Moving for the Military? Your Family’s Guide to Selling your House
Raise your hand if this sounds like you. You’ve only just settled into a house you love when you receive cross-country permanent change of station orders for the military: “selling a house” is now just one of many daunting items on your checklist that you need to figure out, and fast. In February 2022, 84% of homes that sold sat on the market for less than a month, according to the National Association of Realtors®.
With this guide, we’ll help you craft a real estate plan to avoid much of the anxiety of selling a house under the urgency of a PCS. Our experts, Sandee Payne, a top real estate agent in Central Texas, and Chris Norton, a top real estate agent in Trenton, New Jersey, both have extensive experience with home sales involving military families.
Most of the sellers that we work with start the process the minute they get the thought or the word that they might be moving to a different location. That’s the ideal time for us to actually start working with them because things can change quickly.
- Years of Experience 8
- Transactions 219
- Average Price Point $242k
- Single Family Homes 212
Options for your home sale
You have a few different options when it comes to selling your house. Ultimately, your choice will depend on a few factors, including how much time you have to sell. If you only have a few weeks, you might be more willing to take the quickest option available instead of trying to get the most money for your house.
Not sure where to start? Use HomeLight’s Home Value Estimator to get an approximate idea of what your house might sell for. Next, sit down with your family and talk about your goals. Then, consider these options:
1. Hire a real estate agent with relevant experience
There’s a reason why nine in ten home sellers choose to sell with an agent. They have the knowledge necessary to sell your house for top dollar, and help guide you through every step of the process. You can focus on packing and finding your next place while they take care of the details.
You should contact a real estate agent as soon as you decide to sell your house for the move, says Payne, whether you have a few months or a few weeks. Payne’s husband was in the military for 23 years, so she knows what it’s like to move between bases first-hand.
“Most of the sellers that we work with start the process the minute they get the thought or the word that they might be moving to a different location,” Payne explains. “That’s the ideal time for us to actually start working with them because things can change quickly.”
You can then work with your real estate agent to discuss your goals, whether you want to get the best offer possible or would settle for an okay offer to get your house sold quickly. Either way, the sooner your agent knows about it, the better.
If you want to sell your home quickly, consider looking for an agent with a low days on market (DOM) record. You can ask your agent this directly, and see how it compares to your city’s average. The fewer days an agent’s listings have historically spent on the market indicate a better chance that your house will also sell more quickly.
Work with an Military Relocation Professional
Working with a military-friendly agent can also be a good option, since they know what you’re going through.
“We understand that we speak the same language. That’s one of the things that I like to pride myself in, is that I’ve done this before,” Payne says. “We have that relationship off the bat where I understand.”
To easily find a military-friendly agent, consider searching for a Military Relocation Professional (MRP). This certification offered by the National Association of Realtors® teaches real estate professionals the procedures and processes involved in military relocation.
HomeLight can help you with your agent search by matching you with three top agents in your area. The HomeLight Agent Match platform allows you to search based on your top priorities, including military experience and low DOM.
Find a Top Agent With Military Experience
When you’re relocating for the military, having an agent that will go above and beyond to help you sell quickly can be a game changer.
HomeLight’s Agent Matching platform can connect you with top local agents with experience working with military families. It takes just two minutes to match clients with the best real estate agents, who will contact you and guide you through the process.
2. Connect with a cash buyer
If you’re in a real time-crunch, you may choose to sell your house off-market. Cash buyers can make you an all-cash offer, which will give you more flexibility and freedom as you search for your next home and will ensure that your buyer’s financing won’t hold up your home sale.
However, not all cash buyers are the same. Some will purchase your home with the intention of renting it out. Others will renovate and flip it to turn a profit. High-tech players — called iBuyers — have also cropped up in recent years.
Unlike flippers, iBuyers purchase homes in fairly good condition at a high volume, turn them around quickly, and aim to offer a seamless home-selling experience online with easy-to-use digital platforms.
Depending on your home’s condition, price point, and location, your home will be a more desirable purchase to certain cash buyers than others. So you may have to shop around to get the right fit.
