Asking yourself “Should I sell my house?” The good news is that with a little preparation, accurate information, and an excellent real estate agent guiding you, you can navigate the maze of selling with ease.
The current real estate market heavily favors sellers, so this could be a great time to put your home on the market.
Recent reports from the National Association of Realtors show that existing single-family home prices have increased in over 80% of metropolitan areas in the last year. According to NAR’s chief economist, Lawrence Yun, the steady rise is mainly due to “a faster pace of home sales amidst languishing inventory levels.” Combine that with almost record-low mortgage rates, improving job markets, and stagnant new home construction, and you have a lot of buyers without enough houses to buy.
In such a strong seller’s market it’s great to know that you can likely sell your house quickly and get a good price, but is that enough motivation to put it on the market?
Before you put up that “For Sale” sign, there are a few steps you should take.
Start With Your Goals
If you’re like most people, the decision to sell your home is based on a combination of factors unique to you. Knowing what those factors are is the first step toward figuring out your housing goals. Real estate agents agree that knowing why you’re selling is the best indicator of being a satisfied seller.
Richard Schulman, a top real estate agent in Los Angeles, points to goal-setting as the starting point for any real estate consultation.
“The most important thing for sellers is to have as much clarity as possible on their goals. I always want to know why they want to sell their house.”
According to Schulman, as an agent it’s his job to help clients set realistic goals – even when that doesn’t involve selling.
“Let’s say the client wants to buy a bigger house. That’s great, but if they can’t get a loan for that bigger house, there’s no point in selling the one they have.”
Selling your home has to make sense for you on every level. An honest and experienced real estate agent can help you sort through your reasons for selling and come to an answer that satisfies your needs. With their help – and a little homework on your part – you can set achievable goals.
Set Goals by Finding Your “Why”
Below, we’ve created a few tests and exercises to help you clarify and prioritize your housing goals. This is a three-part process.
Determine why you need and/or want to sell your home.
Assess your finances.
Meet with an experienced local real estate agent.
Consider your needs, wants, and finances as the building blocks of your selling goals. Start with the biggest needs, then add your wants in order of importance, then use your financial picture as a lens through which to view it all.
Obviously, needs often hold more weight than wants, but if you have a list of wants that can’t be met by your current home, don’t discount them.
The National Association of Realtors reports a mix of needs and wants for recent sellers: “…for younger buyers many want to upgrade to a larger home or to accommodate job relocation. In comparison, for older buyers many want to be closer to friends and family and buy a smaller home due to retirement.” You may find yourself somewhere in the middle and that’s okay.
Armed with the reasons you want to sell, you can have an informed conversation with your real estate agent. These experts will help you interpret why you’re selling and set realistic goals based on their experience and knowledge of the local market.
The following tests are designed to help you create goals based on data specific to you. You’re likely being motivated to sell by a combination of factors. With that in mind, resist the temptation to simply answer “yes” or “no.” Instead, think of this as a discussion starter (especially if the decision to sell is being made by more than one person). Remember that your answers will be used with your real estate agent to determine whether selling is your best option.
The “Need to Sell” Test
To get a head start on that first meeting with your agent, identify any housing needs that could be met by selling; some of the most common are below.
Question 1: Are you changing jobs?
Question 2: Is your family size changing?
Question 3: Are you retiring?
Question 4: Are you experiencing new health issues?
Question 5: Is your home or neighborhood unsafe?
Question 6: Is your area too noisy, congested, or inconvenient?
Question 7: Has your income significantly decreased?
Experiencing one or more of these major life changes could mean selling your home is your best option, maybe even a necessity. If that new job adds thirty minutes to your commute or a specialist in another city could better address your health issues, selling might be the solution.
On the other hand, if you have a baby on the way or retirement is around the corner, then maybe your current home can still suit your needs after a few alterations. Either way, you will be more successful if you set realistic real estate goals and discuss all the options with your real estate agent.
Remember Goldilocks? The flaxen-haired girl wanted something to eat, but that wasn’t enough; she wanted to eat the perfect bowl of porridge while sitting in the perfect chair, followed by a nap in the perfect bed. Goldilocks had both needs and wants and she made sure she got them. You deserve no less, so let’s move on to the “wants” that might be nudging you to sell your home.
The “Want to Sell” Test
Your answers here will reflect the kind of lifestyle you desire, how that differs from your current situation, and what you’re looking for in a new home. These questions are more subjective and will likely require more time to answer. Don’t limit yourself; just consider these as prompts to get you thinking more creatively about what your home could be.
Question 1: Is your commute too long or too expensive?
Question 2: Are you itching for a bigger, nicer home?
Question 3: Are you looking for a better school system?
Question 4: Are you having trouble with your neighbors?
Question 5: Are you sick of the weather in your area?
Question 6: Would you like to be closer to the things that matter to you?
Unlike the “needs” of the previous test, answering “yes” or “maybe” in this section doesn’t mean that selling is your only option. Maybe you can wait out the neighbor issues or remodel your current home to get the space or amenities you crave.
