Now is the time to put your home on the market!
At least that’s what you might have heard on the news. Without a doubt homes have been selling quickly in 2019. You might be tempted to throw your home on the market and cash out.
It’s common to have questions before you do take that step to sell your home.
Since this is one of the biggest sales you may ever do in your life, it’s important to know you’ve considered all of your options.
So if you’ve been thinking about putting your home on the market, here are seven important keys of information you should know.
Do you have equity in your home?
Before you put your home on the market, it’s important to know whether you have equity in your home. I know this seems simple, but many homeowners believe they have a lot more equity than what they do. It’s always a nice surprise when your home is worth more than you think. But when your home is worth less than what you realized, it can be detrimental. Especially when you have already committed to a sale and you’re at the closing table.
The process to calculate equity in your home is simple. First, you’ll want to get your mortgage pay off balance. If you’re not seeing your mortgage payoff balance is every month you make your payment, you can request this from your lender who owns your mortgage.
Next, you’ll want to know the value your home will sell for today. You will want to contact a local professional that is active in the local market and can accurately analyze your specific property. This commonly comes in the form of a comparative market analysis (CMA). We’ll touch more on that later.
Note: If you know that you’re underwater in your home (you owe more than what your home’s worth) you may be tempted to want to sell immediately. However, I would strongly suggest taking a good look at whether this is the best move for you. Unless you are facing bankruptcy or foreclosure it may be wise to hold onto your home. But if you MUST sell, and your home is creating a financial strain on your wallet and your emotional health, you may want to opt to do a short sale which was very common after the 2008 market crash. (we’ll also touch on this in a separate blog)
If you plan on buying a home after your home closes, then you may want to make sure you’ve set aside a 20% down payment. (This is not a requirement, but it will make things easier if you can)
By putting 20% down on your next home you can avoid private mortgage insurance (PMI). If you’re not sure what private mortgage insurance is, it’s an added monthly fee lenders will tack on to your mortgage payment giving them added protection in case you were to default. It’s usually used in relation to lower down payment loans.
You know how much you’ll profit
After you calculated the equity in your home there are still a couple more tasks you’ll need to complete. This is where having your Realtor(c) on board is essential. After you’ve calculated the equity, you’ll also need to determine the closing costs you’ll pay once the property closes.
Next, confirm with your realtor if there are any additional fees you might have to pay from the sale of your property. I’ve come across quite a few homeowners that didn’t realize before they sold their home they had a lien on the property. I’ve even come across homeowners that ended up breaking even on the home when they thought they’d have a profit. A lien is a debt owed to another party and it can be as little as paying your water bill that leaves a lien on your property.
To find out how much you’ll profit, your realtor should be able to help you get an estimated pay off including all closing costs.
You know your lifestyle will be better
Selling your home should put you in a better financial position while also suiting your lifestyle.
If you’re finding that you’re running out of space in your current home, or you have too much space that’s not used, then it might be time to sell. Having a lot of space in your home is great, but if it’s not being taken care of properly, it can bring down your home’s value.
Consider your family’s needs from a financial standpoint too.
Are you ready to take on another mortgage? Low interest rates make the economy a great time to buy. But you don’t want to be over leveraged.
Whether you decide to go down (or up) in home is a decision to carefully consider.
You’re mentally prepared to handle a move
Selling a home isn’t just about selling your home. It also means getting mentally and emotionally prepared to glide through a move. You’ll need to make sure your home is in the best shape to get the amount of money that you want to make from the sale.
It helps to be mentally prepared knowing buyers will come look at your home to determine if they want to buy. You’ll also want to get mentally prepared to handle vendors like home inspectors, appraisers and more coming through your home. Plus, it helps to be prepared during a negotiation so that you don’t let your emotions cloud your judgement. Knowing the steps to a sale beforehand is helpful which we’ve outlined in our infographic on our Seller’s page that outlines the 7 steps to selling your home.
You can manage the costs of moving
Moving should be an enjoyable experience. It’s exciting to move into your new place and make new memories! But, you also want to consider the costs of moving. Will you need to make any repairs to your current home? Hire movers? It’s important to calculate these costs ahead of time.
If you determine you’d like to get more out of the sale you may consider making repairs or updates. Before you do, ask your Realtor(c) for a recommendation on which repairs or updates you can make that will provide the most value for your home. Either way, these costs need to be factored in.
Other costs to consider include furnishing your next home. Will you need to purchase furniture?
Even if you don’t plan on purchasing a home while you’re in the process of selling, it doesn’t mean you shouldn’t have money set aside for these added expenses just in case.
You know the state of the real estate market
It’s vital to understand the state of the market. You don’t have to be an expert, but you should have a basic understanding of:
- How long homes are staying on the market
- The state of the market for purchasing another home (if you desire)
- Any other important items to consider to make a seamless sale
With the current state of the market, starter homes are extremely popular. So if you’re looking to move up, now’s the time since first time home buyers are looking to get into the market.
You have a real estate agent you trust to handle the sale
Make sure you not only have a real estate agent you trust, but an agent who also has a good track record. Selling your home is one of the biggest sales you’ll ever make in your life. So make sure you have a real estate agent who’s prepared to help you navigate your unique home selling process.
A great agent will not only give you tips on how best to prepare your home for sale, but they’ll also be able to:
- Provide a thorough CMA based on your home’s specific features
- Give you details from working in the trenches about the current state of the market
- Show data for what repairs you can make to your home that will catapult the value and your bottom line
- Successfully negotiate your sale with other agents so that you get the best deal
- …And provide an in-depth advertising plan designed to fit your home (and your timeline!)
Work with a successful agent who knows your market. Don’t leave the success of your home sale with the hands of an amateur.
If you’re looking for help navigating the home sale process in and around the Placer County area, our agents at Quantum CA are the best. We only hire ethical focused agents in the area who have succeeded in today’s market. So you know you’re getting the best.
If you want help selling your first or next home, reach out to us today.