We all want to sell when real estate prices are on the rise, and now may be the time for you. Talk to a professional, and consider these 5 points before you decide:
1. Equity Advantage
Have you built equity in your home? Home equity can be defined as the value of a home, minus the amount of outstanding debt. Although equity does not generally develop in the first few years, it’s always a good idea to talk to a professional familiar with your market, and to know how much equity you have in your home. You wouldn’t ignore your bank account balance or credit card balances for years without ever looking at them, would you? For most people, your home is your biggest financial investment, so why wouldn’t you keep an eye on your equity? During the housing bust, a huge percentage of homeowners saw their equity evaporate as home values dropped. Many even owed more than their houses were worth. If you’ve been waiting to sell for this reason, you may now have more positive equity in your home than you know. Even if you have less equity than you expect, don’t you want to know? Maybe now is the time to sell your house and walk away with the equity value.
2. Financial Situation & Lifestyle
Has your income or financial situation improved or declined? You should consider your overall financial situation, including current and future expenses, in order to make an educated decision about keeping your current home, or deciding a price range for a new home. For example, an increase in salary may allow for an increased mortgage, while additional educational or financial responsibilities may make keeping your current mortgage more of a hardship than necessary. Owning property is all about lifestyle and security, but not every property meets everyone’s needs all the time. Professionals can help you understand your home’s value and options, review various investment strategies, and help you create a plan to meet your current and future financial needs. Did you know there’s several ways to structure your property holdings, leverage your home equity, and protect your home ownership? Our lives are fluid and ever changing, making our financial needs change as well, so shouldn’t your largest financial asset be reviewed regularly to make sure it meets those needs?
3. Upsizing or Downsizing
If you’ve outgrown your current home or are wandering around empty rooms, this may be the time to look at upsizing or downsizing. Sale prices are solid, and you can take advantage of current interest rates before they start to climb. You need a home that meets your current and future needs if you’re growing, but if you’ve recently joined the empty nest club, there are perks to downsizing: operating costs and less cleaning and maintenance, to name a few.
4. Interest Rates
If you’re wondering when would be the best time to get a good mortgage rate on a new home once you’ve sold your old one, the answer is now. Rates are at historic lows and aren’t likely to go anywhere but up in the foreseeable future. Sell now, buy, and get in on those low rates for the long term. I was watching a recorded interview with Warren Buffett today, and one of the things he said was that if you get a mortgage at a high interest rate, you’ll have to refinance it (when rates are low), but “when you get a mortgage at a low interest rate, they’re [the lender] stuck with it.” Over the course of a 30 year mortgage, do you know how much money that saves you? Low interest rates make it a great time to sell because there are lots of buyers able to buy your house, and a great time to buy your new home; it’s win-win, but won’t last forever.
5. Supply & Demand
How is the housing supply in your neighborhood? Demand for homes is high and there are currently more potential buyers than properties for sale. Have you noticed only a few homes for sale in your neighborhood? And more importantly, have you noticed how quickly you get new neighbors since homes are selling so quickly? The Median number of days for an accepted offer in Hawaii in March 2017 was 16 days for single family, and 15 days for condos. I personally had potential buyers who missed out on 2 different properties in April because they were already in escrow in 2-4 days. With fewer homes on the market, there is more competition for yours, which could mean more offers and potentially more money.
Of course there are lots of other considerations, but it all boils down to one thing: sell when you need to. If you’re not ready, don’t rush it, but always know your options. If you’re dealing with a job change, change of dynamics, health issues, etc., and you really need to sell your home right now, it’s a good time to talk to a professional. When you move on, be sure to buy a house you can afford, both now and in the future. If you would like more information, please contact me.