There’s a reason television shows that debate whether to stay in your current home or list it and move are so popular.
It’s a tough decision that brings with it a variety of emotions and the potential for drama that audiences enjoy watching. But now, maybe you’re living the TV drama and realizing just how difficult a decision it is. Should you love your home despite its annoying little quirks, or should you sell it and find a house that better fits your needs?
Determine How Much Equity You Have in Your Home
First, take emotion out of the equation and look at the facts. Have you lived in the house long enough that you’ve acquired sufficient equity to justify selling? Ideally, you should have lived in your current home for at least three years. While it isn’t required that you have equity to sell your house, you could be required to pay the remaining balance on your mortgage and the closing costs if the price you get for your house doesn’t cover the entire amount. In this situation, you’d end up owing money, which isn’t ideal, especially if you want to buy another house.
To determine the equity you have in your home, take the amount your house is currently worth and subtract the balance of your mortgage. Let’s say your house is worth $300,000, and your mortgage balance is $250,000. That means you have $50,000 in equity. If you’re not sure what your house is worth, look at similar houses in your area that have sold recently. Make sure you’re comparing apples to apples — the houses you look at should be similar in age, square footage, number of bedrooms/bathrooms, and location.
If you’re still not sure how much your home is worth, contact a real estate agent in your area and ask them to review the comps (comparable sales) with you. Agents have access to the MLS (Multiple Listing Service) and can give you the most up-to-date, accurate information available.
Review Your Finances
Not only do you need equity in your home, but you’ll also need cash on hand. You’ll need money for home repairs, staging the house, closing costs, real estate commissions, and buyer concessions. Make sure you can afford to buy a new home, especially if you’re in a seller’s market. Will your mortgage be higher, and if so, will the new amount fit within your budget? Use the Homes.com mortgage calculator to help you determine what you can afford.
How Is the Current Real Estate Market?
Before listing your house, you’ll want to examine your local real estate market. Are you in a buyer’s or a seller’s market? If you’re not sure, look at the houses for sale in your area. If you see a lot of houses for sale, you might be in a buyer’s market. On the other hand, if you see only a few houses for sale in your area, you might be in a seller’s market. You’ll likely get more for your house if you’re in a seller’s market, and you might even benefit from a bidding war. However, keep in mind that if you are planning to buy in the same market, you could struggle to find an affordable new home.
If you’re still unsure if you’re in a buyer’s or seller’s market, take the number of houses for sale in your area and divide it by the number of homes that have recently sold. For example, if you find eight houses currently for sale in your neighborhood and four that have recently sold, the result is two. Any result over seven means you’re in a buyer’s market, and any number below five is a seller’s market. In the above example, you’d be in a seller’s market. You can also look at how long houses stay for sale. If they are slow to sell, it indicates a buyer’s market. If they sell fast, it indicates a seller’s market. If you want more information, contact a local real estate agent and ask about your local area. Since markets fluctuate regularly, an agent can help you navigate the ups and downs of local real estate.
Is Now a Good Time to Sell?
In addition to the current market, you’ll want to consider the time of year. Pumpkins, goblins, and witches make October a fun month for treats, but it could be a scary trick to try and sell your home this time of year. And while December may be merry and bright, trying to sell during the holiday season might make you feel downright grinch-like.
While fall and winter are the worst times to sell your house, late spring and early summer are the best times. If it’s April, then it’s a great time to start preparing your house to sell since May through July are considered the best months for home-selling.
That said, much depends on where you are in the country. If you live in the South, for example, snowy weather isn’t an issue for winter home buyers as much as it is for people who live in colder climates. If you live on the coast or a place where tourism is popular certain times of the year, it might benefit you to sell your house before the influx of tourists hits since potential buyers will likely include those wanting investment property that they can have ready to rent out when the season begins. It might be a good idea to talk to a real estate agent to learn more about local trends and the best time to list a house where you live. When you list is crucial because the longer your house sits on the market, the less you’ll be able to get for it.
In addition to what the calendar says, consider where you are personally. For example, are there certain family obligations or a major event on the horizon? If you may have to soon care for an aging parent, send a child off to college, pay for a wedding, have an operation, or welcome a new baby to the family, you might want to review your finances to make sure you can handle the cost of the event and the expenses that come with selling and buying a house.
Consider what else could soon change. How stable is your job or that of your significant other? Perhaps your company is downsizing and you’ve heard talk of impending layoffs. Or perhaps you just started a new job and are still settling in. While it’s impossible to predict the future and job loss could happen very unexpectedly at any time, if you’ve been in your current role for some time and feel you do have job stability, you’ll be in a better position to sell than if you’re not quite sure whether you’ll have a job a few months from now.
Does Your House Still Work for You?
Finally, think about why you want to sell. What bothers you about your home that you’re considering selling? Does the space no longer work for you? If your family has grown or become smaller recently, perhaps the house is suddenly too small or too big.
Does the location still work? Maybe you purchased your house because it was close to work, but now you work from home or you’ve changed jobs. Or maybe you bought the house without considering the school district, but now you have children and would rather be in a different district.
Things that can’t be altered, such as the overall square footage or location, are good reasons to sell. But before reaching out to an agent to put your house on the market, make sure you can’t make the space work. Once you have an offer on the house and you accept that offer, it’s very difficult to change your mind. When considering whether to list your house, ask yourself the following questions:
Am I using all the space I currently have, or are there unused or underused spaces?
Could I repurpose current spaces to make them more functional?
Could I add on square footage?
Could a renovation change how I feel about my home?
Am I able to handle a renovation right now (both financially and personally)?
Is my home worth the investment of a renovation? (Look at resale value vs. the cost of the potential renovation.)
For more tips like this, visit Homes.com.
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