Sellers: This is your time. If you’re already a homeowner, your home is likely a lot more valuable now than it was a year ago. Median home prices increased 14% in the past 12 months, according to Redfin data, with high-end single-family homes in great demand.
But before homeowners break out moving boxes and grab the “for sale” sign expecting a big payday, here are some things to keep in mind.
You just refinanced your mortgage. Should you sell?
You may want to wait. Many people refinanced their mortgages in the last 12 months to capitalize on superlow rates. Just know that it often takes a year or more to recover the costs associated with refinancing.
“When someone is refinancing, they should go through the thought experiment of: ‘Can I stay in this house long enough to make it worth it?’” said Mike Fratatoni, chief economist of the Mortgage Bankers Association.
Consider how the potential profit on your current home could offset the refinancing costs and the savings you stand to get from the new loan terms. Follow up with your mortgage lender to talk over the terms you agreed upon when refinancing. They may be able to help you talk through potential pitfalls.
Which sellers hold an edge now?
Downsizers and retirees. Those who have built up a significant amount of equity in their homes are in the best position, said Brooke Baenen, a Realtor in Green Bay, Wisc.
This is also a great time for those entering retirement, said Samuel Rad, certified financial planner at Affluencer Financial and instructor at the University of California, Los Angeles.
“Retiree sellers are winning in this market,” he said. “You’ve owned your home for a while so you have a ton of equity, and you have the availability and the affordability to move somewhere more cost-effective. They can buy better homes and have a better retirement.”
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Salgu Wissmath for The Wall Street Journal
Which sellers don’t?
The ones about to be buyers. “I tell people, ‘I could sell your house tomorrow, but where are you going to live?” Ms. Baenen said.
Sellers are the big winners of the moment, with the supply of available homes so scarce. The problem is that they’ll be on the other side of the equation when they buy, facing the same low inventory and cutthroat bidding that boosted their profits on the selling side.
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“Unless you’re moving into an apartment or a cottage or you already have a second home, you’re going to end up in the same situation as everybody else,” said Ms. Baenen. “So I have definitely had sellers say, ‘Maybe we’ll wait a little while. Maybe I could get that extra 20k, but am I going to spend that all in trying to rent a place?’”
If you’ll be spending on a rental, consider whether it is really worth it to sell your current home. And if you’re happy with where you live, ignore the housing market.
How can you avoid extra costs if you sell now?
Anyone researching how to sell their home is bound to encounter different advice on how to save as much money as possible. Online sellers. Dual agents representing both buyers and sellers. Even selling your home yourself. But financial planner Mike Metzger says he advises his clients to be extra-cautious right now, especially with so many people looking to alleviate the pressure of low inventory.
“I know folks don’t like to pay commission fees, but there’s so many caveats in a hot housing market like this,” Mr. Metzger said. “Work with a knowledgeable Realtor. That’s the traditional path for a reason.”
Should you try to take any last-minute steps to increase the value of your home before you sell?
Probably not. In years past, Ms. Baenen’s clients would consider sprucing up their houses or buying new appliances before putting them on the market. Now, she sees buyers snatch up whatever is available.
“It used to be that a seller had to serve that house up on a platter with everything clean and all the clutter put away,” she said. “Now, it could be dirty, the paint could be chipping, there could be junk all over the place. People don’t care. I’m telling my sellers, ‘Just leave it. Why bother? The house is going to sell in two days.’”
Write to Julia Carpenter at Julia.Carpenter@wsj.com
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Appeared in the April 3, 2021, print edition as ‘Sellers: Make the Most of Scarcity.’
