Should I Sell My House? 6 Signs It’s Time to Move

On July 22, 2019   /   Selling a Home  
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time to sell

By Stephanie Booth

Ten years. That’s the average amount of time a homeowner stays in a house before a sale, according to the National Association of Realtors®.

Think that sounds shockingly short? Or way too long? The fact is, people’s reasons for selling their homes are different, as are their time frames.

Still, there are some common reasons—financial and emotional—that lead us to sell our current home and move on to the next one. And you don’t always see the reasons coming.

Read on for some telltale signs it’s time to start looking for the next home and packing your bags (and when you should settle in for the long haul).

1. You know the seller’s market is booming and you want in

Let’s start with one of the most obvious reasons to sell: You’re eager to make a profit on your property.

You need to gauge the key indicators of a strong real estate market, explains Allen Shayanfekr, CEO and co-founder of Sharestates, an online real estate investment company.

A few signals: The price per square foot for real estate in your area is increasing, the amount of time properties stay on the market is decreasing, and you’ve noticed an uptick in brokerage activity in your neighborhood. (If you’re situated in an especially hot neighborhood, you might even get a letter or a knock on the door from a listing agent who wants to help you get in on the action.)

“If any of these are true in your area,” Shayanfekr says, “think about selling up.”

2. Because your neighbors just got what for their house?

Check online real estate listings in your neighborhood, and pay attention to the “recently sold” flyers in your mailbox to keep track of comparable home prices in your area.

“If other houses on your street with the same bedroom/bathroom count [as yours] are selling for a price that you’d be more than satisfied with, it might be time to move on,” Shayanfekr says.

Another sign of a hot home sales market is the relationship of asking prices to sale prices. If home buyers are making offers fast—for as much or more than sellers are asking—it’s a seller’s market. A buyer may offer you a sales price you can’t refuse, too.

3. You’re sick of feeling financially stressed

Not everyone sells their real estate in order to pad their bank account. Some homeowners underestimated their ongoing housing costs and simply sell to ease their mortgage burden, or to cash in their equity and use it for other purposes.

If your property taxes or mortgage pa

yments have become unmanageable, the best recourse may be to sell and find another home that’s more affordable, Shayanfekr says. Selling your home is better than struggling with a big mortgage loan, and possibly risking foreclosure.

To breathe easy, your monthly housing costs, including your mortgage interest, principal, property taxes, homeowners insurance, and HOA or condo fees if applicable, shouldn’t exceed 28% of your gross monthly income.

Before you sell your home to reduce your monthly living expenses, make sure you can find another home to rent or buy in your price range, and that you can qualify for a loan at current interest rates when you do.

4. You’ve grown—but your home hasn’t

The starter home you moved into when you were expecting your first child isn’t necessarily the house you need now that you have three preteens and a capybara. It’s bittersweet to give up the memories you’ve made in your home, but if your living quarters are causing you stress rather than comfort, “take the leap and sell up,” Shayanfekr says.

Death, serious illness, divorce—these are all emotionally wrought experiences that may warrant a need for change. Relocation is another factor. But let’s not overthink things.

“Maybe you’re just tired of the same old, same old, and it’s time for a change of scenery,” says Bruce Ailion, a Realtor® and attorney for Re/Max Town and Country in Atlanta.

5. You’re over ‘high maintenance’

The average homeowner shells out $2,000 a year for maintenance services, according to a recent report by Bankrate. Not repairs, mind you, but scheduled services such as landscaping, snow removal, septic service, private trash and recycling, and housecleaning.

Sick of watching these payments steadily drip out of your bank account? You could sell, and buy some lower-maintenance real estate such as a condo or a new-build property, Shayanfekr says. You might even want to try renting, and let a landlord worry about leaky pipes and other property hassles.

6. You’ve put at least 5 years into the relationship

“If you sell too soon—assuming you have a mortgage—you haven’t really built up any equity in the home beyond the down payment,” points out Adam Jusko, founder and CEO of personal finance portal ProudMoney.com. “In the beginning, your mortgage payments are almost completely interest payments.”

In fact, unless the housing market is seriously booming (see above), you might lose money when you sell. You might even owe more than you can get from your house after closing costs.

Remember: Selling isn’t free: You’ll have to shell out to cover all of the costs associated with hiring a real estate agent, closing, and, of course, purchasing another home.

That’s why Jusko recommends staying put for at least five years, unless you have an urgent need to move. In addition to everything else, moving too quickly sends potential buyers a bad message.

“Buyers don’t feel good when it appears you are selling too soon,” Jusko cautions. “What was wrong with the house? Why are you leaving so fast? Are the basement walls about to collapse? Are the neighbors selling drugs and shooting fireworks at your house? Buyers can dream up all kinds of negative scenarios when a seller hasn’t owned the home for very long.”

Another reason you may not want to sell is if you don’t meet the qualifications to avoid paying capital gains tax on your profit from a home sale. Generally, you can exclude the gain from the sale of your home if you owned and lived in the home for two of the past five years. A sale before the two-year mark, if you don’t meet any of the exceptions, could be a costly mistake. By the time you pay capital gains tax, you won’t have as much equity left as you’d planned.

But beware of snap decisions

Of course, there are no promises that selling will be better for you in the long run. Take your time deciding if you should sell, and then study the local home sales market, with the help of your real estate agent, before you price your home. If you underprice your home, a buyer may snatch it up too cheaply. If you overprice it, the right buyer may pass it by.

