Seller’s Guide: Ready to Sell?
Are you ready to sell your home? You may have spent many months considering the huge financial decision of buying your home, but now you are considering the huge financial, social, and emotional decision of selling.
When do you know if you are ready to sell? The following seven signs may signal it is time to sell.
#1 Upsizing or downsizing is on your mind. Is your family growing or have you become an empty nester? Then moving to a bigger or smaller home might become a necessity.
If you could use another bedroom or two to accommodate your growing family or you want to move to a new neighborhood, then carefully consider the buying as well as selling process. Mortgage and taxes on a bigger home might be intimidating, but with the right planning, a comfortable space for the whole family is possible.
If the cleaning and amount of space in your family home has become too much, it might be time to downsize. Empty nesters can benefit by selling when interest rates are low. Selling a larger home and using the cash to pay for a smaller one, while investing the rest in retirement could be the right move for financial security.
#2 You are emotionally ready. Before calculating your equity or scouring your finances, consider emotional attachments to the home. Did your children grow up there? Was it inherited from your grandparents? Do you have treasured items?
Emotional attachments to homes and their contents could cause heartache and further stress. When considering selling, realize potential buyers may not connect with the home in the same way you do and may even give negative critique. However, if you can treasure the time you had in the home and offer new owners a place to create memories, then you may be ready to sell.
#3 You have built enough equity. If you owe more on your home than it is worth, also known as having negative equity, it might not be the time to sell – unless you are trying to avoid bankruptcy or foreclosure. Breaking even on your home also isn’t ideal.
However, Hawaii home values have been on the rise for the past several years, so that means most homeowners have built substantial equity. As homeowners have paid down mortgages and home values have risen, an ideal financial situation for selling has also materialized.
Figuring out the amount of equity you have is simple. Here are the three steps:
- Find your current balance on your most recent mortgage statement.
- Ask a real estate agent to give you a comparative market analysis to find out how much your home is worth.
- Subtract your current mortgage balance from your home’s estimated market value. The answer will give you an idea of the amount of equity you have gained while you had your home.
If you have enough equity to pay off your current mortgage with some leftover for a down payment and closing costs, it might be the right time to sell.
#4 You have time to make your home shine. Before deciding to sell your home, think about the work to prepare it for the best price. Painting, weeding the garden, and doing a thorough cleaning can aid in selling your home fast for the best price. Clearing out clutter and tidying closets and shelves, as well as putting some items in storage, might also be necessary to get the perfect curb appeal.
#5 The market is right. While no one can accurately predict all the ups and downs of the housing market, it is important to consider average selling prices, the average number of days homes are listed for sale, and current interest rates. A real estate agent can give you more advise on the current Hawaii housing market for sellers.
#6 You qualify for the home ownership tax break. Selling a home can offer a hefty tax break – up to $250,000 in profit for a single tax filer and $500,000 profit for a joint filer. This means if you are filing your taxes as a married couple and have made $500,000 on your home (selling price minus original cost of home and capital improvement costs), you could exclude this profit from your taxable income. If you sold at a loss, this does not qualify for a deduction, however.
Here are the basics of the housing tax break:
- Ownership: You must have owned the home for at least two of the past five years before the sale date.
- Use: You must have used the home as your principal residence for at least two of the past five years prior to the date of the sale.
- Timing: You have not taken another tax break from selling another home within the past two years.
#7 You have a real estate agent. While you might want to try to sell your home yourself, it is a much easier task with a real estate agent. If you haven’t bought and sold many properties in Hawaii, aren’t an attorney, or don’t have a lot of spare time or sales personality, then it is highly recommended to have a real estate agent guide you in the home selling process. These are a few of the job duties of a real estate agent when selling a home:
- Advising on essential repairs and staging needs
- Setting the right price for your home
- Marketing your home so it receives more exposure
- Scheduling showings with potential buyers
- Negotiating offers from prospective buyers
- Dealing with the many documents and parties involved, including escrow agents, home inspectors, appraisers, and more
If the seven signs match your situation, it may be time to sell. With the right timing and preparation, you can receive the best price for your property and be ready to transition into your next home.