Should I Sell My Home Now or Wait Until the Spring?

Posted on Nov 6 2014 - 4:29am by Kyle Hiscock

2.7K

There are many questions homeowners ask themselves during the selling process. "How much will my home sell for?"  "How much should I list my home for?"  "Who should I select as a real estate agent to sell my home?"  "What if the real estate agent overprices my home?"  Last but not least, "Is this a good time to be selling a home?" is also a very common question that real estate agents are asked.

As with every decision in life, there are pros and cons, and choosing when to sell a home is no different. There are many factors that need to be taken into consideration before deciding when to sell a home. Many homeowners believe selling a home during the fall or winter months is not a good idea and that the spring is the only time a house should be sold. This is the furthest from the truth. Certainly most real estate markets across the United States experience a "spring market rush" every year. There is no doubt that the "spring market" is a great time to be selling and buying real estate, however, the fall and winter seasons may be the best fit for you for many reasons.

Here are several reasons why choosing to sell your home now may be a better decision than waiting until the spring:

Less Competition
One way that you can tell the spring real estate market has arrived is by driving down a street in your local community. In all likelihood there will be For Sale signs up all over the neighborhood! One great reason to sell your home now and not wait until the spring market is there is sure to be less competition.  The fewer number of comparable homes for sale, the greater the probability that a buyer will look at your home.

Simply put, it’s the supply and demand theory. If there are less homes for sale, there are less homes that a potential buyer can choose from, therefore increasing the demand for your home. Not only will less competition increase the probability for showings, but it will also increase the probability that an offer will be received and you will get the maximum amount of money for your home.

Serious Buyers Are Out There
Homes are sold and bought 365 days a year, period!  Many homeowners believe that buyers aren't out there during the fall and winter months. This simply is not the case. Serious buyers are always out there!  Some buyers may stop their home search because it is the fall or winter, but serious buyers will continue to look at homes, no matter what time of year it is.

The fall and winter months are also a great time for a potential buyer to see what a specific neighborhood is like.  Do your neighbors have pumpkins on their front step?  Are there lots of Trick-or-Treaters wandering the neighborhood on Halloween?  Do any of your neighbors have any light displays for the holidays?  There are buyers out there who will look at these types of things when determining whether your home is in the right neighborhood for them or not.

The Best Agents Are Always Up To The Challenge
Any real estate agent who tells you that the fall or winter months are a bad time to sell is not someone you want selling your home! A great real estate agent will know how to adapt to the current season and market their listings to reflect that.  A great real estate agent can make suggestions and give some of their tips on how to sell a home during the fall or winter seasons. If a real estate agent doesn't have any suggestions on making your home more desirable for the current season, you should be concerned about the creativity they are going to use when marketing your home.

Staging For The Holiday Season
Many sellers believe staging a home is the main reason a home sells.  While staging certainly helps sell homes, some buyers have a difficult time envisioning themselves in a home no matter what you do. However, there are some buyers who can easily be "sold" on a home because it is staged.  Simple “seasonal” staging such as adjusting the color of the decor or having an aroma in the air that is relative to the time of year can go a long way with some potential buyers and possibly be the difference between a home selling or not.

Mortgage Rates Are Low
If you've read about real estate in the past year, it's likely you've read that the mortgage rates are very low.  You also probably read that there is an expectation that the rates will increase very soon. Since mortgage rates are so low right now, buyers are able to afford more expensive homes.  If mortgage rates increase over the fall and winter months while you're waiting for the spring market, it could cost you thousands of dollars as it could eliminate many buyers from the real estate marketplace!  Less demand for your home will mean less money. Bottom line: take advantage of selling your home while the rates are this low.

Quicker Transactions
Right now, there are fewer real estate transactions than there will be in the spring.  The fewer number of transactions means the mortgage lenders have less loans to process, attorneys have less closings to do, and home inspectors have fewer inspections to do.  All of these factors should lead to a quicker transaction and closing for all the parties involved.  One of the most frustrating things for a seller to deal with while selling their home is not getting answers in a reasonable amount of time. A quicker transaction is going to be less stress for you.

By considering all of the reasons above, you will be able to determine whether now is a good time to sell or if you should wait until the spring.

Kyle Hiscock is a top producing Webster, N.Y. real estate agent with Nothnagle Realtors, based out of Rochester, N.Y. He has helped hundreds of buyers and sellers move in and out of the Greater Rochester, N.Y. area. In addition to his vast real estate knowledge, Kyle is very active on many different social media websites. Connect with Kyle on Google+.    

