Should I sell my house?
If you're reading this article, asking yourself should I sell my house?, we hope you know that whatever the reason for selling may be, you are not alone, and you have options. We are here to help you make the best decision and - if you do decide to sell - get the highest net proceeds for your house.
We believe that owning residential real estate is a powerful tool for long term wealth creation and - in an ideal world - you would never need to sell your house. In reality, however, owning and holding on to real estate is not always the right decision.
The most important thing is to make the best decision for yourself and your family. If after thinking through the ideas in this article, you decide to sell, your goal should be to sell for the highest net proceeds possible within the timeframe you need to sell.
If you decide to sell, your goal should be to sell for the highest net proceeds possible within the timeframe you need to sell, with the lowest level of stress.
Things to consider:
Why are you considering selling your house?
Understanding why you are thinking about selling your house is the foundation upon which a sound decision can be made.
The most common reasons people decide to sell:
- Financial issues
- Moving out-of-state
- Upgrading, need money for a down payment
- Health issues
- Don't want to deal with managing a rental property
- Inherited and would prefer the cash
Where are you at in life?
If you're approaching retirement age:
- are you looking to upgrade, downgrade or move to a warmer climate?
- would living in a single level home be more comfortable than climbing stairs?
- do you plan on traveling for long periods of time and not want to be stressed about maintaining and carrying a vacant property?
If you answered yes to any of these questions, then selling your home for the best possible net proceeds makes good sense.
How much equity do you have in your house?
Your equity is the value of your house minus the loan you have on your house. If your house is worth $100,000 and you owe $50,000 to the bank for your mortgage loan, then your equity is $50,000.
Getting your equity out of your house does not necessarily mean you need to sell. You can do a cash-out refinance which means your bank implements a new mortgage loan of let's say 75% of the value of your home ($75,000) amortized over 30 years, and returns $25,000 of your equity (minus fees) to you. Depending on current interest rates, your monthly payment amount may change. Moving forward you will continue paying down your mortgage but the clock has now reset and you have less equity in your home.
Getting equity out of your house incurs transaction fees. Whether you're selling your house or cash-out refinancing, you will pay transaction fees that eat into your net proceeds. Being aware of these fees and eliminating and minimizing them wherever possible is a best practice. It's also why OfferMarket exists.
What are your goals?
Does owning a house align with your goals in life? If your goal is to travel the world and work remotely in the near future, then being responsible for owning a house might not be ideal.
Accordingly, the equity house might help you achieve your goals. Being able to put that equity towards achieving your goals, so long as the money is allocated diligently, can deliver powerful liberating effects and hopefully provide you with happiness.
What is the property worth?
Before we get too far along with the should I sell my house? question, let's consider how much your house is currently worth. If you bought your house 5 years ago for $100,000, and it's now worth $200,000 and you think that is over-valued, the timing may be right to sell your house. You will walk away with considerable financial gains thanks to appreciation and mortgage debt pay down.
If, however, you bought your house for $100,000 5 years ago and it would be difficult to sell it for more than $100,000, you're looking at two core options:
- does it make sense to incur transaction costs to sell my house at this point?
- could I achieve higher returns on my investment if I sell this house and invest the proceeds in something else?
What is the outlook for my local housing market?
Real estate is hyper local. Different neighborhoods in the same city may be on very different trajectories as far as median home values are concerned.
Am I able to comfortably carry the costs of owning my house?
If we're talking about your primary residence:
If the costs of owning your primary residence are well within your means, and you are happy living where you are, then it doesn't make sense to sell.
If we're talking about a rental property you own:
If you are consistently earning free cash flow on a monthly and annual basis and therefore not "bleeding" money, then it would be hard to justify selling unless you can confidently invest your capital in an asset that will have higher returns.
What other options do I have?
It never makes sense to sell un an uncompetitive process
The keys to optimizing your net proceeds:
- high buyer competition
- low transaction fees