So you feel like it’s time to move, but you keep asking yourself, Should I really sell my house? After all, there’s so much history packed inside those four walls—not to mention all your stuff. Your house is the most valuable possession you own in more ways than one.
The good thing is, you’re already asking the right questions. After all, selling at the right time can be a boost to your finances and your lifestyle. While selling at the wrong time can cause trouble for years to come. We’ll help you walk through all the other questions you need to answer before you make the call to sell your home.
Let’s get started!
Should I Sell My House? Here’s When to Say Yes.
It’s a pretty common myth that market conditions should drive your decision to sell—or not to sell. But market conditions are only part of the picture. And not the most important part! Your personal situation needs to take center stage. That means the best time to sell a house is when your life circumstances and the market align.
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Of course, it can be hard to know exactly when that is. That's where expert advice comes in handy! Here are nine signs you should sell your house:
1. You've got equity on your side.
For most homeowners, being financially ready to sell your house comes down to one factor: equity. During the housing meltdown of 2008–09, millions of homeowners found themselves with negative equity, which meant they owed more on their homes than they were worth.
Clearly, selling your home when you have negative equity is a bad deal. That's called a short sale. Breaking even on your home sale is better, but it's still not ideal. If you're in either situation, you shouldn’t sell your house unless you’re trying to avoid bankruptcy or foreclosure.
For the last several years, home values have been on the rise and that means most homeowners are building equity. Their homes are now worth more than they owe on them, and that trend will continue as they pay down their mortgages and home values continue to increase.
Figuring out how much equity you have may sound complicated, but the math is actually simple. Here's how it works:
First, grab your latest mortgage statement and find your current mortgage balance.
Next, you'll need to know your home value. While it's tempting to use figures from online valuation sites to determine how much your home is worth, they're not always accurate. Instead, ask an experienced real estate agent to run a free comparative market analysis (CMA) for the best estimate.
Once you have those two numbers, simply subtract your current mortgage balance from your home's estimated market value. The difference will give you a good idea of how much equity you have.
So how much equity should you have before you sell your house? At the very least you want to have enough equity to pay off your current mortgage, plus enough left over to make a 20% down payment on your next home. If you can make enough profit to also cover closing costs, moving expenses or an even larger down payment—that's even better.
Plus, putting 20% or more down on your new home means you won’t have to pay private mortgage insurance (PMI). That could save you hundreds—or even thousands—of dollars each year!
2. You're out of debt with cash in the bank.
Most people who sell a house buy a new one right away. But if you didn't have all your financial ducks in a row your first time around the home-buying block, you probably learned a few things the hard way. Like the fact that Murphy can smell broke from miles away. If anything can go wrong, it will! Especially when your house payment is taking up your entire paycheck. Put those lessons to good use and be a money-smart home buyer the next go-round!
Start by taking a hard look at your finances. If you've paid off all your nonmortgage debt and have three to six months of expenses in your emergency fund, that's a good sign you're financially secure enough to purchase a home again.
3. You can pay off all your debt with the money you’ll make from the sale.
Yep, people actually do this! Quite a few people who listen to The Ramsey Show have sold their houses so they can pay off all their debt. It’s super radical, but it can be a great financial move if you do it right.
Here’s how you know when to sell your house to get out of debt: First, you have enough equity to pay off both your current mortgage and your consumer debt. (Consumer debt is car loans, credit cards, medical bills, personal loans, student loans—the whole enchilada). Second, you need enough money left over from your home sale to pay for a new place to live. Which brings us to . . .
4. You have a new place to live.
Before you sell your house, you need to know where you’re going to live next! An experienced real estate agent can help you navigate the search for your next home. But be sure to have some backup options ready in case your home sells quickly and you can’t find a new place you love right away. You don’t want to rush into a home you can’t afford or don’t really like just because it’s available.
Now you might also be wondering, Should I still sell my house if I can’t afford to buy a new one? The answer is yes—but you have to be okay with renting for a while. Renting gives you a chance to check out new areas and save up for a down payment. Just remember to rent an affordable place (aka one that costs 25% or less of your take-home pay).
