A home is often one of the largest investments that a person will make in their lives. Because of this, getting the most amount of money when they sell their home is extremely important to all of the sellers I have worked with. However, one question I am always asked by potential home sellers is “When is the best time to put my house on the market?” I have some very straightforward answers that I use quite frequently.
Two Types of Markets
Generally, there are two types of markets: a buyer’s market and a seller’s market. Most seller’s believe that a seller’s market is the best time to put their house up for sale. This isn’t necessarily true.
A buyer’s market is defined by one where inventory is at a high point and interest rates are low. This typically provides a market full of healthy, ready, willing and able buyers for properties currently on the market. This type of market can result in a much faster sale for sellers with profits that are still high yielding. Sellers need to consider if they want a faster sale or a much slower one.
A seller’s market is defined by inventory being low. The upside of this is that they might get more profits as opposed to in a buyer’s market, however, because interest rates are traditionally high at this point, it decreases the pool of buyers in the market. This can mean three times as long to sell a home than in a buyer’s market.
Time of Year
Contrary to popular belief the time of year to sell a home does not really matter. People buy and sell property all year long. The fact of the matter is that in any situation it requires the right buyer at the right time to purchase a home. Don’t wait until “selling season” to put your house on the market.
Typically the only months that are truly “slow” in real estate are the months of October – December. However, slow doesn’t always mean an unsuccessful sale.
Market Conditions
When placing any home on the market the seller’s agent should do a great job by them and keep them informed about current market conditions. Most sellers want to put their home up for sale for more than the market value of what it is worth.
The market value is determined by the price that a ready, willing and able buyer will pay for the property. So, for sellers, it doesn’t matter what you ask for the property, it matters what it will appraise for. A good seller’s agent will have the information on what the property will appraise for based on comparable sales data. Listen to your agent when you settle on a list price.
Equity Position
Sellers should also consider how much equity they have built in their home. Typically the first 5 – 7 years are applied more toward the interest of a loan then the principal of the loan, which can translate into a slower build of equity. The best time to sell is after that 5 – 7 year period, providing that market conditions dictate a favorable sale.