Make big profits while reducing your costs Whether you still have a mortgage or not, downsizing could be your ticket to big profits if you sell. These days, demand for housing is high due to low mortgage rates and low inventory. Mortgage rates are historically low, increasing demand for homes. Now is the best time to sell your home.
If done right, downsizing can still be a good idea. Not only will you be left with more money, but it may also simplify your life and reduce your home maintenance and utility costs for years to come. To achieve that happy outcome, you must avoid the unexpected obstacles that make downsizing so risky. Here are four pitfalls that await those who downsize, with ways to avoid them.
Unless you have the cash to buy your new home outright, downsizing may not be financially worth it. Mortgage rates have risen by more than 2.5 percentage points since the beginning of the year, and financing a home purchase is now significantly more expensive than it was a few months ago. If you want to stay and improve your home, refinancing with cash may be a better option for you than selling it, and it could still leave you with money in your pocket. A buyer's market can make real estate transactions a little difficult for home sellers because it puts them at a disadvantage.
During the height of the COVID-19 pandemic, the amount of available housing plummeted as new housing construction declined, a nationwide moratorium on foreclosures was instituted, and potential sellers began to suspect that strangers would roam their homes. If you're remodeling your kitchen, you might want to slow down too to list your house. As a seller in this situation, you'll be competing for the attention of buyers and you may have to sell for less than you initially expected, or you could get stuck making concessions for your potential buyers, such as promising to repair certain aspects of the house before the sale, etc. In a typical real estate market, these are thresholds that are easy for most sellers to overcome, but with the inflated current value of the homes, not so much.
However, selling a home is an important decision with many factors to consider and should not be taken lightly, so if you don't think you're ready for any reason to sell your current home, you might want to wait. Downsizing to a smaller home that costs less and requires less maintenance frees up funds and time for other things. If the housing market is filled with more homes than buyers (in other words, a buyer's market), you should also consider waiting to sell. Just as there are good reasons to sell your house, there are also good reasons why you should consider waiting.
However, if you're not worried about buying and selling a home at the same time, a period with low rates is a good time to sell your home. Right now, there is an unprecedented opportunity for sellers to take advantage of a historic seller's market. It's still a strong seller's market, which means it could be a good time to sell your home if you're ready to sell your home. That's not only the difference between what you paid for your home and the price you sold it for, but also the difference between the sale price and the cost base of your home.
If you're thinking about moving to a new area, there's nothing better than spending some time there and visiting potential homes.
