Sellers: Consider Capital Gains Before Selling

Even though we’re in a hot seller’s market, you may not want to sell right now.

Considering how much homes have increased in value recently, many people are wondering whether they should sell their homes or cash in on their equity. Selling may or may not be a good idea, so today I’ll give people in this position something to consider: capital gains taxes.

Many people don’t really think about capital gains taxes until after their house has already been sold. When you purchase a home, the IRS determines whether you’ll pay short-term or long-term capital gains based on how long you’ve lived in the home.

If you’ve lived in the home for less than a year, you’ll pay a higher capital gains tax, so be sure to check with your CPA to find out exactly how much yours would be if you sold. For simplicity’s sake, you can expect to pay around 22% of your total profit. If you’ve lived in the home for more than a year, your capital gains taxes are reduced. Again, your CPA can give you a more exact figure, but you’re looking at somewhere around 10% to 15%.

 "If you’re pretty close to that two-year mark, then it may be a good idea to hold off on selling."

Now, if you are in a position where you have lived in the home for at least two out of the last five yearsand you’re single, you are exempt from having to pay capital gains taxes on up to $250,000 worth of profit. If you’re married, you’re exempt for up to $500,000. If you’re pretty close to that two-year mark, then it may be a good idea to hold off on selling.

Hopefully this has given you some helpful information to better inform your decision to sell or not to sell.

If you have any questions or need assistance, give us a call or send us an email. We’d love to be a resource for you.

Should You Wait To Sell Your Home?

Our market conditions suggest sellers should act sooner rather than later.

With how volatile the market is, does it make sense to sell your home now, or should you wait? Many homeowners are asking this question. After all, home values will continue to rise, so wouldn’t it be better to let home prices rise before selling? That way, you could extract the maximal value from your sale. Today I’ll address this question and some concerns that I have for those thinking of waiting.

First, let’s consider what’s going on in the market. As I said, home prices are on the rise. As prices go up, your pool of potential buyers shrinks since fewer people will be able to afford your home. The Federal Reserve has also announced that they’re going to increase interest rates multiple times. They’ve already jumped quite a bit in just the last few weeks. Rising rates also have the effect of reducing your buying pool.

"You’ll have a larger buying pool now than you will later in the year."

It’s not hard to see why consumer confidence has been getting lower and lower. Many are starting to wonder if it’s even worth it to pay that much for a home anymore. If confidence continues to drop, that’s even fewer buyers in the market who will be prepared to make you an offer. That, in turn, means the value of your home will go down since you won’t be able to take advantage of high demand and bidding wars to boost your sales price.

With all that in mind, if you’re thinking about selling your home in 2022, I strongly encourage you to take action sooner rather than later. You’ll have a larger buying pool now than you will later in the year, meaning that you’re more likely to get a higher price if you don't wait.

If you have any questions or need help getting the sales process started, don’t hesitate to give me a call or send me an email. Hope to hear from you soon!

How Interest Rates Affect Your Buying Power

How rising interest rates could affect your ability to buy a home.

Interest rates are on the rise, so what does this mean for you? If you’re thinking about buying a home soon, you need to know what’s happening. Interest rates are in the low 4% range, so I want to break down what that means for your pocketbook.

A chief economist at a large brokerage recently said, “With certainty, by the end of this year, interest rates will be 5.5% to 6%.” That’s a huge jump from where we are now—up to a 2% difference. That might not sound like that much, but it is.

"Act sooner rather than later to protect as much of your money as possible."

The median home price in Pierce County is $525,000. Let’s say you own a home at that price, and you’d like to move into a larger house that would cost around $750,000. If you put 20% down on that home and rates were at 4%, your monthly payment would be $2,864. If rates rose to 6%, your monthly payment would be $3,597 for that same house. 

That’s a difference of $733 per month. Over a year, you’d pay $9,000 more, and over the life of your loan, you’d pay $264,000 more. I want to make sure you’re aware of how much rates affect your monthly payment. If you want to move, I recommend acting sooner rather than later to protect as much of your money as possible. 

