Whether for sale signs are popping up all over your neighborhood, or you’ve contemplated selling your home for the last several months, timing is everything.
Is it possible to know whether you’re ready for such a big step? Several signs indicate it’s time to sell.
Read our guide to 7 signs you’re ready to put a house for sale sign in your front yard.
The Key Is Equity
Free and clear are two words homeowners love to hear. These two words are a key factor in deciding whether you have enough to sell.
You start building equity with your down payment. Over time, as you pay down the principal balance on your mortgage, you build more equity. You also assume your home value appreciates at the same time.
When figuring out your home equity, you can use a simple formula:
Current Market Value – Outstanding Mortgage Balance=Home Equity
Most homeowners know how much they owe. Figuring out the current market value isn’t as straightforward. Without the help of a professional appraisal, you’ll need to do some of your own sleuthing to come up with a market value for your home.
First, you can put together an unofficial comparative market analysis (CMA), or what real estate agents refer to as comps. Don’t understand the nuances of comps? Contact a real estate agent and ask for one, keeping in mind, when an agent goes to the trouble of pulling together a comp, they’ll also ask for your business.
Selling when you have negative equity isn’t wise—it’s a short sale. You also don’t want to sell if you’ll only break even. Avoid both situations unless you’re attempting to avoid foreclosure.
You Have a Game Plan
Like any other major financial move you make, you need a game plan when selling your home. Have you thought about the following situations?
- No Buyer
- Negative Home Inspection Report
- Fantastic Offer on Day 1
- Multiple Offers
If you’ve come up with a plan for how you’ll address each of these scenarios, you’re ready to sell. Even so, always expect the unexpected.
Speaking of the unexpected, another reason you might be ready to sell now is you’re facing one or more unexpected life changes.
The Seasons of Life
You can’t always plan for life’s biggest changes. Things happen out of the left field and suddenly, you need to sell your home.
If you’re dealing with any of these abrupt life changes, it’s likely time to put up the sign:
- New Job
- Aging Parents
- Change in Kids School
- Medical Condition
The first two are almost no-brainers. The others require serious consideration before listing your home.
Looking Forward to Retirement
Not all retirees want to stay in the home where they raised a family. Many don’t even want to stay in the same town or state. One smart move made by people when preparing for retirement is downsizing.
If you’re looking forward to retirement and want a smaller, more manageable home, why not sell now? It makes sense if you’ll have a lower mortgage. Then, you can bank the difference and beef up retirement savings.
The key to selling a home at this stage in life is to view your home as a tool. It’s a tool that can empower you to live well throughout your golden years.
Is It Peak Selling Time?
Another tool you have available when deciding whether it’s your time to sell is a calendar.
There’s a peak time to sell a home. Home sales tend to increase in February. They pick up even more in the spring and peak during the summer months.
Patterns in your area may vary. For example, if you live in a part of the country with mild winters, home sales may remain steady all year.
Making a smart decision about when to put your home on the market means researching local real estate trends.
Talk with a seasoned real estate agent. A good agent can talk with you about the advantages and disadvantages of listing a home during peak or off-peak season.
If you can swing it, think about putting off listing your home until you can take advantage of the most favorable conditions in your geographical location.
When the Market Is in Your Favor
Seasonality isn’t the only market factor you should look at when determining whether you’re ready to sell your home.
One of the biggest factors is inventory. Low inventory often results in more willing buyers who don’t mind paying top dollar.
This is another area where an experienced real estate agent can offer help. Real estate agents know exactly what’s going on with inventory and other real estate trends at any given moment. At their fingertips, they have all kinds of information including:
Number of Active Listings
Median Sale Prices
Days on Market
You should also keep an eye on interest rates since they motivate buyers. More buyers may translate to less time on the market and more money for you.
Your Financial Situation
Finally, your current finances may dictate whether you sell or keep your home.
It’s not only the mortgage people worry about—it’s also property taxes, homeowner’s insurance, utilities, and other maintenance associated with owning a home. All of these can put a strain on an already tight financial situation.
The suggested amount to put aside each year for home maintenance is 1%-3% of the home’s purchase price.
Not everyone can afford to save that kind of cash. Some homeowners end up house rich and cash-poor. In this scenario, a single unexpected financial burden can put someone in a downward spiral toward loan delinquency.
If this is your situation, deciding to sell now could prevent you from ending up in foreclosure.
Do You Need a House for Sale Sign in Your Yard?
Hopefully, we’ve cleared up your questions about whether it’s the right time to sell your home.
We’ve only covered 7 signs indicating the time is right to plant a house for sale sign in front of your home. Each homeowner has their own unique situation.
If you have questions about the ideal time to sell, or if you’re ready to list your home, we’d love to chat with you. Contact us today and let’s figure out the best time to sell your home.