After You Sell Your House, Make Sure You Do These 10 Things

After you sell your house, you’re done, right? You can walk away and celebrate?

Well, not exactly! After you sell your house, you certainly should celebrate, but you have more things to think about, from tax prep to buying your next house. In “House Selling for Dummies,” authors Eric Tyson and Ray Brown lay out things you can do to save money and increase your peace of mind, post-sale.

What to do after you sell your house

You’re going to need to do something with any proceeds you have left from the sale. Plus there are tax implications to consider, and if you haven’t already, you need to think about where you’re going to live long term.

Although it might be tempting to shred the paperwork or put it in storage, you’ll want to have it handy for April 15. When you file your taxes, you’ll need documentation for the expenses and proceeds of the sale. And after you file your return, you’ll want to keep the paperwork in case you’re audited.

2. Keep proof of improvements and prior purchases

This is for tax purposes, too. The IRS allows you to add the cost of improvements to your home’s cost basis during the time you own the home, which is nice if you have a sizable capital gain. But to use this tax provision, you need to keep receipts for everything you spent on home improvement.

3. Stay on top of tax laws after you sell

Because tax laws constantly change, you’ll want to keep current to avoid losing money. For example, a recent law allows you to exclude from tax a significant portion of the profits from the sale of your primary residence.

4. Put your proceeds in a money market fund

If you sell and then don’t immediately buy, you’ll need a safe place to put your money. A money market mutual fund offers safety, a reasonable rate of return, daily access to your money and check-writing privileges.

5. Choose your next home carefully

Scope out a variety of areas and housing options that meet your family’s needs.

6. Don’t feel pressured to buy

Take your time purchasing your next home; rent for awhile if you’d like extra time or want to try an area out first before buying. “Keep in mind that you have two years to defer tax on your house-sale profits,” Tyson and Brown point out.

7. Reevaluate your personal finances

If your situation changes before you buy another house – you get a promotion, have a baby, go through a divorce – you’ll need to rethink your finances and how much you can afford to pay for your new house.

8. Think about what you need from an agent to help you buy

Carefully consider whether the agent who helped sell your house can meet your needs when you’re buying. Buying and selling require different skills. And, if you’re moving to a new area, you may want someone familiar with the area.

9. Think through your next down payment

Brown and Tyson recommend putting at least 20 percent down on your next house in order to qualify for the best mortgage programs. If you can afford more than 20 percent, consider whether it’s better to put that money in the down payment or 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, who tend to invest less aggressively, should opt for larger down payments,” the pair recommends.

10. Remember to send change-of-address notices

The U.S. Postal Service recommends you complete your change of address 30 days before you move.

What Is a Single-Family Home? Here Are the Characteristics That Define It

The phrase “single-family home” is something you’ll often see when browsing the market or as you search real estate listings. A single-family house might seem easy to define: It’s single-family housing, right? Eh, not exactly. To be classified as this type of home, there are requirements the structure must meet.

What are those requirements? Let’s take a look.

What is a single-family home?

The legal description for this home is “a structure maintained and used as a single dwelling unit.” So what does that mean, exactly? A single dwelling unit will have these characteristics:

No common walls: This home is a stand-alone, detached property, says agent Chrisoula Papoutsakis, a real estate agent with Triplemint in New York. This means that the home doesn’t share common walls or a roof with any other dwelling.

Land: A single-family home has no shared property but is built on its own parcel of land.

“The area around the building is for the private use of the owner,” says Kevin Adkins, CEO of Kenmore Law Group in Los Angeles.

Entrance and exit: A single-family home has its own private and direct access to a street or thoroughfare. This is as opposed to an apartment, which has hallways and a lobby that lead to street access.

Utilities: Only one set of utilities can service this home—and may not be shared in any way with another residence. This applies to heating, electricity, water, or any other essential service.

One owner: This home is built as the residence for one family, person, or household, whose owner has an undivided interest in the unit.

Single kitchen: This kind of home has one kitchen. Adding a kitchen to an in-law suite or carriage house will alter a home’s zoning classification.

Benefits of buying a single-family home

The type of home you buy depends on your budget and your needs. A house like this will suit a home buyer who’s seeking privacy. Since it is built on its own slice of land, you’ll have some distance from your neighbors.

You’ll also probably enjoy the extra storage space of an attic or garage in a this house, whereas a multifamily home has shared space.

