To Sell or Not To Sell?

There are many factors that go into the decision about whether to sell your home.  Perhaps you need to relocate for work, maybe your family is growing and you need more space or you just think you want a change of scenery.  Whatever the reason, the prospect of selling your home can be daunting and emotional.  In fact, a recent survey found that 36% of sellers say the process broke them down to tears.

Even if you’ve decided to move, there are options to consider besides selling your home.  Perhaps, the biggest option is renting out the old place to create a stream of income.  This option is much more viable if the mortgage on your current home is fully paid off, or if the monthly payments are low enough that you can comfortably carry two mortgages.  Renting out existing properties is a great way to build wealth and, depending on the financial circumstances, can really open some doors for the new property that you’re buying.  If the current home isn’t paid off and the mortgage payments are substantial, renting may be a non-starter because it could make it challenging to afford the new home.

Another benefit to selling is using the equity that you’ve built in your current home to help with the down payment on the new home, or if you’re downsizing, you could potentially use your equity to fund all or most of the purchase of your new home.

Many people are also considering selling to take advantage of the appreciation of the market, and to sell at the top of the market.  If you’re staying in the same area, one thing to be cautious about is that other homes have likely appreciated at similar rates to your own, so scouting the market as to what you can afford is important to make sure you’re getting the upgrade that you want.

Lastly, financing the purchase of your new home should be a consideration.  If you need funds from the sale of your current home to buy your new home, there are several options.  These include getting a bridge loan and buying first, negotiating a short rent back with the buyers or making the sale of your home contingent upon purchasing a replacement property.  All of these options have pros and cons.  Bridge loans can be very expensive, especially if it takes a long time to sell your home and rent backs and contingencies can reduce the number of interested buyers, many of whom could be in the same situation as you.  One other option on the buy side is buying first and including a sale of property contingency, but in strong seller’s markets that contingency would severely weaken your offer.