How to Generate a Healthier Profit Margin When You Sell Your Home

The home sale process is a complicated and stressful one for most homeowners. You can make it much more enjoyable, however, by increasing the amount of equity you’re able to negotiate at the closing table.

Before you can kick your feet up, you have some work to do.

Try These Five Techniques

There’s never been a better time to sell your home. The real estate market is blazing hot, interest rates remain at record lows, and optimism about the larger economy remains strong. Before you go sticking a for-sale sign in your front yard, though, you’d be smart to think about how you can generate a larger profit margin on the sale of your home.

Here are a few helpful ideas.

1. Make Extra Premium Payments Now

Still have some time between now and when you want to put your home on the market? Go ahead and tack on some extra to the premium of your remaining mortgage balance each month.

This is a sure-fire way to chip away at your loan, which will ultimately provide you with more cash on the back end of a sale.

2. Invest in High ROI Improvements

Any time you can make an improvement that costs $1,000 but yields a $2,000 increase at listing, you’ll make money. Why not effect as many of these investments as you can?

In terms of generating a significant ROI, consider such remodel projects as: painting, upgrading countertops, replacing a backsplash, updating a garage door, staining a deck, remodeling a master bathroom suite, and/or upgrading light fixtures and hardware throughout your home.

3. Hire a Flat-Fee Real Estate Agency

Under typical market circumstances, the seller is expected to pay a three percent commission to his own agent, as well as an additional three percent commission to the buyer’s agent. But everything is up for negotiation these days.

Though it’s fairly rare for a buyer’s agent ever to accept less than three percent, you can always find a seller’s agent who operates on a unique structure … such as a flat-fee commission. Green Residential, a Houston-based agency, is the perfect example.

This is one of the few flat-fee agencies in its area, and – as this interactive tool shows – Green Residential can save its clients some significant cash. On a $400,000 house, the homeowner would pay only $20,000 in commissions (as opposed to as much as $24,000).

That’s a $4,00 savings. As the sale price goes up, savings expand.

4. Have Your House Professionally Staged

There’s substantial value in arranging to have your home professionally staged. The data show that, on average, staged homes sell 88 percent faster and for 20 percent more than non-staged properties of the same quality.

What does this mean in practice? Take a look. Say you have a house that would normally sell for $350,000 in 30 days, which is a fairly average situation. The data suggest you could sell this same home for $420,000 in as little as a week, simply by staging it.

Keep in mind that staging will cost you up front. Generally speaking, a stager will charge $300 to $600 for an initial consultation and then another dollar a square foot (per month).

You may also be required to lock in for a minimum of a three-month commitment (even if your home sells right away). But if we use the example above and assume that your home is 3,000 square feet ($9,000 for three months of staging), you’re still walking out of the situation with close to $60,000 in additional equity.

That’s well worth the time and expense!

5. Negotiate Closing Costs and Fees

Also recall that you can negotiate closing costs and fees with all the parties involved – which includes both the mortgage lender and the buyer.

If you’re in an especially hot market and there’s a ton of demand for your home, you could even require the buyer to pay all closing costs, fees, and commissions. This isn’t the normal operating procedure, but it could work under the right set of circumstances.

Beef Up Your Profits!

Your home is probably your largest financial asset. It’s also one of your greatest tools for building wealth.

When approached from a strategic perspective, a home sale can reap significant rewards – even if you’ve only owned the house for a few years. Keep these tips in mind and be purposeful about how you prepare for the sale of your home.