Deciding to sell your home is a big decision, which is why a lot of homeowners will sit on the fence about it. Most hesitant homeowners simply aren’t sure if they are ready or not, whether that’s financially or emotionally. There are a lot of factors in play, such as where they’ll live next and how much they can actually get out of their home.
If you’re sitting around wondering if you should put your home on the market, take a look at these key ways to tell if you are ready to sell, based on an article featured on Zillow.
- You have either outgrown your home or are ready to downsize.
Usually, there is a moment. A day that you realize you are ready to sell. It might be that day your last child left the nest. It might be the day you bring your third baby home. There is usually a time when you look around and think to yourself, “You know what? This isn’t going to work for us anymore.”
These moments when your life and/or family are going through a change are generally good times to move. If you find yourself in the middle of a divorce, a new baby, an empty nest, or any other situation that is creating a major lifestyle change, you may want to contact a local agent.
- You’ve noticed your neighbors are able to sell fairly quickly.
Maybe you haven’t really considered selling but one day you are out walking the dog and you run into the neighborhood gossiper who informs you that three of your neighbors sold their houses in less than a month! You go online to find out that she was right and that your neighborhood is now in a hot market! Lucky you!
When you find yourself in a seller’s market (low inventory with homes that are selling quickly), you may want to talk with a local agent and see if it’s a good time for you to take advantage.
- You’ve crunched the numbers and have equity in your home.
Typically, the main thing that potential sellers want to know is what kind of money they can get out of their home. That all depends on a little thing called equity. In simplest terms, equity is how much your home is worth minus what you owe on the house.
If your house is worth $350,000, and you have $300,000 left on your mortgage, you have earned $50,000 in equity.
If you aren’t sure about the value of your home, you can either check your home’s Zillow Zestimate or contact your local real estate agent for information on how to get a broker price opinion, or BPO.
According to nerdwallet.com, you can consider selling your home if the potential sale price can cover your mortgage as well as selling costs, such as closing costs. If you do the math and the math is not on your side, you may want to hold off for a bit until either your home value increases, you pay off more of your mortgage, or hopefully both!
- You’ve crunched the numbers and have your finances in order.
Other than having equity in your home, it’s also important to have your other finances in order as well. This is especially true if you plan on buying another home once you sell yours (as opposed to renting, or living with family). Lenders are going to be looking at your big financial picture when deciding what to lend you.
Lenders will take a look at your debt-to-income ratio using things like car loans, student loan debt, credit card debt, and any other outstanding debt you have as compared to your income. Zillow.com provides a DTI calculator so you can see what your situation currently is.
Once you know what you can afford with the banks, you’ll need to prepare for down payments and closing costs. According to the Zillow Group Consumer Housing Trends Report, 52 percent of repeat buyers put 20 percent or more down when buying a house. If you do not have this kind of cash at your disposal, you may need to wait until you sell your home and acquire your equity before you can seriously look at buying your next home.
This can sometimes mean living with family or in an affordable rental for a (hopefully) short period of time.
Don’t Forget: There will always be additional costs such as home improvements and the overall cost of moving that can sneak up on you as well. Keep these costs in mind when determining your financial health.
- You are emotionally prepared to sell your home.
This is oftentimes the hardest part about selling a home. There are a lot of memories made in a home, you’ve been there for 5 years or 25 years. Saying goodbye to the walls that kept your family and friends warm and safe can be rather difficult.
Being emotionally prepared means that you need to detach yourself from the idea of your “home” and look at it as a “house.” This is not your memory box anymore; it is simply a building you own and are looking to sell.
When you go in with too many emotions, it will be difficult to negotiate properly with buyers. Emotionally-attached sellers also tend to place their homes on the market for more money than they are worth, which can really cause issues with the sale.
Part of emotional preparedness is also being ready to hear some harsh feedback on your décor choices, layout, and overall aesthetics that you’ve put so much time and thought into. An experienced real estate agent can provide a good picture of what the selling process is truly like to help you prepare, both emotionally and financially.
If you’re thinking about selling, feel free to reach out to our team today. We’re here to help.