The following post is from Melissa Batai
Has your house skyrocketed in value over the last year? Personally, I have been shocked to watch our modest home increase in value 15% during the last 13 months. If the same is happening to you, you may be wondering, is now the time to sell your house?
The short answer is, it depends.
What to Consider Before Selling Your House
It’s easy to look at the appreciation of your house and imagine what you would do with the profits if you were to sell. After all, you could pay off debt, travel, buy a house somewhere else. The possibilities may seem endless. But first, consider these questions.
Where Will You Live?
If you’re staying in the same area and want to move to a comparable sized home, will you really reap any profits when you sell your current house? You’ll still need to buy a house likely in the same price range.
However, there are three times selling your house now makes sense.
If you’re children have moved out, and you plan to move to a smaller house, selling now makes perfect sense. The market is good for getting out of a bigger house and reaping the financial rewards, especially if you’re downsizing to a home that is significantly cheaper.
You’re Moving to an Area with a Lower Cost of Living
Likewise, now might be a good time to sell if you’re moving to an area with a lower cost of living. A woman I know just sold her home in California and moved to Michigan. She was able to buy a larger house in Michigan than she had in California, and she was able to afford a 15-year mortgage there for less than the monthly cost of a 30-year mortgage in California. In her case, selling now was an excellent financial decision.
You’re Going to Rent
Some people sell their homes and rent for a period afterward, especially if they want to pay off debt with the proceeds of their home sale. Just keep in mind, in some places renting is more expensive than owning a home.
Also, if you use the profits from your home to pay down debt, you’ll need time to rebuild a down payment for the next home you’ll buy. Depending on how expensive houses are in your area, gathering enough money to make another 20% down payment may take years. What if housing prices continue to rise while you’re renting? You may find yourself locked out of the housing market.
Talk to a Realtor
If you’re tempted to take advantage of the current market, before you make the leap, talk to a realtor. A realtor can help you understand how much it costs to sell your home. You’ll need to pay realtor fees, closing costs, home repairs before listing the house, and other expenses when you sell. You may be surprised how deeply those expenses cut into your profit.
Before you take the leap to sell your home, make sure you understand the entire process. Know how much you’ll pay to sell your home, and have a definitive, realistic plan as to where you’ll live after you sell. For some people, now is the right time to sell. For others, it’s best to stay put and ride out this current real estate wave.
My Question for You
Are you tempted to sell your home in today’s real estate market? What is helping you decide to
sell. . .or to stay?