9 crucial steps to prepare a house before selling

Selling a property is a decision an owner may make for personal or financial reasons, depending on various factors specific to their situation. A seller primarily focuses on getting sound returns on their investment, which can be utilised for their next investment. Hence, thoughtful planning is necessary before selling a house or any property. Typically, market conditions govern the best time to sell a property. Once you have decided to sell your house, there is a preparation stage where the owner must invest time and money to make the property ready for sale. Make sure to assess your financial situation before selling the property. This will help you understand whether you are financially ready to manage the costs associated with property sale. Here is a guide where we help you plan your strategy to sell your house.

Checklist to prepare your house before selling

How to prepare before selling a house?

We mention the various steps a property owner must follow before selling their property. One should note that property sale involves significant time, money, and planning, in the same way as required during property purchase.

#1. Hire a real estate broker

Before you start your home-selling journey, you may want to consider hiring a real estate agent who can guide you through the process. Local brokers know the market well and can help you find prospective buyers, conduct negotiations and assist with documentation. Make sure to do thorough research when finding a broker based on their experience and knowledge of the market.

#2. Conduct market research

The crucial step before selling a house is thorough research on the neighbourhood. Analyse the price trends of similar properties in your area over the past few years. Your broker can guide you at this stage by providing relevant data. You can even check for information on price trends online. When performing the research, it is also important to study the demand for properties and buyers. For example, if your property is close to the airport, it is likely that the demand would come mostly from working professionals.

#3. Conduct property valuation and determine the asking price

One should be aware of the various factors that impact property prices, which include:

• Upcoming infrastructure, such as metro projects or flyovers
• Demand and supply of properties in the area
• Availability of inventory of properties
• Home loan interest rates
• Presence of amenities within the society
• Accessibility to social infrastructural facilities

Setting a realistic price for the property is important to ensure a successful property deal. This is essential as too high pricing may turn away buyers. You would have to lower the price if there is not much demand for properties in your area. This is essential to avoid stretching the process.

Calculate ROI

Calculating the returns on investment (ROI) for your property is important as it will help you in getting the best deal by comparing the price offers made by different buyers. To calculate your ROI, consider the various costs involved when you invest in a property. These include:

• Acquisition costs: Property price paid to seller during purchase, stamp duty and registration charges, brokerage charges and amount spent on the total interest component over the value of home loan
• Operational costs: Maintenance charges, property taxes, costs of repairs and renovation
• Selling costs: Brokerage charges and costs involved in advertising the property online or offline

ROI is expressed in percentages and calculated based on the cost method formula:

ROI = (Current value of investment – cost of investment/cost of investment) X 100

Suppose you purchased a property three years ago for Rs 25 lakh and have now decided to sell it for Rs 45 lakh.

You incurred costs such as:

• Maintenance: Rs 2,000 per month or Rs 72,000 annually
• Taxes and repair work: Rs 2,00,000
• Brokerage charges during purchase: Rs 50,000 (e.g. 2% of the property cost)
• Brokerage charges during sale: Rs 67,500 (e.g. 1.5% of the property cost)
• Cost of investment = Rs 25,00,000 + Rs 72,000 + Rs 2,00,000 + Rs 50,000 + Rs 67,500 = 28,89,500

ROI = (45,00,000 – 28,89,500/ 28,89,500) X 100 = 55%

#3. Set a timeline

The sale of a property, just like buying, may take several months or longer. The market conditions are a major factor that influences this process. Thus, setting a timeline is crucial. Typically, consider a timeline of two or three months in advance, including a pre-sale home inspection. A home inspection may be needed in case the property is older. This helps find out if there are any major issues with the property that might delay the home-selling process. This will give you sufficient time to fix these issues.

When determining the timeline, one may have to take into account the reason for selling the property. If you are looking to upgrade, so you require ample time to plan your next property purchase.

#4. Arrange documentation

Before entering any property transaction, ensure you have all the property documents in place. These documents will be required to establish ownership over the property and prove to the buyer that you have the right to sell it. Without these documents, or if there are any issues with ownership or occupancy, the process may be delayed.