Most likely, you’ll find that you need more information to determine whether your “wants” are significant enough to sell your home. This is when hiring a good real estate agent pays off – their knowledge of the market often extends to housing design and construction as well, so they can guide you through alternative scenarios to meet your goals. Before you make that call to get advice though, you have some homework to complete.
Homework Lesson 1: Prioritize Your Needs and Wants
Using your test answers as a starting point, jot down your housing needs and wants on separate lists. Prioritize your lists by putting your needs at the top, then ranking your wants in order of importance. Be careful not to confuse the two! It’s tempting to allow wants to take over your list because they’re often more fun – that bigger kitchen would be awesome, but are you willing to sacrifice a shorter commute to get it? Instead, a sample list might look like this:
- NEED: Move closer to family
- NEED: More space for baby on the way
- WANT: Quiet neighborhood
- WANT: Walking distance to restaurants and schools
- WANT: Large backyard
- WANT: Updated kitchen
Dale Boutiette, a top real estate agent in San Francisco, shares two recent examples of guiding his clients through the tricky territory of wants, needs, and setting goals.
“A young couple bought a condo downtown in 2008 and rented it, but were having trouble finding renters at a higher price point. They were thinking about selling, so I did a market analysis for them. At first blush, the analysis suggested they should sell – comparative sales showed they could double their initial investment. But when digging deeper, I saw that sales in their building had not been as robust and they likely wouldn’t get a good price.
I asked them three questions: Are you making a profit with renting? Yes. Do you mind being a landlord? No. Do you think real estate in your area is a good investment? Yes. With those answers, it didn’t make sense to sell.
For another couple in a similar situation, the right choice was selling. What tipped the scale here was a hellish commute and a newborn. I asked them the same three questions, they were no longer interested in being landlords, so they decided to sell.”
Boutiette’s stories are good reminders that each seller’s “why” is unique to them and is a combination of needs, wants, and finances. The stories also highlight the benefits of using an experienced and informed real estate agent throughout your decision process!
Homework Lesson 2: Conduct a Financial Assessment
Knowing your wants and needs is a great starting point, but to get a fuller picture of your goals you’ll need to create realistic financial expectations as well. To get you started on what can be a complex task, here are a few tools to use:
- Your budget. Create or review an account or your real spending by gathering receipts for a few months. Don’t forget to add in mortgage payments, annual home maintenance fees, and taxes.
- Home value estimate. This will give you a general idea of what you can expect to get from a sale. Use the HomeLight Home Value Estimator to get a ballpark figure (it pulls five different online estimates for a range). But keep in mind that only a real estate agent can give you an accurate estimate.
- Real estate agent. I know this sounds like a broken record, but the tools that a good agent brings to the table are irreplaceable. Together you’ll create a net sheet (a handy breakdown of your current mortgage, a sales price estimate, and the costs of selling in your area). They’ll also conduct a thorough comparative analysis of homes recently sold in your area to help you set expectations for your sale.
Homework Lesson 3: Find the Best Real Estate Agent in Your Area
Even if you’re just testing the selling waters, your next step should be finding a good real estate agent in your area. A good agent won’t mind that you’re not rushing to put your house on the market. To the contrary, a good agent cares more about you making the right decision than getting a commission.
Boutiette chalks his success up to putting clients first: “The most common type of real estate agent is chasing transactions. But our methodology is very relationship based. The difference is that my goal is to honor that relationship with the buyer or seller such that they understand that their interests come before mine. We had a year when 100% of our transactions were referrals – that is unheard of.”
Look for a real estate agent whose top priority is what’s right for you; who has a proven track record of closing sales in your area; and who has satisfied clients that you can call as references.
Start by comparing real estate agents on HomeLight. You can use our site to get an objective view of how agents are performing in your area. You’ll have peace of mind knowing you’re working with an agent at the top of their profession.
The Decision is Yours (But You Don’t Need to Make it Alone)
For a truly confident decision of whether to sell, you should set specific goals and realistic expectations informed by the experience and expertise of a real estate professional.
Derek Oie, a top real estate agent in Chino Hills, CA, starts his client relationships with “the million dollar question” – Why have you decided to sell? Oie says it’s imperative to understand a seller’s motivation and “for them to understand the reason why they want to sell.” The most common reason clients cite right now is wanting a bigger, nicer home. Oie says the conversation may start there, but it’s never that simple. He shares the story of a recent couple as evidence:
“They came to me wanting to upgrade their home and location. Any time you trade up, your payments go up. We looked at their finances and current equity and decided the way to meet their goals was to wait. They started a savings account and are budgeting for a higher mortgage payment. Telling them to sell before they’re ready would have been unethical.”
Once you’ve completed the exercises above, take your time to find a relationship-oriented and successful real estate agent to help you make sense of your situation. Selling a home should never be a cookie cutter experience. For a satisfying process and sale, work with someone willing to customize their approach to your goals.