Tons of tips for the seller, with one blind spot

Sid Davis has written a superb book about selling a home, but it has a major flaw that could potentially be costly to sellers: He left out some very important tax information.

With chapter after chapter of good advice from the experienced real estate broker, this book struck me as one of the best I’ve read on how to sell a home -- and I’ve read virtually all of the new ones.

However, toward the end of the book, I realized that not one word was mentioned about meeting the easy requirements of Internal Revenue Code 121. Davis completely neglects to explain the rules for qualifying for tax-free profits of up to $250,000 for a single owner ($500,000 for a married couple filing jointly) on the sale of a principal residence occupied for 24 months out of the last 60.

Surely, the author has a basic knowledge of this major tax exemption. If he didn’t feel confident enough to explain it, he could have brought in a certified public accountant or tax consultant to explain the details.

Aside from this oversight, the book offers valuable advice on selling a home, whether hiring a professional agent or selling without professional help. The author uses many examples to illustrate his topics.

Especially helpful are the numerous websites listed, which provide current information on the subjects discussed in the book. Also, the author includes easy-to-read checklists that quickly summarize his main points.

Davis suggests using the local average for days on the home market, plus two weeks, to determine how long to sign with a listing agent. He definitely doesn’t like the six-month listings some agents demand.

Although Davis is a broker, he is surprisingly candid about the advantages of selling a home without a professional sales agent. He explains the obvious disadvantage -- lack of access to the very powerful local Multiple Listing Service and the nationwide www.realtor.com website -- but he describes ways in which do-it-yourself sellers can compensate.

He tells how to prepare a house for sale to earn top dollar, such as painting, cleaning and getting rid of extra furnishings that clutter a home. After a home is ready to sell, Davis suggests interviewing at least three agents to compare their success records.

The author explains how sellers should evaluate purchase offers, especially when more than one is received at the same time. Although he never explains the important words “pre-qualified” and “pre-approved” for buyer mortgage eligibility, he tackles tough topics such as making counteroffers, handling contingency clauses in purchase offers and minimizing emotional responses to low purchase offers -- which often result in a sale after a counteroffer is made.

In slow markets, the author suggests that sellers consider renting their house for a while and then making an Internal Revenue Code 1031 tax-deferred exchange for a rental property. Although Davis doesn’t go into the details, he does mention the tax benefits of these exchanges.

The excellent appendix includes information on why home values increase, what things can affect sales time and price, and the seven costliest mistakes homeowners make and how to avoid them.

It’s too bad the book entirely omits information on tax-free home profits. Readers may think paying a real estate sales commission is expensive, but a 15% federal capital gains tax can really take a bite out of your house profits.