So you want to sell your house. But is now the right time? Home prices, mortgage rates, closing costs... there are a lot of factors to consider when making this major decision. The overall real estate market, how you might use the proceeds, and life changes are just a few things that will come into play. If you're trying to time your sale, here are three considerations to make to determine if it is time to pull the trigger right now.
What Will You Do With The Money?
The first thought exercise to put some effort into is breaking down the reason(s) prompting your home sale. Understanding why you're considering selling your house will provide pertinent context for when you should sell your house.
Are you trying to buy a new house with the money from your sale? Well, you aren't alone. In 2022, a reported 26% of sellers reported “home is too small/large” as their primary motivation. Even more listed a desire for relocation as motivation. Obviously, if there are tangible circumstances that require you to move, and you need the money for new mortgage payments, then there is little use in trying to “time your sale.” Life, and personal finance needs, trump perfect plans.
However, if you're more of a real estate investor seeking to capitalize on the pandemic housing boom, then you ought to make a few more considerations. How necessary is the new purchase? Must you act now to avoid capital gains taxes or can you wait out rapidly rising home prices? Will you reinvest the earnings from selling your home equity? If so, what type of return can you expect on your other investment stream? if it isn't higher than that which you project for your current property, then why would you trade?
The Value Paradox
This leads into another point of inflection. There's something of an inverse relationship between the immediacy to sell a home and the likelihood of capturing the maximum amount for it in a sale. If you're in a hurry, you may cut corners or forgo due diligence in reviewing offers from potential buyers, you may put it on the market at an inopportune time and settle for a lesser asking price. If there are zero circumstances precipitating the home selling process, then you can work more strategically with your real estate agent to position your house to take home top dollar.
The same type of dynamic exists between the optimal time to sell a home versus the optimal time to buy a home. Meaning, if it is a hot sellers' market, then it is a good time to sell; however, if your plan is to turn around and buy a home nearby then it is a difficult time (financially) to do so. Mortgage interest rates typify this economic give and take of housing demand and supply, as do fluctuations in home prices. Therefore it is important to consider both sides of the equation regarding buyer demand in the current market. Even better, consider the geographical nuances between the market where you'd be selling and the local market where you'd be buying. If you can time it correctly, you may find an inefficiency in home values that you could exploit in your favor.
Testing The Housing Market
If you're still on the fence about timing your home sale, it never hurts to acquire some real world data. A top local real estate agent, like the ones on TrueParity, will give you expert opinion on when you should sell your home – as well as how to go about it, and how much they can sell it for. Experienced real estate agents agents will even do all of this for free in advance of securing your listing. You should never have to pay for data or this type of help.
You may even consider letting a real estate agent list your home, purely to test the water for a Godfather offer. There is no obligation to sell; so you can always decline until you're 100% satisfied with your return. To learn the local market, test the local market.
Summary
When you're thinking about selling your house, it's important to really evaluate why you want to move to understand the best time to sell. If some personal circumstances or financial implications dictate a sale ASAP, then now is obviously the right time to sell. If you can afford to wait and be cautious, and hunt for a cheaper investment property to buy in another area, then waiting probably makes more sense. If you're still uncertain, get a top listing agent to run some numbers for you to get realistic expectations about when your home will perform best on the market. Potential home sellers need to expand their line of thinking beyond mortgage rates, home equity, and housing prices -- personal circumstances will tell you when it is time to sell.
Find this post helpful? Send it to a friend or family member with future plans to test the waters of the housing market.
