Making the Decision to Sell

If you are a homeowner, the idea of selling your house has undoubtedly crossed your mind at least once. There are countless reasons why people consider selling their homes. Maybe it’s time to trade up to something larger or downsize to something smaller. Maybe your kids are nearing school age and you’d like to be in a better district. You could be considering a job transfer or a change in family situation. Making the leap from “considering” a home sale to actually listing your house can be a difficult process with many considerations. Here are some things to consider as you make your decision.

What is your home worth?

In order to get a true sense of what your house is worth, you will need to enlist the help of a Realtor. A home’s value is based on a huge variety of factors that include neighborhood, house size, number of bedroom and bathrooms, the size and shape of the lot, surrounding homes and businesses, and school district, to name a few. A Realtor will consider all these factors as well as the local market conditions when estimating the value of your home. A home’s “worth” is really a fluid concept – so it is important that you talk with a professional to get a better sense of how buyers will view your home and what the best pricing strategy might be.

Can you afford to sell?

While the ultimate goal of many sellers is to make money, selling a house costs you money as well. Just like when you bought your house, you will have closing costs when you sell that include escrow and title fees. You will also likely have seller assumed costs such as credits for repairs, a home warranty, a natural hazard disclosure report, city and county transfer costs and HOA fees (if you are selling a condo). In addition, you will be responsible for paying the real estate commission fee that is split between your listing agent and the buyers’ agent. That cost is typically somewhere between 5% and 6% of the final purchase price of your property. All this can add up, so you need to consider whether you will actually be making a profit from a sale or taking a loss. There are many reasons why sellers choose to take a loss and sell a property anyway – but if you need to make a certain amount of profit from your sale in order to purchase another property, you will need specific information about what you will walk away with before you can list your home. Your Realtor can provide you will what is called a “net sheet” – this is a breakdown of all the selling costs based on a specific sales price that factors in what you may still owe on an existing mortgage and shows you what profit (if any) you will gain.

What can you do to raise the value of your home?

When you meet with a Realtor to discuss your home’s value, he or she will likely give you a list of things you can do to help to prepare to put your home on the market. The list may include small tasks like cleaning, de-cluttering, and removing personal items or it may include larger tasks like painting, changing carpets, making repairs, or updating the kitchen or bathrooms. You should consider what the return would be on any improvements you make to your home before you start making changes, but be open to considering your Realtor’s advice as even the smallest details can help to sell a home for a higher price.

Where will you go?

Before you make the decision to go ahead and sell your home, you must know where you are going to go next. Are you hoping to buy another home? If so, you will need to examine your finances to confirm that your home sale will provide you will enough money to purchase again. This is particularly important if you are looking to trade up to a more expensive home. You will most likely need to talk with a lender to see if you can qualify for a mortgage on a new property and if that qualification will enable you to purchase what you want. Many homeowners who bought when the market was down are excited to hear that their homes have increased dramatically in value. However, they need to also consider that the homes they want to trade up to have also increased in price. If you are looking to trade up, you need to first research the current market to make sure there are homes available in your price range that will fit your needs. Most Realtors will be happy to set up some showings for you for “research purposes” to help you determine whether you can afford what you want before you list your home.

If you are looking to sell and buy concurrently, you will also need to consider how that process will line up. It IS possible to have what we call a “concurrent close” where you sell your existing home and purchase your new home on the same day or close to the same day. However, that can be a complicated process and it is not always possible. So make sure you talk with your Realtor about how that will work and what your options are if you need to sell before you can buy.

Once you have considered all these factors and made a final decision to sell, you can look to your Realtor to guide you through the next steps. For some, making the initial decision is the hardest part about selling. Once you have committed to that goal, you can shift your attention to the exciting process of making a new start in your next home.