We buy our homes to fulfill basic needs of survival, i.e. the safety and comfort of shelter. Yet purchasing a house can also serve as a financial investment, with the expectation of a generous return at re-sale time. Results, however, are often mixed. Many are very satisfied with the manner in which their home values have appreciated and they walk away from the sale with healthy proceeds. Others, nevertheless, take a bath when they sell. Although real estate markets are out of an individual property owner’s control, there are certain measures that optimize the amount of money received at settlement.
Follow Local Market Conditions
Keeping track of where the real estate market is helps to determine the timing of a sale — if, that is, unloading the property is not super urgent. The first thing to understand is whether you are operating in a buyer’s or seller’s market, the latter being preferable in terms of profit. The best statistic for a quick answer is the number of days on the market for similar homes in the area. The higher that number, the less sway you might hold when negotiating with prospective buyers. An additional market indicator is the rate at which home values are appreciating. If the rate is steep, it could be a good time to list your property.
Equity and Seasons
Traditionally, spring is a popular time for people to shop for new homes. Not only is the weather favorable but, like the markets, it goes to the matter of timing for sellers. The most active buyers want to move in and be settled by the fall when the school year begins. Equally impactful on timing is the sellers own equity situation. Between paying off the current mortgage and taking care of seller closing costs, the person conveying the property may end up with little — or even owing money — unless there is sufficient equity in the house. This refers to the percentage of ownership enjoyed by the seller as opposed to the bank.
Price the House Carefully
In your quest to get the most dollars for your asset you might be tempted to set an aggressive price for the property. Yet there is a fine line between boldness and being over-zealous. A home that is over-priced is likely to be ignored by a whole swath of otherwise interested buyers. This leads to more days on market and an eventual dropping of the asking price. Such circumstances can hurt if you are planning a subsequent or simultaneous purchase of your own. Not only does this postpone the transaction — or even cancel it — it may end up costing the seller in terms of paying an additional month of mortgage. Consult a realtor and appraiser who have experience in ascertaining property values.