Debt Relief May Trigger Tax

The Mortgage Debt Forgiveness Act, originally passed in 2007, was extended three times to protect homeowners from paying income tax on debt that was relieved due to foreclosure, short sales or deed in lieu of foreclosure.  

The law expired on December 31, 2016 and unless it is extended again, homeowners with debt relief in 2017 may be subject to tax.

A homeowner might feel a sense of relief without the obligation of a delinquent mortgage but just because the payments are no longer due doesn’t mean that there isn’t another obligation that replaces it. If a lender cancels or forgives debt, a taxpayer must include the cancelled amount in their income for tax purposes depending on the circumstances. The tax significance could be serious.

This previously allowed relief only applied to a taxpayers’ acquisition indebtedness of their principal residence which did not include second homes and investment property. The maximum amount was limited to $2 million of mortgage debt forgiveness or $1 million if filing separately.

Due to the serious consequences involved in short sales and foreclosures, it is advised that homeowners faced with this possibility should seek expert advice from their legal and tax professionals.

Indecision is Not a Decision

There could be some legitimate reasons for not buying a home but indecision is not one of them. Indecision is rooted in not having enough information to move forward to own a home or continue renting.

If you keep renting, at the end of the year, you have had a place to live and a pile of receipts that helped the landlord pay for his house. Deciding to buy a home will give you a place to live that is yours and all the things that come with that.

When you consider principal reduction, appreciation and tax savings, your monthly cost of housing could be much less than the rent you’re paying. The principal reduction included in each payment is like a forced savings account that increases as your mortgage balance decreases. Your equity in the property will also grow due to appreciation as the home goes up in value. The equity is part of your net worth and an investment in your family’s future.

The income tax savings can be an additional financial consideration if the combined interest and property taxes are greater than the allowable standard deduction.

Trends are showing that both tenants and homeowners are staying in their homes longer. It’s been said that whether you rent or own, you’re paying for the home. Do you really want to buy the home for your landlord? Check out your numbers on a Rent vs. Own and then, call us to help make it happen.

Risk Rate Relationship

Regardless of what a lender quotes on mortgage rates, the actual rate a borrower pays is based on a number of variables. Lenders determine whether to loan money and at what rate based on the risk involved with the transaction.

Factors that increase the risk that the loan will be repaid will proportionately increase the interest rate charged to the borrower. If the risk becomes too high, the loan will not be approved.

• Loan amounts – conventional mortgages above conforming limits as set by Fannie Mae and Freddie Mac are considered jumbo loans and generally have a higher interest rate.
• FICO score – the lowest interest rate is reserved for the highest score; the lower the score, the higher the rate the borrower will pay.
• Occupancy – borrowers occupying a home as their principal residence are considered a better loan risk than second homes and investment properties.
• Loan purpose – purchase transactions generally have the lowest interest rate with refinancing for better rates and terms being priced slightly higher. An even higher rate might be charged for refinancing and taking cash out of the property.
• Debt-to-Income Ratio – a borrower’s monthly liabilities divided by their gross monthly income develops a ratio that helps lenders to assess the borrower’s ability to repay the mortgage.
• Property Type – some types of property are considered higher risk than others which could adversely affect the rate.
• Loan-to-value – the lower the percentage of the loan to the appraised value of the property will generally lower the interest rate.

Any combination of these factors could limit a borrower’s ability to secure a mortgage at the rate initially quoted. Pre-approval by a trusted mortgage professional can be the best way to know what rate you can expect to pay. Please call for a recommendation of a trusted mortgage professional.

Pre-approval is Good for Everyone

Buyer’s mortgage pre-approval is good for everyone in the transaction. It saves time, money and removes the uncertainty of knowing whether the buyer will be qualified after negotiating a contract. The direct benefits include:

• Looking at “Right” homes - price, size, amenities, location
• Find the best loan - rate, term, type
• Uncover credit issues early - time to cure possible problems
• Negotiating power - price, terms, & timing
• Close quicker - verifications have been made

There is a significant difference in having a trusted mortgage professional take a loan application and run all the necessary verifications compared to going through calculators on a lender’s website. Beside the peace of mind, the cost of being pre-approved is a bargain and generally, limited to the cost of the credit report.

Even if a person has been pre-approved, a second opinion from a different lender may be a good option. It can verify there is a good deal or you’ll discover that you can improve it. Either way, it works to your advantage. Contact me if you’d like a recommendation of a trusted mortgage officer.