Typical single-family homes on the market also come in many different architectural styles—whether ranchColonialmidcentury modernCape Cod—as opposed to the more straightforward design of a condo, townhomes, or apartment buildings.

Affordable housing offers lower housing costs, but these structures are usually not of the single-family type.

Disadvantages of buying a single-family home

While owning a single-family home will mean total independence, there are a few factors that can be seen as downsides. Condos, townhouses, or multifamily properties may come with common gyms or pools open to all owners; single-family homes don’t usually have community amenities.

The purchase price of a single-family home tends to be higher, since you’re buying an entire lot, says Papoutsakis. That translates into a larger down payment and closing costs, as well as recurring expenses like insurance and property taxes on the full area.

Searching for single-family homes

When you start a search of real estate listings for your family, you’ll see a zoning letter in the house’s description.

A single-family home will be zoned “R,” which refers to “Residential,” followed by a number, says real estate agent April Kozlowski Palomino at Coldwell Banker Residential in Winter Park, FL. An R1 rating indicates that the land allows for only one home.

Multifamily residences normally have an R2 rating, which means two residential dwellings can exist on the property, typically in the form of a duplex. And an R3 rating permits multifamily units such as apartments or condominiums.

What Does ‘Active Contingent’ Mean? A Home Sale With Conditions

Let’s say you’ve found your dream home online on the multiple listing service, but the status of the property is marked “active contingent.” What does “contingent” mean, and is the real estate still up for grabs? Does “active” paired with “contingent” mean that the property can still be yours, if you make the right offer to a seller?

Read on for some explanation about this real estate listing status and for some insight into making an offer that will make the seller and buyer happy when a property is labeled contingent.

What does active contingent mean?

If a home’s status is “active contingent,” it means that the buyer has submitted an offer to the seller with contingencies, or issues that must be resolved before the sale of the property can be finalized.

The most common reasons a home is labeled contingent are: the home passing an inspection, the buyer getting approved for a mortgage, and the buyer being able to sell his old home.

Once the contingency is resolved, whether it’s the buyers getting approved for a mortgage, selling their property, or the seller’s home passing inspection, the real estate sale can move forward. The status of the real estate will change from “contingent” to “pending.”

What’s the difference between active contingent and sale pending?

The biggest difference between contingent and pending listing statuses in the MLS has to do with the presence of a contingency in the sale. Some contingencies, such as a home inspection or a buyer’s approval for a mortgage, must be met. But if a house is described as “pending,” it means that no contingency exists or that all contingencies have been met, and a sale is pending. Some homes may also be listed as “short sale contingent,” in which case the buyers may be working to get approval for a mortgage, and sellers are seeking more offers.

This, of course, leads us to the big question: Should a buyer put in an offer on a property whose status is active contingent or pending? Often, your real estate agent can review the MLS and help you decide on the best move.

Putting in an offer on an active contingent listing

It’s important to not get your hopes up too high—because a contingent listing is, in fact, likely to sell. It doesn’t mean, however, that you can’t test the waters when making an offer on the property.

Brendan O’Donnell, a real estate agent with Center Coast Realty in Chicago, advises buyers to submit an offer to the seller, unless the seller’s real estate agents explicitly say they aren’t showing the property anymore.

“If a seller knows they have an attractive backup offer, they might be more willing to let that first deal fall by the wayside if something comes up during the contingency period—and go with the second buyer,” says O’Donnell.

When a property is labeled contingent, the key, he says, is to make the backup offer to the seller as attractive as possible.

“Submitting a fair price, waiving contingencies, agreeing to buy as is, and showcasing a solid, local lender go a long way in showing you are committed and are a worthy buyer,” he says.

Buyer, Beware: 5 Home-Buying Negotiation Tactics That Can Backfire

There’s no denying that buying a home is a costly endeavor—in fact, it’s likely the most expensive purchase you’ll ever make.

So it makes sense to try to negotiate where you can. Save a few bucks here, get a few things thrown in there, right? We hear ya—we’re all about making a smart offer that doesn’t leave you house-poor.

But when it comes time to negotiate, there are a few strategies you should avoid, lest you risk offending the seller and losing your shot at your dream home. This is especially true in a red-hot seller’s market, where the seller might have a number of tempting offers and is looking for anything that breaks the tie.

