Before You Sell Your Home, Do These 3 Things
by Maurie Backman | Updated July 19, 2021 - First published on Feb. 18, 2021
Gearing up to list your property? Tackle these key items first.
There are plenty of good reasons to sell a home today. Home values have skyrocketed on a national level, as buyer demand has driven up prices. As such, if you list your home, you may find that you not only get a buyer quickly, but are able to get the asking price you want.
That said, selling a home isn't a decision to rush into. Before you make that leap, be sure to tackle these important items.
1. Research your home's market value
Home prices may be inflated in general these days, but you'll still want to price your property competitively. Before you list your home, do some research to see what comparable homes have sold for in your neighborhood recently. You can do this alone or with the help of a real estate agent. This is an essential step to take because if you're counting on getting a certain amount of money from the sale of your home and you come to realize you should expect a lot less, that could influence your decision to list your property in the first place.
2. Make sure you can find an affordable home to move into
Once you sell your home, you'll need a new roof over your head. And to that end, you'll need to do some research to make certain you can afford a new place to live. You may have your mind set on a specific neighborhood, but remember, just as buyers will have to pay top dollar for your home, so too will you likely have to pay a premium for someone else's home. Make sure you can swing that. And if you're not sure, use a mortgage calculator to see how much house you can afford on your income. Keep in mind the 28% rule, which states that your mortgage payment should not eat up more than 28% of your gross income (that's your income before taxes and deductions).
3. Set yourself up as a strong mortgage candidate
Even if you sell your current home for a nice sum of money, you may need to take out a mortgage to buy a new place to live. The good news in that regard is that mortgage interest rates are sitting near record lows, so you have a real opportunity to score an affordable monthly payment on the sum you borrow. But to get a great rate, you'll need to make sure you're a qualified, appealing loan candidate. To that end, you'll need:
- A strong credit score, ideally, in the mid-700s or higher. You can qualify for a mortgage with a lower score, but that's generally what it will take to snag the best rates.
- A low debt-to-income ratio
- A steady job that pays you enough to cover the mortgage you're looking to take out
If you feel you need to improve in any of these areas, it could pay to hold off on listing your home a bit, work on getting your financial house in order, and then put your place up for sale.
In today's housing market, sellers certainly seem to have the upper hand. Still, selling a home is a big step and one you should approach with caution. Take these steps, and you'll put yourself in a prime position to benefit from the current boom in buyer demand.
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