Things to Do After Selling Your Home
Selling a home is usually not something that most folks get excited about. This is completely understandable as it can take a lot of time and effort on the part of a homeowner. You go through a lot of trouble to get the home ready for the market and then have to grin and bear it as tons of people trample through your home at random times of the day. At times you feel like your privacy has been completely invaded. Recently I talked about some of the smart things to do before listing a home for sale. These home selling tips were designed to make the process go far smoother. Typically if the advice is followed to a tee you will end up selling your home quicker and for more money. What we are going to discuss now is smart things to do after selling your home!
It can feel pretty amazing to finally have your home sold. Once the keys are given to the buyer and the escrow is closed, it can feel like a great weight is finally off of your shoulders. However, there are still tasks that need to be taken care of if you want to act smart financially. There are things to do after selling a home that become critical, otherwise you risk missing out on opportunities and creating more headaches for yourself on down the line.
Things to Do After Selling But Prior to Closing
- Research and contact a mover. It is highly recommended that like interviewing a real estate agent, you take the time and find a great mover to work with. The price of movers can vary dramatically as can what is offered and the services provided. You should not only do your own research but seek out some guidance from friends, relatives and your real estate agent who should have a handle of who is highly recommended in the area. Also be sure to read our top moving tips for a smooth move!
- Make sure to change your address – with everyone! At the most basic, you should be notifying the post office of your change of address at least a few weeks before you move. However, you really should make a list of all the people, companies and organizations that may try to contact you through mail. Make your list and then take the time to contact all of them to notify them of your change of address. One of the most important groups you should absolutely not to forget to send a change of address to is the IRS! The last thing you want is any tax information going to the wrong place.
- Along the same lines make sure you forward all of your magazine subscriptions to your new address.
- Just before you are going to the closing on your home cancel or transfer your bank account to wherever you are headed.
- If you have any medical conditions make sure you scope out a local pharmacy wherever you are going and have any necessary prescriptions transferred there.
- Take all the services in your home out of your name. You want to make everything as cut and dry as possible. Part of this is making sure that you are only paying for the things that YOU are using. Contact the cable company, utilities, phone company and any other company that provides services to your home. Let them know that you will no longer be responsible for any fees accrued after the date you are moving out and that you need your account closed at that time.
- If you have a gym membership and it is not a national chain make sure you cancel it and possibly get a refund of any unused time left on the contract. If it is a national chain ask them to change over your membership to your new location.
- If you are buying a condo and don’t have the need for a lawnmower or are moving to a warm weather climate and don’t need your snow blower anymore sell them or give them to a friend who could use them.
- Have the oil tank read. If your home is serviced by oil it is customary in many locations that you will be able to get reimbursed by the buyer for the oil left in the tank when you close. What you are going to need to do is contact your oil service provider and let them know you have sold your home. Ask them for a final oil reading and they will come out and read the oil left for you and provide you with a receipt. This becomes your proof at closing and allows the buyer to give you proper payment.
- Provide important home ownership paperwork to the buyer. While this is not a requirement it is a great gesture and the buyer will love it. Some of the things that would be helpful to the new owner include any manuals you have for appliances, any warranties for things you might have replaced like a water heater, as well as a list of contractors you have used. This is also great to have as part of the real estate marketing to help sell the home! Buyers absolutely will be thrilled if you take the time to put together people you know and trust who have done a great job for you. Examples include your landscaper, house cleaner, handy man, etc.
As you can see there are quite a few smart things to do after selling a home before the closing takes place. What about after the closing?
Things to Do After Closing
- Keep your paperwork in order. After all the paperwork you have gone through to sell your home, it might be tempting to dispense with all of it now that the dust has settled. This is not the best idea. All of the paperwork related to the sale of the house should be kept available for tax time, because you will need to have proof of the expenses you paid and the money you made from the sale. Even after your tax return is filed you will still want to keep these records in case the IRS comes back to audit you.
- Pay attention to tax laws. Tax laws can and do change frequently. This is a frustration that everyone has to deal with, but there are sometimes advantages to it as well. If the tax laws change in your favor – such as allowing you to keep a higher percentage of the profits from the sale of your home – you certainly want to be aware of it. Even if changes work against you, it is still better to know about it and to plan accordingly. One thing to keep in mind is at the current time you are able to exclude up to $250,000 in profits if your are single and $500,000 if you are married as long as the home was your primary residence. You also need to have lived in the home for two out of the last five years. See capital gains when selling a home for a complete explanation of the tax law.
- Keep records related to home improvement. The IRS may allow you to use home improvement expenses to improve your tax situation – especially if you have a good-sized capital gain. However, you will need documentation of all the improvements you paid for while you owned the home if you are going to take advantage of this. Audits do happen and you do not want to be unprepared if it happens to you. Keep in mind there is a difference between a home improvement and general maintenance as far as the IRS goes. Generally speaking a home improvement is something that will add value to your home. While a repair is considered general maintenance. A perfect example would be replacing your roof being an improvement and a few blown off shingles being a repair. House Logic does an excellent job of explaining this in what is considered a home improvement for tax purposes.
- Go over the settlement statement with a fine-toothed comb. While your real estate agent, the buyer and the other companies you deal with during your sale may all be great, mistakes still happen. And sometimes people try to make a little extra if they can get away with it. Make sure that all the payoff amounts are correct on any mortgages, that any extras your agent promised you are actually there and that all the fees listed are fees you knew about beforehand. No surprises are allowed – and if there are surprises, they should be explained to you in detail. There may also be some suggestions to leave certain things off of the settlement statement. Do not agree to this without discussing your legal risks with an attorney beforehand.
- Invest your proceeds in a money market fund or other relatively safe investment vehicle. When you are selling a home and not immediately reinvesting your proceeds by purchasing another home it makes sense to have your money where you can get a hold of your funds quickly. If you get a good chunk of money out of the sale of your home, you do not want to store it under the mattress or a tomato plant somewhere. You want to put it where it’s relatively safe but that will also yield some sort of return. Money market mutual funds are a popular option for many people who sell their homes. They give you a decent return on your investment, yet still give you access to your money if you need it – such as when you buy your next home.
- Take your time buying another home. If you have the patience and are willing to rent for a little while, you will be more likely to find the home of your dreams at a good price. Desperation and a ticking clock are not beneficial when you are trying to make a sizable financial deal – such as buying a home. Taking some time to make sure you have the right Realtor, that you are looking in the area you really want to live, as well as getting the kind of house you will be happy with is obviously good business.
- Think about your down payment strategically. While it may seem obvious that the bigger the down payment, the better off you will be on your next home buy, this is not necessarily true. Depending on where you are in life, it may be financially beneficial to stick with the standard 20% and put your extra money elsewhere so it can bring in bigger returns. This is especially true if you are a younger home buyer with a little more tolerance for risk.