If you need assistance, please call 936-647-4400

Seller Asks: When is the right time to sell?

Tuesday, October 20, 2015   /   by Marion Franke

Seller Asks: When is the right time to sell?

Seller Asks: When is the right time to sell?

There are many factors that affect timing in selling residential real estate.  None of them are predictable.  So, timing the market exactly right can only be an educated guess.  This article is designed to give you a few ideas about the factors affecting when you might plan your real estate move.

Interest Rates:  Few would deny the fact that interest rates appear to be rising.  That is one reason why there has been a recent rush to purchase.  Buyers want to get the lower rates and they will compete for the chance to get a well-priced listing in a good location and in pristine condition.

Rising home prices:  Lots of home buyers have come into the market because they see that low inventory is pushing up prices.  This market condition also changes the outlook for sellers.  If you will be moving to another home…particularly if the future home has a higher value…you have lots of motivation to move as soon as possible.

Low Current Inventory:  Just a few years ago, our local market had more than 6 months of inventory.  In 2012, the average days on the market in Montgomery County decreased to half that level, with 84 average days on the market.  In June 2013, inventory is so low that we have only 64 average days on the market in our county.  Low inventory conditions push up home values.  This is clearly a seller’s market and it may be the time to plan your move.

Should Seller’s Wait? Some sellers may think they will wait until next year when values will be even higher.  Unless you are planning to rent or retire to a motor home, that decision could be a huge and costly gamble.  Both the increased interest rate and the rising home prices can squeeze a lot of money from the bottom line equity at closing.

Let’s Do Some Numbers:   We will work with easy numbers for this illustration.  Call your real estate agent to get more accurate numbers.  They will give you the statistical information you need to get a better picture of your individual situation.

Current theoretical market snapshot:

  • Competitive Market Analysis indicates your house is currently worth $200,000

  • Current interest rate is 4.5%

  • You want to purchase a home worth about $350,000 when the current home sells

Potential market snapshot in six months:

  • Competitive Market Analysis indicates your house is worth $220,000

  • Interest rate is now 5.5%

  • Future home value is now $385,000

In this sample scenario, both houses increased 10% in value in 6 months.  The $20,000 gain in value looks good until you notice that the home you want to purchase has gone up $35,000.  Add the fact that interest rates have risen sharply and you have lost big money.

Sure, this scenario is simplistic and has no chance of being exactly like we have outlined.  Each seller has a unique set of motives and objectives.  We have no way to accurately predict the future.  Instead, get expert advice from a seasoned real estate professional to give you better insight into your situation.