Your home is one of the most important assets you’ll ever own. For this reason, you want to be sure you’ll earn money from its sale – or at least break even – before putting your house on the market.
That being said, finances aren’t the only thing to think about. Life circumstances, community and emotional attachment to a home will also play a role in your decision to sell.
The biggest factor affecting the financial outcome of your home sale is your equity in it. Equity is the market value of your home minus what you still owe in mortgage payments.
For example, if your home’s market value is $300,000 and your mortgage balance is $175,000, you have $125,000 of equity in your home. The idea is that, after the sale, you can use this $125,000 to:
Put a down payment on your next house
Buy a smaller house outright
Add money to your nest egg
Reinvest the money
Pocket the extra cash
Do not sell your home if you have negative equity unless it’s unavoidable. You’ll be left worse off and further in debt. Instead, continue making home loan payments until you build up enough equity to sell.
Listing, Closing and Moving Costs
Even if you have equity in your home, you still may not be ready to sell. Selling your house and buying a new one is a pricey endeavor. There are many associated costs and fees that can quickly eat into what little equity you have, ultimately making a move counterproductive from a monetary standpoint.
Here are just a few of the costs you may incur:
Utility bills while showing your home
Listing fees/realtor commission
Packing and moving services
It’s better to sell when buyer demand is high because you have a stronger negotiating position. Here are a few things to keep in mind if you’re trying to determine whether the market in your area is currently in the seller’s favor:
It’s best for sellers when the number of homebuyers exceeds the amount of homes for sale
The warm weather of spring – especially May – entices buyers to move
Lower mortgage rates motivate more homes shoppers to enter the market, as buyers have a lower barrier of entry, and you have a better chance of getting a good rate on a new mortgage if you are purchasing another home
Many people decide to sell to either make more room or downsize. Here are a few reasons you may want a different size home:
Children have moved out
Reduced energy costs
Less home maintenance
Smaller or no mortgage payments
Additional family members or pets
Desire to host guests or entertain
Fun rooms (den, gym, home theater, etc.)
A home seller may decide to list their home without equity if they dislike their current location or if the local property taxes and cost of living are too high for them to maintain financial stability. In these cases, cutting your losses now may save you money and heartache in the long run.
You may be reluctant to leave a home that you have a strong personal connection to. For example, you may have inherited your childhood home or raised your family in your current house. Perhaps you’ve made modifications to your home to perfectly fit your lifestyle, and the emotional toll of moving would outweigh the financial gains.
Sometimes selling your home isn’t much of a choice. You may need to relocate for a new job or military service. Other times, sellers are constrained by debt and need to foreclose.
Looking for a Realtor in Charlotte, NC?
If you’re ready to sell your home, you should team up with a realtor who understands the local housing market and can fetch the best sales price. Charlotte area homeowners can trust Qulia Bryant of Perfect House Realty to get the job done. She will work with you one-on-one to explain home selling strategies and create a comprehensive plan to market your home to quality buyers in the area.