If you feel you’ve outgrown your space or are curious to see if your place would sell quickly in a hot market, you may ask yourself: Should I sell my house right now? Deciding when to list your house can be a difficult question to answer. You need to know about the current real estate market, but it’s also essential to understand your situation and finances.
Before you start decluttering your office and interviewing real estate agents, consider some key factors when deciding when to sell your home.
When Is the Best Time to Sell?
Although no one can guarantee the best time to sell a home, some considerations will make the decision easier. First, you’ll want to know the answers to these two questions.
#1. Are We In a Buyer’s Market or Seller’s Market?
You can be in a buyer’s or seller’s market in real estate. There is a lot of supply in a buyer’s market, making it easier to find a home in a reasonable price band. In a seller’s market, there is typically lower supply, leading to a more competitive market and less wiggle room in negotiating a purchase price. Ideally, you’ll want to be in a seller’s market if you plan to sell, but that won’t always be an option. If you find you’re selling your property during a buyer’s market, consider how you can price your home to sell during a time with lots of competition.
#2. What Time of Year is It?
Overall, the real estate market operates on a cycle but with small seasonal variations. Many sellers choose to list their home in the spring, as it offers better weather to show off the curb appeal of their property. But another great option is fall. According to Scott McGillivray in an HGTV article: “The best thing about selling your house in the fall is that you’re dealing with a more serious pool of buyers.” He mentions that they’ll want to finalize the sale before winter hits if they’re looking at a home.
5 Signs It’s Time to Sell Your Home
Once you’ve taken the time to understand the current real estate market, you can then turn your attention to your situation and decide whether you should sell your house right now — or wait.
1. You’re Outgrowing the Space
If you’ve been living in your home for a while, have grown in family or dependents, or feel like your personal belongings are starting to pile up, it might be time to upgrade to a larger home. Many people enter the real estate market by purchasing a smaller or more affordable starter home before selling and moving to a newer, larger place. If your current home was intended to be a starter home and you feel it’s time to make a move, this is a great sign it could be time to sell.
2. You Can Afford the Expenses of Selling
If you’re planning to sell and buy another home, it’s important to know all the costs associated with this choice. First, selling a home means you are responsible for a few expenses, including lawyer fees, real estate fees, mortgage discharge fees, and potentially a mortgage prepayment penalty.
A prepayment penalty is a clause in your mortgage contract that says you’ll pay a fee for breaking your mortgage term early. This penalty is usually either the greater of three months’ interest or the Interest Rate Differential (IRD). The IRD can amount to thousands of dollars, so it’s a good idea to call your lender and ask what your prepayment penalty would be to break your mortgage and factor that into the cost of selling your home.
You want to make enough money by selling your home to cover these costs. Always speak to a mortgage professional to weigh your options and clearly understand where you stand financially.
#3. You’re Equipped to Handle a Lifestyle Upgrade
If you plan to upgrade to a larger or more expensive home, you’ll also want to consider changing your budget’s bottom line. How much more will your mortgage be, and what additional expenses will you take on when you transition to a bigger space? For example: if you’re moving from a condo to a detached home, what additional expenses will you need to consider? Do the math to determine how much more you need to break even.
#4. Other Homes Similar to Yours are Selling Well
Consider speaking to a real estate professional to see if they can provide you with information about what homes are selling for in your area and how long they stay on the market before seeing an offer or closing. If you find that other homes of a similar size have sold for a number that you’d be happy with as a seller, you may determine you should sell your house now.
#5. You’re Ready to Downsize
In contrast to an upgrade, you may be ready to move to a more manageable space. For example, perhaps your children have moved out, and you’re an empty nester who doesn’t have the time or energy to maintain such a large home. If you want to downgrade to a smaller space, selling is always an option.
4 Reasons You Might Not Want to Sell
If you’re still on the fence or couldn’t answer yes to any of the five factors listed above, you may feel like it’s not a good time to sell. If that’s the case, here are some excellent reasons to stay put for a bit longer.
#1. You’re Comfortable with the Space
If you don’t feel cramped or packed into a small home, it may not be worth upgrading for the additional financial burden. So why change what isn’t broken?
#2. You Recently Refinanced
If you just refinanced your mortgage, it could be costly as far as discharge fees and prepayment penalties go. In addition, when you’re not yet far enough into your mortgage term, there is typically more debt than equity — which can make selling your home an expensive decision.
#3. The Numbers Don’t Add Up
It’s okay to run the numbers and realize that now isn’t the best time to sell your home. Realizing you can’t afford to move might be deflated, but It’s great news to discover before it’s too late. Running the numbers in advance ensures that your next move doesn’t make you uncomfortable and gives you the space and time to save enough money or build more equity to transition more easily.
#4. You’ve Only Been in Your Current Home for a Few Years
Sometimes, we are in a rush to move from a starter home to a larger place. Although this may seem like a good time because you’re in a seller’s market or you feel ready for an upgrade, it’s essential to consider how selling your home will impact your long-term financial plans. t.
Selling comes with many costs, and every time you sell your home, you surrender the equity you’ve built to these costs. Frequent moves can mean you don’t build equity in your house, which can be problematic if a paid-off home is part of your retirement plan. The standard advice is to plan to stay in your home for ten years to ensure you have enough equity in the property to move to a larger space while still building wealth.
Final Thoughts
No matter what you decide, choosing when is best to sell your home requires serious research. Although you may have your heart set on upgrading to a larger property, it doesn’t always mean that the numbers are operating on the same timeline. So be patient, and don’t be afraid to speak to the right real estate professionals to determine whether you should sell your house right now or wait it out.
