16. What should I do after the sale?
Taxes
Since 1997, individual home sellers in the United States can hold on to $250,000 in profit free of Federal tax. Couples can hold on to $500,000. The requirements are simple: the seller or sellers must have resided in the home for the last two years and the sellers cannot have employed the same exemption in the last two years.
File the form 1099-S to detail the transaction, then calculate capital gains and losses based on the “cost basis” of your sale. This means tallying expenses associated with the transaction. Did you run an ad in the paper offering your home for sale? Did you pay excrow or title fees as the seller? Consult a local tax accountant to understand which other expenses are currently allowed in your cost basis calculation; you will also want to ask about applicable local and state tax codes for such profits.
Closing papers
As we’ve mentioned, you are advised to work with a local closing agent to complete your transaction. No general book can detail a complete checklist of to-do items, which vary substantially by state.
Oresy.com
Traditional sales online have the advantage of using web marketing techniques to augment the familiar sales process of price - advertise - show - wait for offers. The downsides, as we know, are significant costs (including compensation for brokers and agents that is rarely proportional to their contributions) and an open-ended sales period. Auction-based sales are unfamiliar to many sellers, and can also be very costly given the steep up to 10% fee charged by most auction services. The upside of auction-based sales: accelerated transactions rather than open-ended waiting for offers, the sense of urgency inherent in the process that drives buyers to make competitive bids, and a variety of auction types.
Oresy.com allows you to leverage both traditional and auction-based options while minimizing your cost of doing business. The site’s traditional listings are free and auction services are far cheaper than other major auction options.
So are you ready to save thousands in fees while nabbing an optimal price for your property and selling it faster? That’s our whole sales pitch, because as long-time professionals in online systems and real estate, it has been clear for some time that homeowners could us an open portal to avoid middlemen and connect with serious buyers just as many do when selling a car themselves.
But real estate is a bit more complicated than Buicks: inspections, tax issues, and complex financing are just a few of the barriers to going it alone when selling a property. So we created the “Online Real Estate SYstem, or Oresy.com, to streamline the process of traditional and auction-based transactions. We offer discounted professional services if and when you need them.
In the pages that follow, we’ll outline the selling options and the steps you’ll need to take online. Our service supports both strictly FSBO (“For Sale By Owner”) folks who take over most of the duties of a listing and selling broker, as well as those who don’t want to hire a pricey broker but need help with some aspects of the sale.
Traditional listings on Oresy.com
Registered users can post property listings for free on the site. You will enter the address, specify square footage, number of bedrooms and baths, and age of the property. Also enter a description complete with highlights and upload photos.
Specify dates for upcoming open house events and specify an asking price; keep in mind that because this is a traditional sale listing, prospective buyers will make offers at, above, or below this price.
You’re done when you click “Save & Checkout” but you can update the listing with new information at any time. Of course this is really just the beginning; once the listing “goes live” you are strongly advised to market the property elsewhere both online and off. And you can go back and enhance the Oresy.com listing at any time -- unlike many services it is yours to modify at any time.
Still wondering if you have pulled out all the stops to market your property? Oresy.com charges a nominal fee to assist with your online marketing efforts: we can create and post YouTube videos, optimize search results for your listing, and expose your property to potential buyers worldwide.
What to look for in an online auction provider
Of course every online auctioneer notifies you when you’ve placed a bid, been outbid by another buyer, or won an auction. It should also notify you if you didn’t win an auction, and provide the complete bidding history for review. But Oresy.com believes real estate auctions online have several special requirements:
● The extension of the auction by a few minutes if a bidder drops a last-second high bid so that all bidders can place their final bids. In other words, nobody can “steal” a house by topping the current bid by a dollar. For the seller, this means you will realize a higher price; for buyers, this discourages “gaming the system”.
● Once a bidder has placed a bid in an auction, the system must notify them as higher bids are placed and provide an opportunity to outbid the current highest bid. Since most buyers are away from their browser for much of the auction, this helps keep bids flowing so that the maximal value of the property can be reached by the bidders.
