afford, then calculate how much you should save. You will likely need a down payment of 5-20%, and the larger the down payment you can put up-front, the lower your mortgage will be. Start saving for the closing costs associated with your purchase, which typically run between 3% and 6% of the home’s value.

Listing your must-have features will help you shop for your next home. Divide this wish list into two sections — deal-breakers and nice-to-haves. This will help you narrow down the list of homes you tour, saving both you and your agent time. Your deal-breakers may include things like number of bedrooms or school district, while wish list items might include a spa-like master bathroom, a view, or a designated home office. Remember you can always add wish list items to your new home in the future if you choose to renovate.

Another step you should take before searching for your dream house is to get pre-approved for a mortgage. Once you find your perfect home, you want to be able to quickly put in an offer that the seller will take seriously. Shop around for a lender and then present them with documentation proving your assets, income, employment, and credit, and they will determine how much they will lend you. Receiving pre-approval will also help you budget and create your wish list, as you will have a firm grasp on how much home your lender believes you can afford.  You will need a pre-approval letter from a lender when you write a purchase offer on a home.

When you are ready to start the buying or selling process, work with a professional Castle Rock real estate expert who takes pride in providing clients with top-notch service. Reach out to local real estate agent Kathi Donivan for guidance throughout the journey.