“You won’t find a better ‘how-to-sell-your-home’ book than this one. The authors have included practical knowledge you won’t find anywhere else. . . . On my scale of one to 10, it rates a solid 10.”
— Robert J. Bruss, syndicated real estate columnist
“Brown and Tyson . . . are back with a timely tome: House Selling For Dummies. . . . Packed with the proven punch of the Brown-Tyson combination . . . the book is destined to become a home seller’s best friend.”
— Broderick Perkins, San Jose Mercury News
“The authors cover every aspect of the home-selling process — from deciding whether you are financially able to sell, to assembling a real estate team and marketing your property, to selling it quickly for top dollar.”
— Don DeBat, Crain News Service
“[Tyson and Brown] tackle the complex subject of selling a house with humor and practicality . . . the authors explain strategies that could generate or save readers thousands, perhaps even tens of thousands of dollars on the sale of their house.”
— Inman News Features
“The best thing about this book [House Selling For Dummies] is that it doesn’t recommend anything. Instead, it helps you in a far greater way. It helps you think through the relocation decision.”
— Dr. David Demko, AgeVenture News
“House Selling For Dummies by Eric Tyson and Ray Brown is fun . . . and also filled with practical advice.”
— Allen Norwood, Charlotte Observer
“Do’s and Don’ts for Do-It-Yourself Home Sellers: Start by educating yourself. I recommend the book House Selling For Dummies by Eric Tyson and Ray Brown, which offers excellent advice on the entire process.”
— Rick Wilking, Reuters News Service
“Home Buying For Dummies and House Selling For Dummies, both by Eric Tyson and Ray Brown, go into surprising depth on their topics without straying from their mission of explaining the processes simply. Perhaps the best thing is what the authors call their holistic approach. . . .”
— Maryann Haggerty, Washington Post
“This fun read for home buyers includes the essentials, laced with humor and practical advice. The new material on Internet resources updates this classic how-to-buy-a-home book. Of the many books on this topic, this is by far the best. . . .”
— Robert J. Bruss, syndicated real estate columnist
“. . . takes you step by step through the process . . . humorous insights that keep the pages turning. This is a reference you’ll turn to time after time.”
— Judy Stark, St. Petersburg Times
“. . . Home Buying For Dummies immediately earned a prominent spot on my reference bookshelf . . . takes a holistic approach to home buying.”
— Broderick Perkins, San Jose Mercury News
“. . . Home Buying For Dummies provides a much-needed emotional stabilizer.”
— Judy Rose, Knight-Ridder News Service
“The humorous Home Buying For Dummies by Ray Brown and Eric Tyson is a favorite . . . because the editorial is so good. They check their facts very well. They set out to make you understand this subject and make it fun reading and informative.”
— Michelle Wong, Minneapolis Star Tribune
“The book [Home Buying For Dummies] is a primer on all the things to do and not to do when - buying a home.”
— Brian Banmiller, FOX-TV
“. . . can help you buy a castle for the price of house. The authors present a balanced approach to buying a house.”
— Times-Picayune, New Orleans, LA
“A survival guide to buying . . . fun to read and very clearly written. . . . Whether taking over a foreclosure, determining not how much you can borrow but how much you can actually afford to spend, how to find a good broker, landing a lender . . . Tyson and Brown definitely help ease the trauma of the transaction. . . .”
— Paula Lee Aldridge, Homes and Real Estate Magazine
“Personal Finance For Dummies is the perfect book for people who feel guilty about inadequately managing their money but are intimidated by all of the publications out there. It’s a painless way to learn how to take control. My college-aged daughters even enjoyed reading it!”
— Karen Tofte, producer, National Public Radio’s Sound Money
“Among my favorite financial guides are . . . Eric Tyson’s Personal Finance For Dummies.”
— Jonathan Clements, The Wall Street Journal
“Smart advice for dummies . . . skip the tomes . . . and buy Personal Finance For Dummies, which rewards your candor with advice and comfort.”
— Temma Ehrenfeld, Newsweek
“Eric Tyson is doing something important — namely, helping people at all income levels to take control of their financial futures. This book is a natural outgrowth of Tyson’s vision that he has nurtured for years. Like Henry Ford, he wants to make something that was previously accessible only to the wealthy accessible to middle-income Americans.”
