When Should I Sell My Home?
How can I make sure that I'll get the most value for my home? When should I sell my home?How can I avoid being stuck with two homes?
Just like how location can make or break a deal, timing can make a difference in having a good deal vs. a great deal (or a bad one). Timing is an important factor in determining just how much money or return you can expect from your investment when selling your home. Understanding two primary factors that generally determine how effectively you can maximize those returns will help you figure out the right time to sell your Edmonton home:
Market Supply & Demand
The economic principle of supply & demand is something that holds true for many things in life, and the real estate industry is not exempt from this. Whenever there are more sellers with properties for sale than there are buyers looking for properties to buy, a surplus occurs and prices of homes will decrease until the supply of homes equals the demand for homes and the market levels out. Conversely, whenever there are more buyers than there are sellers, prices of homes will increase until the demand for homes equals the supply of homes and the market again levels out.
Simply put, when the level of motivation to sell your property is high, you're more willing to accept a lower price in order to have the transaction come to a close much sooner. On the other hand, when your level of motivation to sell is low, people will have to pay a premium for your property because "you don't really need to sell it". This is especially evident when your home is about to be foreclosed by a bank, in which case you're more likely to take less than a desirable price for your home in order to pay off the debt.
Now that you have a working understanding of these two factors, you can start deciding when to sell your home:
Competition is something that you cannot directly control and is more of something you adjust to. Other sellers in your neighborhood with similar homes and home features can influence just how much or how little you're able to sell your home. Buyers who do their research will look at the similar properties in the area that not only meet their needs, but also provide the most value for their money. To illustrate, imagine there are two homes in the same area, similar in every way except in price. One is priced at $375,000 and the other is priced at $365,000. Which one would you most likely buy (all else being equal)?
Here's a tip: When possible, wait until your home is one of the few like it on the market. When a buyer looking for your type of home has less options, there's more of a chance they'll pay your asking price to own your home.
Understanding the Seasons
Like many other things in life, the market's behavior changes with the seasons. Things like motivation and logistics should be considered when planning the right time of the year to sell. No one wants to move during Christmas, arguably the busiest time of the year, when they have a million other things to worry about, or in the winter, when the temperature outside can greatly affect people's motivation to haul furniture across the snow. But in the spring, many people believe it's a time for change and pursue new directions by adjusting their living arrangements. Families with children need to be settled by September to coincide with the start of school.
Placing your property for sale on the market in the spring or early summer is by far the best strategy in terms of timing. There are far more buyers at this time, and obviously you'd want to sell when people are buying and buy when people are selling. Be warned that setting your price too high will result in your property joining the hundreds (if not thousands) of over-priced listings that go stale by the time fall comes around and many buyers retreat.
Here's another tip: Opt to sell your home in the spring and ask for a long possession date that stretches into the late summer or fall. You can take advantage of the increased motivation of sellers when buying activities decrease towards the end to get a lower price for yourself when you buy a home.
Selling First vs. Buying First
The standard rule in real estate states that you should always sell first. This puts you in a position of power, as you are less motivated to sell. By doing so you can wait as long as needed for a good offer to come your way, that is both acceptable to you and not low in value. At the same time, when you decide to buy a home, you can make an offer with far less conditions and have the flexibility to match up possession dates for your convenience.
Consider the following scenario: You come across a home that you'd like to buy and write the contract subject to selling your home within the next 30 days. The seller is uncomfortable with this clause in your offer, but agrees to it if you pay an additional $5,000. You reluctantly agree, for fear of being stuck with not one but two homes and for your own peace of mind. Time passes and you start to feel a bit nervous about your listing. Finally, an offer for your home comes in and negotiate with the potential buyer on a price but end up settling for less than you had hoped for because you really wanted that other house and have to sell yours in order to finance it (i.e. you have a high level of motivation to sell). Considering both sides of the transaction, you may have lost a total of $15,000 due to poor planning ($5,000 as a buyer and $10,000 as a seller). This is something you'd want to avoid!
Here's yet another tip: In regular markets, selling first will give you the negotiating advantage to save thousands. If you're looking for a more uncommon type of home or if the market listings are quite sparse, you may want to consider buying first. But do give yourself enough time for the possession date to sell your home without adding too much pressure on yourself. Additionally, speak to your representative at your bank about bridge-financing in case you need to temporarily finance two mortgages in cases of overlap.
Request a free home evaluation to find out how much your home is worth on today's market. Feel free to contact us online or call us at 780-800-9644 with any questions you may have about selling your Edmonton home.