Copy of Selling Your House: Things to Consider
Selling your house can be a big deal. I recall the sale of the first house I ever lived in bringing tears to my mom's eyes as we drove away. While it's just a physical building, it contains a lot more than what meets the eye.
Unfortunately, nobody cares about this sentimental value, especially the buyer.
Today, I want to share a few questions clients have had and some of my own opinions. Again, opinions; nothing is to be taken as recommendation or advice. Before then, I wanted to briefly cover why the housing market matters to you.
State of the Housing Market
As you can see from the photos above, we're not actually in as rare of a housing market as it may seem. I'm using data specific to Texas (the results get too skewed when using everywhere IMO) and comparing 1 year to 5 years.
Why does this matter to you?
If you are in the market to sell your house, or if you've sold before, you'll know your competition can either help or harm you.
Selling a house during times of great demand can lead to selling your house for a premium valuation, while selling at a time of less demand incurs the opposite result.
Demand can stem from a number of things such as:
Did I have to take that jab at the two named states? You betcha.
While that is simple supply and demand economics, we get into a more "gray area" whenever we introduce interest rates.
Interest rates, as a brief refresher, are what a lender charges a borrower for using the lender's money.
As you may know, interest rates have been high recently, and because of this, people are hesitant to sell their house because they would then have to buy a new one and pay the lender those higher rates. (Unless they're paying in cash like the cool kids do-but for the rest of us, we're thankful their are mortgage companies.)
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Some Good Questions to Ask
Now that you have a little better idea where I'm coming from, here are some questions I've been receiving. My added notes will be more to help you think through your own thoughts than my answer, as it's impossible to give advice without knowing the person:
I often tell folks selling your house goes beyond the numbers. While numbers do indeed play a key role, I again want to point out, as I did at the beginning, that there is more to your house than meets the eye.
If you're currently sitting on a loan with a 2.5% interest rate, it's going to have to be a REALLY good reason to sell and then buy a new home. By really, I mean unlikely.
With that being said, you cannot put a price on living the short amount of time we have on earth living in a place that is close to family, brings you joy, or is in a state you've always wanted to live in.
Without getting too deep into tax speak, something I've found many clients are unaware of is if they've owned their home for more than 2 out of the last 5 years while living in it for that time period as well, the capital gains made from the sale are not taxable up to either $250,000 or $500,000 depending on if you're married or not.
This only is true for your primary residence. You cannot do this on rentals or lake houses, etc.
This will be an important question depending on if the homeowner is either buying a new house or if they're downsizing into a condo or something similar.
We often have clients who look to sell their home after their kids grow up, move into a smaller and more cost effective house/condo, and then either invest or spend the rest.
Special note: You cannot do a 1031 exchange for a personal residence. For those not familiar, this is strategy used by businesses/individuals that have investment and/or commercial properties that can "kick the can down the road" in terms of paying taxes owed.
That's all for now. My apologies; this one was longer than I intended. If you'd like to learn more about this, I recommend following some folks in the real estate world.
Good follow to read/watch: I don't know this guy, but as I was researching for this article, I came across this page (click for link) which has a quick and easy bullet point list of tips for selling your home that I thought was helpful.
Action Item: Whether you are looking to sell or have sold in the past, keep in mind there is more to selling your home than numbers...but the numbers should make sense before taking any action. Having a high quality real estate agent can be HUGE in this area.
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