— James C. Collins, coauthor of the national bestseller Built to Last; Lecturer in Business, Stanford Graduate School of Business
“You don’t have to be a novice to like Mutual Funds For Dummies. Despite the book’s chatty, informal style, author Eric Tyson clearly has a mastery of his subject. He knows mutual funds, and he knows how to explain them in simple English.”
— Steven T. Goldberg, Kiplinger’s Personal Finance Magazine
“Personal Finance For Dummies offers a valuable guide for common misconceptions and major pitfalls. It’s a no-nonsense, straightforward, easy-to-read personal finance book. . . . With this book, you can easily learn enough about finances to start thinking for yourself.”
— Charles R. Schwab, Chairman and CEO, The Charles Schwab Corporation
“It can be overwhelming to keep up with the latest developments, which is why you might turn to the book Mutual Funds For Dummies by Eric Tyson. A light touch and the use of plenty of graphics help the pages fly by. This book is a primer for those who flinch when contemplating the 7,000 funds you can now buy.”
— Brian Banmiller, FOX-TV
“Best new personal finance book.”
— Michael Pellecchia, syndicated columnist
“Eric Tyson . . . seems the perfect writer for a ...For Dummies book. He doesn’t tell you what to do or consider doing without explaining the why’s and how’s — and the booby traps to avoid — in plain English. . . . It will lead you through the thickets of your own finances as painlessly as I can imagine.”
— Clarence Peterson, Chicago Tribune
“Personal Finance For Dummies is, by far, the best book I have read on financial planning. It is a simplified volume of information that provides tremendous insight and guidance into the world of investing and other money issues.”
— Althea Thompson, producer, PBS’s Nightly Business Report
“This book provides easy-to-understand personal financial information and advice for those without great wealth or knowledge in this area. Practitioners like Eric Tyson, who care about the well-being of middle-income people, are rare in today’s society.”
— Joel Hyatt, founder, Hyatt Legal Services, one of the nation’s largest general-practice personal legal service firms
“Personal Finance For Dummies is a sane and useful guide that will be of benefit to anyone seeking a careful and prudent method of managing their financial world.”
— John Robbins, founder of EarthSave, author of May All Be Fed
“Worth getting. Scores of all-purpose money-management books reach bookstores every year, but only once every couple of years does a standout personal finance primer come along. Personal Finance For Dummies, by financial counselor and columnist Eric Tyson, provides detailed, action-oriented advice on everyday financial questions. . . . Tyson’s style is readable and unintimidating.”
— Kristin Davis, Kiplinger’s Personal Finance Magazine
“For those named in the title, such as myself, Personal Finance For Dummies is a godsend. It’s bright, funny, and it can save you money, too.”
— Jerome Crowe, reporter, Los Angeles Times
“Eric Tyson has brought his financial experience, investment knowledge, and down-to-earth writing style to create an outstanding book on mutual funds for all investors — and an essential book for new investors . . . in short, a classic. . . .”
— Jack Bogle, former CEO, The Vanguard Group
“This is a great book. It’s understandable. Other financial books are too technical and this one really is different.”
— Shad Johnson, producer, “Business Radio Network”
“An invaluable, easy-to-read financial help book that should be in every family’s library.”
— Stan Schaffer, reporter, The Morning Call, Allentown, PA
Investing For Dummies®
A Wall Street Journal bestseller, this book walks you through how to build wealth in stocks, real estate, and small business as well as other investments.
Personal Finance For Dummies®
Discover the best ways to establish and achieve your financial goals, reduce your spending and taxes, and make wise personal financial decisions. Wall Street Journal bestseller with more than 1 million copies sold in all editions and winner of the Benjamin Franklin best business book award.
Taxes For Dummies®
The complete, best-selling reference for completing your tax return and making tax-wise financial decisions year-round. Tyson coauthors this book with tax experts David Silverman and Margaret Munro.
Home Buying For Dummies®
America’s #1 real estate book includes coverage of online resources in addition to sound financial advice from Eric Tyson and frontline real estate insights from industry veteran Ray Brown. Also available from America’s best-selling real estate team of Tyson and Brown — House Selling For Dummies and Mortgages For Dummies®.