Through HomeLight’s Simple Sale platform, you can request an all-cash offer on your home and receive a competitive bid in as little as 48 hours with the ability to close in as few as 10 days.. Using Simple Sale means you can cut a lot of work out of the typical home sale process. No home preparations, no staging, no open houses — Simple provides cash offers for homes in almost any condition.
Sell Fast With an All-Cash Offer
For military families needing to sell quickly because of a relocation and who may not have time to deal with repairs, prep work and open houses, HomeLight’s Simple Sale platform collects competitive cash offers to chose from, with no obligation.
3. Go FSBO, but keep these risks in mind
Some sellers, in order to avoid paying a listing agent’s commission, will choose to sell their house themselves, going “For Sale By Owner” (FSBO).
However, a FBSO can come with significant challenges — especially for people without real estate experience — which is why only around 7% of sellers choose this route.
With FSBO, the owner is expected to manage all marketing, staging, negotiation, and other activities typically handled or facilitated by an agent. The complexity and the timeliness of the transaction are overwhelming to inexperienced sellers, especially for those, such as military sellers, who may be more pressed for time. FSBO transactions can take longer than agent-represented sales.
Payne encourages sellers to consider that paying the commission might be worth getting a much higher offer on your home.
“But at the end of the day, it’s not just about the commission. We’re able to get you the highest offer. she explains. “We’re able to get you the higher price, we’re able to get your home sold faster.”
4. Take advantage of military programs
Don’t forget to talk to other military families and your higher-ups about how to handle your move. If this is your first one, they can help you weigh your options. Plus, they’ll help guide you to resources and programs that can help you with the move.
For example, some military personnel are eligible for funds such as dislocation allowances that can help offset the cost of their move. The Department of Defense’s National Relocation Program can even guarantee you a buy-out in some situations where a buyer has made an offer but the appraisal (which has the potential to disrupt the sale) has not yet occured.
Key tips for all military sellers
Norton and Payne have the following tips for military sellers. Their combined real estate and military experience make these key suggestions you should keep in mind.
1. Remember OPSEC (Operations Security)
OPSEC prohibits military members from posting specific information about their movements, deployments, and job details online. Keep in mind that any trace of your military involvement in your listing photos or information can break this code.
That means you must make sure any military-related items are removed from your house before you take photos. It’s also best that you remove them for tours for your personal safety. Keep them in a storage unit or at a friend’s place during the selling process.
2. Market your transferable VA loan terms
Norton urges his sellers to offer the option of transferring their favorable VA loan terms within the property’s marketing plan.
VA loans can be assumed by anyone who meets certain VA loan requirements; this opportunity isn’t exclusive to military members and veterans.
“For example, two years ago, a VA buyer was able to purchase a home at 2.5 percent interest. And let’s just say the interest rates all of a sudden were seven or eight percent,” Payne explains. “A VA buyer would have the ability to purchase that home and assume their interest rate of the 2.5% that’s already set on that loan.” As interest rates begin to rise in early 2022, this can be an attractive option to potential buyers.
As the existing loan holder, you’ll want to obtain a release of liability from the lender so that your name is no longer associated with it. Otherwise, your credit standing could be harmed significantly if the person assuming the loan makes late payments or defaults.
Military sellers offering a VA loan assumption should also consider their future home purchase entitlements (an “entitlement” here is the amount that the VA will guarantee to a lender on a VA loan, allowing buyers to purchase a home with no down payment in certain cases). If the buyer is a veteran or active duty, you’ll want to ask them to sign a Substitution of Entitlement, which frees up your remaining VA loan eligibility. If you don’t complete this step, your entitlement stays tied to the property until the loan terms wrap — making buying your next home much harder.
3. Make sure to meet the VA’s minimum property requirements
To take advantage of your VA loan, you have to undergo an authorized appraisal and meet the VA’s Minimum Property Requirements (MRPs).
Most regulations are health and safety-related, including properly functioning HVAC and water and sewage systems. Some sellers find it helpful to invest in a professional home inspector with MPR experience before putting the house on the market.
Before starting a home improvement project beyond the standard MRPs, discuss with your agent the payoffs of the update or upgrade. Their knowledge of the local real estate market provides insight into which projects resonate most with buyers and which are not worthy of the time and money.
4. Know your military tax benefits
As a way to incentivize and reward homeownership, U.S. tax rules are set up so that most sellers won’t have to pay capital gains taxes on the sale of their primary residence. Generally homeowners will be eligible to exclude up to $250,000 in gain, or $500,000 if married and filing jointly.
But to qualify for the exclusion, civilian sellers will have to show that 1) they owned the property for at least two years and 2) they’ve lived in the property for at least two of the preceding five years.
Servicemembers who relocate to a new duty station may find it difficult to meet these ownership and use tests — so the IRS has created special tax rules for military sellers.
According to the IRS Armed Forces’ Tax Guide, military members who fail to qualify for the ownership and use tests due to a permanent change in station can still exclude gain, but the cap on that gain may be reduced. In addition, they can suspend the 5-year test period in order to meet the use test. There are restrictions: one property at a time is eligible, and there is an overall 10-year limit.
Norton encourages military members to consult with a real estate attorney or financial advisor to take advantage of these tax relief scenarios and others, including the possibility that your state waives property taxes for veterans with disability ratings.
There is also the option to deduct unreimbursed PCS moving expenses from your federal income tax returns, if you don’t use military allowances to reimburse them.
What to do if your house doesn’t sell in time
It’s not ideal, but consider what will happen if your house hasn’t sold by the time you move. Here are a few options:
1. Become a military landlord
It’s not for everyone, but plenty of service members are also rental owners. Many got into the game just like normal landlords do, while others have fallen into it due to houses not selling before their next relocation.
It might also work out for you to keep the house for a few more years if you have info that points to you coming back to your original location after this station reassignment.
As military landlord life progresses, the option to offer your tenants a rent-to-own situation may prove beneficial. A rent to own agreement provides the tenant an investment into their future property while creating an alternative selling solution for the homeowner.
2. Consider a long- or short-term geo-bach move
Military members who leave families behind at a duty station to move onto another are affectionately referred to as Geo-Bachelors or Geo-Bachelorettes. This situation can occur when a house fails to sell, but frequently, quality of life factors such as school disruptions, a spouse’s career, or an exceptionally undesirable gaining location are the reasons for a temporary separation.
Geo-bach moves are varied in every sense, from their length to their purpose. Some consider the fact that the house won’t sell an insurmountable financial burden. The costs of renting the home and adding a second house payment can be out of reach, especially if the non-military spouse cannot transfer their job to the new location.
Some moves are only temporary, depending on the length of your relocation.
3. Leave your house behind, but in your agent’s care
It’s not uncommon for a military seller to have the confidence in their agent to continue the sale in their absence. You may have developed a level of trust with your agent while working together and would like to keep the continuity until closing day.
You’ll have to communicate regularly and let your agent know if there are any additional responsibilities they may pick up in your absence. For example, monitoring the house regularly and noting upkeep and safety needs.
Technology has taken real estate transactions to a new level and in-person transactions are not necessarily a requirement. Your agent should be well versed in several virtual platforms that foster a long distance sale.
“There are a lot of families that do have to leave mid-timeframe in order to get to their next duty station in time for their report date,” Payne shares. “And so we just keep the homefront going. We keep up with them.”
You can do this, and help is out there
Avoiding a stressful PCS is a top priority for military sellers, especially first-timers. Thankfully, there are real estate experts who understand the ins and outs of your unique situation, and you have lots of benefits to claim as a result of you or your spouse’s service to this country.
Take advantage of whatever offerings you’re granted, ask for help when you need it, and you’ll be well on your way to selling a home with confidence.
That way, you can focus on everything this next chapter of life — in a new location — has to offer.
Header Image Source: (Artazum / Shutterstock)
from HomeLight Blog https://www.homelight.com/blog/military-selling-house/
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