How do I figure out the next step in deciding to sell my home to the market or to a uniquely interested buyer?
You decide whether the improvements will result in a net higher price.  You also need to figure on how long the house will be on the market and the cost of carrying the home, unoccupied.  Some people would prefer the quickest sale. Others would wait to get the highest price. If you sell to a known buyer, you avoid using a real estate agent. If you plan to sell on your own and avoid the agent, there's a bit of effort dealing with the public, especially those who just want to look at houses with no real interest in buying. (As an agent, I can tell you, there's nothing like talking for nearly an hour, and then figuring out these people are from 1/2 mile away, but just attend every open house in the area.) "We considered similar big renovations when putting our house on the market. The answer turns out to be pretty simple; unless you do renovation-type work as your day job, or have really good friends in the residential contracting business, sell as-is. You will virtually never get back the full price of bringing in a gen-con to renovate any space in your home; you do that when you want to spend the extra to make your home exactly what you wanted, so you can live in it for decades and get the enjoyment out of it. If you're trying to turn a profit with the renovation, like house-flippers do professionally, you look for easy repairs/renos, buy good-looking but inexpensive materials, and do the labor yourself. Whether you sell to the market or to a specifically-interested buyer is your call, but I will caution you that a specifically-interested buyer is going to be looking for a deal, or a steal.  When marketing our house, we met with three different realtors. The first one was very overoptimistic about what we could list for (basically assuming that we could get the same price as a fully-upgraded version of our same floor plan with a pool out back). She also had a to-do list a mile long, and my wife and I both noticed that she looked very apprehensive about the house when looking around, even as she reassured us that selling it would be no trouble. We eventually realized why she was so apprehensive, and fired her before we got even halfway through her to-dos, which included major landscaping, new kitchen floors and countertops, etc, which would have cost us thousands and would not have gotten the house price even close to the target. The second one took a look at our half-finished refinish and told us to stop everything we were doing to update the minor stuff like paint and fixtures, saying we were putting lipstick on a pig; she would market the house to some cash buyers she knew personally, for about 80% of the list price our first realtor quoted, and implied that we should be kissing her boots for finding us a buyer willing to take the house off our hands at all. During the tour, she pointed out ""problems"" with the house that weren't even there, like foundation issues such as sloping floors, in an attempt to scare us into going with her strategy. We sniffed that out pretty quickly, showed her the door at the end of the initial consult and never called back. This, by the way, is the kind of thing you want to avoid; unless your home is really dilapidated or torn apart with unfinished major renos, it should have decent value on the market and you shouldn't have to resort to a cash buyer looking for a flip or a rental property on the cheap. Just like Goldilocks, our third choice was just right. He saw all the same comparables, toured our house, and recommended that we offer about $20k less than the fully-upgraded version (but still about $20k more than the second realtor was estimating), targeting a ""real"" buyer and not an investor or flipper, but at a price that would make the lack of upgrades more acceptable. We finished the paint and finish projects we started, brought in a weekend's worth of scheduled showings, and our house was under contract for full price within 3 days, giving us the extra $20k worth of down payment to put into our new house. In summary, I highly recommend a realtor, because the one we eventually listed with worked his butt off on the business side while we fixed up the house. However, make sure you find the right one; realtors are ultimately in business for themselves, and their ultimate interest is in getting your house sold and getting you into a new one. That is what gets them paid. Some of them will do it the right way, working the deal with other realtors and their prospective buyers to get you what you need. Others will take the easy way out, at your expense, either giving you bad advice about how to present and price your home so that you end up on the market for 6 months with no offers, or handing your house to their business buddies at a discount."
In this case, trust the real estate agent; negotiating experience is one of the things you selected them for. Especially if they're suggesting a lower number than you expected, since they get paid on commission and so may be biased the other way.  Part of their job is to look for hints about how motivated this seller is and what price they might accept, as opposed to what price they hope to get.  And remember that the default assumption is that the two parties will meet in the middle somewhere, which means it's customary to offer 10% less to signal that you could probably be talked into it if they drop the price about 5%. This is like bridge-hand bidding: it's a semi-formalized system of hints about levels of interest, except with fewer conventions and less rationality. As far as the seller paying the closing costs: that's really part of the same negotiation, and doing it that way makes the discussion more complicated for the seller since they need to figure out how much more to charge you to cover this cost. If they offer, great, factor that into what you are willing to pay... but I wouldn't assume it or ask for it. Edit: Yes, unless you have engaged a Buyer's Agent (which I recommend for first-time buyers and maybe all huyers), their fiduciary duty is to the seller. But part of that duty is to make the sale happen. If the price goes too high and you walk away, neither the agent nor the seller make money. A bad agent can be as bad as a bad car salesman, sure. But if you don't like and mostly trust your agent, you are working with the wrong agent. That doesn't mean you give them every bit of information the seller might want, but it does mean you probably want to listen to their input and understand their rationalle before deciding what your own strategy will be. I have the mortgage from Lender A. Can I get a HELOC from Lender B? Yes. Do banks pull my credit to approve a HELOC account? Yes. How is it reported to the credit bureaus and how does it affect my credit (Let's say my limit is $30k and I use all of $30k)?  It is reported as HELOC and the current balance. Similar to credit cards (in fact, some banks report it exactly as credit cards). Anything unique about it's tax deduction? Same as mortgage, except that the limit is $100K unless used for home improvement. Anything else to watch out for? LTV - Loan to Value. This is the ratio of your overall home value to the indebtedness secured by the home. Currently, your LTV is 93% (you have 7% equity). For HELOC, most banks require the LTV, including the HELOC, not to exceed 75%. So the chances you'll get a HELOC are pretty slim. "I just wanted to give you a different perspective, as I own a house (purchased with a mortgage), with my girlfriend. I think it can be done safely and fairly, but you do need to involve legal help to do it right. There really is nothing to be terrified about, the extra cost to set this up was almost irrelevant in the bigger picture of legal costs around purchasing and the documents describing the ownership scheme are quite straightforward. Maybe it's a UK thing, but it seems rather commonplace here.  We've chosen to hold this as ""tenants in common"" and use a trust deed for this when we purchased. We had a solicitor write the trust deed and it clearly states what percentage of the house is owned by either party and exactly what the steps would be taken, should we decide to end the trust (e.g. in case of a split-up). This includes things like the right to buy out the other person before selling on the market etc.  We also had to make wills separately to indicate what should happen with our percentage of the property in case one of us died as with this type of ownership it doesn't automatically go to the other person.  Finally we're both on the mortgage, which I guess is the main difference versus your situation. But again, you could get legal advice as to how this should best be handled." "Most of the investors who have large holdings in a particular stock have pretty good exit strategies for those positions to ensure they are getting the best price they can by selling gradually into the volume over time. Putting a single large block of stock up for sale is problematic for one simple reason: Let's say you have 100,000 shares of a stock, and for some reason you decide today is the day to sell them, take your profits, and ride off into the sunset.  So you call your broker (or log into your brokerage account) and put them up for sale.  He puts in an order somewhere, the stock is sold, and your account is credited. Seems simple, right?  Well...not so fast. Professionals - I'm keeping this simple, so please don't beat me up for it! The way stocks are bought and sold is through companies known as ""market makers"".  These are entities which sit between the markets and you (and your broker), and when you want to buy or sell a stock, most of the time the order is ultimately handled somewhere along the line by a market maker.  If you work with a large brokerage firm, sometimes they'll buy or sell your shares out of their own accounts, but that's another story. It is normal for there to be many, sometimes hundreds, of market makers who are all trading in the same equity.  The bigger the stock, the more market makers it attracts.  They all compete with each other for business, and they make their money on the spread between what they buy stock from people selling for and what they can get for it selling it to people who want it. Given that there could be hundreds of market makers on a particular stock (Google, Apple, and Microsoft are good examples of having hundreds of market makers trading in their stocks), it is very competitive.  The way the makers compete is on price.  It might surprise you to know that it is the market makers, not the markets, that decide what a stock will buy or sell for. Each market maker sets their own prices for what they'll pay to buy from sellers for, and what they'll sell it to buyers for.  This is called, respectively, the ""bid"" and the ""ask"" prices.  So, if there are hundreds of market makers then there could be hundreds of different bid and ask prices on the same stock.  The prices you see for stocks are what are called the ""best bid and best ask"" prices.  What that means is, you are being shown the highest ""bid"" price (what you can sell your shares for) and the best ""ask"" price (what you can buy those shares for) because that's what is required.  That being said, there are many other market makers on the same stock whose bid prices are lower and ask prices are higher.  Many times there will be a big clump of market makers all at the same bid/ask, or within fractions of a cent of each other, all competing for business.  Trading computers are taught to seek out the best prices and the fastest trade fills they can. The point to this very simplistic lesson is that the market makers set the prices that shares trade at.  They adjust those prices based (among other factors) on how much buying and selling volume they're seeing.  If they see a wave of sell orders coming into the system then they'll start marking down their bid prices.  This keeps them from paying too much for shares they're going to have to find a buyer for eventually, and it can sometimes slow down the pace of selling as investors and automated systems notice the price decline and decide to wait to sell.  Conversely, if market makers see a wave of buy orders coming into the system, they'll start marking their ask prices up to maximize their gains, since they're selling you shares they bought from someone else, presumably at a lower price.  But they typically adjust their prices up or down before they actually fill trades.  (sneaky, eh?) Depending on how much volume there is on the shares of the company you're selling, and depending on whether there are more buyers than sellers at the moment, your share sell order may be filled at market by a market maker with no real consequence to the share's price. If the block is large enough then it's possible it will not all sell to one market maker, or it might not all happen in one transaction or even all at the same price. This is a pretty complex subject, as you can see, and I've cut a LOT of corners and oversimplified much to keep it comprehensible.  But the short answer to your question is -- it depends. Hope this helps. Good luck!" "First of all, never ask a realtor for advice. The realtor represents the SELLER. Blankip's advice above is by far the most accurate of the previous answers. The first step is to estimate the market. Look at past sales in the neighborhood over time, and from them estimate the prospects for the house at different time durations. Based on other sales, how fast do you think the house will sell at a given price? 60 days, 90 days, a year? If a house is high priced, that means the seller is prepared to wait. He is saying ""I am happy to wait a year to find somebody who will pay this."" Next, who is the owner? Young professional? Retiring couple? Landlord? Flipper? Who is it? The more you know about the owner, the better. Everybody has a time table, you need to find out what that is. Next, what is YOUR timetable? You need the house by the end of the month, or by the end of the year, or never, which is it? Objectively rate the house. Plusses and minuses. Good houses are those which everybody else hates and you love. You will get the best price there. (Assuming you need to find a house in 90 days) Based on these considerations determine the lowest price you think the owner will accept in a 30-day time frame. Make a written offer with an address and email, no phone number. If he comes back with a counter offer, ignore it. If for some reason a realtor has your number and calls you, tell them ""My written offer speaks for itself. I have nothing further to say."" It is very important not to entertain haggling or counter offers. Don't even pick up the phone. He has your WRITTEN offer. He can email or write you: I accept.  If the 30-days elapse, move onto your #2 choice and make a more aggressive offer. If that doesn't work, go to choice #3 and accept the listed price. This strategy may seem counter-intuitive because the natural tendency for people is to want to communicate. Trust me: the way to succeed in a negotiation is to NOT communicate. Make your offer and that is that. That is the pro way to do it, and will produce the best result for a short-term situtation. Long term situation If you are an investor (""flipper""), or have a lot of time to wait/spend, you can use a different strategy which involves pressuring the seller. What you do here is find a property you want in which the owner is vulnerable. That means someone who is old, bankrupt, out of work, indicted and on their way to prison or already in prison, etc. Bank owned properties fall into this category. In this case you figure out the 6-month price or however long you are willing to work on it. Then you pester the person. Become their buddy. Visit them in prison. Take the bank officer to