Can I Sell My House For Less Than Market Value?
Selling your house for less than market value may be a good option if you have unpaid loan balances or taxes. It is an alternative to foreclosure, when the lender seized your home at an auction. Foreclosure is a bad option because it stays on your credit report for seven years and significantly limits your ability to borrow money in the future. Instead of facing foreclosure, consider turning your home into a rental property.
Selling your home for less than market value
When selling your home for less than market value, you are not only paying off taxes and unpaid loan balances. This is an effective way to avoid foreclosure, which occurs when the lender seizes the property at an auction and severely limits your credit rating for seven years. If you have been in this situation, you may want to consider turning your home into a rental property. Here are a few tips to help you avoid this trap.
Before you begin selling your home for less than market value, you should first determine the value of your home. Ideally, your listing price is lower than the market value. However, you should also factor in real estate agent commission, which can run a couple of thousand dollars. It is also a good idea to get a real estate broker's price opinion, which will give you a good idea of what your home is worth in the real estate market.
When a loved one passes away, the IRS may consider the sale as a "bargain" if the price is less than the house's fair market value. The IRS allows a 25 percent price discount, but will still levy gift tax if the price is below the appraised value. Additionally, if the tax-deductible mortgage loan interest rate is less than the IRS guidelines, the sale is also treated as a "bargain."
While you may expect a windfall when selling your house, tax implications can dampen this. In most cases, you will have to pay taxes on the profits that are realized from the sale. The good news is that there are exceptions to this rule. In general, you should have lived in the home for at least two years prior to selling it. Depending on your income, you can write off up to $250,000 of your profit. If you're married, the threshold increases to $500,000.
Setting the right price
The process of listing a home for sale is a critical component of selling for top dollar. While most sellers wish to list their house for a price that will attract buyers, they also want to leave room for negotiation. An underpricing strategy can work in many situations. In the following article, we'll discuss a few things to keep in mind when setting the price of your home.
First, determine the value of your home. Research the comparable sales of similar homes in your area. You can set your price 5% to 10% above comparable sales to create room for negotiation. Even if you're selling for less than the market value, you may be able to get top dollar if the house is listed for an unrealistic price. By avoiding overpricing, you'll get top dollar.
Negotiating with a real estate agent
When negotiating with a real estate agent to sell t a house for less than market value, remember that you are making a business decision. Negotiating is a process that involves making a strong case for what you want, while also focusing on factors in your favor. It is a good idea to research real estate agents in your area and choose one who seems willing to negotiate. A younger agent may be more motivated to do so.
When dealing with a real estate agent, make sure to consider their fee structure. While you may be able to negotiate a lower real estate commission when working with an independent agent, larger brokerages usually have an agreement to handle these tasks efficiently. Nevertheless, if you are selling a high-end property, independent agents can help you save thousands of dollars in real estate commissions.