Of course, the key to smart negotiating is having the right team in place to advocate for you without alienating the other party. Sellers (and their agents) might be reluctant to deal with you if your agent is perceived as being difficult or—worse—shady, says Cara Ameer, a Realtor® in Ponte Vedra Beach, FL. And if a seller is dealing with multiple offers, that could be enough to get you sent to the bottom of the pile. So find out the word on the street about your agent by talking to people you trust.

And then help your agent help you into a great home by not trying to pull off one of these misguided maneuvers.

1. Making a lowball offer

How low can you go? That seems to be the game some buyers play, assuming that if they start really low, they’ll end up getting the house for a song. But lowballing seldom works.

Gary Lucido, president of Chicago-area firm Lucid Realty, says that buyer’s agents commonly dissuade their clients from this tactic because they fear it will “insult” the seller. But the problem might be bigger than just hurting someone’s feelings.

“The real issue in starting well below the market value is that it costs you credibility,” he says. “The seller either thinks you don’t know the market or you are looking to take advantage of someone, and in either case, they don’t want to deal with you.”

The bottom line: The seller has a number in mind, and whether you start at $1 or $300,000, it only matters if you can hit the seller’s lowest target selling price.

“You’re not going to lower their target by starting at a lower number,” Lucido says.

2. Asking for a bunch of add-ons

You’ve found a place that’s within your budget. What’s more, you’ve fallen in love with the home—and everything in it.

You might be feeling emboldened to ask for more than just the house, but you should resist that temptation, says Ameer. She’s seen buyers who think it’s a good idea to ask for furniture or appliances to be thrown in for free, or expect that the sellers will just leave their patio furniture because it “goes so well” with the house.

Apparently the adage “it doesn’t hurt to ask” doesn’t apply in this situation.

“Sellers become totally offended when you keep asking for more, and you risk alienating them,” Ameer says. “Even if they don’t like their patio furniture anymore, they’d typically rather sell it on Craigslist than leave it for a greedy buyer.”

Of course, you can always ask to buy their stuff—in that case, they’d probably be flattered!

3. Using the inspection as a renegotiation tool

So, your offer was accepted, but then you start to get cold feet and you subconsciously (or consciously!) start searching for flaws that you could use as leverage to lower the price.

“Most inspectors are going to find something to recommend—such as adding gutters, improving the drainage, or upgrading all the smoke detectors—but those aren’t repairs that the seller is responsible for,” Ameer says.

If the inspection turns up something major (like a cracked foundation), by all means that should be discussed. But you shouldn’t demand that the sellers fix every minor thing or lower their price.

“You can’t expect a perfect house,” Ameer says. “If you’re constantly nickel-and-diming the seller, they might decide you’re not someone they want to do business with.”

Mind you, the sellers generally can’t just back out because they’re unhappy, but if both parties are unable to come to an agreement regarding repairs, they can both decide to abandon the deal.

Remember how much you have already invested in the process, in terms of time and money, and be willing to let the little things go.

4. Negotiating with incremental amounts

Nobody wants to pay more than they have to for a home—why offer $350,000 when you could have it for $325,000? But if you engage in too much back-and-forth, you’ll risk alienating the seller. When buyers insist on making incremental counteroffers, they’re just giving sellers a chance to move on to the next buyer, says George Theodore, a senior real estate adviser in Miami.

So, for example, if you’re ultimately willing to go up $8,000, don’t make four additional offers of $2,000 each.

“This tactic just tires out both sides and prolongs the transaction since you usually give each party 48 hours to reply,” Theodore says. It “actually gets you nowhere tactically or psychologically.”

5. Making a ‘one-way offer’

Just as the seller has a target price in mind, you probably have a point at which you’ll be unwilling to budge. But one of the worst things you can do is advertise this to the seller.

Ameer calls this the “one-way offer,” where buyers dig in their heels and state right off the bat, “This is our offer, you have X amount of time to respond, and if you don’t take it, we’re moving on.”

“This just puts the seller on the defensive and usually is a path to a dead-end offer,” Ameer says.

It seems like an obvious no-no, right? Well, even in this red-hot seller’s market, Ameer has seen buyers push for this tactic despite her warnings—especially if the buyer is offering all cash, or if the property has been on the market for a while. She calls it the “seller-is-lucky-to-have-me syndrome.”

“Sometimes buyers have to try this tactic themselves to see how it really ends up before they decide to get with reality,” Ameer says.