Few things resonate so perfectly with our emotions than the idea of home. It is what we are all looking for. If you’ve spent years in a house, lived a lifetime there, raised kids there then it’s likely that every corner of the house will contain some precious memory or reminder of a special moment.
So deciding to sell your house is much more than a financial decision. It can often signify a transition from one era of life to the next. Here are 4 things to consider when deciding whether its time for you to sell your house.
1. Isn’t that one of the reasons you bought a house?
If you think back to when you bought the house I’m sure that one of the deciding factors was so that you would accrue equity. You told yourself, that’s exactly why owning is better than renting. You made every one of those mortgage payments with that fact in mind.
The younger version of you was very smart and here is where the older you reaps the benefits of that excellent decision.
My in-laws are a perfect example of this. They bought a home in the 1970’s for well under $50,000 and, after their children got married, they sold it for well over a million. Even taking into account inflation and the time-value of money any time you can get a 2000 percent return on an investment (and have a great place to live for 30 years) is a win win in my book.
If you are looking to expand your horizons, travel, start a new career, the equity in your home can be the perfect springboard for those plans. Even if you are not planning any radical changes the money in your home can smooth the path to a worry-free retirement.
2. Flexibility.
In all likely-hood you were an entirely different person when you bought the house. Your family has changed in the intervening years and what was once the perfect home that checked all the boxes may not be the home you would buy today. You may have decided on the neighborhood because of the excellent school system, is that still important to you? Or it could have been close to a job you no longer have. And if you switch your gaze from the past to the future you now have a flexibility and options you never did when you were younger. Maybe you want to move into a smaller place and travel more, buy a boat or simply have fewer rooms to clean.
3. Money (of course)
As I mentioned earlier selling house is often way more than a financial decision but make no mistake there is a huge financial component involved. For most of us buying, owning and selling a home is largest single financial involvement we will have in our lives. If it’s addressed intelligently owning a home can set you up for financial success for the rest of your life,
Of course market conditions will make a big difference in your decision to sell your home. The market is cooling off a little at the moment but that doesn’t mean that it’s not a good time to sell.
- According to the National Realtors Association, the average home spends only 34 days on the market before sale and that is 4 days less than 2017.
- The number of starter homes listed is almost 10% less than the number of searches being performed. Which points to the fact that more people are buying than selling. It doesn’t take a genius to realize that’s good for the home seller.
Figuring out how much equity you have in your house.
Obviously the argument for selling your house is more persuasive if you will make more profit from the sale. Finding out exactly how much equity you have in your home may sound complicated but in fact it’s quite easy. Here’s how.
Step One: Take a look at your last mortgage statement and find your current mortgage balance; the amount you still owe on your house.
Step two. Find out your home’s value. At this point I could direct you to one of the many on-line valuation services that have sprung up like weeds recently, however I have had very mixed results with them. They are inherently unreliable and don’t take into consideration many factors that can have a huge impact on the value of your home.
Instead I’m going to suggest that you contact me. I’ll run a no obligation, comprehensive market analysis (CMA) for you. It’s free but more importantly it’s much more reliable than an on-line service. I’ll get back to you within one business day and you can be sure you’re working with accurate numbers.
Step Three: Once you have these two numbers you simply subtract your current mortgage balance from your home’s market value and the difference will give you a ballpark estimate of the amount you can expect to make.
Obviously you will incur other costs if you decide to sell but it’s a good starting point.
How much equity is enough? Well that depends. Are you planning on renting or buying your next home? If you are buying then I would suggest that you have, at a minimum, enough for a 20% down payment. Not only is that a good amount but putting down 20% will allow you to sidestep Primary Mortgage Insurance (PMI) which will save you hundreds of dollars every year.
4. One last thing
The final thing I would recommend when you’re considering selling your home is that you hire a licensed realtor. Selling your home is a big deal. A real estate agent does way more than just put your home on the MLS and show it off.
It’s 2018 do I really need a realtor?
This may be the first time you’ve ever sold a home, it is certainly not your realtor’s first time. We are trained and experienced and that experience can translate into a better price for you as well as a smoother process with less hiccups and headaches.
A realtor will also help in other ways:
- Advising you about which repairs will make your home more attractive to a buyer and which are a waste of money
- Helping you set a good price for your home that will facilitate a quick sale
- Marketing! You want your home to get as much exposure as possible
- Scheduling showings with buyers
- Giving you insight and advice while negotiating offers
- Handling all of the paperwork
Only you will know when it’s the right time to sell.
Let’s be honest, if the home you are selling is the home you raised a family in you will have misgivings. The house is way more than bricks and mortar and you will, almost certainly, feel some moments of regret afterwards. However the financial benefits can be huge. For many people, selling their home means ensuring a comfortable retirement. Owning a home, especially a home with considerable equity, gives you a wide range of options. If you decide not to sell you can feel settled and secure and find other ways to use the equity in your home. [Here are three great ways to do just that] If you want to expand your horizons your home can provide the financial freedom to enable that.
Why you need a native Angeleno as your realtor
