There are many responsibilities that homeowners have to deal with, and one of these will be knowing whether it’s time to hold or sell? A lot hinges on this decision. Sell too soon, and you could miss out on a price upswing that may be just around the corner. Sell too late while in financial difficulties, and you risk going into foreclosure. When you first bought your home, a lender was there to help ensure you were financially ready for homeownership. But when it’s time to debate the question of holding or selling, you’re largely on your own.
So how can you recognize the signs that tell you to dig your heels in and hold? How can you know when it’s time to give in and sell? This is what we’ll try to answer here.
Signs You Should SellSigns You Should Sell
There’s been strong price growth in your area for years.There’s been strong price growth in your area for years.
There’s a saying in the stock market, buy low and sell high. The same is true of real estate; time your sale right, and you can reap the full rewards of your investment. This is why it’s so important to study the current market before making any decision to sell. You can start by searching online for market reports to see what they say about your area. Remember, local factors largely drive real estate prices. Just because prices are going down, in general, doesn’t mean the same is true for your specific area. Every locality and neighborhood is different, and you should try to understand what affects prices in yours.
Generally, what you’ll want to see is a steady price appreciation of 2-3% over 5-10 years, as well as rising demand and falling inventory. These are good signs that it might be an ideal time to sell. Just don’t let it be your only reason for selling, as there is far more to this decision than just price.
Your sale would line up with seasonal trends and buyer behavior.Your sale would line up with seasonal trends and buyer behavior.
The timing of a sale plays a crucial part in what you stand to make. Most experts would advise listing your property in the spring, a traditional time when most buyers start looking. However, this may differ depending on your area and local market. The pandemic has also thrown a wrench in seasonal predictions, though things seem to be returning to normal now. As you study market reports, please pay close attention to seasonal trends and what they tell you about buyer behavior.
Keeping up with your home expenses is becoming a stretch.Keeping up with your home expenses is becoming a stretch.
Mortgage payments aren’t the only expense homeowners need to keep up with; there are also property taxes, home insurance, utility bills, and general maintenance. All of this can add up to a lot in payments each month, and if you start slipping up on one, you may eventually start slipping up on the others. The last place you want to find yourself is with a delinquent mortgage and a possible foreclosure. Job losses and furloughs from the pandemic have exacerbated this plight for many homeowners, and for a lot of them, selling might be the only way out.
If you see that you are at great risk of a foreclosure on a close inspection of your finances, then it may be better to face the music and start thinking about selling. Hopefully, you’ve built enough equity that you can sell for enough to pay off the remainder of your mortgage. If not, then you could try transferring your mortgage to a buyer. However, this is a tough ordeal, and you should understand what you’ll be up against before committing to this path. In any case, it may still be a better option than going through a foreclosure and suffering the inevitable credit hit that comes with it.
You’ve outgrown your home and are in a good position to trade up.You’ve outgrown your home and are in a good position to trade up.
We like to think that the first home we buy will also be our last. That’s usually not the case. Their first home is only a stepping stone that will take them closer to acquiring their dream home for many people. With real estate prices being so high, especially in NYC, this is usually the only way to get into the market. Buy a moderate home that will suit you for the next 7-10 years, watch its market value rise, then sell and use the proceeds to trade up. So long as you’ve built plenty of equity, experienced steady price appreciation, and the market is in your favor, trading up could be the way to go.
Signs You Should HoldSigns You Should Hold
A slow housing market could force you to lower your price.A slow housing market could force you to lower your price.
Slow markets are rarely a good time to sell. If your local area is currently saturated with listings that have been on the market for months, then this does not bode well for your own plans to sell. Even if you can attract a few interested buyers, you’re likely to be under a lot of pressure to lower your asking price, pay for repairs, cover most of the buyer’s closing costs, or all three at once. It’s not a good situation to be in for a seller and one you should avoid if at all possible. Hold until things improve, and you can get the sales price you’re looking for.
You don’t have enough equity yet.You don’t have enough equity yet.
Just as high equity is a good sign to sell, low equity is a sign of when to hold. It makes little sense to sell if you owe more on your mortgage than the home is worth. Hold as best you can until you’ve built further equity.
You haven’t got the cash reserves to get your home in marketable condition.You haven’t got the cash reserves to get your home in marketable condition.
Any homeowner with high hopes of getting top price for their home will first need to get it in top condition. This costs money, and if your home is in dire need of repairs and renovations before it’s market-ready, it may not be worth it. This presents a tough dilemma for homeowners looking to sell because they can’t keep up with their home expenses. One solution might be to list your home “as-is” and look for an all-cash buyer. This removes the problem of attracting the right buyers but still means you’ll be selling for less than the home could potentially go for. Depending on your situation, this could be a sign that it’s better to hold for the time being.
You stand to benefit more from keeping the home as a rentalYou stand to benefit more from keeping the home as a rental
Not everyone who’s looking to sell does so because they’re in financial distress. For many, it’s simply because of a change in life circumstances. For instance, a new job offering that requires a move or the arrival of your first-born child. So long as you’re not under intense financial pressure to sell now, there’s no need to risk taking a loss by selling in an unfavorable market. In fact, it may even be more beneficial to keep your first home and use it as a rental property once you’ve found a new home. You could even move into a smaller rental for the time being so you can start renting out right away. With time, the money you make from becoming a landlord can go towards a down payment on your new home.
Final ThoughtsFinal Thoughts
It’s never a light decision when debating on whether to hold or sell. As shown above, numerous financial and personal considerations have to be taken into account. Sometimes it will make sense to sell, sometimes not. Whatever decision you come to, make sure you have all the facts and know the path you’re committing to.
Even if you’re still on the fence about what approach to take, schedule a consultation meeting with a local real estate agent. They can give you all the facts on the current state of the market and help you decide what’s best for your interests. Remember, this is your home and your investment, so it’s on you to get the very best you can out of it.