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So you’re thinking of selling your home, but you’re not sold on the idea yet. Maybe your current home size isn’t working for your family or you want to relocate, but whatever the reason, you want to make a financially sound decision.
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The last couple of years have been a spectacular seller’s market, but this one may soon begin to level off. Zillow predicts 11% home price growth for 2022, a significant decline from the 19.5% projected for 2021. So if the market is nearing a peak or has already peaked, it may be best to sell soon to ensure you get top dollar. Your home – but of course there are other things to consider.
Are you ready to decide whether to stay or go? Weigh these six factors to make the best choice for your family’s financial situation.
The amount of equity in your current home
Before you decide whether to sell, Ashley Oshinsky, a real estate agent with James Real Estate Agency, LLC in Waterford, Michigan, says check your mortgage balance.
“Access the seller’s paperwork, which can be provided by most realtors or title companies,” she said. “A clean sheet breaks down other major costs involved in selling, such as real estate commissions and transfer taxes.”
She says you can put different sales values into a spreadsheet to figure out what your top selling point is.
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If you’re likely to be in the red, Dan Belcher, CEO of Mortgage Relief, an Oklahoma-based company that specializes in foreclosures and short sales, says it’s not a good idea to sell. “Avoid selling your home unless you’re trying to avoid foreclosure or bankruptcy,” he says. “You want enough equity to pay off your mortgage and selling costs.”
On the other hand, if you have at least a 20% down payment on your new home, you’re in good shape, he said.
The gross proceeds of your home sale can be incredibly high, but not all of that money ends up in your pocket.
“Many sellers forget that there are high closing costs when selling,” says Kathy Wethman, CPA, MBA, a real estate agent at Keller Williams of the Wethman Group in Arlington, Virginia. “I tell my sellers to budget 7% to 9%, and that doesn’t include the pre-fab costs and maintenance of the home itself.”
Advance sales costs
Putting your home on the market isn’t always easy by having your agent create an online listing. “Even in a hot market like ours, sellers can maximize their ROI by making the home a model,” says Weightman, who is licensed in Virginia, Washington, D.C. and Maryland. “This takes time and money – new paint and a deep clean or new carpet and other floors are usually the best value for money, but new furniture and countertops make a home feel ‘new’ to a buyer and create emotional appeal.”
In addition to updates, investing in proper maintenance can help you get a premium for your home.
“Hosting is one expense that vendors often shy away from, but it’s arguably the most important thing they can do,” Weightman said. Today’s buyers grew up on HGTV and are used to seeing homes that are completely neutral and look like they were shot in a magazine, making it easy to imagine living there.
What adds value to your home: interior or exterior improvements?
Where you move
If you sell your home, you need to find a new place to live. “If you want to stay in your current area, rising home prices and mortgage rates mean that buying and selling in the same area can mean higher monthly costs, unless you’re willing to put down heavily,” says Daniel Hall, chief economist at Realtor.com. could be.”
On the other hand, if you currently live in an expensive area, you may want to consider moving to a cheaper location. She said that if you go this route, you may be able to reduce the amount of money. “In other words, even if your home’s square footage doesn’t change, you can lower your monthly expenses,” she says. “If this is an option you’re considering, consider not only housing and mortgage costs, but also the overall cost of living and the new tax and living environment in your new home.”
Related: From Alabama to Wyoming: The Cost of Living Across America
Tenant buy from the next house
You currently own your home, but that doesn’t mean you can’t rent your next home.
“I often work with seniors who are downsizing and looking to rent,” Weightman said. “Despite the merits of this, it often comes at a high financial cost to incorporate a new large expense – which grows with inflation and market pressures – into their fixed income budget.”
She says she can often help these customers find a condom that meets their needs while protecting their nest egg. Another thing to watch out for is that rents are expected to rise faster than prices next year, Hale said.
Prepare: Renovate – and skip – before selling your home
Selling your home can leave you with a hefty tax bill.
“For most homeowners, they get the capital exclusion, which allows you to deduct the first $250,000 — $500,000 if you’re married — in taxes on the sale of your home, without paying taxes on them, maybe not. To pay taxes on the sale of your home,” Hale said. Homeowners who have lived a long time or seen many home improvements should be aware of the tax implications.
You probably don’t want to give Uncle Sam a portion of your profits, so fix this before you put your property up for sale.
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