Identifying the right time to sell your home
Timing is everything, but it’s not always the case that we have a choice when it comes to selling our home. Life changes fast, and big life changes can necessitate a move without much consideration for what you or your family want. We’ve all known people whose jobs send them to far-flung locales at the drop of the hat, or perhaps we are or have been those people. But in the event that you are able to be deliberate, there are a lot of factors to consider when deciding on the right time to sell.
Considering seasonality and market demand when selling your home
As a start, you need to be able to afford to move if you’re choosing to do so. Selling a home comes with costs and expenses, and you’re already familiar with how much money you’ll have to put into the home buying process, and the home itself. If you haven’t been in your current home long enough to build up some equity beyond your down payment, it may be difficult to sell your home at a price that would pay off your mortgage with enough money left over to cover additional costs. Potential sellers should do the math to see what they can afford before thinking further about selling.
Home selling seasonality
The seasons play an outsized role in people’s motivation to put their homes on the market. As the weather gets warmer, more people think about moving, and thus more sellers put their homes on the market. Practicality has a lot to do with it: yards and homes look better in the warmth of spring or summer, kids are out of school, and no one wants to move in the cold of winter. (Unless you live in the desert or other hot climates, where winter is likely the only time to move.) You want to align your listing with the time of year most likely to garner attention, whenever that is for your region.
Housing market demand
Like the weather, you can’t control the ebb and flow of the housing market, but you can try to ride the wave. A seller’s market, with an abundance of buyers and a dearth of homes, is obviously preferable to a market tilted towards buyers. Similarly, interest rates for home loans can impact the number entering the fray, with lower rates compelling some buyers to finally take the home-buying plunge. You can still sell with higher rates and a more crowded market, but it may require patience and a willingness to move off of your original asking price and make concessions to get a deal done.
Buy a home before you sell or sell your home before you buy?
One of the main questions home sellers wrestle with is whether to sell their home before buying a new one or to try and manage both processes concurrently. Trying to both buy and sell at the same time is difficult not only for the amount of work involved but also the difficulty of aligning the timeline of both purchase and sale to be able to simply move into your new home right after closing on your old one. Each option creates unique challenges.
Buying before selling
If you buy a new home before you sell your current one, you’re avoiding any temporary housing crisis and finding the house that’s right for you, not just the most convenient or easiest to buy once you sell. But that leaves you in the position of carrying two mortgages, which may be a tremendous financial burden for any family. The possibility of carrying that burden for an extended period might scare some sellers into taking the first offer to come along for their old home, even one less than what is needed.
Selling before buying
Selling your home before buying your next one eases the potential financial burden, but leaves the seller in a similar bind trying to find a home instead of offloading one. That desperation can again lead to a bad decision, this time in settling for a home that’s just okay to purchase.
First, identify how quickly you can buy a home and sell your home
Buyers and sellers can make their deals contingent upon their ability to sell their current home or close on a new property, but that relies upon the other party to those deals being willing to accept those terms and not move on to other offers or homes. In considering which step to take first, homeowners have to consider how quickly they think they can buy or sell, and what they can afford if the market doesn’t cooperate.
Foreclosure and short sale considerations
Money troubles can never be considered the “best” time for anything, but if you’re struggling to pay your mortgage, it may be advisable to consider selling before getting too far underwater. If the current valuation of your home is less than the outstanding value of your mortgage, you can try a short sale, where you sell the home at a price less than what you own on it, with the lender forgiving the difference.
The lender has to agree to the sale and approve the buyer, and you’ll have to pay taxes on the forgiven debt and take a hit to your credit, but it’s a way to avoid foreclosure. If you’ve been informed by your lender that they plan to foreclose on your home, you can also look to sell to avoid the long and difficult process. Provided that you can find someone to pay at least enough to pay off your mortgage, you can avoid having your lender take back the home to put up at an auction.
If the home is valued at less than that, you may choose to pursue a short sale. Both foreclosure and short sales are complex legal processes and even if your state does not require a lawyer to be involved with real estate transactions, consulting an attorney is prudent.
The right time to sell depends upon a number of different forces, but it also depends on you and your desire to sell. While there are better times than others to put your home on the market, with patience and diligence you can sell at the right time for you and your family.
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