5 Steps You Should Take Before Selling Your Home
Your life circumstances and financial situation should be considered when determining if you should sell your home, including the amount of equity you have in your home, your ability to afford a new home, and the costs of selling. Additionally, you should understand how seasonal trends affect your local housing market goals. In case you are wondering, “Should I sell my home?” Here are some important questions to ask:
1. How Much Is My Home Worth?
A real estate professional will compare recently sold homes in your neighborhood with yours in order to estimate the value of your home. It is common to refer to these comparable homes as “comps”. Using comps as a guide, you can determine what home buyers are likely to pay for your house by comparing the sale prices of different properties.
If you are looking for comparably priced homes, you will need to take into account things like the number of bedrooms, bathrooms, and square footage. No two homes are exactly alike, so each feature will need to be adjusted accordingly; it’s extremely difficult to do that precisely for each comp. The good news is that computers are very good at doing this.
We can provide you with more than an estimate; it’s free, and you’re not obligated to accept it. Your home is valued based on information provided by you, current market trends, and the sales data of hundreds of recently sold comparable homes. Moreover, we have a team of local pricing experts who can provide you with both local and national pricing expertise.
2. Do I Have Enough Equity To Sell My Home?
You will typically need enough equity to cover your mortgage, selling costs, and moving costs. It is also common for people to wait until they have enough equity in their home to put towards a down payment on their next home before selling.
A recent Bankrate survey found that most homeowners don’t accumulate enough equity in their homes until five years after purchasing them.
Homeowners can have negative equity, meaning that they owe more money than their homes are worth. It is commonly referred to as being “underwater” on your mortgage. When you sell your home for a substantial discount from what you paid, it’s usually the last resort.
The first step to selling your home is determining how much equity you have. The cost of selling your home will be covered by your equity once you know how much of your home you own.
3. How Much Will It Cost To Sell My Home?
In selling a home, most people focus on the 5-6 percent commission that’s typically paid to the agent. It is possible, however, that the total cost of selling a home may come closer to 10 percent of the purchase price. In the event that you aren’t able to align the sale of your current home with the purchase of your next, there may be costs associated with seller concessions, closing costs, repairs, and housing overlap. Remember to take into account the cost of your time and sanity as well.
Also, if you’re buying a house, check out our guide to determining your monthly budget. You can qualify for a loan based on your debt-to-income ratio, so it’s important to know how much cash you have coming in and how much debt you’re paying off each month.
The 28/36 rule refers to the conventional rule, which states that housing costs cannot exceed 28% of your gross income and that total debt cannot exceed 36% of your gross income.
4. How Long Will It Take To Sell My Home?
When determining if you should sell, take into account your moving timeline and the impact moving might have on your goals. Selling a home can take longer than expected, which can have a financial impact. There are a variety of consequences, such as delays in job opportunities, the need to spend money on temporary housing or storage fees, and, of course, maintaining a home is part of the process of selling one.
The Days on Market (DOM) is one of the best indicators of the time it will take to sell your home. Using this statistic, you can track how long a home stays on the market from the time it is listed until it is sold. As an example, realtor.com reports that the average US DOM for February 2019 was 83 days. A DOM may differ greatly depending on local market conditions and the season. You can get a sense of how long it takes to sell similar homes around you by looking at the average DOM for nearby homes.
There are factors that influence the time it takes to sell a home and what the best selling time is. Your home will stay on the market for a certain amount of time-based on factors out of your control, such as how “in demand” your neighborhood is, how many houses are for sale, and how seasonal the market is. The National Association of Realtors (NAR) reports that home sales tend to peak in the summer across the country.
Keeping up with current market trends, such as interest rates and home sales, is also essential for setting realistic goals and timelines.
5. Should I Make Repairs?
Sellers are required to disclose any known issues with their homes to buyers. While it is not necessary to make repairs, you may have to price your home based on the cost of needed repairs, or you may have to make a concession to the buyer for them to do the repairs themselves. Repairs that are expensive, such as fixing an HVAC unit or repairing a pool, can be a deal-breaker for buyers in the market for a move-in ready home.
The decision to sell a home is not only influenced by life events like a family milestone or a new job, but also by a variety of other factors. When you understand your finances, your timeline, and how you plan to sell your home, you’ll be able to tell if you’re ready to sell. Estimate your home’s value with our home valuation tool.
Taking into account your home equity can help you determine if the proceeds of a sale can cover the costs of selling, moving, and possibly putting a down payment on a new home. You can reach out to us today for a free confidential evaluation.
To estimate your home’s value, consult a real estate professional who will compare your home to recently sold properties (comps) in your neighborhood. They consider factors like the number of bedrooms, bathrooms, and square footage to provide an estimate based on market trends and comparable sales data.
Yes, having enough equity is crucial before selling. You need enough equity to cover your mortgage, selling costs, moving expenses, and possibly a down payment on your new home. Waiting until you have sufficient equity is common before selling.
The total cost of selling a home can be around 10% of the purchase price. This includes agent commissions, seller concessions, closing costs, repairs, and housing overlap costs. It’s important to factor in your time and effort as well.
The time to sell a home varies depending on local market conditions and the season. The Days on Market (DOM) metric is a good indicator. Various factors like demand in your neighborhood and current market trends can influence the selling time.
While not always necessary, repairs can affect your home’s value and appeal to buyers. Expensive repairs like HVAC or pool fixes might deter buyers looking for move-in ready homes. You may choose to disclose known issues or consider making repairs to improve your home’s marketability.
Apart from life events and finances, factors like moving timeline, seasonal market trends, and local housing demand play a role. Understanding your financial situation and home equity helps determine if selling aligns with your goals.
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