Need Retirement Income? Sell Your House!

February 26 2009

investopedia.com

Many retirees view their homes as a major source of funding their retirement nest eggs. There are two primary ways of using one's home for this purpose, either through a reverse mortgage program, or by selling the house. In this article, we'll focus on selling your home to fund your retirement - and how to make sure you get top dollar.

A Buyer's Market?
When real estate experts describe the real estate market as a "buyer's market", this means that the buyer is usually in control and is able to dictate the purchase price. That said, there are steps that sellers can take to gain a measure of control in any market. The following are 10 steps that can help to make your home attractive to potential buyers and enable you to get top dollar.

1. Get Curb Appeal Buyers want to get that feeling of home when they enter their driveways. Help them to get that impression when they arrive at your home. Take time to spruce up your lawn, hedges and curb. If cost is a factor, do some of the work yourself, such as removing weeds and tilling the soil. The more challenging areas can be left to a professional landscaper. This includes the actual design, if your yard is large enough to warrant landscaping beyond the basic hedging, addition of any necessary top soil, nutrients, grass and beautification pieces (like plants/stones/flowers).

2. De-Clutter Your HomeWhat may seem homey to you may overwhelm potential buyers. Allow them to envision what the home will look like if they style it in their own way. In other words, try to tone down your own style in the house and make it as neutral as possible. This can be achieved in a variety of ways:

• Consider repainting using neutral tones. If using more than one color, make sure the colors are in the same family. Most paint brands offer guides on compatibility and how to blend colors properly. This will help to ensure that your color choices will appeal to - or at least not offend - the largest number of potential buyers. 
• If you have colorful wallpaper in any area of the house, have it removed and paint those areas.  
• Remove large pieces of furniture that overpower rooms. If your couch is a sectional, consider breaking it up and resetting it into a conversational area, if it is not already styled in that manner. If necessary, move the items you want to keep to a storage facility. By keeping rooms relatively empty, you will help to create the impression of space.
• Add curtains or window treatments that compliment the season. For instance, if it's summer, light billowy curtains in bedrooms will help to give off a cool ambiance, while heavier curtains may provide a warmer feeling in winter.
• Clean the house thoroughly inside and out. The windows should be properly done and any cracked or broken panes must be replaced. If the exterior is wood, a fresh coat of paint will help. Aluminum siding can often benefit from a power wash to remove dirt and stains.

3. Get Your Neighbors to Spruce Up their PropertiesPotential buyers want to know that their neighbors will keep the neighborhood looking sharp, and will likely make that judgment based on the appearance of your neighbors' properties. This is one of the times when being a good neighbor can pay off. If you plan to use a landscaper, ask about discounted rates for multiple jobs to increase the likelihood of your neighbors will buy in. Regardless of whether you plan to use a landscaper, make it a group effort. For instance, if your neighbors agree, you could work together to spruce up the yards on your block. Or, if they are unable physically or financially to attend to their yard, maybe offer to pay for someone to mow their lawn or weed their garden before your open house. A few bucks spent this way may help out both you and your neighbour.

4. Complete Minor Repairs Complete minor repairs, such as handles and doorknobs that jiggle, floor boards that squeak and leaky faucets. While many of these may seem insignificant to you, they cheapen the house in the eyes of the buyer and may leave a lasting bad impression with them. The key is to leave potential buyers with a good impression and to try to eliminate any minor problems that might detract from your home's overall appeal.

5. Modernize Kitchens and BathroomsThe rooms that most often sell houses are bathrooms and kitchens. The amounts invested in these rooms are often recouped in the sale price. Buyers usually prefer bathrooms and kitchens with a modern look and feel. If your bathrooms and kitchen are outdated, consider remodeling or upgrading to modern fixtures. If necessary, add new cupboards or reface old ones, and add new showers/bathtubs. 

6. Money is Cheap - Leverage Cost or RepairsIf interest rates are low, taking out a loan to finance repairs that you cannot cover out-of-pocket can be a good option, and the loan can be repaid from the proceeds of the sale of the house. Don't let the lack of a few thousand dollars result in you selling your house for $20,000 to $30,000 less than it is really worth.

7. Talk to Multiple RealtorsIf you plan to use a realtor, talk to more than one. This is no different than shopping for a financial advisor. You want to know that the realtor has the savvy needed to sell your house. In this case, while experience helps, intuition may be an even more invaluable trait. If you get that feeling of comfort with your realtor, the feeling that you can trust him or her, then a potential buyer will likely get that same feeling. You also want to make sure your realtor will work to get you top dollar for your house.

If you plan to sell it yourself, first determine whether you really have the time to dedicate to the process. You want to be sure you are always available to show the house to potential buyers

8. Price Your Home to SellBe realistic when setting the price for your home. Do not play a cat and mouse game with buyers. There are several ways you can determine whether your home is overpriced or underpriced:

• Use one of the internet services (or if you use a realtor, ask him or her) to get the sell price for homes in your area during the last year.
• Find out how much the listed homes in your area are selling for. 
• Find out the open-house dates for listed homes in your area and be your own mystery shopper, so that you can see what is actually being provided for the listed prices. This may even provide you with some decorating ideas from houses that are built in a similar style/design to yours.

You don't want to give away your house, but you don't want to put yourself in a position where it does not sell for months, which may force you to reduce the selling price several times.

9. Make Good Aroma on Open House DayAroma can work to your advantage or disadvantage. Stay away from overpoweringly sweet smells. Instead, focus on creating a fresh-smelling atmosphere by removing pet odors, cigarette odors and those caused by dirty laundry or sneakers.  

Have something baking in the oven - preferably pumpkin pies or cinnamon flavored cake - that instantly reminds people of thoughts of home. If you are not into baking, simmering cinnamon sticks on the stove through the open house can create the same effect.

10. Stage the House on Open-House DayIf possible, make sure you and your family stay out of the house on open-house day. You want buyers to feel comfortable looking around and they may feel uncomfortable doing so in your presence.Exceptions apply if you are not using a realtor.

If you must stay, resign yourself to a secluded spot from which the rest of the house is not visible. Engage yourself in something like reading a book or doing a crossword puzzle and if possible have some light/soft music in the background. Your attitude and demeanor should say to the potential buyer "take your time and look around, because I am relaxing and will not be getting up anytime soon."

After (or Pending) the SaleOnce your house has been sold, talk to your financial advisor about the best ways to invest the proceeds from the sale of your house. In most cases, investing in vehicles that are easily liquidated - without penalty - and produce a guaranteed rate of return will be on the list of recommended investment if you are already in retirement and/or have only a few years left before retirement. Other options include purchasing annuity products that produce life-time guaranteed income and income for your surviving spouse, if you have one. Some financial advisors may even recommend other investments, depending on your risk tolerance and other means of helping to finance your retirement. 

ConclusionSelling your home can be challenging. However, you can make it less so by taking the right steps. These steps will not only help to expedite the sale, but will also help to avoid any sellers' remorse by getting you top dollar. In most cases, you usually get out what you put in. However, with homes, you likely get more than you put in, especially if you put in some time and resources to bring out the best in your home before the sale.