By David McMillin
Home prices have been on a rocketship trajectory in the last two years, growing by 18 percent between October 2020 and October 2021, according to CoreLogic. With that record-breaking pace, you might be pondering a big question: Should I sell my home to cash in on the market before it slows?
Should I sell my house now?
There’s no clear-cut answer whether 2022 (or any year) is the year you should sell your home. The right timing for you relies on careful consideration of your local housing market, your current financial picture, and your plans if you find the right buyer.
Reasons you should think about selling your home soon
This is the definition of a seller’s market. — for now. Waiving home inspections, submitting all-cash offers, buying sight unseen — buyers have made life easier than ever for sellers in the past two years because there simply aren’t enough listings. In fact, active listings at the end of 2021 were down by 27 percent compared with the same time in 2020, according to data from realtor.com. So, if you’re thinking about selling your home, you have the law of supply and demand in your favor. You can be in the driver’s seat, particularly if you get multiple offers, which has been happening for many sellers.
Prices can’t go up like this forever. If you’re waiting on the sidelines in hopes that your home’s value will continue to rise at a blistering clip, you might want to get in the selling game now. CoreLogic forecasts a much tamer 2.5 percent growth in home prices between October 2021 and October 2022.
Interest rates are set to rise. Part of the reason buyers have been jumping at the chance to purchase a home is that borrowing a mortgage has been cheap. Throughout 2021, record-low interest rates meant that highly-qualified borrowers could land loans with a measly 3 percent interest rate (or even less). Those rates are gone, though, and they’re expected to continue rising this year. That’s bad news for two reasons: Buyers might leave the market, and you may also be in the buying position after you sell, which means you’ll have to pay higher borrowing costs. Simply put, waiting around could cost you.
Reasons you should probably stay in your home
You haven’t hit the break-even point on your refinance yet. The record-low rate environment in 2020 and 2021 also paved the way to record refinance activity. If you refinanced into a better deal, you made a smart move — but if you sell this year, you may erase that financial wisdom since you likely haven’t allowed enough time to recoup the closing costs you paid for the new loan.
You don’t have a plan for what’s next. Selling your home means moving somewhere else, and that takes planning. Ask yourself: Will you have enough money for a down payment on a home, even if you get less for your current home than you expect? Would you be comfortable renting for a while as you think about your options? Are you at a point in life where you can downsize to keep more of your profit from the sale? If you want to move into a property that feels close to the one you’re living in now (in the same city), remember you’re going to need a budget similar to that of the buyer who’s acquiring your home.
Your housing market doesn’t match the headlines. There’s a nationwide housing boom, but some markets are much hotter than others. If you live in Phoenix, Arizona, for instance, you’re sitting pretty — the median list price there has soared by nearly 27 percent in the last year, according to realtor.com. If you’re thinking about selling in Peoria, Illinois, however, things aren’t looking so good: The median list price declined by more than 2 percent in the same period.
Six tips if you plan to sell
If you’ve weighed the pros and cons of selling your house in 2022 and decide the time’s right, here are six tips to get ready to list, close, and move:
1. Do your research on comps
You’ll need to set a price for your home, so do your homework on what similar homes in your neighborhood have recently commanded from buyers — you’ll want to have a solid understanding of how your property stacks up. Then, if a real estate agent you’re thinking about working with suggests an unrealistic listing price, you’ll be prepared to push back.
2. Look at your home through the eyes of a buyer
Is your home’s outdoor space in need of sprucing up? Will the broken shelf that never bothered you turn a buyer away? As you think about listing your property, think about what repairs are worth paying for, as well as what you shouldn’t bother spending any money to fix. You can also consider paying for a home inspection before listing your property (known as a “pre-listing inspection”). While it’s an extra few hundred bucks out of your pocket, it can help you proactively identify any major issues that a buyer’s home inspection might uncover.
3. Stage it
First impressions matter. You’ll need to get professional photos taken of your place to capture attention from buyers scrolling through new listings. Rather than taking photos of your property as you’ve lived in it, consider working with a home staging service to make anyone say, “Wow, I could live here.”
4. Timing is everything
The question you need to answer might not be, “Should I sell my house in 2022?” Instead, you might need to figure out when exactly to sell your house this year. Ask a real estate agent for advice on which months present the best odds of a quick sale with higher offers. Spring and summer have historically been the winning seasons, but any time of year could be fair game in this unprecedented market.
5. Know how low you’re willing to go
You might be going into the listing process with the hopes that five buyers will continually raise their bids until you’re signing a contract for more than you ever dreamed of. However, even in the current market, you can wind up disappointed. What will you do if you list your property without much buzz and don’t receive any offers? Drop the price? Take the listing off the market altogether? Make sure you have a plan in place if you need to pivot.
6. Compare iBuyers to speed up the sale
In some markets, listing to selling a home can take a while. That can mean weekend after weekend of open houses, regularly leaving your place to let potential buyers check it out, waiting for financing to come through for a buyer, and more — in other words, tons of time and stress. Even lining up selling one home with buying another can present issues. If all that sounds like a hassle, consider selling your place to an iBuyer like Opendoor. You can get a preliminary offer in a few minutes without meeting anyone in-person, and also conveniently choose your own closing date. If you’re asking yourself, “Should I sell my home in 2022?” and you want to do it as fast as possible, the iBuyer route might be your best choice.
This article is also posted on Bankrate here.