Over the last several months, I’ve had many conversations with clients and in social settings on the pros and cons of selling a home in today’s market. These days, everyone who owns a home knows someone who has sold at a profit. It’s a seller’s market, and the signs are good that it will likely remain so for some time to come.
The temptation to sell is particularly high among those with substantial equity in their current home. In markets from coast to coast, homes that may have had trouble attracting attention before are sparking bidding wars or even selling “sight unseen” in a matter of a few days.
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Properties priced under $700,000 are particularly likely to attract multiple qualified bidders. New real estate technology means potential buyers can learn about the home without traveling or even visiting it in person. And sellers rarely need to worry about buyer finances, as cash-in-hand offers are common.
Even under these remarkable conditions, it’s important to stop and consider if selling is right for you.
The key questions for any would-be seller to ask are:
Above all, sellers want to avoid “sell high, buy high.” To do it, they need to know what their timeline is for their ultimate move. If you sell and then rent, the inevitable trade-off is the loss of equity while you wait. Interest rates don’t look like they’ll be changing quickly, so the timeframe is very ambiguous.
On the other hand, if you are expecting to sell and then move toward your forever home, you might be pleasantly surprised by the financial outcome. Due to low interest rates and your equity, your monthly payment may not be much higher than it is currently.
This effect is compounded if you are moving from a market where housing prices have traditionally been high to one where they are more moderate. Many life-long Californians and New Yorkers are making their way to Texas or Tennessee, for example, because of the long-term value the move affords. You can look at the cost of living for states to compare one against another.
Before you explore properties, identify your top priorities. Whether that’s a bigger house, a nicer area, or whatever’s important to you, it’s wise to clarify your expectations. It may sound counter-intuitive to aim high with your desires in a fast-paced seller’s market, but it can be the best financial course.
The converse is that the emotional side of the transaction can be especially hectic.
The best advice I can offer is to choose a property you can imagine making a long-term commitment to, but be ready for the roller coaster. Buying in today’s market is rarely a “one and done” deal. You may need to bid on three, four, or even more properties before an offer is accepted.
If selling is in your future, a financial advisor can help you get clarity on these considerations:
I’m always happy to have this conversation with you. To get started, contact Birchwood Financial Partners.
Investment Advisory services offered through Birchwood Financial Partners, Inc. an SEC Registered Investment Advisor.
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