Should I Sell My House? How to Decide If You Should Sell Your House

Should I Sell My House?With the turn of the new year many people are considering selling their house and looking for a new one.  They ask questions such as: “Should I sell my house”, or “Is it the right time to sell my house?”

Early in the year or spring has traditionally been a good time to put your house on the market.  After the holidays many people are shopping for houses and the spring weather brings buyers out of their homes.

So, should you sell your house?  Truthfully, there isn’t a right answer, or one size fits all answer.  It will vary across different situations and you have to do a little bit of thinking and planning to determine what makes the most sense for you.

Let’s look at some 14 considerations (financial and non financial) for selling your house that will definitely impact your your decision and help you assess if it’s the right time to sell your house.

1.  Will you profit on the sale of your existing home?

A good real estate agent is likely to ask you how much you need to sell your current house for and what is the highest price you can pay for a new house?

It’s important to run some numbers to find out.  Consider these costs (hint: look at a previous settlement statement to get estimates):

  • Real estate sales commissions
  • Fees paid at closing:  In looking at my last settlement statement we paid some
  • Title charges
  • Government recording and transfer charges
  • Any additional settlement charges
  • Pay off for existing mortgage
  • Home repairs if this is included in the sales contract.  Or, perhaps you need to make repairs before putting your house on the market.
  • Pre-sale preparations such as landscaping, painting, etc.

You’ll need to know how much your house is worth and what you plan to list it for on the market.  Your real estate agent can help by pulling comps to show you what other houses are selling for in your area.  You can also use websites such as zillow.com to get ideas.

If you have good cost estimates and a realistic sales price, you should be able to determine if you can expect to walk away from the deal with any profit, or get the cash back that went into purchasing your house.

2.  Make sure the price is right.

Remember that you can’t just list your house for whatever your heart desires.  Basic economics applies to the housing market.  There is a price point for every area in which people will buy unless it’s a special circumstance.  You just have to find that price point and consider whether or not it is going to leave you with a profit or loss in consideration of the costs.

3.  How much will it cost to get into the new house?

Once you know how much you’re expected to make on the sale of your house, consider the costs to get into a new house:

  • Costs associated with the new loan
  • Title charges
  • Government recording and transfer charges
  • Prepaid expenses such as insurance and taxes or reserves deposited with the lender
  • Moving costs
  • New house purchases (such as window coverings (if not a new house).

Do you still have any cash left after these costs for a down payment?  If so (or not), you should be able to determine how much house you can afford.  If you use Dave Ramsey’s mortgage rule in which the mortgage payment, taxes and insurance cannot exceed 25% of your monthly take home pay, you’ll be able to determine the purchase price required to make those numbers work.

4.  What interest rate can you get for your new loan?

Determine current interest rates for home loans.  Bankrate.com can be a good source to use here.  I would also recommend contacting some lenders to find out in advance how much you can qualify for, but don’t consider that amount your purchase price.  Know what you can afford and use the estimates to make sure you can get a loan with a good interest rate.  At the time of this post, interest rates are still low, so this is definitely some added incentive.

5.  Will selling your house help you pay off a mortgage sooner?

I think this is a question not considered often enough.  Are you planning to one day pay off your house?  If not, you should because a mortgage is still considered debt.[ad#In-Post Links]

I realize there is a whole other discussion about whether or not you should pay off your house because of the tax deductions, but for now, think of it as a step towards a life without debt.  Factors to consider here include the total interest you’ll pay over the life of the loan and the amount of years to pay off your loan.  Try to get this number down.

6.  Consider how long you’ve been in your house.

It’s often said you need to be in your house 5 years to recover the costs associated with the original purchase.  Perhaps there is less to consider here if you can sell your house for enough to get all of your money back and more.  But if your house price isn’t as high as you had hoped for and you’ll lose money, it may be wise to wait until the housing prices rise.  Or until you can cover original costs and make some money for a down payment.

7.  Do you have a good reason to sell?  Is selling a need or a want?

Your real estate agent is probably going to ask you why you are selling.  In fact, anyone looking at your house will probably ask this question.  Many people have a need to sell such as a job change, or necessary relocation.  Others just want a new house.

The point is really evaluating the necessity of selling.  There is a lot to consider and it can be a stressful time if not well planned.  So, before you put the sign in the front yard because the bathroom isn’t the right color, consider making a list of the reasons to move and ask yourself if it’s really worth the effort.

8.  Consider the home or house thing and try to remove emotions.

Do you live in a home, or do you live in a house?  Most men would agree it’s a house.  But most women look at it well beyond the roof over our heads and see it as a home.  Women will typically look at new houses (or homes) in the same way.

While the differences can be humorous, the point is both men and women have to take the emotion out of selling.  Truthfully, you have to view it as selling a house because that is how the market looks at it.  The pictures, painting and drapes that can make it homey, don’t count when selling.

9.  Are you willing to put forth the work required to sell your house?

There is certainly something to think about here if you are trying to sell an older home.  Actually, even with selling a newer home you might expect to do some minor repairs to make it market ready.  Anytime you get ready to list you want to make sure your house is visually appealing.  Outside it’s always a good idea to have fresh mulch in the landscaping, flowers and a neat looking yard.  The inside of your house needs to be organized and in order.  If you can’t organize it others might think there isn’t enough space, etc.  If you’re serious about putting your house on the market, try to make it model home ready.  But keep in mind it’s going to require some work and time.

10.  What will the neighbors say?

Perhaps you’ve lived in your neighborhood for a while and have become friendly with the neighbors.  Unless announced in advance, you can imagine there will be some surprise and a lot of “why” questions when that sign is seen.  Yes, you’ll have your neighbors asking all sorts of questions initially.  While this consideration alone isn’t reason enough to sell or not sell, just be prepared for the forthcoming discussions.

11.  Is there a lot of competition?

You and your real estate agent need to evaluate how you will handle the competition within your neighborhood, or even around the same area.  What sets your home apart from others?  Do you have some upgrades and are you priced better than others?  Do you have a bigger back yard?  Consider what is going to make your house sell in comparison to a similar house down the street.

12.  What is the overall condition of your house?

Conditions of your house definitely matter in a lot of cases, especially if you’re in a market to sell to a family.  Again, make sure you consider repair costs or preparation of your house before listing it.

Think again if you’ve been putting off fixing that toilet that doesn’t flush properly, or perhaps patching the hole in the wall where little Johnny swung his baseball bat too hard.  The little things count when showing your house and you have to be willing to put forth some prep effort.

13.  Will selling your house help simplify your life?

Consider if selling your house and buying another one will make your life more or less complex.  There is something about house shopping that is similar to car shopping.  Have you heard of new car fever?  You can easily develop the same thing in looking for a house.  Sometimes, you lose site of the fact that your current commute is only 15 minutes.  But a move to another house in your dream neighborhood will increase your commute to 60 minutes.  Is it really worth the move?

14.  Consider contentment.

Beyond the financials and everything else discussed, dig down deep in your heart and make sure you’re living a life of peace and contentment.  Don’t get caught up in chasing after the perfect house, or what the neighbor has because it’s a never ending race no one can win.

What do you think about these tips to help you decide if you should sell your house?

This is a post I previously published at BibleMoneyMatters.com modified for posting here at OMD.

About Jason Price

Jason Price is a family man saved by grace, passionate about faithful financial stewardship (1 Cor 4:2 NIV), soccer and the Pacific sun.