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Your Realtor just called with news you’ve been anxiously anticipating: a buyer agreed to your terms and your home is under contract to be sold. You’re elated—and relieved—that the process is over. Or is it? Turns out a lot of things have to happen before the moving van shows up to whisk you away to your new abode, and you’re thinking, “I sold my house now what?”
So, where do you start? Thankfully, we’ve thought of everything you need to take care of from what papers to hold onto to how to hire a mover to what you’ll need when the time comes to purchase a new place. Read on for a comprehensive list that will make the days leading up to the closing table a breeze.
The Paper Trail
First off, buy a file box (or just use a sturdy cardboard box with a lid) and put every single piece of paperwork relating to the sale of your home in it. Even if you think you don’t need it, save it, because these documents will become important when it comes time to do your taxes.
For example, if you made any improvements to your home such as adding new bathrooms, creating a master suite, or finishing your basement, you may be able to claim a portion of what you spent on your taxes.
Download Publication 523 on the IRS.gov site to determine whether your improvements qualify.
Read all contracts carefully. While your Realtor will, hopefully, be on top of deadlines, it doesn’t hurt to be aware of all of the sellers’ and buyers’ responsibilities set forth in the contract, says David Reiss, Professor of Law at Brooklyn Law School in Brooklyn, NY.
“Have the buyers applied for a mortgage within the time allotted in the contract? Have the buyers received a mortgage commitment within the time allotted in the contract? If the answer is no, the sellers should understand what their rights are under the contract as a result of those events.”
(Read: you may be able to back out of the deal.)
Conversely, once you’re at the closing table, go over your settlement statements carefully. Then go over them again. You’re looking for any hidden fees (like courier or processing fees) and the correct amount on mortgage payoffs, if any.
The Money Matters
You probably already have a trustworthy accountant and you’re definitely going to need their services come tax time. If the home you’re selling is your primary residence (and has been for at least two out of five years) you’re eligible for a $250,000 exemption on capital gains tax or $500,000 for married people. Basically, if you’re married and you sold your home for less than 500K, you won’t pay tax on your earnings. Cha ching!
But what if the home you’re selling is an investment property?
Turns out you may be exempt from taxes in that event as well, according to Adam Lesner, a licensed mortgage loan officer in Farmington Hills, MI., In this instance you can do a 1031 Exchange, says Lesner, where the proceeds of the sold home go towards purchasing a new property, thereby eliminating the tax obligation.
Visit 1031exchange.com to learn more about this process.
If you aren’t purchasing a new home right away, consider putting your proceeds in a money market mutual fund, which will keep it safe, but also allow you to access it when you want. This is also a good time to revisit your financial goals, says Ryan Frailich, a financial coach and planner at Deliberate Finances, LLC.
“Check if you’re on track to meeting your short term goals (such as an emergency fund or upcoming vacation you’re planning), as well as longer term goals like retirement. If you’re behind in those areas, prioritize using the funds to catch up,” advises Frailich. “If you’re eligible to contribute to a Roth Ira, now may be a great time to open one and contribute the annual maximum to boost your retirement savings.”
Visit rothira.com for details on whether you are eligible for a Roth Ira as well as how to open an account.
Prepping for the Home Inspection
Home inspections are a standard part of the process when you sell your home. After all, the buyer doesn’t want to get stuck with a money pit, and a home inspector will point out any potential problems. And there will be problems, says Robyn Porter, a top real estate agent in the Washington D.C. Metro area who has roughly 3 times more homes sold than the average agent in the area. “I tell sellers to mentally prepare themselves for the results. As much as a seller thinks they’ve prepared their home for a sale, an inspector will find things wrong with the property. That’s their job.”
While you may be tempted to have your own inspection done pre-sale to avoid any surprises, Porter advises against that. “Every inspector will come up with a different list of repair items. So if the home seller does get an inspection and fixes everything, another inspector will just come along and give them another list of things that they have to fix,” she says.
“After all,” she points out, “if the home inspector doesn’t find anything wrong, the buyer will be very suspect about the inspection they just paid for.”
What you can do to minimize any delays or issues:
According to WIN Home Inspection, a home inspection company with offices in 28 states, you should:
- Clean out dirty gutters.
