You've paid good money on it. You've preened it. Heck, maybe you've even added an expansion to your house, thinking that you'll be there forever. However, life changed, and now you're looking at potentially selling. It's a tough decision to make, not to mention a rather emotional one. So how do you decide if you should sell your house?
If you're debating selling or keeping your home, it's a good idea to know what to think about when you're making that decision. Here are some important questions you should ask yourself before making a decision to sell.
- How much is my home worth? If your home is not worth much, there's not going to be much good in selling it. It may be better to wait until your home's value increases, creating a better financial incentive to sell.
- How much equity do you have built up in your home? You get to build up equity as a part of homeownership. With every bill you pay, you get to own more of your home. Most homeowners have to wait at least five years before building up enough equity to pay off their mortgage and the cost of moving.
- How much would it even cost to sell my home? Most people assume that selling your home will only cost between 5 to 6 percent of the home's price. This isn't true! While broker fees will likely be 5-6%, it actually will be closer to 10 percent of your home's price to sell your home. Besides the fees you'll pay the real estate agents, you'll have several other closing costs. You might also have to pay for various repairs before listing the house to ensure it's presentable.
- Can I afford to stay in my house? People who find themselves struggling with mortgage payments they can't afford need to think about whether or not downsizing is right for them.
- How pressing is it that I sell my home? Certain life events, such as divorce, can put a huge amount of pressure to sell fast. If you find yourself in such an event, you might not have an option aside from selling.
Though selling your home is never something that you should rush, there are some situations where selling your home is a no-brainer. Whether it's planned or unexpected, several situations are commonly considered to be "must-sell" moments. These include:
- Bankruptcy- Depending on the terms of your bankruptcy, you might be legally obligated to sell your home.
- Divorce- Though some courts might allow you to keep the house, most people who are going through a divorce do not want to stay in the same house as their former spouse once lived. If only due to the emotional pain you feel, you might be better off selling.
- Fix and Flip- If you bought the property as an investment, then you probably already have a general idea of when you want to sell your home. Use your personal discretion to determine if the time is right to cash in on your home's improvements.
- Environmental Calamity- Should you find yourself in the unfortunate situation where your hometown is deemed "unliveable" by a governing agency, you will probably be legally obligated to sell your home.
- Moving- Assuming that you don't have enough money to put down for a new home, you will most likely have to sell your home to fund your next move. On a similar note, many homeowners will not want to keep a home as a rental property simply due to the upkeep they require.
With COVID-19's chaos hitting almost every industry, there's a chance that you might be tempted to sell in hopes of getting a better life elsewhere.
When it comes to real estate, timing will make a huge impact on your decision to sell. As many of us remember, the housing crash in the late-2000s left many people with homes they couldn't afford to live in or afford to sell.
If you bought your home at a time when prices are high, and your home's value is currently less than what you owe on it, selling your home might not be financially feasible. In some cases, your bank might not even allow it to happen.
The ideal time for you to sell your home would be when the market is seeing high demand, and when you've built up enough equity to afford the move. For example, if you've already paid off a home worth $100,000 and noticed that people now want to move to the area in large numbers, you should consider selling your home.
Generally speaking, several strong signs would suggest you should hang onto your home for the time being. These include the following:
- Your home is "underwater" or "upside-down." If you owe more than you would be able to gain through your home sale, then it's a bad idea to move unless you absolutely have to.
- The prices of homes in your area are plummeting. Current events and similar issues can cause the value of homes in specific regions to take a nosedive. If you have reason to believe that the current events will eventually blow over, then you might want to wait it out.
- You have the luxury of waiting until the right buyer or offer comes along. In many cases, it's alright to wait around until you find a buyer who is willing to pay your asking price on your terms. Just make sure you have the time and leeway to do that.
- You don't want to rent it out. Airbnb made renting out vacant homes a cinch. But it's not for everyone. If you don't have the time, energy, or money to rent out your home, it won't make sense to leave it vacant in most cases.
- The lifestyle change you'd need to make exceeds the benefits you'd get. Sometimes it's not about the price that you would be getting, but rather, the quality of life you're getting. If you live five minutes away from work, get great amenities, and have a low mortgage, why are you worried about moving?
The decision to sell your home is a deeply personal one that should not be done overnight. You need to take a look at everything from a holistic level—your lifestyle, your personal finances, the potential profit, as well as potential areas where you want to move to.
If you are not sure whether or not you should move, or if you're not 100 percent sure about the finances behind it, you do have help available to you. All that you need to do is reach out to a qualified real estate agent, a financial planner, or a similar professional in your network.