Jusko and his wife lived in Chicago in the early 2000s, when home values were through the roof. After about three years, they sold at a 40% profit. But soon after moving to the Cleveland area, where they’re both originally from, home values plummeted.

“For many years, our home was worth less than what we paid,” Jusko says. “It’s only now—more than 15 years later—that I believe we could sell for more than our purchase price. And don’t get me started on how much money we’ve put into the house over that time.”

Selling your home is, above all, a personal decision. Do what will help you live—if not happily ever after—happily for now.

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The Lowdown on How Comps Can Drag Down Your List Price

On April 24, 2016   /   Selling a Home  
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By: Angela Colley

How Comps Can Drag Down Your List Price

We’ve all had that crazily obsessive-compulsive neighbor who keeps his property in pristine, showroom condition, keeps a stern eye on the whole street, and never hesitates to walk over and scold you about your broken shutters while you’re trying to drag groceries in from the car.

Maybe you’ve wondered what happened to cause your neighbor to get so uptight in the first place. Our guess: He’s tried to sell a house before. And he got burned by the comps.

When you’re getting ready to put your house up for sale, your Realtor® will likely run a comparable market analysis (or CMAs, aka “comps”). Comps are usually a good thing—the information can really help you price your house right.

But what happens when good comps go bad?

How comps work

First, a little background. To find a comp, a Realtor looks at homes in your area comparable to yours that sold recently. So if you have a three-bedroom, the Realtor will probably come back with the three-bedroom one block over that sold last month. She’ll be armed with the sold price, the list price, and other salient facts.

In theory, all that info can be used to decide a good list price for your house. But the reality is that collecting methods might not be perfect.

“Don’t believe the hype that all CMAs are created equal,” says Aaron Seekford, a real estate broker in Arlington, VA.

When comps work—and when they don’t

If you’re lucky enough to be living in an eerily perfect place that reeks of the 1998 classic “Pleasantville,” you probably won’t run into any trouble. Congrats! But if your hood is unusual or a little rough around the edges—or your home is a one-of-a-kind, and maybe not in a great way—comps might send you traveling down the wrong road.

Price your home too high due to those inflated comps, then it simply might not sell. Your Realtor can drop the listing price—again and again, if necessary—but then buyers might wonder if something’s wrong with the place. Price it too low, and your home will probably get snapped up right away—but you’ll walk away with less than you could have netted. Either way, it’s a bummer.

So you need to know the different comp-skewing dangers and how to deal with them.

So what are the trouble areas?

Living adjacent to crime or run-down areas: In my area people like to say there aren’t really bad neighborhoods, just bad streets. And it’s true. I live on a great block, but the people living two blocks over aren’t as lucky—and the houses there sell for much cheaper.

Having the best house on the block is rarely a good thing (we’ve talked about it before), and this is especially true in those up-and-coming areas. You just know you have what it takes to turn the nabe around, but you might pay for it with a bad comp.

“Most pros will adjust the analysis by pointing out the lower-priced homes and tax values,” Seekford says. But the only real way to tell how a neighborhood works is in person. “[They] would have to drive by the surrounding neighborhood, looking at the higher sales on your street versus the other blocks.”

Your Realtor should do this. But if you think she hasn’t, flag it.

The other house was next to a toxic waste site: OK, hopefully your house isn’t anywhere near a federal Superfund site, but you get the idea. What happens if the comp house sold for dirt-cheap because it was next door to something awful?

“ON CMAs, I often like to include a section of what I call ‘Other’—like if the home is located next to a mill or waste treatment plant,” Seekford says.

When you’re looking at your comps, make sure they factor in all the nearby things—good and bad.

The comps were based on number of bedrooms, but not square footage: When running comps, the number of bedrooms and baths definitely comes into play. After all, your two-bedroom isn’t the same as the five-bedroom down the block.

But the number of rooms shouldn’t be the only thing that matters. If your home has two master suites and the comparable home has two impossibly tiny rooms, that should be taken into consideration.

“Price per square foot is another excellent tool in pricing,” says Joshua Jarvis, founder of Jarvis Team Realty in Duluth, GA.

Square footage is especially important if you live in an older, less planned community. “It helps in neighborhoods where you can’t find the exact same floor plan,” he says.

No one has sold a home in your neighborhood yet: If you’re the first to sell in a newly developed neighborhood—or your area is coming out of a housing slump—and you’re the first seller out of the gate, that might be bad news for your comps.

“Some sellers are held hostage because no one [else] has sold their home,” Jarvis says. “It’s a weird standoff where the first one that sells loses but blazes a trail for others.”

So you can at least pat yourself on the back for helping out your neighbors, right?

What if your comps don’t measure up?

The information you get should be thorough, but what if the prices seem skewed, or you get the feeling your Realtor isn’t pulling the right comps?

“Challenge it,” Seekford says.

How Comps Can Drag Down Your List Price

While not all Realtors are going to have an “Other” section, they should include information on location and surroundings, the pricing should make sense, and the Realtor should be able to tell you why she included what she did.

But don’t expect her to give you the green light to ask for loads of money just because your neighbors are living in squalor. Remember: Your Realtor wants to help you get your house sold, but she also has ethics to consider.

“A real estate professional will comment that your street warrants a higher value, but we as Realtors are under a strict code of ethics that do not allow us to comment on neighborhood demographic,” Seekford says.

But if you think that isn’t the problem—and more investigative work should have been done—ask for it. Your Realtor can run the comps again.

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