Is It A Good Time To Sell A House? When To Sell And When To Wait

Are you asking, "Is now a good time to sell my house?"

When considering selling your house, you likely dream of selling it under the perfect conditions – maybe doing it quickly and for more than your asking price.

Homeowners may consider selling a home now rather than later in 2023 due to affordability pressure from rising mortgage rates. Housing prices could fall later in 2023, and some potential buyers may bow out of the market, creating a perfect storm of low demand and less competition for on-sale homes.

In short, now may be a better time to sell than later in the year, and experts generally cite late spring and early summer as the best time to sell.

A good time to sell your house is during a seller’s market, when supply is low and demand is high. If mortgage rates are rising, you’re better off waiting or selling before they climb higher. Let's look at several factors that indicate ideal home-selling conditions.

Mortgage Rates Are Low

Low mortgage rates are beneficial when selling a home. When COVID-19 first hit, the Federal Reserve dropped the federal funds rate between 0% – 0.25%, which caused mortgage interest rates to drop. In December 2020, Freddie Mac reported an average 2.68% interest rate for a 30-year fixed-rate mortgage. Since July 2022, the Fed has hiked interest rates, and more hikes may come down the pike, affecting the market as a whole.

Looking at comparable sales, also called comps, can be helpful. Comps refer to similar homes sold in a specific area, which can help you and your real estate agent find the fair market value of a house. Real estate comps should be homes sold in the same area and have the same approximate size, age, condition and the number of rooms.

Market Supply Is Low

A low supply of homes can be beneficial when selling a home. A low inventory means that there are fewer houses on the market.

A noticeable market supply trend began in the early part of the pandemic, when people began working from home and became reluctant to sell their homes. Builders also reduced the number of homes they built, and lumberyards quit producing building materials. Existing homes experienced a drag in sales, resulting in more demand and less supply.

This phenomenon created great opportunities for those selling their homes.

Your Home’s Value Has Gone Up

A home’s increased value can be beneficial when selling. In other words, selling your home for more than you bought it for can offer a great opportunity.

Assess how much equity you have in your home. Equity refers to the difference between what your home is worth and the amount you owe on it. For example, if your house is worth $200,000 and you owe $50,000, you have $150,000 in equity.

Consider having enough equity to cover the down payment and closing costs of the new home purchase so you don't have to worry about paying for these out of pocket. A down payment refers to the cash you put down when you purchase real estate, which can range from 2% – 6% of the sale price of the home. Closing costs refer to the fees you pay to close on your home, such as origination and appraisal fees, title searches, taxes and other costs. 

Think you might want to downsize to a smaller home? If your home seems too large for your needs, opting for a smaller house may be a smart move.

Downsizing may allow you to adopt a lower mortgage payment, more affordable homeowners insurance and cheaper utility bills, not to mention potentially lowering your upkeep costs and the profit you make when you sell your extras – furniture and other possessions you no longer need.

Consider having a new home purchased before selling a home because managing buying a new home while selling your current home can be tricky, especially if you need to carry two mortgages for a while.

Consult an experienced real estate agent or REALTOR^® to help you learn your best move. Develop a game plan that doesn't jeopardize your financial future or leave you without a place to stay.

On the flip side, when should homeowners steer clear of selling their homes? Consider doing so when rates are high, market demand is low, you have low equity, your home has unfinished renovations or you can't afford a new home. We'll walk through these factors below.

Rates Are High

When mortgage interest rates are high, it can affect your home sale. Rising mortgage rates can increase buying demand and create a fall in home prices.

Pricing a home with rising rates can prove tricky. If you must sell your home during a rising interest rate environment, it's important to do your research and connect with a great real estate agent in your area.

Market Demand Is Low

A buyer’s market occurs when the number of homes exceeds the number of potential buyers. In other words, it can occur when supply exceeds demand. If you're in a buyer's market, you may find it hard to compete with other home sellers to sell your home. A low-demand market may be the wrong time to attempt a sale.

You Have Low Equity

When you haven't had a chance to build a lot of equity, or in other words, you have low home equity, you may not want to sell your house. You will find yourself on the hook for closing costs and the down payment for a new home. In addition, the seller usually pays real estate commissions, which can run 5% – 6% of the home's sale price, split between the buyer's agent and the listing agent.

Your House Has Unfinished Renovations 

Having unfinished renovation projects in a home can make it harder to sell. Major projects, such as a leaky roof, a cracked foundation or other major flaws can make selling harder. Double-check with your real estate agent to determine whether certain renovations might give you trouble when you sell.

You Can’t Afford A New Home

If you can't afford the monthly payments or the down payment on a new home, you may want to reconsider selling your home. Take time to evaluate your budget and see if there are ways to save for a down payment to make home buying more affordable.

Consider looking into assistance programs, such as USDA mortgages through the U.S. Department of Agriculture, VA mortgages through the Department of Veterans Affairs, HUD Homes through Housing and Urban Development, state and local assistance.

These programs traditionally offer lower credit score and down payment requirements, lower closing costs and options for those with poor credit histories.

So, how will you know when it's time to sell your house? Home buyers can rely on a few tried-and-true methods for pinpointing the right time to sell a home.

Consult A Real Estate Agent

Selling with a real estate agent can help you effectively market your home. Real estate agents are licensed professionals who help buyers and sellers. Listing agents represent sellers, while buyer's agents represent buyers. REALTORS^® take licensing further – they are members of the National Association of REALTORS^® (NAR).

Listing agents typically do the following for sellers:

• Provide an unbiased home valuation
• Help with the listing price in the context of the broader housing market
• Make suggestions for home updates
• Vet buyers
• Market the home
• Negotiate aspects of the home sale
• Prepare, submit and file documents

Determine The Best Time Of Year To Sell

When are the best times to sell a house? Home sales are more effective in the spring and summer months. Generally, for areas with four seasons, the beginning of May is the best time to sell a house. Homes tend to sell faster (with higher sale prices) at the end of spring and the beginning of summer.

However, it also depends on where you live. November and December are often the best time of the year to sell a house in Florida because of the people who snowbird during the winter. In ski towns, the winter holidays offer an opportunity. The best season for beach houses occurs right before or after the summer.

Review Your Financial Situation

Certain expenses pop up when selling a home. If you're not prepared, they may catch you off guard. For example, the following costs associated with selling a house include:

• Real estate agent commission fees: A listing agent will market your home, including a photo shoot of the house, arrange tours and more. You’ll likely pay 5% – 6% of the home sale price for real estate commission fees.
• Seller concessions: Seller concessions mean that you agree to pay some of the closing costs on behalf of the buyer, such as the buyer's inspection fee or title insurance.
• Closing costs: The seller and the buyer typically pay closing costs.
• Mortgage payoff: You'll need to pay off the balance of your mortgage when you sell your home, if you have one. Naturally, this varies depending on your situation.
• Capital gains tax: When you profit from an asset's sale, you may pay capital gains tax. You will pay tax on the home sale if you sell your home less than a year after moving in.
• Home repairs: If there are unfinished projects or you just want to increase curb appeal, home repairs can help put your homes best foot forward.
• Moving costs: There will likely be costs associated with moving your belongings to your new home. Whether your friends and family help you out or you hire professional movers, you can expect to have some costs associated with moving.

Consider selling when mortgage rates are low, market supply is low, your home's value has gone up, you want to downsize or you already have a new house ready. But remember, ultimately the right time to sell has more to do with your family's needs than market conditions.

Connect with an agent today to take the next step.