Deciding when to sell

Homeowners who cannot decide whether to sell their house should examine all alternatives before reaching a decision.

No homeowner wants to be forced into a sale, but it is occurring with more frequency. On average, homeowners stay in a home five to seven years. The transition often involves an involuntary sale. People are transferred in their jobs, relocate to a work for another company or lose their jobs. Couples split up and sell the house as part of the settlement. People also find new homes to match a changing lifestyle. New or larger families often dictate housing choices, such as deciding to purchase a single-family home in the suburbs or a two-bedroom condominium in the city. Still, deciding to sell your home can be an emotionally wrenching experience.

If you have a choice in the decision, consider all your options before you jump into the market:

Why Sell?

Job change: If your job is in a new city, you may have to sell in order to purchase another home. If your new job is in another part of the city, moving to another location could save on commute time, gas and wear and tear on your car.
Space: If the number of people in your household is changing, your need for space also will change. When you need less space, selling is the primary option. But if you need more space, consider building an addition. If it is impractical or too expensive to remodel, selling may be your best option.
Marital status: If you are getting divorced or were recently widowed, you may need to sell the home as part of settling up with your spouse or probate court. Consult a lawyer or accountant to examine the best option.
Equity: If you have substantial equity, selling your home may be a way of cashing in on your investment, especially if you are moving to a less expensive area.
Timing: If the housing market is hot and you plan to move to a less expensive area, you may make money on your sale even if you have lived in your home for only a short time.

Why Stay?

Tight finances: If you barely able to make your current mortgage payment, trading up to a more expensive house (even if you make a profit on your current home) may end up costing you money in relocation and commission costs, as well as increasing your monthly loan payment. You may want to consider refinancing your current home instead of selling.
Unsure destination: If you don't know where you want to move, it could make more financial sense to keep paying on your house and build equity. You'll also avoid the cost of moving twice--once when you have to vacate your current home and again when you decide where you want to live.
Reality check: Your neighborhood is homey, your schools are good, but you just don't like your house. Ask yourself if there is anything you can do to make your house more appealing. If you have owned the home for several years, you may have enough equity to do major remodeling.
Timing: If the housing market is weak, you may lose a large percentage of what you have paid into your home if you sell. But markets are cyclical, and it could be better to wait until conditions are in your favor.

The seller’s frame of mind

The first step to take once you decide to sell is to emotionally detach yourself from the house and treat it as a commodity. This means doing what it takes to sell. Most important, this means facing the pricing issue. When you look at a comparative market analysis, examine your home's assets and how they compare with comparable homes that have recently sold. You may find that you need to lower your price because you don't have a finished basement but a similar house down the street has made improvements in the basement. You may think that the décor takes priority over the unfinished basement, but buyers tend to judge properties in terms of available living space. On the other hand, if your home has a beautifully tended landscape and the other homes do not, that could help you justify your price.

Make it a money decision

Your home is an investment and part of your financial portfolio. If you are selling your home to buy a more expensive house with a better view, consider whether the view is worth the cost of selling and moving, and the percentage of equity you'll lose going from your current home to the new house. If the market is appreciating, you may easily absorb the costs of selling and moving, and it could turn out to be an excellent investment. If it is the house of your dreams, money may just not matter. But it is worth considering.

Selling with a second

If you have taken out a home equity loan or second mortgage on your home, you may have to bring money to closing in order to satisfy both loan obligations. Unless you have additional resources, this is not the ideal situation in which to sell. Consult your accountant or real estate attorney to determine a better time to sell if you can afford to wait. Otherwise, do what is needed to boost your home's value without spending a lot of money.