5. You can afford to buy a home that fits your lifestyle better.
Another factor to consider is how well your home meets your everyday needs. Do you need another bedroom (or even two) for your growing family? Or maybe your kids have all moved out and you’re ready to downsize. Selling your too-big home will give you the chance to pay cash for a smaller one so you can invest more for your retirement. Boom!
Whether you’re sizing up or down, make sure your mortgage fits your budget. Remember to keep your monthly payment to 25% or less of your take-home pay on a 15-year fixed-rate mortgage. For help making smart decisions on your next home loan, work with our friends at Churchill Mortgage—they’ve earned the right to be called a RamseyTrusted mortgage company.
6. You can cash flow the move.
Don’t get so carried away by the excitement of a new home that you forget to account for the cost of moving out of your current one. Hiring professional movers? Save up cash to cover the cost of packing up and hauling out your stuff.
You should also spend a little money to stage your home so it’s ready for showings. Focus your home improvement dollars on paint, curb appeal, plus kitchen and bath upgrades. A little bit of fresh paint and elbow grease can go a long way toward making a great impression—and getting your home sold fast!
Want a bonus tip that doesn’t cost a dime? Clear out the clutter. Neat closets and tidy shelves make your home look larger!
7. You’re emotionally ready to sell.
If the numbers show you’re financially ready to make a move, great! But just because the numbers say you should sell your house doesn’t mean it’s the best time to actually do it. Don’t forget—selling your home is an emotional issue too. Before you plant the “For Sale” sign in the front yard, take a minute to answer a few more questions:
- Am I ready to put in the work to get my home ready for house hunters?
- Am I committed to keeping it ready to show for weeks or months?
- Am I ready to hear the reasons why potential buyers believe my home is not perfect?
- Am I ready for honest—and sometimes hard—negotiations over what buyers are willing to pay for my home?
- Am I ready to move out and leave the place where my family has made memories?
Translation: Ask yourself, Am I really ready to sell my house? Don’t get us wrong—we’re not trying to talk you out of selling your home! We just want you to be completely ready when you do decide to move on to the next stage of your family’s life.
A qualified real estate agent will give you a clear picture of what it’s like to sell your house and will also help you decide if now is the right time for you, both financially and emotionally.
One more thing: If you’ve recently lost a loved one, remember that it’s wise to give yourself some time—at least six to 12 months—before you decide if you should sell your house. The house will still be there, and you (and the housing market) might be in a better spot to sell by then.
8. You understand the market (a little bit).
No one can predict how the housing market will perform with 100% accuracy. But you can get an idea of what you might experience when selling your home based on things like housing inventory.
For example, you can ask a real estate agent if the number of homes for sale in your area has been going up or down in the past month or so. If inventory is decreasing, your competition might be lower when your home goes on the market. And that means you can probably sell your house for more money and have plenty of offers to choose from. On the flip side, if housing inventory is increasing, the added competition might make it take a little longer to sell your home.
A good real estate agent will know what’s going on in the market, and they’ll be able to help you know when it’s the best time to sell your house.
9. You have a real estate agent.
Okay, maybe all the signs are saying it’s time to get your home on the market. Just remember that your real estate market is unique—and so is your financial situation. An experienced real estate agent can help you find out how the current housing market is shaping up in your area so you can decide if a sale makes financial sense for your family.
That’s why you need to partner with a pro you can trust: They’ll provide honest advice so you can do what’s best for you and your budget. A good agent puts service before sales—but knows how to get things done when it’s time to sell. They bring experience and confidence to the table when they handle their many job duties, which include:
- Giving you advice about updates or repairs that will make your home more attractive
- Helping you set the right price for your home
- Marketing your home so it receives as much exposure to potential buyers as possible
- Scheduling showings with potential buyers
- Advising you as you negotiate offers
- Handling all the required paperwork
That’s a lot of responsibility—so finding a top-performing agent who knows your market is a must! We can connect you with the best agents in your area through our Endorsed Local Providers (ELP) program.
ELPs are experienced agents who will serve you with excellence. They’ve worked hard to be the best in the business—and they’ve earned the right to be called RamseyTrusted. That means we’ve vetted them, and we trust them to put your needs first. Period.