There are many responsibilities that owners face, and one of them will be determining whether it is time to hold or sell. Much depends on this decision. Sell too early and you could miss out on the looming price hike. Sell too late when you are in financial difficulty, and you risk ending up in foreclosure. When you first bought your home, the lender was there to help make sure you were financially ready to own the home. But when it comes time to discuss possession or sale, you’re pretty much on your own.
So how do you recognize the signs that tell you to dig in and stay on your heels? How do you know when is the right time to give in and sell? This is what we will try to answer here.
Signs you should sell:
There has been strong price growth in your area for years.
There is a saying in the stock market, buy low and sell high. The same is true for real estate. It’s time to sell well and you can reap the rewards of your investment. This is why it is important to study the current market before making any decision to sell. You can start by researching market reports online to see what they have to say about your area. Remember that local factors largely determine property prices. Just because the prices are lower in general doesn’t mean the same is true in your area. Every neighborhood is different, and you should try to understand what affects the prices in your area.
Typically, what you want to see is a stable 2-3% price estimate over 5-10 years, plus higher demand and lower inventory. These are good signs that maybe now is a great time to sell. Don’t let that be the only reason to sell, because this decision involves more than the price.
The sale will match seasonal trends and buyer behavior.
The timing of the sale plays an important role in what you can do. Most experts advise listing your property in the spring, the traditional time when most buyers start looking. However, this may vary depending on your region and the local market. The pandemic has also cast misery into the seasonal forecast, although things now appear to be returning to normal. When studying market reports, pay close attention to seasonal trends and what they tell you about buyer behavior.
Dealing with your household expenses has become intimidating.
Mortgage payments aren’t the only expenses homeowners face, Property taxes, home insurance, utility bills and general maintenance. All of this can add up to a lot of payments each month, and if you start slipping on one you can eventually start slipping on the others. The last place you want to end up is in a late mortgage and potential foreclosure. Job losses and vacations from the pandemic have exacerbated this plight for many homeowners, and sale may be the only way out for many.
If you see that you are at a high risk of foreclosure after taking a closer look at your finances, it may be best to face the music and start thinking about selling. Hopefully, you’ve created enough equity to be able to sell enough to pay off the rest of your mortgage. If not, you can try to transfer your mortgage to a buyer. However, this is a difficult ordeal, and you need to understand what you will be facing before you embark on this path. Either way, this can still be a better option than going through foreclosure and the inevitable credit crunch that comes with it.
You have outgrown your house and are in a good position to trade.
We like to think that the first house we buy will also be the last. This is usually not the case. Their first home is just a steppingstone that will bring them closer to the home of their dreams for many people. With real estate prices rising, especially in New York City, this is usually the only way to enter the market. Buy a moderate home that is right for you for the next 7-10 years, watch its market value rise, then sell and use the proceeds to negotiate. As long as you’ve racked up a lot of stocks, seen prices keep rising, and the market is in your favor, then bull trading might be the way to go.
Signs you should hold:
A slow real estate market may force you to lower your price.
Slow markets are rarely a good time to sell. If your area is currently saturated with listings that have been on the market for months, that doesn’t bode well for selling your own plans. While you may attract a few interested buyers, you will likely be under significant pressure to lower the asking price, pay for repairs, cover most of the buyer’s closing costs, or all three. It is not a good situation to be a salesperson and you should avoid it if possible. Wait until things improve and you can get the selling price you are looking for.
You don’t have enough stock yet.
Just as rising equity is a good sign to sell, falling equity is a good sign when to hold. It doesn’t make sense to sell if you owe more on your mortgage than the value of the house. Keep the best until you earn more shares.
You don’t have the cash reserves to bring your house to marketable condition.
Any homeowner with high hopes of getting the top price for their home will need to be in top condition first. It costs money, and if your home is in dire need of repairs and renovations before it’s ready for the market, it might not be worth it. This presents a difficult dilemma for homeowners looking to sell because they cannot meet the expenses of their home. One solution might be to list your home “as is” and find a buyer who will pay cash. This eliminates the problem of attracting the right buyers, but it still means that you will be selling for less than the house can go. Depending on your condition, this could be a sign that it’s best to hang in there for now.
You will benefit more from maintaining the house as rent.
Not everyone looking to sell is because they are strapped for cash. For many, this is simply due to a change in life circumstances. For example, a new job posting that requires a move or the arrival of your firstborn. As long as you are not under great financial pressure to sell now, there is no need to risk a loss by selling in an unfavorable market. In fact, it may be better to keep your first home and use it as a rental property once you’ve found a new one. You can even upgrade to a smaller rental now so you can start renting straight away. Over time, the money you earn by owning a home can be used to put down a down payment on your new home.
It is never a simple decision when discussing whether to hold or sell. As stated above, there are many financial and personal considerations that need to be taken into account. Sometimes it makes sense to sell, sometimes it doesn’t. Whatever decision you make, make sure you have all the facts and know which path to take.
Even if you’re still not sure which approach to take, schedule a consultation meeting with a local real estate agent. They can provide you with all the facts about the current market situation and help you decide what is best for your interests. Remember, this is your home and your investment, so you need to get the most out of it.