The Commonwealth Blog

Monday, January 28, 2019

Things to Consider Before Selling Your Home

Many factors come into play when making the decision to put your house on the market. Traditionally, homeowners are told the best time to sell is in the spring and summer months before the school year begins – but our friends at Opendoor have something different to say. Selling your home is a highly personal decision requiring homeowners to consider far more than the “seasonality of the housing market”. When placing your house on the market, take into consideration these five important things.

Personal Finances

The state of your finances can make or break a sale and a subsequent move into your dream house. Taking a hard look at your finances, then, is necessary before deciding on a move.

If you’ve lived in your home for several years, you may have equity that can be used for a future down payment on a house, for retirement, or to pay for other costs associated with a move. Having occupied a place for a bit of time (specifically two years) also helps. As Opendoor mentions from their research through MarketWatch, you won’t have to pay capital gains tax on the first $250,000 or $500,000 on the profit of a sale (single and married owners respectively) if you’ve lived in your primary place of residence for two of the past five years.

Of course, possessing the funds for a down payment, mortgage insurance, and closing costs is necessary. Learn about the basic fiscal requirements for closing on a deal here.  

Lastly, you’ll need enough money to cover the cost of home repairs and enough for making the move itself. Depending on the state of your home, home repairs may be necessary. Repairs often include purchasing new furnishings, appliances, as well as installing new floors and painting walls. Intrastate versus interstate-moves also vary in price, and you’ll need to do your research before putting a ‘for sale’ sign in your front yard and calling the movers.

If your numbers don’t add up and you’re not in the right financial position to move, don’t fret – there are some key things you can do to build equity and make your move a reality, including: talking to a lender about modifying a loan, applying for a refinance from another lender, or starting a government refinance program. Renting out the place is another option, and while it may require a bit more work, you’ll get help making mortgage payments from renters while simultaneously building equity.

Big Life Moments

Life is full of surprises, and you don't always have time to prolong the moving process. New jobs, aging parents, medical conditions, and school districts may require that you move quickly. In these circumstances, you may want to forget about making any repairs and leave the house in its current state. Moving suddenly is stressful enough, so consider nixing home improvement projects for a fast, less stressful move.

Life changes also impact your decision to upgrade a home or downsize. If you’re a growing family or staring a home business, investing in a place with more space is necessary for comfortably carrying out everyday activities. Contrarily, if you never use certain rooms or your home requires too much maintenance like heavy yard work, moving into a smaller home may be best – but keep in mind that upgrading and downsizing both come with a price tag.

Other Housing Factors

Depending on the location of your home, seasonal changes in the market will affect housing prices. We suggest taking advantage of peak months to secure a better deal on the sale of your home. Traditionally, home sales begin to rise in spring and peak in winter – but this largely depends on your place of residency. Cities that have a warmer climate year-round like Phoenix generally maintain peak sales throughout the winter months. Trends like these, as well as the inventory of houses for sale in your neighborhood and mortgage interest rates, largely determine the outcome of a sale. Do the appropriate market research before signing any papers to help ensure a profitable outcome.

Everything Considered

Finding a home you love and that suits your unique needs and circumstances may take time. If you have time to spare, do your research to receive the best return on your sale. It will pay off when you find yourself in a new house you adore with a bit of extra money in your pocket. 

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