To work out if you should sell your home, consider life circumstances, but also your financial situation like the amount of equity you have in your home, your ability to afford a new home, and all of the costs of selling. You’ll also want to understand the local housing market and how seasonal trends can impact your goals.
If you’re wondering “Should I sell my home?”, here are some important questions to ask:
How much is my home worth?
To estimate how much your home is worth, most real estate professionals compare recently sold homes in your neighborhood that are similar to yours. These comparable homes are often referred to as “comps”. By comparing the sale price of different comps, you can get a sense of the price range home buyers might pay for your home.
When searching for comparable homes, you’ll need to consider things like the number of bedrooms and bathrooms, the square footage of the home, and any unique features. The challenge is that no two homes are exactly the same so you’ll need to make adjustments for each individual feature; it’s extremely hard to do this precisely for each comp. Luckily, computers are really good at this task.
Do I have enough equity to sell my home?
You’ll typically want to have enough equity in your home to pay off your mortgage, the costs of selling, and the costs of moving. Many people also wait to sell once they have enough equity to put towards a down payment on their next home.
According to recent data from Bankrate, most homeowners do not build enough equity in their home to offset buying, closing, and moving costs until they’ve been in their home for around five years.
What is home equity?
Home equity is the percentage of your home that you truly own. Let’s say you bought your home entirely with your own cash, then you would have 100 percent equity. However, most people choose to borrow money to buy a home, which means they slowly build equity as they repay the loan with interest each month.
You can estimate your home equity by subtracting the amount of money you owe on the home (remaining loan balance) from the amount of money you could sell your home for (market price).
It’s possible to have negative equity in a home, meaning you owe more money than the home can sell for. This is commonly called being “underwater” on your mortgage. Selling your home for significantly less than you paid is typically done as a last resort.
Understanding how much equity you have is a good first step in determining if you should sell your home. Once you have an idea of “how much of your home you own”, you can estimate if your equity will cover the costs of selling.
How much will it cost to sell my home?
When selling a home, many people fixate on the 5-6 percent that’s typically paid in agent commissions. However, the total cost of selling a home can come closer to 10 percent of the sale price. Some of these additional costs include seller concessions, closing costs, repair costs, and housing overlap costs if you aren’t able to line up the sale of your home with the purchase of your next. And of course, don’t leave out the cost of your time and sanity.
And if you’re buying a home, see our guide on determining how much home you can afford. Typically, the loan you can qualify for depends on the ratio of your debt to income, so it’s important to have a strong understanding of how much money you have coming in each month versus money that’s paying down debt.
As a conventional rule, many lenders will require that your housing-related expenses do not exceed 28% of your gross income, and your total debts do not exceed 36% of your gross income, often called the 28/36 rule.
How long will it take to sell my home?
To determine if you should sell, consider your moving timeline and how when you move might impact your goals. Taking longer than expected to sell can have a financial impact. It can delay a job opportunity, force you to incur costs like storage fees or temporary housing, and of course, selling a home means maintaining it.
It’s also important to understand how current market trends like interest rates, homes sales, and home price appreciation might impact your goals and timeline.
Should I make repairs?
As a seller, you’ll be required to disclose any known issues with your home to buyers. You aren’t required to make repairs, but you’ll likely need to price your home based on the costs of needed repairs or you may need to offer a concession to the buyer so they can do the repairs themselves. Expensive repairs like fixing an HVAC unit or fixing a pool, for example, can be a deal-breaker for buyers looking for a move-in-ready home.
However, if you prefer to just sell your home in Arizona now then reach out to SellforcashAZ.