The real-estate market revival has made many homeowners happy. They are starting to see home equity rise again, their balance sheets are expanding and they may now have the ability to sell. In many cities, inventory is low and homes are selling quickly. So, yes, this might be a great time to sell. However, before you make this decision, take time to have a comprehensive look at the financial impact of putting your home on the market.
First, meet with a local real-estate agent to walk through your home. They should be able to give you a competitive analysis, a realistic selling price and identify any items that need to be fixed prior to the home going on the market. Next, once you have these figures, deduct all the costs of getting the house ready. You’ll want to factor in selling and moving expenditures as well. Finally, don’t forget to estimate all the little expenses like steam cleaning the carpets, purchasing new blinds in your next home, etc. For this exercise it is better to overestimate than underestimate.
Now the million-dollar financial questions: Can you really afford this transition? How will this affect your long-term financial plan? If you sell your home and buy another one are you increasing or decreasing your mortgage debt? Will this move cause you to work longer because of the increased debt? Can you afford the new mortgage and property tax if you were to lose your job? All of these items should be reviewed with your financial planner after you’ve met with your real-estate agent, run the numbers and prior to making any moves.