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Selling a Home While Serving in the Military

Military Family Buying a Home

Selling a home can be stressful. Selling a home while in the military can be even more burdensome! As a member of the military, you are probably used to moving often, and sometimes with no notice. Sometimes you make the choice, and a lot of times you don’t. There are many reasons you may need to sell your home:

  • You received “Permanent Change of Duty Station” (PCS) orders and must relocate.
  • You’ve had a life change and now need a bigger or smaller home.
  • You are retiring or separating from the military.
  • You are deploying and must sell so your family can move closer to other family and friends while you are away.

Whatever the reason, we can help take away some of the worry involved in selling your home while serving in the military.

Find a Military-Friendly Realtor

The first step to selling your home is to hire a Realtor who is eager to support military home buyers and sellers. In supporting those in the armed forces, military-friendly Real Estate Agents know about the struggles of military life, they know of military benefits and military-friendly service providers. They manage every step of the transaction with your special circumstances in mind.

For sellers, they assist with pricing your home with their knowledge of recent sales of comparable homes in the area; they offer advice on updates, repairs and home improvements; they help in getting your home organized, staged and ready; they conduct marketing and advertising for both on- and off-base housing with a focus in military websites and newspapers; they conduct open houses and market those appropriately; they review contracts, manage and attend inspections and appraisals; and finally, they get you to closing and beyond, and help match you with another Military Relocation Specialist in the area where you are moving.

Ask your military correspondences and connections for Agent recommendations. Interview several Agents. Choose an Agent who listens to your needs and is quick in response since timing is sometimes of the essence. Make sure the Realtor you choose is well-versed in what could come up, one who knows about the options you have as a service member and situations that could benefit you, and even look for an Agent who offers special discounts or cash back to those who serve. Some Agents have completed special schooling and have obtained designations (such as “Military Relocation Specialist”) to demonstrate that they are equipped to work with those in the armed forces.

Things to do to Help your Real Estate Agent

Once you choose your Real Estate Agent, stay in communication with them throughout the entire process. The goal is to sell your home quickly and for top dollar, and the right Agent will do just that! To assist your Realtor, get them a copy of the survey or plat, your deed, any home warranties you may have, your title insurance policy (possibly resulting in a reduced rate for the buyer) and your loan payoff amount. Discuss offering a home owners warranty policy for a more attractive offer.

Once you have gone over the paperwork aspect of selling your home, help get the home ready based on your Realtor’s recommendations. They will then list your home in the MLS (Multiple Listing Service), place signs in your yard, add a lockbox with your house key for other Agents to be able to show your home to buyers, take photos and videos, begin marketing and advertising and schedule the first Open House with you.

Throughout the listing period, work with the Agent in scheduling showings, keep your home spotless, take all evidence of children and pets with you each time you step out of the home and repeat until you obtain a contract on your home.

Power of Attorney

There are specific things a military-friendly Realtor will know about that others may not even think of. If you are deployed or away from your spouse for any reason, you may need to obtain a Specific Power of Attorney for the sale of your home, which will authorize your Agent to act on your behalf in specific situations only. This is vital to this transaction going smoothly!

If Your Home Isn’t Selling

There are a few things you can consider if time is running out and you must sell your home fast.

  • You may need to drop the price on your home. This may put you in a situation where you may have to bring money to the closing table, but bear in mind that each month your home sits on the market, that’s another mortgage payment you must make.
  • You could rent out your home. Hopefully when you were shopping for your home, you considered its rental possibilities as part of your buying decision, and chose a home with a good style, in a great location, nearby amenities, maybe near a military installation since you have acquired connections; in other words, a home that will rent. If you go this route, do your homework on the rental price, and consider depreciation and other write-offs.

    Remember to run credit checks and verify income and references of potential renters for your home. This may be a good decision if you plan on returning to the area once you get out of the military. Make sure you set aside an emergency fund to help cover the mortgage and expenses in case you go a few months without a renter. The same laws that help military members get out of rental leases when receiving orders (The Servicemembers Civil Relief Act) may hurt you if you are renting to a fellow servicemember.
  • You could leave your family behind until your home sells. No one likes separating from their family, so this would only be a last resort suggestion.
  • You could consider leaving the military for a civilian job. Don’t forget you may receive veteran’s preference on federal service opportunities. This could even end up landing you a better paying position with all your military experience and education.
  • Lastly, you may consider foreclosing (where the lender takes possession of your home) or selling your home as a short sale (where the lender allows you to sell your home for less than you owe on it), but this is not recommended, because this could ruin your credit, and compromise your security clearance. The VA loan version of a short sale is the VA Compromise Sale. The buyer can utilize a Compromise Assumption, if the lender agrees to have the amount of its guaranty reduced by the amount of the claim payment. Many conditions must be met for this to take place. Also, despite the name, there is nothing short about a short sale, so due to the timely nature of your orders, this may not be a good option.
  • As an alternative, your duty station may offer temporary living quarters, or sometimes the Department of Defense provides special programs to help servicemembers alleviate financial burden of selling your home if they fall under financial hardships because of the military.

