If you are wondering whether it is the right time to sell your home, there are a few things that you should consider. You’ll want to have a good understanding of your local real estate market and the value of your home. But it’s also important for you to be mentally and financially prepared. The market may say that you can sell quick, but what does that really mean for you personally.
How to know if it’s time to sell
Does your home have equity?
If you’re thinking about selling your home there are many factors to consider with the most important being the amount of equity that you have. It’s taken several years for home values to improve since the real estate crash of 2009. During that time and for years after, many homeowners were upside down with their mortgages, meaning they owed more for their homes than what they were worth.
When you’re upside down in your mortgage you’re in a state of negative equity. The only way to sell your home in this situation is a process called short sale – which has to be approved by your lender. The next best situation is to break even, meaning you sell the home for an amount that is enough to pay off any liens on the home. If you find yourself in either of these situations you don’t want to be in a rush to sell.
In recent years, home values have increased tremendously.
When this happens, it means that most homeowners will start to accumulate equity. When you have positive equity in your home it means that your home is worth more than what you owe on it – which is only increased further with additional mortgage payments and home values.
Tip: If you find that you have substantial equity in your home or the property that you’re looking to sell, you’ll want to research a 1031 Exchange. 1031Gateway is a great resource for finding the best way to protect your profits and defer taxes if you intend to invest your profits into your next real estate purchase.
Can you afford to make a move?
Before you sell your current home, you need to have a better understanding of your overall financial picture. Sure, you may have quite a bit of equity in your home that will give your bottom line a boost at the closing table, but have you factored in what happens next?
- Your mortgage is most likely only one of many debts. Take some time to go through your budget.
- Will the sell of your home put you in position to buy your next home?
- Do you have enough equity to pay off other debts and free up some of your income?
- How much of a (new) mortgage do you qualify for? … and is it enough to get you your next-level home?
- Is it more cost effective to stay in your current home and a few renovations?
There’s a lot to consider but you want to make an informed decision. For example, you don’t want to sell your home because you don’t like the area, only to find out that it’s considered up-and-coming and your home’s value will likely triple in a few short years. In that case, you may want to explore your options to hold on to the property – as an investment. And if you absolutely need to move, consider renting it out.
Are you mentally and emotionally ready to sell?
If you’ve done your research and all signs point to selling your home, great! But before you put the ‘for sale’ sign in the yard, remember that selling a home can also be an emotional decision that you don’t want to take lightly.
Take a few moments to breathe and ask yourself these questions:
- Are you ready to stage your home for home buyers? … this can mean anything from a fresh coat of paint and depersonalize to having to change out the furniture and giving the home a complete overhaul.
- Once it’s staged, are you prepared to keep it that way until it sells (this can sometimes be months)?
- Can you handle the criticism that comes with putting your home on the market? … not everyone will think it’s the gem that you think it is.
- Are you prepared for the negotiation process? Most home sellers believe that their home is worth more than what buyers are willing to pay.
- Have you thought through the emotional toll of moving out of your first home or your family home?
It’s important that you are ready for this process and to make the move when the time comes. If you still find that you have questions, contact a real estate agent. Don’t wait. Even if you’re not quite ready to list your home just yet, a qualified real estate agent will be able to help you understand exactly what to expect. They will also be able to help make the final decision on if it’s the right time for you to move.