Timing the housing market to the moment when interest rates are low and buyer demand is high may seem ideal, but if everyone had the ability to see exactly when home values are at their peak, we’d all be millionaires.
The decision to sell your home should be based on a variety of factors that are both financial and emotional. While you should definitely pay attention to market conditions as part of your thought process—and those conditions will absolutely impact your home sale—you should always keep in mind that the choice to buy or sell a home is completely individual.
Homeowners have a variety of reasons to sell their home at any given time. Some of the obvious reasons include an expanding family or a shrinking family that changes the amount of space you need; a job change or retirement to a different location; a local job change that impacts your commute; or a desire to move to a particular school district as your children get older.
In other cases, the reason to move can be purely financial: Your income has decreased, you’ve recently divorced and you need to live in a less costly home, or your income has significantly increased and you can now afford to live in a different neighborhood or a more expensive property.
How to decide
Once you have made up your mind that you want to sell your home, you need to gather some information before you determine when to put it on the market.
First, find out your loan payoff amount so you have an accurate idea of what your sales proceeds will be after you’ve paid off all home loans and paid your closing costs, including the REALTOR®’s commissions.
Next, find out the recent sales price of comparable homes in your community. You will need to interview several REALTORS® and consult with them about current market conditions to estimate a listing price and how long it may take for your home to sell.
Many sellers opt to put their homes on the market in the spring because that’s when more buyers are looking, but you can choose to sell at any time of year. If your home attracts families and is in a sought-after school district, you are just as likely to get offers in the summer as in the spring because buyers want to settle in before school starts. On the other hand, if your home is located in a resort area or appeals to young professionals or empty-nesters, the school calendar is meaningless.
Prepare your home
An important element in determining when to list your home is its condition. You will need time to make repairs and improvements, to deep-clean your home, and to clear away many of your possessions.
If you have a large, disorganized home with overflowing closets and a garage with no space for a car, you may need weeks or months before you’re ready to put your home on the market.
It’s extremely important to recognize that today’s buyers have high expectations of your home’s condition, so don’t expect to be able to work on your home after it’s listed. Your home should be priced correctly and in prime condition on day one in order to sell quickly and for the best possible price.
Buying a house is likely the largest and most important investment you will ever make. Getting the timing right can save money and hassle. If your urge to buy isn’t urgent, observe the market and your finances.
What is the market like in the area where you want to buy? If prices are increasing, you may need to buy soon. If prices are decreasing, think about how fast they are falling. If they’re falling slowly and you need to move out of your current home soon, then it may not be worth waiting for a lower price. If prices are plunging rapidly, then you may want to wait a while.
Tax credits and other government schemes are not always available, but it’s worth finding out if there are any upcoming programs.
Most mortgage lenders require a buyer to put down 20 percent of the price. Do you have the down payment right now? Would friends or family be willing to offer you a loan? If the answer is no, then now is not a good time for you to buy.
How good is your credit rating? Is there a way you can improve it? You could monitor the minimum credit rating required for a mortgage and try to buy when that benchmark is lowered. However, the best strategy is to fix any issues with your credit rating.
Mortgages are nearly impossible to get if you have been bankrupt within the past three to five years. If that is the case and you cannot raise the money for a house without a loan, then now is not a good time for you to buy.
Shop around for the best mortgage rates available. Most buyers will be looking for a 30-year mortgage, and local banks can offer competitive rates. Don’t shy away from haggling.