Should I downsize my home? Learn the top 3 money-smart reasons to do it.
4 Minute ReadTopic: home selling
Almost every day, someone calls The Dave Ramsey Show to ask Dave if he thinks they’re ready to buy a home. But there’s another side of homeownership that doesn’t get as much attention: When are you ready to sell?
It’s an important question to answer since selling at the wrong time can cause trouble for years to come.
Consider the Effects of Equity Before You Sell Your Home
For most homeowners, being financially ready to sell your home comes down to one factor: equity. During the housing meltdown of 2008–09, millions of homeowners found themselves with negative equity, which meant they owed more on their homes than they were worth.
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Clearly, selling your home when you have negative equity is a bad deal. That’s called a short sale. Breaking even on your home sale is better, but it’s still not ideal. If you’re in either situation, don’t sell unless you have to in order to avoid bankruptcy or foreclosure.
For the last several years, home values have been on the rise, and that means most homeowners are building equity. Their homes are now worth more than they owe on them, and that trend will persist as they pay down their mortgages and home values continue to increase.
Financially speaking, it is best to sell your home when you have enough equity to at least cover the down payment on your next home. Or you can go all the way and use the proceeds to buy your next home outright—no more mortgage for you!
How Much Equity Do You Have?
To figure out how much equity you have in your home, first find out your mortgage balance. That’s easy enough—simply look on your latest mortgage statement
Next you’ll need to know how much your home is worth. While it’s tempting to use figures from online valuation sites to determine your home’s market value, they’re not always accurate. You don’t want to base such an important decision on iffy information.
Consult a real estate professional who will compare your home to others that have recently sold and take local market trends into account. You can trust their estimate to reflect what your home is worth based on their experience selling homes in your area.
Are You Ready to Make the Move?
If the numbers show you’re in good shape financially to make a move, great! But don’t forget, selling your home is an emotional issue too. Before you plant the For Sale sign in the front yard, take a minute to answer just a few more questions:
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- Are you ready to put in the work to get your home ready for house hunters?
- Are you committed to keeping it ready to show for weeks or months?
- Are you ready to hear the reasons why potential buyers believe your home is not perfect?
- Are you ready for honest—and sometimes hardball—negotiations over what buyers are willing to pay for your home?
- Are you really ready to move out and leave the place where your family has made memories?
Don’t get us wrong; we’re not trying to talk you out of selling your home! We just want you to be completely ready when you do decide to move on to the next stage of your family’s life.
A qualified real estate agent will give you a clear picture of what it’s like to sell your home and if now is the right time for you, both financially and emotionally.
Sell Your Home for More Money in Less Time With a Proven Pro
Ready to take the next step? Partner with one of our real estate Endorsed Local Providers (ELPs) to get top dollar for you home.
When it comes to selling homes, our ELPs rise to the top. According to a six-month survey of home buyers and sellers who used our ELPs versus those who used other real estate agents, our ELPs are twice as fast at selling homes and twice as likely to sell your home above asking price.
Don’t trust an amateur with one of your biggest financial investments. Work with a high-octane agent who knows your market inside and out. Find an ELP in your area.