Your Top 6 Money-Making Tips for Selling New Homes at a Profit

You’re ready to get your home on the market…except, you’re not one of those homeowners who’s put down 30-year roots in the same old house.

Quite the contrary, the ink’s barely dried on your last purchase agreement and you’re still fanning out that “new house smell.”

You need to pull off a miracle to make a profit despite this fast turnaround and stiff competition from fresh new construction (even newer than yours!) down the block.

Without financial clarity and a deep understanding of your local market, you have an uphill battle in front of you.

We’ve compressed the advice from real estate agents who’ve mastered the timing and marketing of these delicate deals into 6 top money-making tips for selling new homes so you walk away with a solid gain.

1: Get up to speed with your local housing market conditions

The big picture shows that average and median sales prices of new homes in the U.S. rise with time.

When you own a house over the course of several years or decades, you can ride out dips in the market that drag down your home’s value and take advantage of long-term price appreciation.

But when you sell at a fast clip after you buy, you’re more vulnerable to market fluctuations. So before you pull the trigger on your new-home sale, get a good reading of the market and whether prices have gone up or down since your purchase.

If the economy is in the midst of a crash (and no one can afford to buy homes, à la 2008) then it’s unlikely you’ll gain anything close to your original purchase price.

Collin County, TX real estate agent Ryan Cave, who ranks in the top 3% of agents in the area, explains, “Selling a new home is very market dependent. In 2007, 2008, or 2009, when the market went flat, I would tell people, ‘You really need to be in a home probably 4 years before you’re going to break even on the cost of the sale.’”

If however, the market is doing well, you won’t have to wait nearly as long to earn back that money. “When the market is skyrocketing,” says Cave, “and homes are going up 8-10% a year, then I’ve had people in a home for a year who sold it and did OK.”

Remember that real estate is local, meaning what’s happening at the national level might not be reflected in your city or neighborhood.

Here are some key ways to find the pulse of your local market:

• Ask a top real estate agent to use their sophisticated tools to give you up-to-the-second information on home prices in your neck of the woods.
• Find the selling prices of homes in your area online using tools from Zillow, Trulia, RealtyTrac and Realtor. Be sure to look at similar homes nearby that were sold recently.
• Keep an eye on your local media. Read the paper—whether it’s your city’s paper, or a paper specific to your neighborhood—because they’ll often have real estate trend pieces.

2: Pin down your home’s value and calculate your home sale proceeds

Top real estate agents suggest owning your home for no fewer than 2 years and ideally 5 years  before you sell so that you can take advantage of rising home values.

Just ask Warren Buffett, who’s Laguna Beach, California home that he bought in 1971 for $150,000 is now listed for $11 million.

Since your new home won’t go through this 50-year price appreciation, figure out how much you will make on your sale before you put it on the market.

HomeLight’s Home Value Estimator can help calculate a general ballpark of your home’s value, but a real estate agent provides a better estimate of the price after evaluating your new home’s location and other details the calculator might miss in their comparative market analysis.

Once you pinpoint that number, start on Step 2 in this home-selling guide to figure out your home sale proceeds. To summarize:

• Start with: the value of your home
• (Subtract) the agent commissions
• (Subtract) attorney fees
• (Subtract) property taxes
• (Subtract) title, escrow, notary, and transfer fees
• (Subtract) your mortgage payoff
• Equals: your home sale proceeds

3: Is the price right? Two key things to remember when pricing your new home

The median income calculation

Researchers from The Brand Constructors, the country’s top construction marketing specialists, explain that “new homes should cost about 2.5 times the median household income of the market they’re in.”

The National Association of Realtors provides reliable surveys that can help you identify the median incomes in your area and target an asking prices. This calculation will set your home at an affordable price that is attractive to buyers of new homes.

For the most accurate pricing point, you should complete a comparative market analysis with your real estate agent to take into account all of the nuances that could impact your home’s value, such as its proximity to local attractions (adds value) or the presence of low-flying planes (subtracts value).

