Housing Market Shortage: Is now a good time to sell your home?
Questions to ask and tips to consider when deciding to sell your home in the current housing market.
Have you had a realtor knock on your door asking you to sell your home? They probably have promised you a big return and now you are seeing dollar signs. Before you put your home on the market, here are a few things to consider.
Is your home paid off?
The most common type of personal debt in the United States is mortgage loans. Paying off your mortgage is a huge accomplishment. Not only is it less debt, it’s extra money in your account to save and spend. Here are some benefits to having your home paid off.
Protection during Unstable Housing Markets
Most homeowners are concerned about the effects of an unstable real estate market. Homeowners could be concerned about paying their mortgages during a large-scale financial crisis.
Having your home paid off will relieve you of a monthly house payment. During an unstable market your home has a likely chance of decreasing in value. People who are trying to sell their home during an unstable housing market are likely to struggle from it the most. However, if your home is paid off, there isn’t a rush for you to sell. You can wait for the housing market to improve so your house can increase in value.
Paying off your mortgage frees up a large amount of monthly income. Consider using these funds to pay off any remaining debt, add to your emergency fund or other goals. If your assets are in a good place, evaluate if you can use the extra funds on a vacation or favorite hobby.
Pay off other debts
Having more financial security over the long term is one of the main advantages of paying off your mortgage. Your budget may be able to expand a bit. With freed up income, it’s a good idea to start paying off your other debts that you have.
When you pay off your mortgage, you can use your extra cash to help pay off college loans, credit cards, and utility bills. Paying off these debts can improve your credit score, reduce the amount of interest paid over time, and remove an emotional or mental burden.
Are you retired?
When you retire, it’s normal to want to move or downsize. The first step is to evaluate your house’s equity. If it’s low, you might lower your monthly housing costs by selling. Also, if you’re retired, you might be close to paying off your home. One of the biggest questions retirees face is deciding whether or not to pay off a mortgage. Paying off your mortgage will give you extra money you haven’t had in a while. You could use funds toward house renovations or increase your savings.
Some benefits for selling are:
Influx of Funds
How’s your retirement planning? Selling your home in a healthy and safe market can help you add to your retirement funds. Owning your home outright and having a large amount of equity can provide a larger profit. If you remain in your current home, you have the option to sell whenever you would like. It’s also possible your home will appreciate in value.
As your home gets older, it’s likely it will require more maintenance. Whether you do the maintenance yourself or hire someone, the costs can add up. Upgrading to a newer home with newer technology and better hardware can save more overall. It’s also likely you won’t need to make as many repairs with a newer home.
Buying Your Ideal Home
As you think about your ideal home, it probably changed throughout your life. At one time, the school district or location in relation to your work were more important. As a retiree, you may not be as concerned about those requirements. But rather, you might be more in favor of being close to your kids, grandchildren, or your favorite vacation spot.
Benefits of Staying in Your Home:
You have already modified your home to your liking.
You might be less inclined to move if you already customized your home to fit your needs. Whether it’s popular accessibility accommodations, like renovations to the floor, handrails, and walk-in tubs and showers.
Do you love your home?
If your financial situation supports a move, great! It’s important to keep in mind selling your home is an emotional decision as well. Before you are sure you want to sell, take time to think about some questions.
- Do you plan to keep it ready to show for several weeks or months?
- Is it really time for you to leave the home where your family had made so many memories?
- Are you prepared to work hard to make your house appealing to house hunters?
- Can you accept honest negotiations over your home’s price, which can sometimes be contentious?
Housing prices are at an all-time high and there is low inventory.
Home prices are skyrocketing on houses across the U.S. because there are fewer houses on the market. During 2020, housing inventories decreased 39.6% nationwide. With so few homes on the market, sellers have all the bargaining power. While the lack of inventory often leads buyers to bid above asking price.
A low inventory market can increase your chances of getting multiple offers on the property, cash offers, and offers above the asking price.
Have you already been looking?
You might have already had your eye on a promising house and are thinking about selling. For some homeowners, waiting for a balanced market is a good strategy. It will also not affect your chances of getting the best price for your home when it’s time to sell. In a market where supply and demand are more balanced, multiple offers and sale prices well above the list price are less likely to occur. Even so, you will still see positive gains in home value.
Thinking about renting until the housing market settles down? Consider the costs!
If your mortgage has been paid off, your rent costs alone could be substantially higher. Usually, the next step after selling a home is to rent or buy a less expensive home. The long-term costs of living in a home might be less than renting. When thinking about renting, be sure to consider costs outside of just your rent payment.
Here are some of the costs associated with renting:
- First and last month’s rent payment
- Renter’s Insurance
- Application fee
- Security deposit
- Utilities and trash collection service
- Moving Costs
- Pet deposit
- Pest control
- Yard Maintenance
- Cable or Internet deposit
With the housing market in its current situation, it’s important to understand the effects of selling your home. Asking yourself these questions and considering these tips is a great way to decide whether to sell your home or not.
Benefits of Paying off Your Mortgage, Investopedia
Am I ready to Sell My House?, Ramsey Solutions