First Time Selling Your Home? Here’s 7 Things You Should Know

Considering that my wife and I are currently going through the process of selling our home, there have been a few surprises to me that I think first-time home sellers should know.

While some of this information might be knowledge to some, I think this could serve as a great guide for anybody looking to SELL their first home.

7 Things First-Time Home Buyers Should Know

1. Get Pre-Approved

My wife and I thoroughly enjoy looking at houses, so the first thing we did when we decided to sell our first home was start looking at all of the homes we could buy.

house for sale

Picture by FreeDigitalPhotos

We even started getting our house ready to list by cleaning, selling stuff, and having an agent come over. However, looking back I realized all of that would have been a waste of time if we weren’t able to get approved to buy a new home!

So, before you get too excited about moving and looking for new places, take a few minutes and contact a mortgage lender. Find out if you’re pre-approved and also find out how much they’re willing to lend to you.

1a. Find Out How Much Equity You Have

This is especially important in the aftermath of 2008. Many people are underwater in their homes (meaning they owe more than it’s worth), so one of the first steps you should take is finding out how much you owe on your mortgage AND how much your home could possibly sell for.

Knowing how much equity you have in your home is extremely important for a myriad of reasons:

  • You’ll generally pay real estate agents a 6% commission (3% to the buyer’s agent and 3% to your agent), so you’ll need to have some equity if you plan on selling the house and not have it be considered a short sale.
  • Depending on the market, the buyers may request that you pay a specific dollar amount in closing costs. In the midwest this ranges from $2,000-$4,000. So, unless you have that money sitting around to pay out-of-pocket that money will have to come from the equity in your house.

2. Know That You’re Going to Have to put 5% Down

Ideally you’ll put a larger amount of money down on your next home, but for a minimum you need to plan on putting 5% down.

For us the majority of this money has been set aside and we can pay it out-of-pocket, however we’re hoping to make enough on selling our first home (after paying realtor’s fees and closing costs) to cover the majority of the down payment.

3. If You’re Self-Employed or 100% Commission, It’s Tough to get Pre-Approved

This certainly won’t be an issue for many and I knew this before we decided to sell our first home, but if you’re 100% commission (or if you own your own company) then the mortgage lender typically won’t count your income UNLESS you’ve had a commission history of at least 2 years.

Unfortunately for me, I’ve only been 100% commission for 5 months so NONE of my income can be counted. With that in mind, we had to get pre-approved based on my wife’s income and credit score alone.

4. A New Job Probably Won’t Affect Your Ability to get Pre-Approved

Knowing that my income wouldn’t count, we were extremely concerned with our ability to get pre-approved because my wife just changed jobs a few weeks ago!

After talking to the mortgage consultant they informed me that it wouldn’t be an issue. As long as you’re able to show that you work full-time (via 2 complete pay stubs) AND the mortgage company is able to call your employer to confirm you work full-time, then you shouldn’t have any issues.

5. You Can’t Buy a Foreclosure

Well, you CAN buy a foreclosure if:

  • A. You can qualify for 2 mortgages and are willing to carry both until your first house sells.
  • B. You sell your home and are willing to live with friends or family, or in an apartment or hotel for a few months.

We’re not in a position to carry two mortgages (well, we could if we wanted but we don’t) and we found out that you can’t really put submit an offer on a foreclosure unless your first house is SOLD!

We discovered that there is a slim chance you can put in a contingent offer but it’s highly unlikely.

With that said, our only chance to buy a foreclosure is to sell our house first, and find a place to live for a few months while we’re looking for foreclosures to buy. With our enormous dog and due to a few other reasons we decided that this really wasn’t in the cards for us.

6. Contingent Offers are Unlikely

Even if you decide to buy a regular house (one that isn’t in a short sale position or one that has been foreclosed on), it’s still unlikely that the seller of the house you’re looking at will accept an offer ‘contingent’ on your house selling.

So, if you put your house on the market tomorrow it’s unlikely that you’ll be able to put an offer on a house until you have a contract on yours.

Of course this will depend on the market that you live in. Right now houses are selling like crazy in the area that we’re looking to move to, so the sellers aren’t inclined to accept contingent contracts when there are buyers that are ready-and-willing to close immediately.

However, if you’re in a slow market it’s much more likely that you can place a contingency offer.

7. Don’t Waste Your Time Looking, Yet

It’s not a bad idea to start looking at a few houses (online) that are in your price range so you can get a sense of what type of house you’ll be able to buy with your budget.

However, I’d encourage you not to waste too much time doing this. The problem we encountered was that my wife and I found a few houses that we LOVED…we had gotten our hopes up and two weeks later, before our house was even listed those houses were gone.

Take things one step at a time. Focus on getting pre-approved and getting an idea of how much your house is worth and how much you owe.

Then, get your house ready to sell (which I will talk about in an upcoming post), and once it’s listed then it will be time to start looking at homes for you to buy.

About the Author

By , on Jun 21, 2012
Andy Tenton
Andy is a 30-something New Yorker who turned his financial life around. He took charge of his finances, got out of debt, and is now working his way toward financial success. He is the publisher of

How to Become Rich e-Course

Budgeting 101


  1. Very helpful guidelines. These are really must-know facts not just for first time sellers but to serve as readily useful info in understanding the mechanics of a generally possible future option. Nice to know.

  2. I’ve been looking to get into rental property, so my strategy for a new house is not to sell the old home, but to rent it out. I’m pretty sure this isn’t going to go too well on the pre-approval, but then I hope to have a lot of equity and a good sized downpayment before executing.

  3. Wonderful advice! Knowing the amount that you will be pre-approved for is so important. It just helps keep your expectations and “wants” in line with what you can reasonably afford.

    My dad was a real estate broker for years. He is retired now. If I remember correctly, he rarely had success when contracts were contingent upon another house being sold. There were just too many things that could go wrong.

  4. I have a question for those who have bought and sold homes (or are knowledgable about doing so). Out of the goodness of their heart, a family friend financed our home for us. We pay them monthly, but technically we have never bought a home from a mortgage lender.

    Does that mean we could still qualify as a first time home buyer (in the eyes of a lender)?

    • Andy says:

      I’m definitely not an expert Thad but I can’t really see any way that you could be considered a home owner. Technically (in my opinion), you’re renting your house. You just are lucky and get to keep some of the equity you’re paying to the landlord.

  5. Katie says:

    I have a friend who is a Realtor, in our area houses are not selling. It is definitely a buyers market and I’ve heard of him talk about waiting on sales that are contingent of the buyer selling their home. It probably just depends on what type of position the seller is in and how long the house has been on the market. I definitely don’t see sellers doing this if their is a good market though.

    My husband and I tried to refinance about a year ago, his credit score was too low so they had to qualify off me but my income was too low to get the loan without him. It sucks to be in a position where you have to go with one person to be qualified.

    Good luck with selling your house!

    • Andy says:

      Thanks Katie! That is super unfortunate that you couldn’t really get refinanced. Hopefully you’re working on aggressively building back up your husband’s credit to get that taken care of. You’d be able to save a lot of money by refinancing in this environment!

  6. Michelle says:

    Hey Andy, how’s the house sale going? Hoping you and your wife are getting some good offers! That last one…totally true! We looked at so many houses before we were ready to buy (had sold our house, been pre-approved) and it was heart-breaking. We will definitely know better if and when we sell again!

    • Andy says:

      The process has been SLOW and no offers yet…but it’s only been 11 days. We found a house last night (again, truly to early to be looking) that we really like and may schedule a showing. We’re crossing our fingers that they’ll consider a contingency offer as it’s been on the market for quite some time but it’s doubtful.

      Patience, patience, patience.

  7. Those are some really great tips – but I would warn that unless you go FHA for your loan, you will need 20% down. And don’t think about going over the conforming loan limit for your area! You may find only 1 in 100 lenders will do anything jumbo right now.

    • Andy says:

      Fortunately for us we don’t have the misfortune of needing a jumbo mortgage. Although I wouldn’t mind having that problem. ๐Ÿ™‚

      20% down on a conventional would be great but going with the non-jumbo, conventional loans, all you really need is 5% down.

  8. All great things to know! We just bought our first home a few years back, so we’re not looking to sell anytime soon, but I will definitely remember these tips when looking to sell. I think the hardest part will be to not look at other houses until we’re pre-approved and know how much equity we potentially have. Also, we’re now a one-income household, so I need to start raking in the big bucks for a few years before we apply for pre-approval!