These are just a few things to consider, if you are running out of time and in a challenging situation.

Tax Benefits

When it comes time to sell your home, know the tax benefits allotted to you. The IRS allows you to exclude the first $250,000 of capital gain or $500,000 for married couples filing jointly (Section 121 Tax Exclusion), on the sale of your residence if you have owned your home for at least 24 months of the five years leading up to the sale, and it has been your primary residence for at least two of the previous five years. If married filing jointly, you both must meet the use requirement. If you sold for a loss, you cannot deduct the loss, and if you made any income above and beyond this Section 121 exclusion, you must pay capital gains on it. There is a way to get out of this by pursuing a 1031 exchange, but that is for another discussion.

If you do not meet the requirements for a full exclusion, the IRS allows partial exclusions if you sell the home due to work or health-related moves, death, divorce, natural disaster, unemployment or other qualifying reasons found in the IRS Publication 523.

Military personnel also have a special exception called the “Stop the Clock” exception, which allows you to defer the five-year requirement for up to ten years if you are on qualified extended duty. This requires an indefinite period, or a period of more than 90 days, duty station more than 50 miles away from your main home, or you must be living in government quarters, on government orders. Therefore, you can combine the five- and ten-year suspension period for a total of up to 15 years, but only for one property at a time.

Things get a little tricky if you decided to rent out your home. As a rental, you can depreciate the value of the structure over 27 ½ years. This will most likely reduce your tax burden, but if you sell your house for more than the value after depreciation, you will owe some money back to the IRS. This is known as Recaptured Section 1250 Depreciation, and you will typically be expected to recapture the depreciation and pay a flat 25% tax on it.

You Receive an Offer on your Home

Once you receive an offer on your home, make sure you review it very carefully with your Realtor so that they can point out contingencies that you need to monitor.

If you used your VA entitlement to purchase the home you are selling, you have two options. You can allow the buyer to obtain their own financing or pay cash, or you can allow them to assume your VA loan. There are pros and cons to both. If your buyer receives a new loan, your existing loan is paid off so you will not have to worry about the purchaser defaulting, and you will receive your full VA entitlement. The disadvantages are that you will have to have your home appraised, closing costs will be higher, and you may have to make repairs on your home. If you allow the buyer to assume your VA loan, no appraisal will be needed, the closing costs are much lower, it is an overall shorter process, and you will not have to make any repairs; however, if you go this route, your entitlement will not be restored until the buyer pays the loan off in full (unless they are a veteran who meets requirements, where you may then be eligible for a substitution of entitlement).

You can have two VA loans at one time, as long as you do not go over the entitlement amount (which could be an option if you choose to rent out your home). But the more common approach is restoring your VA entitlement (which is the amount of guarantee by the Veterans Administration), then reusing it. Your VA entitlement is a lifelong benefit for serving your time. Allowing your buyer to assume your VA loan is sometimes an awesome selling feature.

Let your Agent take the lead with negotiating until you come to an agreement and a ratified contract is formed.

Last Steps

So, you accepted an offer, what’s next? Your Agent will help you through the required or requested inspections. If you live in a subdivision with a Home Owners Association or if you live in a condo, you will need to order the HOA or condo documents. This is very important, because at this point, you will need to eliminate any opportunity the buyer may have to void the contract. The buyer’s lender will most likely require an appraisal to make sure your home is worth what they are lending to the buyer.

Once all of this is complete, you are in the final stretch! You simply must close on your home and move out.

There are a lot of benefits and programs for you to utilize when serving in the military, and the right Realtor will be with you every step of the way, guiding you through options you may face.


As a final note, military-friendly Real Estate Agents will have ideas up their sleeves to help your individual situation. For instance, if you have sold your home quickly and haven’t found a home at your new duty station yet, you can see if there is the option for a lease-back (where you sell your home to a buyer, but they lease it back to you for an agreed upon timeframe and for a specific amount).

You CAN have a very successful move! Your Agent’s goal is to help you sell quickly, for top dollar and alleviate your stress through the entire process. We wish you MUCH success in selling your home while serving in the military!

In the military and interested in learning more about home buying, too? Nestiny is a great place for homebuyer education and to help you gauge how ready you are to buy a home. Journey Homeward allows you to enter all your wants and needs while the True Affordability Tool will break down your budget, showing what you can comfortably afford. You will also receive a Ready Report that will give you a vital head start in the home buying journey, saving you valuable time and money.

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Ready To Become A Smarter Homebuyer?

By signing up, you agree to Nestiny terms of use .
Whether you need a step-by-step guide, video resource or one of our many helpful tools, Nestiny has your back 24/7 for all things home buying and selling. You choose the pace, material, and when and where to learn. Unlock your free access to Nestiny today!
Are you a real estate professional? Go here .
By clicking this button, you'll enjoy free unlimited access to Nestiny and agree to our terms of use . And don't worry! Nestiny will not share your information with any parties without your consent.