Monday, June 3, 2013

Home Sellers: Is Now a Good Time to Sell?

It can be hard to make any sense of the chatter out there. Most of it is driven by those who stand to make their livings when transactions close, so it's in their self-interest to cast the facts in the best possible light. Real estate sections in newspapers, for example, always quote real estate brokers. Even though the information they offer may be accurate, it's akin to asking Newt Gingrich if Republicans are smarter than Democrats.

If you're of a mind to sell, tune out the hype and chatter and instead, focus on your goals for selling. If you need a larger home, focus on the reasons why and how you'll manage two transactions--selling the old and buying the new--and how to make that work. Sure, price is a big part of that discussion, but what you lose, or gain, on one end you will probably lose, or gain on the other. 

Selling one home and buying another is stressful, so work on minimizing stress by laying out the hypotheticals and what you would do if one happened. For example, would you make an offer on a new home subject to your old one selling? What if the seller refused your offer? Would you accept an offer on your home subject to a buyer selling her present home? What would you do if you had an accepted offer on a new home and the deal on selling your present home fell apart? You can't solve these, but you can save yourself some grief if you think them through.

In most places, it's a seller's market, which means there are too many buyers and not enough sellers. That said, many homeowners are either still underwater, even, or only have a little equity.

It's also my belief that interest rates, already starting to tick up, will continue to do so. And I don't believe buyers' incomes are going up all that much. The monthly payment they can afford to make is the same whether mortgage interest rates are high or low.

If interest rates go up, therefore, house prices have to either flatten out or drop. This possibility is something you should figure into your thinking on whether or not you should sell now or fairly soon.

If a prospective buyer were to ask if now was a good time to buy, I'd note that we've had, for the last year or so, a juxtaposition of ridiculously low interest rates and low home prices, by historical standards. With the market in the early stages of recovery, this phenomena will change. Prices are already moving up, and so are interest rates.

Sellers should consider this notion as well.