lunch. Show up on holidays. Invite them to Thanksgiving. Start a relationship. Every two weeks you pester them. Want to sell yet? Want to sell yet? You basically harass them until they capitulate. Maybe it takes 6 months. Maybe it takes 2 years. Eventually they will give in. By this means you can get a much better deal than in strategy 1 above, but it takes a lot more time and effort and is appropriate more for an investor." If she is a legitimate owner, you can't force her to sell her interest in the house. You can communicate indirectly with her, perhaps through a lawyer, and see if she is willing to sign something authorizing you to sell. Unless she is mentally incompetent, you will likely have a very difficult time of proceeding with a legal challenge. At minimum she should be paying you rent, if she is the sole occupant, and if she is unwilling to let you live in the house or pay you rent as co-owners, you could possibly proceed with a suit along those lines. This is a good example of why it's not ideal to co-own a home with someone you aren't legally married to, including a relative or someone you are dating, because there is no (relatively) simple process similar to divorce which determines the allocation of property in the case of a serious dispute. If living together, it may be preferable to have one party own the home and rent it to another. If inherited, it may be preferable for one party to buy out the others and rent it back to them or arrange for a portion of any money made through the sale or rental of the home. Best of luck - I hope you are able to reach an agreeable outcome. "There's no objective definition of what your house is worth between sales.  If you sell it for $107K, then that's the current functional definition of its worth.  There is not ""extra"" money to be had because you sold it for less than it was worth.  If the buyer is able to flip it for more, then the value of the house effectively went up and he will pocket the difference when he sells it. EDIT This turned out to be unexpectedly controversial, so let me be more precise in my answer.  I think this is important because it seems like many people misunderstand equity and how it figures (or doesn't) into the value of their home, which then leads to significant confusion and errors in what's many people's largest single investment. At any given time there are several possible ways to put a dollar value on your home.  A non-exclusive list that includes: Some of these obviously are more ""official"" than others. It would not be strange for these different values to vary by quite a bit at any given time. (This is what I meant in my original answer when I said there's ""no objective definition of what your house is worth between sales."") The interesting thing - and what I meant in my original answer when I wrote ""current functional definition of its worth"" - is that none of these factor directly into the transaction that the OP described of selling his house except for the last.  Using the numbers from the OP's example, that means the $107K.  Wherever the OP got the number $155K (either from one of the options on my list above or somewhere else), it won't be directly part of the sale between him and his friend. (For completeness, with a nod to Eric's comments on my original answer, some of these numbers may indirectly influence the sale.  For example, the buyer typically won't be able to get a mortgage for a value greater than the appraised value of the house, and so that might influence what he's willing and able to bid.  There may also be tax consequences if the price is artificially low, like, say, a gift.  As further expounded below, however, that's not directly relevant to answering the OP's stated question.) Now, the OP seemed to believe that there is an ""extra"" $48K in cash up for grabs in this scenario.  That comes from the $155K value that the OP claims his house has and the $107K price of the actual proposed sale.  This is a complete misconception.  When the buyer and seller sit down at closing and the title agent sums up who owes and who receives cash in this transaction, the $155K ""theoretical"" value will not enter into the calculation and therefore no one will pocket it. Subsequently, however, after the buyer takes possession, he may sell it.  If it's true that he ""got a deal"" on the transaction at $107K, then he maybe able to flip it and turn a profit.  But if that happens, it will be in a completely separate, subsequent transaction. Even if you look to this hypothetical second sale, however, the $155K doesn't really figure.  The new owner will have to find his own buyer, and they will have to agree on a price.  That might happen to be $155K, but there's no real reason to believe that it will or it won't." Both seem to be reasonable. To decide you need to guess if the value of the house will go up or down between now and when you sell. If you think the value will go up - reach a calculation agreement now. If you think the value will go down - wait until the house is actually sold. So ya pays yer money, and ya takes yer chances... I think I understand the two scenarios Unless you are absolutely confident that you understand both scenarios - make sure your lawyer gets involved and explains them to you until you do understand.