Monday, September 7, 2020 / by Jeff Lovato
The decision to sell your house isn't based solely on market conditions. You have to take your situation into account—and that's where expert advice comes in handy.
Here are seven signs you're ready to sell your Denver Home.
1. You've got equity on your side.
For most homeowners, being financially ready to sell your house comes down to one factor: equity. During the housing meltdown of 2008–09, millions of homeowners found themselves with negative equity, which meant they owed more on their homes than they were worth.
Selling your home when you have negative equity is a bad deal. That's called a short sale. Breaking even on your home sale is better, but it's still not ideal. If you're in either situation, don't sell unless you have to avoid bankruptcy or foreclosure.
For the last several years, home values in Denver have been on the rise, and that means most homeowners are building equity. Their homes are now worth more than they owe on them, and that trend will persist as they pay down their mortgages and home values continue to increase.
Figuring out how much equity you have may sound complicated, but the math is simple. Here's how it works:
First, grab your latest mortgage statement and find your current mortgage balance.
Next, you'll need to know your home value. While it's tempting to use figures from online valuation sites to determine how much your home is worth, they're not always accurate. If you're considering selling, contact us, The Lovato Group at 720-854-4834 to run a free, comparative market analysis (CMA) for the best estimate.
Once you have those two numbers in hand, subtract your current mortgage balance from your home's estimated market value. The difference will give you a good idea of how much equity you have to work with.
So how much equity is enough? At the very least, you want to have enough equity to pay off your current mortgage with enough left over to provide a 20% down payment on your next home. But if your sale can also cover your closing costs, moving expenses, and an even larger down payment—that's even better.
Plus, putting 20% or more down on a home keeps private mortgage insurance (PMI) at bay. That could save you hundreds—or even thousands—of dollars each year!
2. You're out of debt with cash in the bank.
If you didn't have all your financial ducks in a row your first time around the home-buying block, you probably learned a few things the hard way. Like the fact that Murphy can smell "broke" from miles away. If it can go wrong, it will! Put those lessons to good use and be a money-smart home buyer the next go-round!
Start by taking a hard look at your finances. If you've paid off all your non-mortgage debt and have three to six months of expenses in your emergency fund, that's a good sign you're financially secure enough to purchase a home again.
3. You can afford to buy a home that fits your lifestyle better.
Another factor to consider is how well your home meets your everyday needs. Perhaps you could use another bedroom (or even two) for your growing family. Or maybe your kids have all moved out, and you're ready to downsize. It's freeing to sell a large home, pay cash for a smaller one, and invest the rest for your retirement.
Whether you're sizing up or down, make sure your mortgage fits your budget. We recommend keeping your monthly payment to 25% or less of your take-home pay on a 15-year fixed-rate mortgage.
4. You can cash flow the move.
Don't get so carried away by the excitement of your next home that you forget to account for the cost of moving out of your current one—hiring professional movers? Save up cash to cover the cost of packing up and hauling your stuff away.
You should also invest a little to stage your home so that it's ready for prime time. Focus your home improvement dollars on paint, curb appeal, plus kitchen and bath upgrades. A little bit of fresh paint and elbow grease can go a long way into making a great impression—and getting your home sold fast!
Want a bonus tip that doesn't cost a dime? Clear out the clutter. Neat closets and tidy shelves make your home look larger!
5. You're emotionally ready to sell.
If the numbers show, you're financially ready to make a move, great! But don't forget—selling your home is an emotional issue too. Before you plant the "For Sale" sign in the front yard, take a minute to answer just a few more questions:
- Are you ready to put in the work to get your house ready for house hunters?
- Are you committed to keeping it ready to show for weeks or months?
- Are you ready to hear the reasons why potential buyers believe your home is not perfect?
- Are you ready for honest—and sometimes hardball—negotiations over what buyers are willing to pay for your home?
- Are you prepared to move out and leave the place where your family has made memories?
Don't get us wrong—we're not trying to talk you out of selling your home! We want you to be completely ready when you decide to move on to the next stage of your family's life.
A qualified real estate agent will give you a clear picture of what it's like to sell your house and help you decide if now is the right time for you, both financially and emotionally.
6. You understand the market (a little bit).
No one can predict how the housing market will perform with 100% accuracy. But the National Association of Realtors expects price growth to continue in 2020. As home sales in 2020 are forecasted to decrease by 11%, the median price is projected to increase by 4%.
Remember the law of supply and demand? When supply is down, and demand goes up, prices tend to go upwards as well. That means your home might be worth more than you think. Consider these trends:
- Compared to last year, the supply of homes for sale has been significantly down (-19% in May 2020).
- Potential home buyers who had to put their plans on hold due to the challenges of 2020 are now experiencing an urgency and a pent-up demand to buy.
In other words, the market's hot for just about any home seller.
7. You have a real estate agent.
Okay, maybe all the signs are saying it's time to get your home on the market. Just remember that your real estate market is unique—and so is your financial situation. Consult an experienced real estate agent to determine how the current housing market is shaping up in your area so you can decide if a sale makes financial sense for your family.
Partner with a pro you can trust to provide honest advice so you can do what's best for you and your budget. A good agent puts service before sales—but knows how to get things done when it's time to sell.
A real estate agent does more than just schedule showings of your home. They bring experience and confidence to the table when they handle their many job duties, which include:
- Giving you advice about updates or repairs that will make your home more attractive
- Helping you set the right price for your home
- Marketing your home, so it receives as much exposure to potential buyers as possible
- Scheduling showings with potential buyers
- Advising you as you negotiate offers
- Handling all the required paperwork
Don't trust an amateur with one of your most significant financial investments. Work with a top-performing agent who knows your market. We can put you in touch with the best agents in your area who have earned our recommendation through our Endorsed Local Providers (ELP) program.
An experienced real estate agent can help you navigate the search for your next home too. Be sure to have some backup options ready if your home sells quickly, and you can't find a new place you love right away. You don't want to rush into a house you can't afford or don't like, just because it's available.