By Stephanie Booth
(Getty Images)
As much as you love your home, there may come a time when you start thinking: Should I sell my house?
According to the National Association of Realtors®, homeowners tend to stay in a house about ten years before they sell. Think that sounds shockingly short? Or way too long? The fact is, people’s time frames will vary widely based on their reasons for selling.
The choice to sell your home can come about for a variety of reasons. And it may have been something you’ve been considering for a long time, or a snap decision.
“Sometimes a sudden defining event prompts a seller to sell—a transfer, death, or divorce, which quickly starts the process,” says Bruce Ailion, an attorney and real estate agent with RE/MAX in Atlanta, GA. “More often, it is a slower process—children leaving the nest, a need to be closer to a relative, retirement, or the desire to be in a smaller, bigger, newer, or different neighborhood. The gestation period for this type of decision is often two to four years.”
There are many common reasons—financial and emotional—that lead us to sell our current home. Plus, you don’t always see these reasons coming, so if you’re wondering whether or not to list your house, here are some telltale signs it’s time to sell, even if it hasn’t been ten years.
It’s a seller’s market
Let’s start with one of the most obvious reasons to sell: It’s a seller’s market, which means you stand to make a nice profit on your property.
You need to gauge the key indicators of a strong seller’s market, explains Allen Shayanfekr, CEO and co-founder of Sharestates, an online real estate investment company.
A few signals: The price per square foot for real estate in your area is increasing, the amount of time properties stay on the market is decreasing, and you’ve noticed an uptick in brokerage activity in your neighborhood. (If you’re situated in an especially hot neighborhood, you might even get a letter or a knock on the door from a listing agent who wants to help you get in on the action.)
“If any of these are true in your area,” Shayanfekr says, “think about selling up.”
Local homes are selling for a lot
Check online real estate listings in your neighborhood, and pay attention to the “recently sold” flyers in your mailbox to keep track of comparable home prices in your area.
“If other houses on your street with the same bedroom/bathroom count [as yours] are selling for a price that you’d be more than satisfied with, it might be time to move on,” Shayanfekr says.
Another sign of a hot home sales market is the relationship of asking prices to sale prices. If home buyers are making offers fast—for as much or more than sellers are asking—it’s a seller’s market. A buyer may offer you a sales price you can’t refuse, too.
You’re financially stressed
Not everyone sells their real estate in order to pad their bank account. Some homeowners underestimated their ongoing housing costs and simply sell to ease their mortgage burden, or to cash in their equity and use it for other purposes.
If your property taxes or mortgage payments have become unmanageable, the best recourse may be to sell and find another home that’s more affordable, Shayanfekr says. Selling your home is better than struggling with a big mortgage loan, and possibly risking foreclosure.
To breathe easy, your monthly housing costs, including your mortgage interest, principal, property taxes, homeowners insurance, and HOA or condo fees if applicable, shouldn’t exceed 28% of your gross monthly income.
Before you sell your home to reduce your monthly living expenses, make sure you can find another home to rent or buy in your price range, and that you can qualify for a loan at current interest rates when you do.
You’ve outgrown your home
The starter home you moved into when you were expecting your first child isn’t necessarily the house you need now that you have three preteens and pets. It’s bittersweet to give up the memories you’ve made in your home, but if your living quarters are causing you stress rather than comfort, “take the leap and sell up,” Shayanfekr says.
Another factor may be other life changes, such as death, serious illness, or divorce. These are all emotionally wrought experiences that may warrant a need for change. Relocation for a new job is another factor.
You’re tired of home maintenance
The average homeowner shells out $2,000 a year for maintenance services. Not repairs, mind you, but scheduled services such as landscaping, snow removal, septic service, private trash and recycling, and housecleaning.
Sick of watching these payments steadily drip out of your bank account? You could sell, and buy some lower-maintenance real estate such as a condo or new construction, Shayanfekr says. You might even want to try renting, and let a landlord worry about leaky pipes and other property hassles.
You’ve built up enough home equity
“If you sell too soon—assuming you have a mortgage—you haven’t really built up any equity in the home beyond the down payment,” points out Adam Jusko, founder and CEO of personal finance portal ProudMoney.com. “In the beginning, your mortgage payments are almost completely interest payments.”
In fact, unless the housing market is seriously booming (see above), you might lose money when you sell. You might even owe more than you can get from your house after closing costs.
Just remember: Selling isn’t free: You’ll have to shell out to cover all of the costs associated with hiring a real estate agent, closing, and, of course, purchasing another home.
That’s why Jusko recommends staying put for at least five years, unless you have an urgent need to move. In addition to everything else, moving too quickly sends potential buyers a bad message.
“Buyers don’t feel good when it appears you are selling too soon,” Jusko cautions. “What was wrong with the house? Why are you leaving so fast? Are the basement walls about to collapse? Are the neighbors selling drugs and shooting fireworks at your house? Buyers can dream up all kinds of negative scenarios when a seller hasn’t owned the home for very long.”
Another reason you may not want to sell is if you don’t meet the qualifications to avoid paying capital gains tax on your profit from a home sale. Generally, you can exclude the gain from the sale of your home if you owned and lived in the home for two of the past five years. A sale before the two-year mark, if you don’t meet any of the exceptions, could be a costly mistake. By the time you pay capital gains tax, you won’t have as much equity left as you’d planned.
But beware of snap decisions
Of course, there are no promises that selling will be better for you in the long run. Take your time deciding if you should sell, and then study the local home sales market with your real estate agent (here’s how to find a real estate agent in your area) before you price your home. If you underprice your home, a buyer may snatch it up too cheaply. If you overprice it, the right buyer may pass it by.
Jusko and his wife lived in Chicago in the early 2000s, when home values were through the roof. After about three years, they sold at a 40% profit. But soon after moving to the Cleveland area, where they’re both originally from, home values plummeted.
“For many years, our home was worth less than what we paid,” Jusko says. “It’s only now—more than 15 years later—that I believe we could sell for more than our purchase price. And don’t get me started on how much money we’ve put into the house over that time.”
Selling your home is, above all, a personal decision. Do what will help you live—if not happily ever after—happily for now.
Source: https://www.realtor.com/advice/sell/how-long-should-you-live-in-your-home-before-selling/