Real Estate Investing For Dummies®
Real estate is a proven wealth-building investment, but many people don’t know how to go about making and managing rental property investments. Real estate and property management expert Robert Griswold and Eric Tyson cover the gamut of property investment options, strategies, and techniques.
Small Business For Dummies®
Take control of your future and make the leap from employee to entrepreneur with this enterprising guide. From drafting a business plan to managing costs, you’ll profit from expert advice and real-world examples that cover every aspect of building your own business. Tyson coauthors this book with fellow entrepreneur Jim Schell.
House Selling For Dummies®, 3rd Edition
Published by
Wiley Publishing, Inc.
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www.wiley.com
Copyright © 2008 by Eric Tyson and Ray Brown
Published by Wiley Publishing, Inc., Indianapolis, Indiana
Published simultaneously in Canada
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400, fax 978-646-8600. Requests to the Publisher for permission should be addressed to the Legal Department, Wiley Publishing, Inc., 10475 Crosspoint Blvd., Indianapolis, IN 46256, 317-572-3447, fax 317-572-4355, or online at http://www.wiley.com/go/permissions
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Library of Congress Control Number: 2007939645
ISBN: 978-0-470-17046-5
Manufactured in the United States of America
10 9 8 7 6 5 4 3 2 1
Eric Tyson, MBA, is a former financial counselor, lecturer and coauthor of the national best-seller, Home Buying For Dummies, as well as the author of four other best-selling books in the For Dummies series: Personal Finance, Investing, Mutual Funds, and Taxes (coauthor).
Eric has counseled thousands of clients on a variety of personal finance, investment, and real estate quandaries and questions. In addition to maintaining a financial counseling practice, he’s a former lecturer of the San Francisco Bay Area’s most highly attended financial management course at the University of California, Berkeley.
Eric is also a syndicated columnist and was an award-winning journalist for the San Francisco Examiner. His work has been featured and praised in hundreds of national and local publications, including Newsweek, Kiplinger’s, The Wall Street Journal, Money, The Los Angeles Times, and the Chicago Tribune, and on NBC’s Today Show, PBS’s Nightly Business Report, CNN, The Oprah Winfrey Show, ABC, CNBC, Bloomberg Business Radio, CBS National Radio, and National Public Radio.
A former management consultant to Fortune 500 financial service firms, Eric is dedicated to teaching people to manage their personal finances better. Over the past two decades, he has successfully invested in securities as well as in real estate, started and managed several businesses. He earned his MBA at the Stanford Graduate School of Business and his bachelor’s degree in economics at Yale.
Ray Brown, coauthor of the national best-seller Home Buying For Dummies, is a veteran of the real estate profession with over three decades of hands-on experience. A former manager for Coldwell Banker Residential Brokerage Company, McGuire Real Estate, Pacific Union GMAC Real Estate, and founder of his own real estate firm — the Raymond Brown Company — Ray is currently a writer, consultant, and public speaker on residential real estate topics.
Ray knows that most people are pretty darn smart. When they have problems, it’s usually because they don’t know the right questions to ask to get the information they need to make good decisions themselves. He always wanted to write real estate books that focused readers on what they needed to know to make sound home-buying and house-selling decisions.
On his way to becoming a real estate guru, Ray worked as the real estate analyst for KGO-TV (ABC’s affiliate in San Francisco) and as a syndicated real estate columnist for The San Francisco Examiner. He also hosted a weekly radio program — The Ray Brown on Real Estate, for KNBR — for 16 years. In addition to his work for ABC, Ray has appeared as a real estate expert on CNN, NBC, and CBS and in The Wall Street Journal and TIME.
Ray’s most significant achievements, however, are still Jeff and Jared, his two incomparable sons, and over 42 years of nearly always wedded bliss to the always wonderful Annie B. He’s delighted to welcome Jeff’s wife, Genevieve, and his grandson, Aidan Joseph Brown, to the family.
This book is hereby and irrevocably dedicated to my family and friends, as well as to my counseling clients and customers, who ultimately have taught me everything I know about how to explain financial terms and strategies so that everyone may benefit.
— Eric Tyson
This book is lovingly dedicated to Annie B., who makes my heart sing.