A lot of people don’t want to sell until they find where they’re moving to, but there are a few strategies you can use to help. You can purchase the new property first and sell your home immediately afterward. There are ways you can structure and finance that option. 

If you know someone who would benefit from this information, please pass this on to them. As always, if you have any questions, I’d love to help. Just call or email me.

Using a HELOC To Make Your Move

Here’s how you can use a HELOC to buy a new home before you sell. 

Are you looking to move? If so, you probably need to sell your old home before you can buy a new one. If you’re in this position, how can you sell your house without going homeless? I have a great tip that’s helped plenty of our clients, and I want to share it with you today. 

The big issue in our market right now is our low inventory. Sure, you can get a great deal on your home, but what will you do when you have to buy? Fortunately, we’ve worked closely with lenders to help solve this situation, and you may be able to use a home equity line of credit, or HELOC, to make your move. 

So how would this work? Let’s look at an example: Say you want to move up from your existing house into a bigger one. Because homes have appreciated so much in the last few years, you probably have a lot more equity than you think. In this instance, you can use a HELOC to pull the equity out of your home. It doesn’t cost any money until you deploy the funds, so you can use that cash to pay for a down payment on your new home. 

"You probably have more equity than you think."

Even if you aren’t looking to move, there are plenty of good reasons to take out a HELOC, such as an emergency fund. While I’m not a financial expert, I will caution against spending your equity on things like expensive cars. If you need a lender to speak with about this topic, please reach out to us. We'd be happy to put you in touch with a great one.

If you have questions about today’s topic, please call or email my team. We are always happy to be a resource for you!

Summer 2021 Market Update

Ours continues to be a hot seller’s market as we hit the middle of summer.

The Pierce County real estate market continues to go crazy this summer. The market conditions that we’re seeing here make it the perfect time for those who were potentially thinking about selling their house to take the leap. You can take advantage of this market and get top dollar for your property.

Cited below for your convenience are timestamps that will direct you to various points in the video. Feel free to watch the full message or use these timestamps to browse specific topics at your leisure:

0:23 — Five-year price history

2:05 — Days on market

2:51 — Active listings

4:00 — Inventory

5:18 — Why it’s a good time to sell

5:42 — Wrapping up

If you have any questions about real estate matters or are looking to buy or sell a home, don’t hesitate to reach out to me. I look forward to the opportunity to help you reach your goals.

5 Home Selling Mistakes to Avoid

There are a lot of different mistakes to be made in a home sale. Here are five that you need to make sure you avoid.


Want to sell your home? Get a FREE home value report. 

Want to buy a home? Search all homes for sale.

Selling a home is a complicated process. There are a lot of different dos and don'ts, but we’re going to focus on the don'ts today. Here are five things that you should NOT do when preparing your home for the market:

1. Remodeling your kitchen or bathrooms. Although this goes against conventional thinking, there is evidence to back up our claim. The National Association of Realtors has consistently determined that those are some of the worst areas for return on investment. The place where you get the most bang for your buck is actually the deck.

2. Keep wallpaper. I do not recommend installing or even keeping outdated wallpaper, unless you have a luxury home that was designed by a professional. Most buyers don’t like wallpaper.

Replace bold colors with neutral, natural tones.

3. Bold colors. You want your home to be as appealing as possible to buyers. Tone down those bold colors to appeal to a wider audience. You want more natural, neutral colors in your home when selling.

4. Replace carpet with carpet. Most of the time, you can add more value for the same price by replacing carpet with a nice looking hardwood laminate. That’s a pretty good upgrade to do.

5. Gaudy light fixtures. Replace old brass fixtures and modernize them. Above all else, keep them simple.

If you have any questions for us about preparing your home for sale or any other questions about buying or selling, give me a call or send me an email. I would love to hear from you.