Although the purchase or sale of real estate is the largest financial transaction most people ever make, many rely on guesswork. Some guess on the value of their existing house or condominium. Some guess at how much they will have to pay for their next home. Others guess on what their closing costs will on both their sale and their purchase.
With the cost of real estate and financing as high as they are today, you can no longer rely on guesswork. For this reason, you need to do some smart planning when you decide to sell your present home and buy another. The two vital facts you will require are the estimated seller’s net proceeds and the estimated buyer’s cost. Let’s look at the elements of each
Estimated Seller’s Proceeds: In order to know how much money you will have to use in purchasing the next home, you must determine the actual amount you will receive from the sale of your present home. You must determine what your home is worth in today’s market. Though there are many companies on the Internet who will gladly offer you their automated opinion of your property’s value like Zillow and Trulia, which too is only guess work in a high tech format. Only a real estate agent who has access to all the information available through the local multiple listing service can put an accurate value on your home. This figure is the result of comparing the features of your home with similar properties that have sold in recent months. After you arrive at a sales price, a complete list of selling costs must be compiled so that you can compute the actual amount you will receive at the closing.
Estimated Buyers Cost: Now that you know how much cash you will have, the next to investigate is the total out-of-pocket cost to acquire the next home. The three basic factors that affect your costs are the home purchase price, the financing method you will use and the closing cost. Although the purchase price will be the result of negotiation, a knowledgeable real estate agent can tell you what you should expect to pay for the type of home you want. After a purchase price is estimated, you must calculate the amount needed for the down payment and various closing fees in order to figure the total cash requirements.
Advice: Relying on guesswork can be a very costly proposition. To get help and assistance to guide you through the buying and selling process, depend on a professional. Use the services of a licensed Realtor®.