    • Andy says:

      You don’t HAVE to rake in the “big bucks” as long as you have a large down payment for the next house…or you just won’t get pre-approved for as much. It’s okay to buy what you can truly afford. Sometimes we don’t like the options on our real price range though. ๐Ÿ™‚ At least I know that’s the case for us.

  9. I’ve actually been writing a lot about home buying since that’s what we’re in the midst of right now. It’s a tiring process for sure. Many of these things apply to purchasing a home too.

    • Andy says:

      That’s a very good point! It is undoubtedly a tiring process and I’m learning that selling can be much more-so than when we bought. It’s been annoying keeping our house clean, trying to figure out if we should drop our price, and impatiently wait for people to schedule showings. ๐Ÿ™‚ Patience is a virtue though, right?

  10. Joe Morgan says:

    Good luck on selling Andy!

    Are you upsizing, downsizing or just relocating?

    • Andy says:

      Upsizing and downsizing. ๐Ÿ™‚

      Downsizing in value and home quality (age/features) but upgrading in size.

      Also moving much closer to our works. Instead of a 20 mile/25 min drive it will be a 3-4 mile/<10min drive!

  11. These are some great tips I probably wouldn’t have even though of. Of course I am not looking to sell currently but I may in the future.

  12. Wow, I didn’t know that about being 100% commission or self-employed (#3) and the impact on getting approved. Not sure that makes sense–especially the self-employed piece–but I guess we have to live by the rules, so good to know. Would this mean a husband/wife operating a small business–say they’re bookkeepers–would have a lot of difficulty getting a mortgage?

    • Andy says:

      Kurt, it does mean that they’d have an extremely difficult time. I’m not saying it’s impossible but they’re going to really have to have a good relationship with a banker in order to make it happen.

      Someone I know well recently bought a new home (his 2nd, and he owns about 10 rental properties) and it took him about 3 months and jumping through MAJOR hoops to get it all taken care of. And he’s owned his business for 5 years!! He owns a few of the rentals on his own (which was a headache to get approved for) and the only reason he was able to get the rest was because he partnered with somebody.

  13. Daisy says:

    Wow, I didn’t know you had to put 5% down on the next house you buy! Interesting. Foreclosures can be a good investment but usually only work for first time home buyers, investors, etc.

    • Joe Morgan says:

      5% is not a law or even a hard-fast rule. It’s always better to put more down, but in some markets you can still get 98-100% financed, depending on credit worthiness. Also, the banks what will finance that much will also give you a higher overall interest rate, which they don’t always disclose in an obvious way.

      • Andy says:

        5% is actually a pretty good rule of thumb here in the midwest post-2008, but no, it’s certainly not a law. Each lender I spoke with said that I’ll need 5% down for a conventional. I’m not saying there isn’t a bank or two out there that will give you 98% financed but they weren’t any of the banks I spoke with. I found that a refinance was a little different as there were a few lenders that specifically told me that there are a few out there that will give you a 100-105% loan-to-value refinance.

        Furthermore, it’s even a better rule of thumb because you SHOULD put at least 5% down. Frankly, if you can’t afford to do that then you can’t afford to buy a house. I’d go so far as to say that number should be 10% but 5 will suffice I guess.

  14. Great article Andy. I think so many people fail to get pre-approved for a loan and this can just lead to a lot of disappointment if you find a house you love and then can’t get a loan.

    • Andy says:

      I agree Sean. I was surprised I wasn’t smart enough to think that I should get pre-approved first. Frankly, emotions just kind of took over and it didn’t pop into my mind. However, pre-approval is absolutely where everybody should start.

  15. Eddie says:

    Great post Andy!
    I particularly emphasize on # 1. It’s a must, and will solve a lot when it comes to monthly affordability, and the price of the new home. In regards to #4, I think why it didn’t affect your wife is because there are two incomes co-signing on the loan. If a single person were to apply for a loan, red flags would be raised, and certainty does not mean that they won’t get approved, just that there may be some hoops to jump.

    • Andy says:


      This will be interesting when we actually apply for the mortgage, because there is only 1 income on the loan. NONE of my income counts because of the 100% commission deal and therefore we got pre-approved based on my wife’s income and credit rating only.

      Hopefully there won’t be any hoops to jump but we’ll find out I guess.

  16. Linda Larkins says:

    Andy you are doing a good job

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