For most homeowners, being financially ready to sell 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.
Clearly, selling your home when you have negative equity is a bad deal. That’s called a short sale, and it impacts your credit almost as much as a foreclosure. 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 in order to avoid bankruptcy or foreclosure.
For the last several years, home values 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.
Financially speaking, it is best to sell your home when you have enough equity to at least cover the down payment on your next home. Or, you can go all the way and use the proceeds to buy your next home outright—no more mortgage for you!
How Much Equity Do You Have?
To figure out how much equity you have in your home, first find out your mortgage balance. That’s easy enough—simply look on your latest mortgage statement.
Next you’ll need to know how much your home is worth. While it’s tempting to use figures from online home valuation sites, they’re not always accurate. You don’t want to base such an important decision on iffy information.
Contact a real estate professional who will compare your home to others that have recently sold and take local market trends into account. You can trust their estimate to reflect what your home is worth based on their experience selling homes in your area.
Are You Ready to Make the Move?
If the numbers show you’re in good shape financially to make a move, great! But don’t forget, selling a 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 home 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 really ready 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 just want you to be completely ready when you do 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 a home and if now is the right time for you, both financially and emotionally.
(Courtesy Dave Ramsey blog: https://www.daveramsey.com/blog/ready-to-sell-your-home)