Tuesday, January 31, 2012

When You Should Sell

Over the past year or so I've had several friends and clients ask me when they should sell. Let me be frank, there is absolutely no way to perfectly time the market on either the buy or the sell side. There are so many outside factors that could and should affect your decision.

When You SHOULD Sell
The main factors that determine when you absolutely should sell are personal in nature and are typically things out of your own control and financial in nature.

· Death or Divorce: Let's face it, these things happen. If there is a separation between you and your spouse, either through death or divorce and it would be financially unreasonable for you to continue making payments on your home, you should sell.

· Job Loss: Over the past 4-5 years this has been a huge reason why people have had to sell their home. When you know that paying your mortgage might come after trying to feed your family, it's best to sell your home and get into a more affordable situation.

· House Poor: Times were great in the mid-2000's. You could get approved for anything. Maybe you wanted that dream life with the huge dream home, and the bank said you could afford it. Fast forward to the present. You have a monstrous house payment that has kept you from funding retirement for yourself or funding your children's education. You can barely scrape by after paying your mortgage payment. It's not that you're poor, you just have too much house, and you're house poor. Once again, it's best to sell and get into a better situation, and save some sanity.

When You CAN Sell
There are plenty of reasons out there that won't force you to sell your home as well. These factors aren't dire, but will generally improve your quality of life after sale.

· Moving Up: Got five kids and a 2 bedroom/1 bathroom home? Maybe you're looking to get out of an unsafe neighborhood. If you're moving up, it's always a good time to sell, simply because even if it's a buyer’s market, you can make up any losses from the sale of your home, on the buy side. It's safe to move up when you can afford a reasonable payment and when you're doing it for the right reasons.

· Moving Down: Often moving down can be attributed to empty nesters and retirees. They want to downsize because they just don't need the space anymore, and they want less housework and yard work. This can dramatically improve quality of life and is a perfect reason to sell.

· When Prices Are High: If you've got a lot of equity and you're looking to make a move, obviously the best time to make a move is when prices are high. When you sell, you can apply some or all of that equity towards a new home and a better situation for you.

The best time of year to sell your home (in Northern Colorado) is during the warm months from March through September. Typically, the number of homes sold in July are twice that of January. People are eager to take advantage of warm weather and the summer break so they can easily change school districts for their children.

Like I said before, there is no great way to time the market. If it feels right and your finances are in order, there's never a bad time to increase your quality of life.

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