To head out on our grand adventure we had to sell our house. When I bought it in 2003 it was the first I owned and I was incredibly proud. Selling it was a scary and challenging prospect, both as uncharted territory and the biggest commitment of heading out to be full-time travelers. Ultimately, things worked out really well so I thought sharing what I learned might help others considering the same journey.
Why Sell Your House?
First and foremost it made good financial sense. Mortgages are expensive, for us, far and away our biggest expense. My mission was to create a living from anywhere in the world, and I knew that starting out I’d not be making very much. I also wanted the freedom to try lines of work I’d avoided in the past because they are not very lucrative, for example, travel blogging. Keeping my expenses to a minimum was paramount and that meant cutting out the huge sums of interest on my home loan and to a lesser degree other loans we had at the time. Selling our house would not only mean no more interest, but also no more property tax. The principle payments you could see as savings, but at only 3 years into our current loan, there wasn’t all that much principle being paid each month. Some suggested we rent, but renting property almost never pays more than the mortgage and comes with responsibilities that could call us back from our travels frequently. Furthermore only selling the house would give us the capital we needed to buy our trailer and truck free and clear and pay off all our other outstanding debts.
Agent or no Agent?
While you can sell your house without an agent, I had zero experience selling houses, yet was well aware it is no simple task. If I knew how to do it, I would have considered it, and I did get at least one no-agent offer while it was up for sale. Looking back, their offer was terribly low, even considering there would be no agent commissions. Most folks who will pay cash for your home are buying at a discount to turn around and sell it to someone else. An agent may cost you a fair bit, usually around 6% to 7% of the closing price, but a good one will work hard to get you the very best price. Ours certainly did.
Once you have an agent, seek and listen to their advice. Once you have done that, do some research on your own to see if what they say sounds reasonable. If you have questions, ask them sooner rather than later. If the agent doesn’t like your questions, get another agent. This is a person you have to trust if you want things to work out. You need to do your best to help them sell the home, and they need to be looking out for your interests.
Getting the House Ready
This is where we had a lot of questions for our agent. We had seen our share of flipping and real estate TV shows and wondered what was real and what was sensationalism. There were things in the house we thought should be fixed, and others we thought could slide. Our agents advised us first impressions were the most important, and that the essential impression to make was that the house was clean and presented a kind of blank slate for the buyer on which they could impart their own sense of taste. Thus, our directives were to paint the house like it was new and de-personalize the spaces as much as possible.
We took that advice to heart, but we made our own decisions about exactly how we would accomplish those goals. In some cases we weren’t further than they suggested, replacing all the carpets downstairs rather than simply cleaning and patching them. In others we scaled back: they suggested re-painting the exterior, instead we color matched and touched up areas that looked off color. Inside we did paint everything, but again, using color matching we only did light single coats to make the walls look fresh and clean while not painting the ceilings.
To de-personalize we decided to simply clear everything out of the house and let them stage it for us (which was included in their fee). We also moved out during the open house and stayed with a friend for two weeks. This was partly possible because we were selling nearly everything we owned ahead of the house sale. After staging, it was a very different house.
All in all, it didn’t cost us very much, about $3,500 for all the work and supplies with the carpeting being the largest expense, followed by buying some doors we had misplaced (kind of a long story there). It also took a lot of elbow grease. We spent a good month doing almost nothing but working on the house or selling our possessions. We also had help from Trail’s brother who pitched in for fixing a fence and porch that had suffered from the wet and mold of the pacific northwest.
Picking a Price
I’m not a person that loves to haggle and negotiate, but when you sell a house, you darn well had better care about the price. Our agent wanted to take a strategy where they would price the house lowball in the hopes of sparking a lot of interest and getting a bidding war going among buyers. The price they suggested would have left us with barely the money needed to enact our plans, leaving almost nothing left to live off of. Still, they felt it was the way to go. This was a case where I placed my faith in their expertise and hoped for the best.
In the end, it paid off. Not only did we have many offers, a good number of them included contingencies to bid up against other competing offers. We listed the house at $415,000 and we sold it for $453,000, far more in fact than our agents had expected. Not only that, the winning offer had no conditions and offered payment in cash within a week of closing. Our agent proclaimed it possibly the best offer they had ever seen.
The Tax Man
Where there is money made there will be taxes paid and selling your house is no exception. At the federal level, the news is generally good. If it is your primary home and it is under $500,000 you won’t have any federal capital gains or income tax to pay. Where we got hit up unexpectedly was the county. We paid a county excise tax of $8,000 and a County Treasurer fee of $2,300. These two were something of a surprise, a fault of mine for not doing enough research. Still, it is not like you have a choice if you are committed to sell but if you are figuring out what you will clear, you need to keep such taxes in mind.
The Final Tally
All said and done, we paid around $30,000 to sell our house. We received $453,000 and paid off $270,000 in loans on the sale. When the dust cleared we deposited a check for $150,000 in the bank.