— Ray Brown
Many, many people at Wiley Publishing, Inc. helped to make this book possible and (we hope in your opinion) good. These folks include Chad Sievers, Project Editor; Carrie Burchfield, Copy Editor; and all the fine folks in Production! Thanks also to everyone else at Wiley who contributed to getting this book done and done right.
Extraordinary acclamation, copious praise, and profound gratitude is due our brilliant technical reviewers for this and prior editions who toiled long hours to ensure that we didn’t write something that wasn’t quite right. These good folks include two extraordinary real estate professionals: Kip Oxman, McGuire Real Estate and Lynnea Key, Lynnea Key Realty; one extraordinary mortgage consultant: David Wales, Palo Alto Funding Group, Inc.; as well as Patti Wallace with ECHO Housing and Dennis Ito, Bob Taylor, and all the good folks at KPMG Peat Marwick. Thank you one and all!
We also owe an enormous debt of gratitude to Paul Bragstad, Pacific Union GMAC Real Estate, for his incredible Internet insights; Joy Alafia for helping us obtain the California Association of Realtors’ exclusive listing contract and the property disclosure statement used in Chapter 8, the counter offer used in Chapter 14, and the real estate purchase contract included in Appendix A; Warren Camp, Warren Camp Inspection Services, for providing the exemplary premarketing inspection report included in Appendix B; Patty Oxman, Frank Howard Allen Realtors’ super star, for her staging tips; Victoria Naidorf, VP and Brokerage Counsel for Coldwell Banker in Northern California, who developed the ten troublemakers in Chapter 12; Brian Felix, Old Republic Title Company, who provided his usual scholarly advice about title insurance and escrows; Roland Jadryev, listing-statement writer extraordinary; Barbara Pacak, who unlocked the mysteries of lockboxes; Liz Johnson, who had answers to all our questions; and last, but far from least, Esty Lawrie and Dolly Toms, for their greatly appreciated wisdom and support.
We’re proud of this book; please send us your comments through our Dummies online registration form located at www.dummies.com/register/
Some of the people who helped bring this book to market include the following:
Acquisitions, Editorial, and Media Development
Project Editor: Chad R. Sievers
(Previous Edition: Suzanne Snyder)
Acquisitions Editor: Mike Baker
Copy Editor: Carrie Burchfield
(Previous Edition: Neil Johnson)
Editorial Program Coordinator: Erin Calligan Mooney
Technical Editor: Kip Oxman
Editorial Manager: Michelle Hacker
Editorial Assistants: Joe Niesen, Leeann Harney
Cover Photos: © Seth Joel/Getty Images
Cartoons: Rich Tennant (www.the5thwave.com)
Composition Services
Project Coordinator: Kristie Rees
Layout and Graphics: Reuben W. Davis, Alissa D. Ellet, Melissa K. Jester, Shane Johnson, Barbara Moore, Christine Williams
Anniversary Logo Design: Richard Pacifico
Proofreaders: John Greenough, Jessica Kramer, Nancy Reinhardt
Indexer: Potomac Indexing, LLC
Publishing and Editorial for Consumer Dummies
Diane Graves Steele, Vice President and Publisher, Consumer Dummies
Joyce Pepple, Acquisitions Director, Consumer Dummies
Kristin A. Cocks, Product Development Director, Consumer Dummies
Michael Spring, Vice President and Publisher, Travel
Kelly Regan, Editorial Director, Travel
Publishing for Technology Dummies
Andy Cummings, Vice President and Publisher, Dummies Technology/General User
Composition Services
Gerry Fahey, Vice President of Production Services
Debbie Stailey, Director of Composition Services
Title
Introduction
The Eric Tyson/Ray Brown Difference
Conventions Used in This Book
Foolish Assumptions
How This Book Is Organized
Icons Used in This Book
Where to Go from Here
Part I: The Selling Decision
Chapter 1: Deciding to Sell
Figuring Out if You Really Need to Sell
Knowing the Health of Your Housing Market
Chapter 2: Selling and Your Personal Finances
Trading Up
Making Retirement Housing Decisions
Tax Facts Sellers and Landlords Ought to Know
Chapter 3: Exploring the Economics of Selling
