Selling a home is a big deal and needs to be done only when you’re both emotionally and financially ready to take the plunge. No matter what the current market may dictate, the right time to sell is when you’re adequately prepared and in a solid place to do so. While it’s still helpful to sell when the market is prime for selling, you still need to take your own individual situation into consideration before selling your home.
Here are some signs that will tell you whether or not it’s really the right time for you to sell your home.
It’s a Hot Seller’s Market
When the market highly favors sellers, it can be tempting to jump in. A seller’s market is essentially one in which demand exceeds supply, or the number of buyers looking to purchase is much higher than the number of homes available on the market. The basic concept of supply versus demand put sellers in the driver’s seat. During times like these, sellers can demand higher prices for their homes and can sell as quickly as a mere hours after their listings go live.
If you’ve been contemplating selling for a while now and you happen to be in the middle of a seller’s market, you might want to consider testing the waters to see what type of bites you can get.
Your Home Doesn’t Suit Your Lifestyle Any Longer
One of the biggest reasons why homeowners decide to sell is because their homes no longer suit their lifestyles. Maybe another bedroom is needed to accommodate a growing family, or perhaps downsizing is in order after grown children move out. Maybe a new job requires a move across state or the area itself has been deteriorating over the years.
Whatever circumstances have changed in life, the current home might no longer be suitable. This is a good reason to sell, no matter what the current phase the housing market may be in.
Your Debt is Manageable
If the new home you are thinking of buying is cheaper than your current home and your mortgage payment will effectively be reduced, then selling can make financial sense. However, if you’re selling your present home in favor of a more expensive one, you might want to make sure that the debt that you currently have is manageable.
Trading in your current mortgage for a higher one can put you in financial turmoil if your non-mortgage debt is not under control. On the other hand, if your debt is minimal, you may be financially ready to sell and make another home purchase.
You’ve Built Up Equity in Your Home
A decade ago when the housing market collapsed, homeowners who owed more on their properties than what they were actually worth found themselves upside down on their mortgages, and eventually lost their homes through foreclosure. The danger of holding very little equity in a home can put homeowners at a real risk of losing their homes if interest rates ever skyrocket.
Thankfully, homebuyers have learned their lesson and have become more conservative with their purchasing decisions. In addition, many owners who have held onto their homes for years and consistently paid their monthly mortgage payments are benefiting from a growth in equity. If your home has enough equity that would cover a minimum 20% down payment for your next home purchase, it might be worth selling.
Not only will putting at least 20% down keep your outstanding balance low, it will also help you avoid paying PMI (Private Mortgage Insurance), which will just make your mortgage more expensive. Not only that, more equity that you can put towards your new home can help you pay less in overall interest over the life of your home loan, helping you save hundreds or even thousands of dollars each year.
You Have the Funds to Cover the Costs of Selling
Selling a home is an expensive endeavor. There are plenty of costs associated with selling, including realtor commissions, home staging efforts, closing costs, moving fees, and so forth.
Before you plant that For Sale sign on your front lawn, make sure you’ve got enough funds to cover these costs. Generally speaking, you can expect to pay anywhere between 5% to 7% of the sale price of your home.
The Bottom Line
Waiting for a strong seller’s market is a great time to sell, but only if you’re actually ready to sell based on your particular situation. Your best bet is to team up with a real estate professional who can provide you with honest expert advice so you can make sure that you’re making the best decision possible for you.