Here are some of the documents required during the property sale:

• Sale deed: This is a legal document that is used to transfer property ownership from the seller to the buyer. It includes details such as location, property features, etc.
• Building plan: This document is a representation of the property’s approved design and layout.
• Encumbrance certificate or EC: The EC is a crucial document that proves the seller’s ownership rights, tittle, interest in property, etc. and proves that there are no legal claims or encumbrances on the property.
• Completion certificate: This document, issued by a competent authority such as the municipal corporation or the local government authority, certifies that the construction of the property has been completed as per the approved plans and it is fit for occupation.
• Occupancy certificate: This document, issued by a competent authority, proves that the property has been built per the approved plans and is fit for occupation.
• Tax receipts and utility bills: One should keep these documents for reference as they prove that the seller has settled all the property tax dues and utility expenses.
• NOCs from various authorities: These documents will be required during the property sale and must be obtained from the housing society, municipal corporation or local government. It states that they have no objection to the sale.
• Succession certificate: A succession certificate is a document issued by a court stating that the seller is the legal heir to an inherited property.
• Khata Certificate: A Khata Certificate is issued by the municipal corporation or local government and states that the property is registered with the seller’s name and all taxes have been paid.
• Patta: This is a legal document required before selling a property. It is issued by the local authority (revenue department) and establishes the ownership of the land on which a property is built.
• Bank approvals: This is required if the seller has an outstanding home loan on the property and permission from the bank is needed to sell the property since the bank has a lien on the property.

Keep all the necessary documents securely. Make sure to read the documents carefully before signing.

#5. Decluttering and cleaning

Decluttering makes your house look presentable in front of prospective buyers and allows them to imagine how their furniture may fit into the living room. Moreover, a room that is overcrowded with a lot of items may look smaller, giving a false image of your property. Hence, adopt a minimalist approach with décor once you have decided to sell your house. Discard unwanted items and start depersonalising the space. Deep clean your house, including the carpets, windows, walls, etc.

#6. Staging

Get your house ready to create a perfect impression on potential buyers. This process is known as staging and can be done either through DIY (do-it-yourself) or by hiring professionals.

Conduct a home inspection by hiring professional home inspection services to find out if there are any issues with the property. Apply a fresh coat of paint on the walls. Go for a neutral colour, which is the most popular choice. Make necessary repairs such as leaky faucets, light fixtures, cracked tiles, etc. If there are wooden floors, check if they require re-staining. These could add up to significant costs, which you must consider when calculating the returns on your investment. Renovating your house can increase your asking price. Thus, it is essential to weigh the cost of renovation to the property’s condition. Consider adding new lighting fixtures and other features that will increase the property’s value.

#7. List property for sale

Nowadays, the number of property buyers looking for home online has increased. There are several real estate platforms where you can list your property to find potential buyers. You can work with a real estate agent to help you with this process. Mention all the relevant property details, including the number of rooms, bathrooms, parking facility, etc. Post quality pictures and videos, which can be highly beneficial for prospective buyers checking your property. In addition to these steps, develop effective communication skills to help you negotiate price with potential buyers.

#8. Consider closing costs and tax implications

This is a crucial step in any home seller’s journey. When it comes to property sales, there are two vital cost considerations – closing costs and the amount of tax to be paid. The closing costs may include agent commissions, legal fees, property inspection costs, etc.

Every property seller should be aware of the capital gains tax. The profit arising from the sale of a property, known as capital gains, is taxable in the year in which the transfer takes place.

During the announcement of the Union Budget 2024-25, the government reduced the LTCG tax rate would be reduced from 20% to 12.5% with the removal of indexation benefits. However, after the reactions received from the real estate sector, the government made a change by giving a choice between two tax rates of LTCG- 20% with indexation or 12.5% without indexation.

Sellers must consider the tax implications to make an informed decision.

Click to read in detail about the two options – 20% LTCG with indexation or 12.5% without indexation

#9. Plan your next investment

While you focus on the home staging and finding prospective buyers, it is essential to plan for the next move simultaneously. That is, you must have a plan on where you will reside after you have sold your house. If you are planning to buy a new property for investment, start the process early on, as it can take several months. If you are planning to downsize or move to a rental home, prior planning is crucial.

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If you are overwhelmed with the idea of selling your house and do not know where to start, you must first classify the housing selling process into different stages and proceed gradually. You can first hire an experienced real estate agent to help you with the process. Spend a few days doing extensive market research, which includes finding prices of similar properties in your locality and understanding the market trends and latest developments. This will help you set the right price for your property. Knowing the buyers’ needs and checking if your property fulfils them can equip you to handle the negotiation stage effectively. In the next stage, prepare your house by decluttering and undertaking essential repairs or renovation. Finally, list your property online or advertise it through newspapers or local agents. Focus on the financial and taxation aspects of property selling. For this, you may consult a financial expert.

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