Estimating Proceeds of Sale
Assessing the Financial Feasibility of a Move
Chapter 4: Confronting Financing Issues
Financing Decisions When Trading Up
The Trials and Tribulations of Seller Financing
Part II: Tactical Considerations
Chapter 5: Timing Is Everything
Timing the Sale of Your House
The Seller’s Quandary: Timing the Purchase of Your Home
Consolidating Your Sale and Purchase
Chapter 6: For Sale By Owner
Eyeing the Potential FSBO Advantages
Focusing on Potential FSBO Disadvantages
Increasing Your Chances of Success
Chapter 7: Your Real Estate Team
Teaming Up — a Winning Concept
Landing the Perfect Listing Agent
Bringing in the Broker
Handling House Inspectors
The Officiating Escrow Officer
Finding Financial and Tax Advisors
Locating a Good Lawyer
Chapter 8: Listing Contracts and Commissions
Understanding Listing Contracts
Considering the Types of Listings
Examining Broker Compensation
Preparing Seller Disclosure Statements
Part III: Getting Top Dollar When You Sell
Chapter 9: Preparing Your House for Sale
Handling Presale Preparation
Think Again: Avoiding Major Improvements
Chapter 10: Determining Your House’s Value
Defining Cost, Price, and Value
Determining Fair Market Value (FMV)
Using a Comparable Market Analysis
Bidding Wars
Chapter 11: Price It Right and Buyers Will Come
Getting a Grasp on Pricing Methods
Identifying Incentives and Gimmicks
Overpricing Your House
Part IV: The Brass Tacks of Getting Your House Sold
Chapter 12: Marketing Your House
Advertising That Works
Arranging Open Houses
Showing Your Property
Chapter 13: Harnessing Your Computer for House Selling
Knowing the Internet’s Limitations: The Net Alone Can’t Sell Your House
Relying on Software and the Web to Determine Whether to Sell
Chapter 14: Negotiating Strategies for Sellers
Mastering Your Feelings
Following Some Basic Rules
Surviving the Bargaining Process
Negotiating from a Position of Strength
Negotiating from a Position of Weakness
Distinguishing Real Buyers from Fakes
Chapter 15: It Ain’t Over ‘til the Check Clears
Entering the Neutral Territory of an Escrow
Letting Go of Your House
Surviving Seller’s Remorse or (Gasp) the Double Whammy
Chapter 16: Income Tax Filings after the Sale
Profits from a House Sale
Tax Filings Required after the Sale
Part V: The Part of Tens
Chapter 17: Ten Things to Do After You Sell
Keep Copies of the Closing and Settlement Papers
Keep Proof of Improvements and Prior Purchases
Stash Your Cash in a Good Money Market Fund
Double-check the Tax Rules for Excluding Tax on Profits
Cast a Broad Net When You Consider Your Next Home
Remember That Renting Can Be a Fine Strategy
Reevaluate Your Personal Finances When Things Change
Don’t Simply Rehire Your Listing Agent When You Repurchase
Think through Your Next Down Payment
Remember to Send Change of Address Notices
Chapter 18: Ten Tips for Selling Rental Real Estate
Don’t Inadvertently Convert Your House into Income Property
Exercise Extra Care When You Sell Rental Property
Know How to Defer Your Investment Property Profits
Understand Your Local Market to Time Your Sale
Understand Opportunities for Adding Value
Maximize Your Property’s Income
Minimize Your Property’s Expenses
Utilize Agents with Investment Property Experience
Visit Comparables and Review the Valuation Analysis
Work with Rental-Property-Experienced Tax and Legal Advisors
Chapter 19: Ten Questions Home Buyers May Ask and How to Answer ’Em
What Do You Like Best and Least about Living Here?
Why Are You Selling This Lovely House?
How Much Did You Pay for This House?
How Did You Establish the Asking Price?
Have You Received Inspection Reports?
May I See Your Written Defect Disclosure Statement?
Are There Any Neighborhood Changes that May Affect the Home’s Desirability?
How Many Times in the Last Year Have You Called the Police and Why?
What Problems Have You Had with the House?
What Are the Local Public Schools Like?
Part VI: Appendixes
Appendix A: Sample Real Estate Purchase Contract
Appendix B: Example of a Good Inspection Report
Appendix C: Glossary
: Further Reading