Your new construction competition down the block

Once you decide on the timing of your sale, Cave advises homeowners to take a look at the construction happening (or not happening) around their neighborhood.

“Say you bought your home from the builder for $350k, and now the builder is selling new homes $360k or $370k—it’s going to be very hard for a buyer to want to pay that $350k to you, if they can get a new home for $10-20k more,” says Cave. “It sounds like a lot of money, but at $150 more per month they get to pick their colors, their cabinets, plus a one-year warranty, that’s hard to compete with.”

As Cave explains, even though your home is new, it’s still pre-owned and “no one’s going to buy a pre-owned home for the price of a new one.”

To sell your house in less time, you’ll have to price it against the competition.

4: Keep your capital gains tax burden in check

If you’ve owned your new home for less than 2 years, you’ll have to pay capital gains tax on your home sale—unless you choose to hold onto the property a little longer.

Capital gains tax exemptions on the sale of your home (up to $250,000 for single filer, and $500,000 if you’re married) apply to you if:

1. You have owned your home for at least 2 years
2. You have occupied this home for 2 of the last 5 years as a primary home

The rate for capital gains on the sale of your home is 0%, 15%, or 20% dependent on your tax bracket. You’ll need to report these gains on your annual tax return using Schedule D of IRS Form 1040. Failing to do so could result in an IRS sanction.

Before you put your new home on the market, consult with a seasoned tax professional about your options for mitigating your tax burden.

5: Know your audience: What do buyers want in a new home?

A main advantage of selling your new home is just that—it’s new! Buyers don’t have to flip through pamphlets to choose a marble top or carry around paint cards. So, what kind of features does your house have already that can be marketed and tailored towards these modern buyers?

According to Kiplinger, a leading personal finance site, some top features buyers look for are:

• An open-floor plan
• Tech-savvy and energy efficient designs
• A separate laundry room
• A patio

Does your new home check off any of these items?

If so, this is a great time to speak with an real estate agent, who can help identify and promote these qualities in your listing description and marketing materials to justify a higher asking price

From brand new appliances to the latest design trends, play up your home’s best asset— newness!

Finally, remind buyers that a new home will be far less likely to pose big maintenance headaches and surprises such as a leaky roof or water heater on the fritz shortly after the deal closes. Just like a new car, a new house is clean, fresh, and reliable.

6: Be prepared to answer, ‘Why are you selling your new home?’

Marketing your new home for sale is all about the messaging. Buyers are going to be curious about why you’re abandoning this place so soon after you snatched it up. They’ll naturally wonder if there’s something wrong with it—which you know isn’t the case!

So, be upfront, but vague. You don’t need to dish on any personal details. But you also don’t want buyers to concoct imagined issues of pests or haunted bedrooms.

Cave recommends posting a note in the listing about a homeowner’s “life change,” which is a discreet way of signalling to the buyer that this has more to do with the seller than the home.

Says Cave, “I try to get permission from sellers to put something in the listing about it being a life change, ‘Seller’s life change is your gain.’ Not telling them what it is or how urgent, but just a life change that allows the buyer to get the home for less than a new one.”

That should satisfy the buyer’s curiosity and dissolve any concern regarding the quality of your home.

Sell your new home at the right time, with the right price, to the right buyer

Selling a home is a complicated process, but selling a new home comes with its own set of unique challenges.

“Right now, it really depends on your area. But you’re probably going to want to be in a home at least a year or two, unless you’re OK with walking away from the losses,” says Cave. “And [things like] new builds will suppress your home’s price, until they’re gone.”

Team up with a top real estate professional in your area to get a solid reading on your local market conditions and how much you could realistically fetch for your new home to cover all your bases.

You’re bound to drum up interest from buyers who love all things new and shiny—you just have to make sure the price and timing are spot on for a successful sale.

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