As a Realtor, People often ask me, “When should I sell?”
The question “When is the best time to sell a property?” is a very good question. The answer is when you need to. Being half in or not sure is not a good strategy. Often, people make decisions without considering different scenarios. Some of the advice I have received and wished I had heeded myself is all in hindsight. However, there are some good general guidelines to follow when you are thinking about selling.
When You Are House Poor
If you are no longer able to financially sustain where you are living, or you know your household income is going to decrease due to retirement, maybe a divorce, or perhaps your spouse or significant other has passed, all these are valid reasons for selling. A good rule of thumb is to take your current income and divide it by four; if your total annual housing cost exceeds 25% of your annual income, you should consider making a change. If you are within a few percentage points, that just means tightening up the budget. However, if housing costs are taking a big chunk of your income, you are house-poor. Currently, inflation affects this in a negative way, as it raises insurance rates, costs for repairs, and regular maintenance. The bottom line is that if you are significantly depleting your nest egg to stay put, you need to make a change.
Lateral Move
If you can afford your home but your housing needs have changed (adding to the nest or emptying it). If you are downsizing (decreasing your carbon footprint), you could significantly lower your monthly living expenses by selling and downsizing, but it is very important to get the big picture. Is the home you downsizing going to be affordable for you five years from now? The cost of insurance is usually the deciding factor on that. If you are moving up in size, know that your carbon footprint is going to increase, you will use more electricity, your insurance will be more, and most likely, your cost of replacing the roof and air conditioning will be significantly higher.
The Simultaneous Closing
One more thing about lateral moves: when people need to move, they can experience significant stress if they are selling and buying at the same time, known as a simultaneous closing. Keep in mind that the more people involved in a transaction, the more complex it becomes; the buyer’s mortgage lender, the appraiser, the home inspector, the title company or lawyer, and the movers all contribute to the complexity of the sale, it is like juggling four or five things at once; this is why having an experienced realtor who has done this many times makes all the difference in the world.
Relocation
Another major reason people move is relocation. When people are relocating from one area to another, whether it is a few counties away or across the country, has upfront costs. This can be perilous. Movers require deposits, and so do landlords; furthermore, they usually require this well ahead of the closing date. Unfortunately, many times, underwriters delay closings, and the place someone is buying is trying to make plans to move to. Most realtors like myself try to warn their clients, but sometimes, they are not received, and the clients find themselves in stressful, costly situations. Have contingency plans and backups for where you may end up if this happens. At the end of the day, it can simply end up being an inconvenience for a few weeks or months, especially with the availability of storage pods and air-b-n-bees.
Change is Inevitable
Emotional attachment to your home is normal, especially when you raised children there and have the marks on door frames as they grew. Transitioning and adapting to a new place to a new home has rewards and challenges. When should you sell? Only you know the truth about your situation. Should or can you age in place? Should you move closer to your children? Or should you move to a 55+ so they cannot follow you there? These are all questions people ask and must answer for themselves. Don’t do it alone; having a realtor who gets you is a great asset. Chose wisely!
