After sell your Breckenridge property you’ve signed the papers and escrow has closed, you hand over the keys to the new owners and you may sigh with relief that the whole selling process is finally over. However, there are still several things you should do once the transaction is complete.
Authors, Eric Tyson and Ray Brown, let you know what you need to do in their book, “House Selling for Dummies (Hungry Minds Inc., 1999). The fact is if you follow their simple guidelines, you can save money and save yourself from having problems later on.
Tyson is a syndicated columnist and best selling author of Personal Finance for Dummies. Brown is a real estate consultant and speaker.
After escrow has closed, the authors suggest the following:
One of the most important things you can do is to make certain you place all copies of the paperwork related to your closing and settlement in a safe place. Many make the mistake of running it through the shredder, however, you will need to have this paperwork when you file your taxes. All expenses and proceeds of the sale will need to be reported and, of course, you will need to keep the paperwork in case you are audited.
If you did any home improvements on the home while it was in your possession, you will want to make certain you keep proof of this and any purchases you made. The IRS will allow you to add the cost of these improvements to your home’s cost basis during the time you owned the home. This works out very nicely should you have a sizeable capital gain. Without your receipts and proof, however, you will not be able to use this tax provision.
If you get money from the sale of your home, place your cash in a money market fund. If you don’t immediately buy a new house after you sell, you will need this safe place to put your money. A money market mutual fund will give you both safety and a reasonable rate of return. They also offer daily access to your money, as well as check-writing privileges.
Stay on top of tax laws. A recently passed law allows you to exclude from tax a significant portion of the profits from the sale of your primary residence. Because the tax laws are continually changing, you’ll want to make certain you stay on top of any new tax laws. This can help you to avoid losing a lot of money.
Choose your next home carefully. You will want to research a variety of areas before you move your family and look at all housing options that meet your family’s need.
Don’t feel pressured to purchase another home immediately. Renting a home in an area you like will allow you to try out an area before you purchase. This can save you time and money if you end up not liking the place and need to sell a home again.
Reevaluate your financial situation if things change. If your situation changes before you purchase another house-you get a promotion, have a baby, go through a divorce-you’ll need to reevaluate and decide how much you can afford to pay for your new home.
Choose your real estate agent carefully, when choosing an agent to help you buy. While the agent who assisted you in selling your house may fit your criteria to help you sell, you should choose carefully whether he or she can meet your needs when buying. Buying and selling require different skills. If you are moving into a new area, you will also want to make certain to choose a real estate agent who is familiar with this area.
Think carefully about your down payment on a new home. Brown and Tyson recommend putting at least 20 percent down on the next house you purchase in order to qualify for the best mortgage programs. If you can put down more than 20 percent, you will want to consider whether you can earn a high enough return if you were to invest the money elsewhere. “Younger home buyers willing to take on more investment risk should lean toward a 20 percent down payment, whereas older home buyers ten to invest less aggressively should opt for larger down payments,” the pair recommends.
Don’t forget to send change of address notices. These should go out to anyone who regularly sends you mail or may need to in the future. The U.S. Postal Service recommends you complete and mail your Change of Address Order Card or Internet form 30 days before you move.
If you are interested in additional information about Summit County real estate opportunities, please contact me: