What are the best ways to save money when selling a home?

Narrator
00:00:02

Welcome to the Ask Ralph Podcast where listening to an experienced financial professional with over 30 years of experience can help you make sense of confusing questions, current headlines and industry trends about taxes, small business, financial decision making, investment strategies, and even the art of proper budgeting. Ask Ralph makes the complex simple by sharing his real world knowledge from a Christian perspective with all things financial.

Now here's your host, Ralph Estep Jr.

Ralph
00:00:30

Welcome everybody to the show. Tonight, I want to start with a question. And listen, I'm not trying to annoy realtors tonight, but I'm going to start with this question. Have you ever wondered why some people walk away from their home sale with a fat check while others barely break even? So tonight, I'm going to share how four of my clients saved thousands when selling their home and one of them pocketed an extra way for this $45,000.

So if you're feeling trapped by high realtor commissions and endless fees, tonight's episode might just be life changing. I'm going to show you how to keep more of your hard-earned money and equity when selling your home. Well again, thank you for joining me on this weekly live show. It's been a long day for me.

I actually took time out today and I got this little sticker here today. I actually went and voted. I put myself on the voting list and boy, what a day that was, 55 minutes waiting in line. Got up this early voting in Delaware, so, but we got it done and got it all ready to go. And don't forget, this weekend we got a big-time change coming up, so you're going to fall backwards.

Well, this is your weekly opportunity to get your questions answered, so feel free to enter those in the chat. Do me a favor, just hit the Q so I know a question's coming in. And if you don't have time to comment, you can comment tonight as well if you'd like to, but if you don't want to put your questions in the chat, you can also go to justaskralph.com. It's a great place to send over a question and don't forget, I do this daily podcast every day. You can find that at askralph.com. It's also released on YouTube, Rumble and listen, we're going live tonight on several platforms. We're live on YouTube, we're live on Rumble, we're live on LinkedIn, and we're live on our Facebook Insiders Group.

And I'll talk in a minute about how you join that. But all of these things we do on a daily basis. Also I do a daily blog, so if you're interested in finding out more about the show, just go to askralph.com. And if you're interested in joining our Insiders Group, and I'm going to encourage you to do it.

You can do that by going to askralphpodcast.com/group. So let's jump right into our first topic. And that's Ralph, how do I save money when selling my home? And I received this question in our feed here. And it says this, it says, "Dear Ralph, my husband and I are planning to sell our home next spring. After meeting with a realtor,

I'm shocked at how much we'll lose in commissions, repairs, and staging costs. Between the 6% realtor commissions and everything else, we're looking at giving away over $30,000 of our equity. There must be a better way. Can you help?" We always like to start the show with a Bible verse. So I dug deep and I found this one from the book of Proverbs.

It's verse 21:5 and this is what it says. It says this. It says "The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty." And I really feel like that is a great place for us to get started today. So let's get right into this. So I'm going to share some stories of clients that I've had over the years.

I've been doing this for a long time, almost 30 years now. And talk about some ways that you can save money. Now, listen, I'm going to start by saying, I'm going to talk about some topics tonight about for sale by owner, and I'm not trying to short any realtors because definitely realtors are great assets to have, but I'm going to talk about some of these things that you could do potentially to save money.

So the first one I'm going to call it story number one, and this is Mike and Jennifer's For Sale By Owner Success. Now, picture this. Mike and Jennifer were looking to sell their $300,000 home but when they looked at it, they were concerned about paying $18,000 in realtors commissions. So you might say, Ralph, what did they do?

Well, here's what they did in their particular case. They use what's called a flat fee MLS listing service. What that means is that's the multi list where you can go and have your house listed so that everyone can see it. Now, in this particular case, it only cost them $500 to put it on the multi list. The next thing they did was they took professional high-quality photos themselves.

Everybody's got these iPhones and Android cameras that really take nice pictures. Again, I'm not slating professional photographers because there are great services they offer as well. Now, because they were selling it for sale by owner, they had to handle those showings personally. Well, in the end, they ended up selling their house.

I guess it was priced right. And they saved $17,500 in commissions because again, they had to pay that $500 for the listing service. Well, you might ask Ralph, what was their key to success? Well, their particular key to success was they had excellent online marketing and pricing. They put the home on the price that was correct from the start.

You know, I talked to a lot of realtor clients and a lot of times what they'll tell me, they'll say, Ralph, listen, the problem with most customers, they think their house is worth more than it's worth. And yeah, you can put your house on the market. I'm just talking to my administrator here before she left tonight and she's got a neighbor that's selling a house there by where she lives.

And this particular person listed her house for probably 20-30,000 more than what he's going to get for it. And now he's just been in this stage is just dropping the price and dropping the price and dropping the price. So the other key factor to this, and I'm not a real estate agent, but you got to price it correctly.

So let's look at story number two, and we're going to call this one Barbara's Smart Renovation Strategy. Now, Barbara was ready to spend $20,000 on pre-sale renovations. He came in and talked to me and instead, here's what she decided to do. I kind of convinced her about this. I said to her, I said, Barbara, here's what I would suggest you do.

Focus only on those essential safety issues. Don't worry about fixing everything under the sun. And what you could do if you want to entice the buyers is maybe offer them a buyer's credit. Do that instead of making repairs because they might want to do something totally different than what you were thinking.

You might've went through and made paint changes or something like that and they might really dislike the colors and they might say, you know what? I would rather the paints were this, or I'd rather do this. And the thing that, and this is the thing, if you talk to realtors, they're going to tell you this is the truth.

The thing that Barbara did was she did some basic landscaping herself, because think about first impressions. When you're out looking at a home, the first thing you see is that curb appeal, is that basic landscaping. I know when my wife and I have been out looking for homes, we go up to a house and if it's a disaster from the outside, you pretty much are guessing what you're going to see on the inside.

So the other thing Barbara did, this is what you got to do, because I've been through some houses that need to be cleaned. Well, Barbara deep cleaned, and she staged her house with existing furniture. And she wasn't one of these people that look like an episode of hoarder. She went through and put things in their proper places.

She puts some stuff in storage so that she wouldn't have all these problems to deal with it. It looks like an episode of hoarders, like I said. Well, you might be asking Ralph, what was the result? Well, here's what the result was. She sold her home for the same price, but here's the kicker. She saved $15,000 in unnecessary renovations.

So that's why I called that Barbara's Smart Renovation Strategy. Let's look at story number three and this is the Rodriguez Family's Timing Victory. And sometimes at real estate sales, it's all about timing. So the Rodriguez family needed to sell quickly, but they wanted to sell smartly. So what they did was they researched the market conditions.

They took a good look at what the market was really bearing, and they listed their home during the peak season, which is generally early spring. You're not going to sell your house quickly during the holidays. People just don't want to move. And the other thing that the Rodriguez's did was they priced it correctly from day one.

And a lot of people don't understand this, but if you price your house wrong, guess what? You're going to carry the cost of that house moving forward. You're going to have to pay the mortgage interest. You're going to have to pay the utilities. So you have to factor that in. Let me give you a quick example.

You know, let's say that you could reduce your house costs by $10,000 and sell it right away. Well, what are you going to pay in mortgage interest? What are you going to pay in utilities? What are you going to pay in insurance on the carrying side? So you got to consider that.

Here's the result. They sold their house in five days, and they saved $12,000 in total cost. I would say that's a win for the Rodriguez family. And my final story, this is story number four. I'm calling this one Tom's Do It Yourself Marketing Success. Now, listen. We are all not marketing gurus, but Tom certainly understood it because guess what?

Tom was a retired photographer and what he did was he saved big. He took his own professional photos. He was able to create virtual tours with his smartphone. He used some free real estate listing sites, and he understood social media marketing. So he leveraged that. And guess what? In the end, he saved $45,000 in sales commissions on his luxury home sale. Well, maybe you've got questions. If you have any questions, let me know in the chat.

If you're implementing any of these strategies right now, let us know in the chat which ones you guys are using right now. Well, you know, I don't like to just leave you with ideas.
I want to leave you with some actionable steps. So here's my first actionable step. And again, I'm not saying that you're going to do better than realtors. I'm not saying that at all, but one of the things you could consider is doing that for sale by owner or some kind of flat fee multi listing service.

Another thing, like we learned with one of our clients. Number two, focus on essential repairs only. You don't have to go fix everything. Focus on those things that are obvious. Focus on that curb appeal. Look at that landscaping and see if there's any way to make some improvements that people are going to see immediately.

Another thing, you can save a lot of money by doing this. Stage your home yourself. You can go online. There's all kinds of resources out there that tell you what to do and how to not look cluttered. And most people got too much stuff in their house. You got to kind of look at it so that's an open canvas for somebody walking through your home.

I've been told by many people, you know, don't have crazy colors on the walls, have some of those neutral colors. Another thing you've got to do, and I have this as number four on my list is you got to master your timing and pricing. That is absolutely crucial. You got to think about when you're going to sell your house for the most optimal time to sell. And it's all about the price. If you price it too high, a lot of times people aren't even going to look at it. They're going to say, none of this does make any sense. I know where that house is, it's in a market. It's not going to support that. But if you price it right, you may end up in a bidding war.

And then the other thing I'm going to recommend that you do is leverage those free marketing tools. Hey, we've all got social media accounts. We've all got those things that we can talk to. Send it out to everybody that you know and see what happens. All right. Well, let's move on to our second topic. And I've got a listener question for that one.

And this one came to us from Paul, and it says this. It says, Ralph, we're retired and take a monthly withdrawal from a 401k plan. We're looking to buy a new car. What's the best option lump sum taxable distribution or increase our monthly installment to cover a car loan, or maybe something else, Ralph, the total price of the car is going to be between 35 and $40,000.

So let's talk about how we can help out with this particular question from Paul. And Paul, I appreciate your question. And see, the thing is, it's wise that you're asking that question now before you just went to your broker and took that distribution. So you've made the first step. You've made the right first step. Because there's a lot of things to consider.

So let's walk through those. You already mentioned this. Option one is this what we call a lump sum 401k withdrawal. So you could go to your broker and say, listen, broker, I want to get $40,000 right now so I go buy that car. The problem with doing that is you're going to put all of that $40,000 of income in the current tax year.

And depending upon your other income, that may very well put you up into a higher tax bracket, which may not be exactly what you want to do. So you might look at doing some other things so that you can, one of the things that I recommend clients do, especially now that we're getting closer to the end of the year, one of the things you could do is take half in this year and then take half right after the first of the year.

So then you split that into two pieces and not cause so much what we call bracket creep. You also can meet with somebody like me and say, how much could we take till we get to that next tax bracket? That's what we call bracket packing. So that would be a good idea as well. And the other thing you got to think about, I talked about this on the show the other day.

You have to look at your retirement as a garden. You planted this garden, you put the seeds in, you fertilize, you took time. You want to make sure that you're not taking all those things out of the garden all at the same time, because then you're going to lose that tax deferred growth on that money. So that is an option.

You could do the lump sum. Now, the other thing you alluded to was potentially doing a monthly 401k withdrawal. Well, the benefit to that is now you're going to spread that tax impact over multiple years. You're not going to have it all in one year. You're basically going to take enough to cover whatever that monthly payment would be.

And the benefit to that, it keeps more money invested for potential growth. You're not taking it all out at the same time, but you've got to think about this. You're going to have that monthly car payments. You're going to go get a traditional loan, and then you're going to have to consider that you're going to pay that loan.

You're probably going to pay some interest on that loan. And also, you've got to factor in for the taxes as you take those additional withdrawals. So again, that's another option. And depending upon your particular situation, it may not be the best option, Paul. So again, I think you need to talk to somebody, sit down with them, put pen to paper and really think about it.

And I'm going to throw out an alternative here. One of the things you might want to think about is consider traditional auto financing, because that may be more advantageous to you. Look at what the current loan rates may be. Maybe if you got excellent credit, you can go get a really low or no interest rate loan, and then you could keep that money in your investments and you might earn enough right from your investments to cover even if you're paying a small amount of interest. And the best of all, it keeps that garden planted and it preserves your retirement savings.

So you're asking me for my recommendation. Here's what I'm going to tell you. My recommendation would be to explore traditional auto financing first. I think you would better off to do that anyway, because to drop all that money in one year is no doubt going to cost you more than if you spread it out or even if you took my advice and did it over two years. Now, if that's not feasible, the increased monthly withdrawal option is generally more tax efficient because you're not dumping all of that lump sum into a particular year. And as I always say on the show, This is not specific advice for you. You want to go meet with somebody.

You can schedule an appointment with me by going to askralph.com. You'll see a banner ad that says 'Book a Call with Ralph'. I'm going to encourage you to do that because we can take a look at your overall tax situation, put everything into a model and say, what is the best way to do this? Now, another topic that came in is what's called Delaware EARNS.
And this is one that was sort of talked about in a Facebook group. And a lot of people are wondering what's going on here. Now, this is generally for our Delaware clients, but it affects both employers and employees in Delaware. So I want to take a few minutes and talk about it. The idea here is that for those small businesses that don't have a retirement plan, the state of Delaware, and I'm not saying I support this or don't support it.
I kind of like the idea of it. It worries me, the implementation, but basically here's how it works. The state is basically saying, we understand that there are some small businesses out there that can't afford or have chosen not to set up a retirement plan. So the state's created this retirement plan.

It's called Delaware EARNS. And this is going to allow employers, now, some of them are mandated. You'll have to go look at the specifics for this, but for the non-mandated ones, you can always ask to be joined in this group. But here's the employer benefits. So there's no cost to employers. They're going to do it for free.

It's fast. It's easy to get started. You'll work with your payroll processor directly. Like we have clients that we do payroll for. We're going to be able to handle this for them. It'll just be a deduction from the employers. And then it goes right from the employee's paycheck to the state. And here's the thing, it's going to be a way to make you competitive in that job market, because you're going to be able to offer access to a great benefit to your employees.

And like I said, it costs nothing. If you wanted to offer a 401k plan or some other traditional plan, it's going to cost you something to do that. Now I'm a big fan, and this is sort of a sidetrack, but I'm a big fan of what's called a simple IRA plan. And if you're an employer, you could consider doing that.

That's what I offer here at my firm for my employees. The simple IRA plan really doesn't cost the employer anything besides the processing time to do the payroll. And then you have to match up to 3%. There's a whole, a bunch of little nuanced things you can do. But then what happens is effectively, there's no cost to that because the employees basically bring their own IRA account that they have with their broker. Usually you work with the same broker that way they can construct the IRA accounts and put them all in the same spot. But they bring their own person to the table and then they pay whatever fees there are.

So it's a way to offer that for free. But this Delaware EARNS program sort of works the same way. It requires very little time and administration. And here's one of the things they really sell it on. There's no fiduciary responsibility for employers. So the employers don't have to worry about testing, have to worry about, you know, how much money people are making and all that sort of thing.

So it's really a good program from the fiduciary responsibility. It doesn't cost the employer anything besides implementing it and then give an access to your employees and letting them take it out of their paycheck. Well now let's talk about the employee side of this. Cause it's actually what somebody was talking about in one of these Facebook groups.

They said, hey, this is not good. They're going to automatically take 6 percent of your pay. And guess what? That is true unless your employer opts out of the program. If your employer already has a retirement plan that you're able to contribute to, even if you choose not to, they're opted out of that plan automatically.

Now, if your employer doesn't and they're covered by this plan, yes, you will automatically be enrolled at some point in the future, but you can go right to their website and you can decide not to do it. But here's the benefits to it. If you don't have a retirement plan, listen, if you're banking on social security to be your only form of retirement, you're going to struggle.

I did a show the other day, a person that was on the show with a guy, he interviewed me. It's a health show. And he asked me, you know, specifically about how can you get to that stress free retirement? Well, one of the things we talked about on this show is the sooner you can start to put away money for retirement, the better off you're going to be. It's creating that habit.

So that's one of the things I like about this program. If you've got that employer who doesn't have that plan, then this is a way for you to get started. It doesn't cost you anything either because it's all managed by the state and you can customize your contributions and it's voluntary.

You can stay enrolled automatic, or you can opt out of it. And now this hasn't been fully built out, so I got to be honest with you. I've tried to contact the State of Delaware about this. And they're working on getting it all instituted. They're sending out letters to employers who are affected by that.

So if you're an employer and you've got more than, I want to say 10 employees, don't hold me to that. I can do a follow up show later. Talks about exactly how many there are, but if you're an employer covered by that, you'll get a letter from the State of Delaware they're telling me where you can go and opt out, or you can tell them, hey, I've already got a plan.
Or go ahead and get created with that plan so that you can get your employees on that. So I think that was some really good information there. So I don't see any questions coming in on the chat. So I'm just going to kind of move on here and let me ask you a few questions. Do you ever feel like you're overwhelmed with your finances?

I mean, really, do you feel like you're all alone? Are you looking to find financial freedom? Do you want to escape the bondage of debt? Do you want to align your finances with your faith? Here's another thing I ask people all the time, do you feel like your dreams are slipping away? Do you live in a constant state of financial instability?

Do you feel like you're living paycheck to paycheck? And here's the big question. Do you feel frustrated? Do you feel hopeless? And do you feel stuck? Well, guess what? I've got some great news. There is hope for you. And I talked about this early on the show, so I'm going to invite you to join the Ask Ralph Show Insiders group.

We've got this community of people who feel the same as you. These people are facing the same challenges as you. I face the same challenges as you, but the difference is in the group, we're mastering our finances. We're living our dreams and we're finding peace of mind. And listen, like I said, we're feeling those same pain points, but we're seeking to balance our finances with the faith and best of all, and this is the best part of the whole thing,
the insiders group is sharing answers. It's the whole point of the group. We're sharing solutions and most importantly, we're sharing hope. Now you can apply to join the community by going to askralph.com/group and just complete the questionnaire. I'm going to encourage you to do it now and become a member of the insiders team.

Well, thank you for joining me tonight. I remind you that every Tuesday night, this is available for you at 7 P.M. Eastern time. It's a way to come and get your questions answered and join our community and talk about what's on your mind. I'm going to encourage you to share the show with others, share it with your friends and family.

Tell them, hey, you got to go check out this guy, Ralph. And if they can't make Tuesday night, send them to askralph.com. Check out the podcast. And you'll maybe like to listen to them. They can watch them on YouTube and Rumble. We do Shorts. We do reels. Listen, we got it going on over here at Ask Ralph show. But this is the key.

My passion is to help you achieve your financial success. That's what I want to see you do. I want you to achieve financial success. I want to see you live out your dreams. I want to see you grow in your faith. And I know together, joining that group and working with me, I can help you master your finances from that Christian perspective. So as I always end the show, if you listen, I want you to stay financially savvy out there and may God bless you.

Narrator
00:21:57

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