Owning property is one of the greatest investments. No matter the region and no matter the era in history, real estate prices have overwhelmingly trended in a positive direction. However, just like any other investment, there has to be an exit point.
This gets complicated because real estate is not just any other investment. It’s not as easy as just taking your profits and running. Whether the house you are considering selling is your primary residence or a rental that you use for income, moving on from a property will likely include a major change in lifestyle.
This can make the decision to sell emotionally draining. To help make this decision easier, consider the following points that provide strong signals on whether or not to sell your house.
1. You’ve Outgrown Your Home
What seemed like the ideal home when you were fresh out of college or just starting a family will likely begin to feel cramped and confined as the years pass. Whether your family has grown through the addition of children, the items you have accumulated have turned your guest bedroom into a storage unit, or there is no place to park the new four-wheelers you decided to purchase, your real estate needs will likely increase as you age.
If you start feeling resentful about having to wait in line for the bathroom or cannot clear enough space on the kitchen table to have dinner, then it’s highly likely that you need to move on.
2. Your Plans for the Property Never Materialized
Whether purchasing a vacant tract of land or a run-down house as a fixer-upper project, many people enter the real estate market with an eye on turning nothing into something. Unfortunately, these plans can sometimes be better in theory than in practice. If continual financial investment in property upgrades or the time commitments required to make the property livable become more than you’ve bargained for, then you should definitely consider cashing out your investment and selling your house.
3. The Real Estate Market is Just Too Hot
Lifestyle considerations are likely to provide the major impetus behind when to sell your house, however, there are times when the financial aspect is just too sweet to ignore. Keep an eye in your mailbox for “recently sold” flyers to get an idea of what comparable properties in your area are going for. Pay attention to the brokerage activity in your city and note if “for sale” signs are going up and coming down seemingly overnight. This is an indication of a strong seller’s market.
A strong seller’s market is particularly attractive in the current pandemic climate. With the advent of online listings and virtual tours, buyers from all over the country are part of your potential market. Many such remote transactions are taking place, with people paying above appraisal and asking price for the chance to move out of cramped cities.
If one of these attractive offers presents itself for your property, you could use the extra money to buy a bigger or more luxurious house elsewhere.
4. You’ve Been in the House for at Least 5 Years
Historically, people have lived in a house for an average of 10 years before selling. However, it can be expected that this average will go down in the years to come, as remote work opportunities are putting an end to career-based obligations that have kept people rooted in one spot.
Nonetheless, even if you have the freedom of working from anywhere, you should strongly consider staying in your house for at least five years before selling. Since early mortgage payments are mostly all interest, you will have accrued little to no equity above the down payment when staying in a house for less than five years, and the costs associated with hiring a brokerage and closing on the sale of your home might actually contribute to you losing money on your property.
5. Your Income Has Changed
Many people get a fancy new job and celebrate at finally being able to afford a house. However, they often buy more house they can actually afford and do not consider the implications that a career change may have. If you find yourself in a situation where more than 30% of your gross income is going toward a mortgage payment, you should strongly consider downsizing to give yourself some financial breathing room.
Consider Your Options
Buying a home is one of the best investments a person can make. However, there are more than financial considerations at play when it comes to selling a property. If you find yourself struggling on when you should sell your house, take a close look at the advice listed above to give yourself some peace of mind.