The real estate market has appreciated for the better part of the past couple of years. Depending on what part of the country you are in and when you bought, you may be sitting on some equity. If you have rented your property and have a lease expiring, you could be on the fence as to whether or not to rent again or explore cashing out. A few factors come into play, but it is important to know all of your options before you make a decision that you may regret down the road.
The first, and most obvious, factor is nailing down an idea of what the house will sell for. Even investors who have a good idea what the market is doing will think their property is worth more than it really is. The upgrades you may have made are nice, but they are only as good as the market you are in. Take a look at similar properties that have sold within a few mile radius over the past few months to get an idea of your value. If you are satisfied with the number, you could move forward. However, keep in mind there will be real estate commissions and other closing costs to impact your bottom line.
Secondly, ask yourself why you are selling. Are you selling because you have to or you have other projects lined up that you could use the capitol for? Could you sell for more next year or in five years? If you are selling because the property has become a headache you can explore the option of hiring a property manager or other remedies. Whatever the reasons are that caused you to think about selling write them down and then ask yourself if you would regret selling it if the market took off in or if things changed in your life in a few months.
If you are selling because you are trying to time the market right and beat interest rates, you should know that those can all change on a dime. Interest rates have hovered around 4% for the past few years, but they are expected to increase by years end. Would this increase mean fewer buyers will be approved and demand lowered? This could happen, but lenders may also roll out new programs with more lenient guidelines to bring these buyers back. While interest rates and policy changes are important, they should not be the sole reason you are considering selling. From the time you list your home to the time you get a buyer, things can change dramatically. You should sell because you are happy with the expected result and you are confident that your home will remain attractive regardless of these changes. If you need rates to remain low and the first interested buyer to make an offer, you may want to consider waiting.
Trying to time the market to get the maximum selling price is very difficult. Like everything else you do in real estate, think about why you are selling and what you are going to do with the profits. Even though you can sell this year for a profit, you don’t ever want to have regrets that you sold too early.