- Repaint the outside of the house if it looks weathered or deteriorated.
- Caulk around your chimney, windows and doors.
- Repair any loose bricks, broken pavers, or loose stair railings.
- Make sure crawlspaces and attics are accessible.
- Test smoke and carbon monoxide detectors to ensure they are in working order.
- Make sure all plumbing fixtures are leak-free.
- Replace any burned out light bulbs.
Finally, be prepared to leave the house on the day your inspection is scheduled. While this isn’t mandatory, it’s strongly suggested, says Porter. “Sellers love to talk about their property. So they might over share info they might otherwise not want to reveal. This could be a ghost, a death, noise between the walls, something that would give a buyer pause about the property.”
Getting Ready For Your Move
Once the buyer has secured their mortgage, met their deadlines, and a closing date has been determined, it’s time for you to get packing—literally.
Hiring a reputable moving company is crucial, seeing as they’re going to be handling many of your valuables. Start by asking friends and colleagues for recommendations.
Once you’ve got a good list, log onto the Better Business Bureau to see if the company has any complaints against it. The U.S. Department of Transportation can also help you determine whether a company is properly licensed and insured.
Plan on getting an in-home estimate from three movers before choosing one. When a representative for the company comes to your home, be honest about all of the items you want them to move so that your quote is as accurate as possible. They should provide you with an estimate that sets their hourly wage, amount of hours the move will take, and any additional costs you may incur.
- Whether their employees will handle your move or whether they contract it out.
- How many years they’ve been in business. (Ideally more than one.)
- The company’s full name and any other names it does business under.
- Their address, phone number, email and website.
Once you’ve decided on a moving company—and whether or not to have them pack any items for you—you’ll need to start boxing up your belongings.
First, go through each room in your house and figure out what you want to keep and what you want to donate. Consider contacting Goodwill, Habitat for Humanity, or GreenDrop to donate items that you aren’t taking with you.
Move For Hunger works with moving companies to move your non-perishable food items to a local food bank for no charge.
Start stocking up on packing supplies such as boxes, packing tape, labels and Sharpie markers. Home Depot and Amazon have a large amount of moving supplies.
Before You Go…
- Have your house professionally cleaned before the final walk through. Or if you have the time, and the inclination, clean the house yourself.
- Call all of your utility companies and request that all services be turned off the day after you close. If the utilities are turned off on the day the buyers do their final walk through, your closing may be delayed.
- Take a meter reading before you leave and give this number to the customer service representative when you call to have your utilities shut off. If you have oil, have the tank read. Most of the time you’ll receive a reimbursement from the buyer for any oil left in the tank.
- Leave a folder full of essential documents for the new homeowners. You don’t have to do this, but it’s a nice gesture, especially if the closing process was pleasant. Think:
- Appliance manuals
- Any useful tips about your house
- A list of contractors or service providers (maintenance, house cleaners, landscapers) you’ve used in the past
- Go fill out a change of address form on USPS.gov. You’ll also want to alert the IRS, Social Security Administration, State Motor Vehicle Office and State Election Offices of your move.
- Don’t forget to visit the website of any magazines or publications you receive and follow their instructions to change your address.
When It’s Time to Buy a New Home
Get your financial documents in order. Here’s a handy rule:
“Think 2/2/2/2: two years worth of tax returns and W-2s, two most recent pay stubs and two months of bank statements,” says Lesner. This will make securing a mortgage (if you need one) much easier.
Think about your next down payment. If you can afford to, you may want to consider putting more than 20 percent down rather than investing that money elsewhere.
The “I Sold My House Now What?” Checklist:
- Organize all of the documents related to the sale of your home. Keep any receipts for home improvements you’ve made.
- Know your tax laws, or hire a good accountant.
- Get your home ready for its inspection—and be prepared to stay out of the process on the day of.
- Hire a reputable moving company.
- Figure out what you’re keeping, what you’re donating and what you’ll need to pack all of it up.
- Have your house cleaned.
- Call all utilities to have your services turned off for the day after your closing.
- Check all meters, including oil tanks, to get an accurate reading.
- Leave essential documents for the new owners.
- Go to the USPS website to have your address changed.