Do These Things Before You Sell Your Home This Year
by Maurie Backman | Updated July 19, 2021 - First published on March 3, 2021
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Thinking of listing your home? Check these items off your list before you do.
You may have heard that now's a pretty good time to put a home up for sale, and there's a lot of truth to that. Mortgage rates are sitting near historic lows and buyers are clamoring to purchase homes. That means that if you list yours, there's a good chance you'll walk away with a nice amount of money for it. But before you sell your home, make sure to do these important things.
1. Price out a replacement home
If you're going to sell your home, you'll still need a place to live. But just as you're likely to command top dollar for your property in today's market, so too might the people you're buying from. As such, you'll need to make sure you can afford a replacement home before you put yours on the market. Let's say you're selling a starter home in the hopes of upsizing. You do some research and realize you can't afford a larger property in your target neighborhood. At that point, you may not want to list your home after all.
2. Decide if you need a real estate agent given buyer demand
There's a very low inventory of homes on the market right now, which, combined with low mortgage rates, is driving buyer demand. As such, you may find that your home sells easily -- so easily that you don't need to hire a real estate agent to help you.
The upside of working with an agent is that you'll get an expert who knows the process inside and out and can market your home well to potentially get you a higher sale price. The downside of working with a real estate agent is you'll have to pay that person a commission. This could amount to 4% to 6% of what your home sells for. In other words, if you sell your home for $400,000, your real estate agent could get $16,000 to $24,000 of your proceeds. That's money that could otherwise go toward a down payment on a new home or other moving expenses. So think about whether it pays to hire an agent or sell your home solo.
3. Make sure you'll qualify for a mortgage
Chances are, you'll need to finance your new home. To that end, you'll want to make certain you can qualify for a mortgage before you list your existing home. Mortgage eligibility usually hinges on these factors:
- A minimum credit score of 620, though some mortgage lenders may impose higher standards
- A reasonable debt-to-income ratio
- A steady job
- A high enough income to support your loan amount
- Funds for a down payment
The latter item may not be an issue if you're selling your current home at a profit. But make sure you're all set with the others before you move forward.
In today's housing market, sellers seem to have the upper hand. But that doesn't mean you should rush to list your home. Instead, tackle these items so you can be certain you're making a smart choice.
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About the Author
Maurie Backman writes about current events affecting small businesses for The Ascent and The Motley Fool.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
