How to Know When it’s Time to Sell your House
November 11, 2022
It can be tricky to figure out whether or not it’s a good time to sell your house. There are so many factors to consider when doing so. Other than the housing market being in your favor, other lifestyle, financial, familial, and living situations are all important aspects to consider but what parts of these can indicate it’s a good time to sell? Below we’ll go over these and outline what makes each a signpost for selling.
While knowing exactly when it is time to sell your home can be tricky, other circumstances may leave you with little choice or help push you to decide it is time. Whether it’s a new job or to move closer to older family members to care for them, a strong need for relocation is one of the easiest ways to know.
Expanding your Home
Perhaps your family has grown or maybe you’re looking for a more open feel. Either way, feeling cramped in your current home is another one of the more obvious signs that it may be time to sell your house and move elsewhere.
Expansion isn’t the only reason people may be looking for a change in home size.
You may be busy and caring for a larger and/or older house does not fit with your lifestyle, or perhaps you are a bit older and maintaining a larger house is no longer feasible. If you’re looking to downsize your living situation, then this may tell you you should be looking to sell your home.
How to be More Sure it’s Time to Sell your Home
So what other financial, living, and life situations are good signposts for knowing when it’s time to sell? Let’s go over these:
Financially Ready for Budget Shifts
Typically, if you’re selling your house, you’ll also be looking to buy one as well. Budgeting out current and predicted costs is key to knowing if you are financially ready. Outstanding or hard to manage debt may be an indicator that it’s not a good time to sell.
Different situations bring about different budgeting needs. For example, if you’re looking to downsize, perhaps the sale of your old home will completely cover your new, smaller one and some. In this case it’s likely you’ll be more than capable of affording your budget without the major living expense of a mortgage.
If you’re looking to expand, be sure your financial situation allows for the subsequent growth of living expenses such as utilities, home care products etc. If a new, larger mortgage will mean living paycheck to paycheck, you may want to reconsider. Downsizing doesn’t always mean you can’t make a profit to purchase a new home, the new home may be larger but the real estate may be in a location which costs less and/or your equity is in the positive.
It’s also important to note your savings and emergency funds. Experts recommend three to six months of expenses be available in your funds before feeling secure enough to sell and buy a new home. It’s all about weighing debts, whether its current or future, and income stability.
The Market is in a Good Place for Sellers
Unless it’s a part of your profession, it’s difficult to understand and predict the housing market. Even professionals disagree on projected outcomes. Being able to approximate the market in general where you are selling is an important skill to have in order to know when it’s time to sell your house.
An example of how to know the market is in your favor as a seller is researching or asking a local real estate agent if the number of houses available for sale has been recently decreasing. If the answer is yes, then it’s a good indicator that there’s a smaller ratio of houses to buyers, meaning you’ll have a lot more offers to sort through to find the best one quickly.
Understanding this can be the difference between buying a new house out of necessity and waiting to sell your old one, and selling for a fantastic offer quickly and smoothly transitioning to your next house. No one wants to get locked into a double mortgage!
Your Equity is in the Positive
A part of knowing you’re ready to sell your house is having good equity. Having negative equity would mean you are short selling your home. Best case scenario, you break even, but even that is not an ideal.
If your home is worth more now than when you first bought it and other financial situations line up, then this is another positive indicator that it is time.
So how do you calculate your equity? It’s fairly simple: find your latest mortgage statement balance and subtract it from a good estimation of your home’s current market value from a comparative market analysis. If it is positive equity, then how much in the positive is it? Experts recommend that the amount is enough to pay off your current mortgage and ideally, enough for a 20% downpayment for your next house. The more profit the better!
If you have a lot of debt such as student loans, car payments, credit cards etc. This doesn’t always mean it’s a bad time to sell. If you’ve calculated your equity and its in the positive, so much so that there is leftover enough to pay off consumer debts and purchase your new home this is a sign that it is more than the right time to sell your house
You Have a Place to Live After your Home Sale
While this may seem like a no-brainer, knowing you’ll have a place to live if you sell your current house is important to knowing that it’s an appropriate time to do so. This could look like a family member who can and is willing to accommodate your household while you search or wait on your closing.
Perhaps purchasing a new house can’t happen right away and no one can house you until then. If this is the case, you may have to consider renting for a short period of time. If this becomes a reality, be sure to budget for this intermediate expense as well. Rent in some places can often be unaffordable and sometimes even more expensive than a mortgage.
You Have Time/Money for Staging/Moving
It’s also important to note the time and money you will have to put into selling your home. Unless you’re selling to a cash buyer looking to swiftly purchase a house without even seeing it, you’ll need to put in extra work for curb appeal and general home improvement. A bit of decluttering, landscaping and painting can lead to more- and better- offers! Whether you do these yourself or hire a professional, make sure you take into account not only the money but also the time that you may have to spend to accomplish this.
Additionally, moving expenses such as boxes, packing materials, and movers should be considered. Even if you don’t hire movers you may need to be able to afford a moving truck and the expenses that come with it.
You’re in an Emotionally Good Place to Sell
While finances may be lined up more than perfectly, it’s important to consider if you’re personally ready. Logic does not just mean numbers, it means being realistic and considering your feelings. You’ll need to be ready for a huge change, people going in and out of your home, listening and taking in criticisms of your house, and perhaps a difficult negotiation process. Maybe being in a place tied to family memories is more important than selling and moving to you, and that is a completely justifiable reason to not sell your home.
Another important tip related to being emotionally ready: if you’ve recently experienced a loss, it’s a good idea to wait before making a huge decision. Experts recommend at least 6 to 12 months before solidifying a decision to sell. Added stress while dealing with loss is one thing, but sometimes grief may tunnel vision us in a direction we come to deeply regret later.
Overview of Knowing When to Sell Your House
All in all, we’ve gone over the various whys and whens of knowing it’s time to sell your house. Considering circumstances other than knowing if it’s a sellers market or not is crucial. Whether you need to move for relocation, downsizing, or expanding, understanding your budget, debts, income, equity and overall financial situation along with personal readiness when it comes to time, post-sale living situation, and emotional investment are all key components to being sure that it is time to sell.