Making the decision of whether or not it’s time to buy a home can be very difficult. Most students wind up renting property, but for those savvy and interested in investing, you can often buy a house with monthly payments adding up to less than you’d have spent on rent. Of course, starting this journey means learning more about buyer’s and seller’s markets, when the right time is to buy, and when it’s best to hold off. For those times when you and your family are not sure as to whether it is a good time to sell your house, here is a look at the top indicators that it’s a good time for you to sell your home.
You recently updated some key aspects of your home.
By recent, I’m talking within the past two years or so. There will always be those standard home upgrades that homebuyers look for when shopping around for a home. The top upgrades that homebuyers look for include:
- Kitchen appliances
- Kitchen countertops (especially granite or quartz)
- Bathroom remodel
- Garage door (especially one that increases curb appeal)
- Plumbing upgrades (as needed)
- Electrical upgrades (as needed)
- Fresh paint
If you’ve recently upgraded your home in those areas, then your home is, in many ways, already ready for the market. If some of these things are upgrades that you are already planning to make in the near future, consider waiting until these upgrades are finished to put your home on the market.
Your home no longer suits your lifestyle.
How well does your current home serve your lifestyle? Maybe your family is growing out of your current home, for example, with three kids all sharing one bedroom and all of you sharing one bathroom. Alternatively, maybe you and your spouse are empty nesters now that the kids have moved out, meaning that you would be completely ready to downsize. If your current home no longer suits your lifestyle, that’s often reason enough (assuming your finances will allow it) to consider putting a for sale sign in your yard.
The housing market favors the seller.
Sometimes the housing market is a “buyer’s market,” and sometimes it is a “seller’s market.” How do you know which one it is currently? Well, in a buyer’s market, the number of homes listed for sale exceeds demand. In a seller’s market, there aren’t enough homes being listed for sale to keep up with the current buyers’ demand. One easy way to assess the current market in your area is to look at the average duration of a house market listing. The shorter the average duration of a listing, the more the market favors the seller.
You have the resources to buy a new home.
Before listing your home on the market, it’s essential to take an inventory of your finances and to determine if you truly have the resources to move to a new location. Are you prepared to take on a more expensive mortgage? Do the homes in your desired new area fall within your budget? Will you be able to pay a mover to help you take all of your possessions with you? Even if all of the other “stars” are aligned as you consider putting your house on the market, none of it will matter if moving will be a major detriment to your finances. If you’ve paid off all non-mortgage debt and have three to six months’ worth of expenses in your emergency fund, then you’re probably ready to start looking at a new home.
Your current equity would help you put 20% down on a new home.
Okay, so there’s one more thing that you would want to seriously consider when assessing your finances before a major move—and that thing is equity. Ask a real estate agent to run a comparative market analysis (CMA) for you to determine your home’s approximate value. Then, subtract your outstanding loan balances from this number to determine how much home equity you hold. The number you end up with is the portion of your property that you truly own, or your equity. If your equity is high enough to afford you a 20% down payment on your next home—something that is highly advantageous as it allows you to forego paying for mortgage insurance—then you can rest assured that you are in good financial shape for buying a new home.