● Automated bidding. In other words, you can bid $200,000 to place the highest bid, but you can also specify a maximum bid that’s even higher. If you enter $250,000 as your maximum and nobody outbids your offer of $200,000, you win at that amount. If another bidder offers $210,000, a slightly higher bid will be placed on your behalf. This continues until another bidder offers more than your maximum or you have won the auction.
● The process of creating a property listing must be self-explanatory, including the posting of an unlimited number documents and multimedia files, such as photographs, reports, and disclosures. The multimedia is crucial marketing: it’s based on these that prospective buyers will decide to visit the property in person before the auction.
Despite these differences, listing process for auction-based sales is similar to traditional listings. in many way. You prepare the property for auction, document it with photos, and describe it in your listing just as if you were preparing for a traditional sale. Next, select one of the three “auction types” which include absolute, minimum bid, and reserve. Each has its advantages:
Absolute Auction
Two huge benefits from this auction type: it will generate the strongest response from the marketplace, and the property will definitely be sold. Anyone who has used ebay.com is familiar with the absolute model: bidders from all over have the opportunity to place bids on the property within a set frame of time. At the end of that time, the house will be sold at the winning price. Bidding starts at zero and, theoretically, the property could sell for $1 since the winning buyer is contractually obligated to buy the property for the final price and the seller is obligated to sell at the winning price. In practice, as seller you would be unlikely employ this method unless you were certain that multiple buyers were ready to make reasonable bids.
Minimum bid
This type of auction is very popular for real estate auctions since it provides a baseline minimum that bidders must match or beat before their bid can be accepted. Of course this means response may be less enthusiastic than for an “absolute” auction, and there is no guarantee that the minimum bid will be met and that, therefore, the property will sell. So if you are serious about selling, set a low minimum bid; advertise this low-ball prices wherever you list your Open House and you are sure to attract many to view the potential bargain.
Reserve
Want to keep your options open and rethink whether you wish to close the deal once the auction is over? Consider this auction type. It is more difficult to entice bidders since they know that winning the auction at a bargain price will probably result in the seller refusing to sell. You might steer more interest towards your reserve auction with a low starting bid -- bidders may access public records on the property you’re selling and see how much is owed on this property; start bidding at or just above that amount and potential buyers will realize you actually may sell at this price. (Of course, the property should qualify for an auction sale, which means that the property should have equity 25-30%, allowing the starting bid to be 25-30% below the market value.)
Setting auction dates
When setting the auction dates, keep in mind the following for residential single-family homes and condos:
● Give yourself sufficient time to prepare for and advertise the first preview (open house), typically 7-10 days. If you start advertising the property only two or three days before, you are unlikely to attract a sizable pool of potential buyers and, therefore, a less competitive number of bidders.
● Some properties require just one or two open houses to generate a sufficient pool of bidders, while others may require three or more. The relative desirability of the property and local level of demand are the determining factors. Rural properties, for example, may require several preview events, while suburban properties rarely require more than two. More showings is not always better; dragging out the open house marketing process may cause potential bidders to lose interest.
● Experience shows that the best time to end an auction is a day or two after the last open house. I you have only one preview event, market the property for seven to 12 days and finish the auction on the 14th day. This is the minimum recommended marketing time for an auction.
● If you have two preview events, allow seven to 10 days before the first preview to market the property and then another seven days to market for the second event. Again, end the auction a day or two after the last event.
● Land, agricultural, commercial, and industrial properties usually take longer to market. Allow at least 30 days; many such properties will require 60 days or more.
● Of course every property and every market is unique. The above guidelines have worked well for many sellers, but of course it’s up to you to judge your circumstances.
● The best days for an auction preview are when most potential buyers have time to attend: weekends from 9 AM to 1 PM or from 1 PM to 5 PM. During these hours, you’ll draw “street traffic”who see your signage while driving by in addition to those who’ve read about your open house in advance.
● If you sell land rather than a built property, you won’t need formal open houses by work with interested parties to show the property on request.
Broker/Owner
Continental Realty, Inc.
16 Crow Canyon Court Suite 100
San Ramon CA 94583
925-548-5461
www.24by7bid.com
DRE# 01422589
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