What is My Home Worth?
- Assessing the value of your home, your needs and your timeline can change a multitude of factors. How quickly you need the proceeds of the sale and the market conditions can help decide your path as you prepare to leave your current house. It’s a balance of current and future needs and the route you choose can always be changed until you enter into a contract.
Is It Better for Me to Rent My Home or to Sell?
- Deciding whether it’s better to rent or sell will often depend on the conditions in the market, your needs, your timeline, sale prices and rental prices. Historically, owning rental property is a great investment, but it’s not without pitfalls. Determining whether you can cover your mortgage with rent and if the property will appreciate is a challenge that takes research and analysis.
- Start by evaluating the current market conditions. Ask yourself the following questions: What is my home worth in this market? How much are homes selling for in my neighborhood? What is the average rent? Is the value of the house likely to rise or fall in the next several years? If it’s likely to fall, it might be best to sell the property now.
- Next, analyze your current situation. How much do you owe on your home? Do you have enough for your down payment without selling it? Will the rent checks cover the mortgage? Do you have the temperament or desire to be a landlord? Can you afford to cover the mortgage if your renter cannot? Tax rules for landlords can be favorable, so what will the tax implications/gains be?
- If you need to move on quickly or don’t have the patience to deal with potential issues, selling might be the best option. If you think that the house might appreciate and you can move on without needing the income from the sale to purchase your next home, renting might be the answer for you.
Should I Buy First or Sell First?
- Current market dynamics and personality can influence whether you choose to buy or sell first. In a buyer’s market, sellers are less likely to have issues with contingencies and may be willing to take more risks to sign a contract. A seller’s market favors buyers who have already sold their homes and can make a cash offer. As for personality, some people like to know that they can sell before they look to buy another home and others like to know where they are going to live before they sell their current home. There are benefits to each. Speaking to a Weichert Sales Associate can help you better understand the current local market conditions and gauge a timeline for each option.
- Before making the decision, the first question to ask is, “What is my home worth? The amount of equity that you have in your current home could have a large impact on the home that you are able to afford. Also, you’ll want to evaluate the mortgage for which you’ll qualify and your ability to carry those new monthly payments in addition to your current mortgage. It might also help to start to look for your new home. If you see a few options available that you can afford, it might be a safer option to put your home on the market.
- Buying first offers the security of knowing where you are going before you sell your current home, but also comes with some risks. If you have very specific needs which could lead to a prolonged home search, like location, size, age or extended garage space for example, you might want to considerer finding your new home first. One risk is that it can be harder to get a mortgage for a second home. This can be overcome by using a Home Equity Line of Credit (HELOC) to cover the down payment, but this only works with significant equity in your current home, assuming you have the ability to carry new monthly payments in addition to your current mortgage. Another possibility is that you might feel pressured to take a lower offer on your first home to avoid being burdened with long-term debt that you cannot afford.
- Selling first offers the most control. If the buyer is agreeable, it might be possible to rent back your home for up to 60 days. It’s always possible to move into another short-term rental, although that adds the stress of moving twice and storing your belongings. If you do choose to sell first, you will not need a sale contingency which means you will have more power when negotiating your purchase price.
The Weichert Seller’s Guide explains what you need to know to learn how to sell your house successfully: