The Average Home Seller Made $94,000 Last Year. Will Profits Remain That High?

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  • Last year, the average home sale yielded a roughly $94,000 profit.
  • If mortgage rates remain high in 2020 and buyer demand wanes, home sale profits could shrink.

Home prices soared last year, leaving sellers in a great spot. Will they have the same experience this year?

While 2021 may have been a tough year for home buyers, it was a fantastic year for sellers. Low mortgage rates kept buyer demand strong, and limited inventory put sellers in a position where they could command much higher prices for their properties.

The average profit last year on a home sale was just over $94,000, according to ATTOM. That's a 45% increase from home sale profits in 2020 and a 71% increase from pre-pandemic profits.

If you're thinking of selling your home, you may be wondering if you can anticipate a whopping profit like so many sellers did in 2021. But the answer is that it depends on how market conditions play out.

Home buyer demand could wane

The demand for homes has been strong despite higher property prices because mortgage rates have been too competitive to pass up. But mortgage rates are already up this year, and they're sitting at higher levels than at any point in 2021.

If rates continue to climb, buyers might pull back. Once buyer demand starts to shrink, sellers will have no choice but to start lowering their prices -- even if real estate inventory doesn't pick up substantially.

If you're thinking of selling your home this year, you may want to plan on listing it sooner rather than later. Right now, it's still possible to get a 30-year fixed mortgage at under 4%. But as 2022 moves along, the average 30-year rate might rise above that threshold. And that might change buyers' mindsets in a big way.

Though mortgage rates in the 4% to 5% range are still competitive from a historical standpoint, in the context of pandemic-era rates, they come across as high. Buyers may not be willing or able to pay today's prices if rates reach that level. If you list your home before rates jump higher, you might manage to eke out a higher price for your home.

Should you wait until spring?

Listing a home in the winter has its challenges. But if you're looking to snag a profit on the sale of your home that's comparable to what buyers enjoyed last year, then you may want to get moving.

Not only does it make sense to try to list before mortgage rates climb, but inventory might pick up in the spring. Listing now could mean less competition.

But either way, because of the way mortgage rates are trending, it won't be shocking to see average home profits decline in 2022 compared to 2021. If you're going to sell, it's important to go in with the right expectations. And if you're not sure what those should be, team up with a local real estate agent.

You might assume you don't need a real estate agent to sell a home in today's market since buyer demand has been so strong. But enlisting an agent could help you market and price your home strategically so at the end of the day, you walk away happy.

Our Research Expert

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