Selling your home is a major decision - and not one that should be taken lightly. From lifestyle changes that have impacted your home needs to where you're at from a financial perspective and the current market status - there are many signs that it could be the right time to think about selling.
Take a look at the scenarios below -- do any of these sound like they apply to you? If so, it may be time to start considering selling your home.
1. Location, Location, Location
The location of your home is the biggest, and easiest, deciding factor on whether it is time to sell. If you get a new job across the country, want to move closer to family, or just need a change of scenery, then there’s really nothing your current home can do to become more appealing.
Depending on your situation, you may have the flexibility to wait it out for better market conditions or a busier real estate season, but sometimes you have to sell right now, no matter what. The old adage rings true when deciding the buy and sell – location, location, location is a major determining factor in all real estate transactions.
2. Space is getting tight
You may absolutely adore your current home, but sometimes a space issue is hard to ignore. Maybe you’ve had a child since you purchased your house, or perhaps you’ve started a home business and need extra office and storage space – either way, you’re starting to feel a little cramped.
While sometimes expanding your current home may make sense (see #3), often the best option is to close this housing chapter and start the next one. Luckily, in these situations, you can typically plan to sell your home at a time when you’ll get the most return. But if you’re feeling claustrophobic in your current living situation, it may be time to start planning to sell.
3. Renovations aren't worth it
We’ve all heard the saying – “the only constant in life is change.” If you’ve lived in your home for a few years – or more – then your life could very well look very different than it did when you first purchased it. Many people are very attached to their current homes and it may be tempting to start trying to expand or improve to make it fit your current needs. However, don’t let the sentimental value and emotional connection to your home put you in a bad financial spot.
Large renovations – like adding on an extra bedroom or completely remodeling your kitchen layout – can cost 10s of thousands of dollars or more. If your home is already on the high end of the real estate market for your area, it may not be worth the investment.
4. You can't keep up with maintenance
When you purchased your home, the giant yard and in-ground pool may have seemed like a dream come true. But now that you’re older and much busier with work, the maintenance has just become too much. That’s okay!
If you’re being more and more dragged down by the maintenance commitment required by your current home, it may be time to consider a change.
5. It's a Seller's Market
The current market state can be a major factor on whether now is the right time to sell your home. If you’re fortunate enough to be in a flexible situation – i.e. you’re thinking about selling, but no external factors, like a new job or looming move, are determining the timeline – then you may want to wait it out for a seller’s market.
By waiting for the right market, your home will likely spend less time on the market and you’ll be more likely to get a higher purchase price for your home.
6. Rates are low
Going hand in hand with #5 – low rates help contribute to a seller’s market. However, it’s important to keep in mind that selling your current home probably means you’ll also soon be in the market to buy a new home.
Not only do lower rates mean more potential buyers for your current home, but you’ll be in a better position to buy a new home to move into after selling yours.
7. You've built up Equity
One of the biggest factors you should consider when determining if it’s the right time to sell is how much equity you have in your home. Equity – or the amount of your home that you own outright, vs the amount that is still owned by your mortgage lender – will typically increase over time. As you make your regular mortgage payments, a portion of each payment goes to pay down the principal balance – essentially to buy that portion of your house from your mortgage lender.
After a certain period, typically 3 – 5 years, you’ll have built up enough equity to cover the costs of selling your home. To roughly calculate how much equity you own in your home, get an estimate of your home value by looking at similar homes in your area. Then, review your most recent mortgage statement to find your remaining loan balance. The value of your home minus the remaining loan balance is your home equity amount.
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