Deciding to sell your home is a major decision. Not only will it have a significant effect on your finances, but it will also impact your personal life. You’ll have to find a new home, wait in limbo while your home is on the market, and handle the business aspect of the sale. In light of the current pandemic, selling your house may be the very last thing on your mind. However, now may be the right time to sell your New Jersey home.
There’s no denying that these are uncertain times, but there’s a light at the end of the tunnel, and things are finally looking up. The same is true for the housing market, which has weathered the storm. With 2021 finally here, selling your home could be the right move to put you in a strong financial position for the rest of the year. Not sure if selling your home in 2021 is the right decision for you? This guide will walk you through everything you need to know about selling your home in 2021 and why you should be considering it. Let’s go!
Why Should I Sell My House in 2021?
Generally, a home sale can produce a significant financial boost for the seller. Not to mention, it liquidates a hard asset, which enables the seller to move funds around with more freedom. As a bonus, tax incentives, like 1031 exchanges and capital gains tax exclusions, can help you avoid capital gains taxes, so you lose less money to taxes.
The numerous benefits of selling a home might make you eager to get your home on the market, but is it the right time? The answer is simple.
There is no “perfect time” to sell a home. There are far too many factors that influence the outcome of a sale for everything to line up perfectly. However, there are times in which certain elements of the housing market present an optimal time to sell. Luckily, 2021 is one of these times. Here are some 2021 housing market factors to consider when determining whether to sell your house.
Low Market Rates
One of the primary indicators of a good time to sell a home is mortgage rates. It’s a good idea to keep an eye on mortgage rates if you intend to purchase a new home after your current home sale. However, tracking mortgage rates is a great way to determine whether buyers have an incentive to start their house hunting.
Homebuyers typically wait for lower mortgage rates to start trending before starting their search, so you’ll usually see an increase in potential buyers as mortgage rates dip. This helps to save them money in the long run.
The pandemic has thrown the U.S. economy in a loop. The Associated Press revealed that the economy shrunk 3.5% in 202. This represents the largest drop since 1946, which marked the end of World War II. As a result, mortgage rates dropped to record lows and are significantly lower than they were a year ago at the same time.
Another factor that will contribute to your selling success is the low inventory available here in New Jersey. Home sales of single-family homes range by 11% from October to November. This is largely due to the sheer lack of homes on the market. The low inventory makes buyers more competitive as they must beat out other potential buyers for available homes.
One of the biggest drivers of the low inventory is the pandemic. With lockdowns and stay-at-home orders, owning a home is a secure financial investment and provides owners with ample space and stability in these uncertain times. However, with the rollout of a vaccine and projected economic growth, more homes will likely enter the market, and more buyers will be keen to begin their home search. In short, now is the optimal time to get your home on the market before the competition does.
It’s a Seller’s Market
It’s always ideal for a seller to get their home listed in a seller’s market. A seller’s market indicates low inventory, as described above. The low inventory and many interested buyers creating demand empowers sellers to price their homes higher, sell faster, and make fewer concessions with the buyers. In short, New Jersey homeowners have a lot more freedom and incentive when selling in a seller’s market.
How to Sell Your House in 2021
You’ve got the why. Now you need the how. Selling a house can be a complex and time-consuming process when you are unprepared and don’t have the right support by your side. That’s why it’s essential to start the home selling process on the right foot by being prepared and knowing what to expect when going in. Here’s a step-by-step breakdown of how to sell your home in 2021. Let’s dive in.
1. Determine Your Home Value
First and foremost, selling your home is a major financial transaction that can wreak havoc on your finances if you are unprepared. So, it’s essential to have all the right numbers before moving forward with a sale. You’ll need to determine your home’s value and your equity.
Your home’s value is exactly what it sounds like. It’s the appraised value of your home expressed at the amount your home would likely sell for if it was listed on the market in its current condition.
This is an essential measurement, as it will determine a lender’s willingness to loan buyers money to purchase your home. Additionally, if your home’s appraised value comes in lower than you expected, you can make necessary repairs and changes to increase its value exponentially. A home’s value is assessed by considering multiple factors, including neighborhood, local real estate market, location, amenities, size, condition, and more. S, it may be difficult or impossible to significantly increase the value of your home in some cases in some cases.
When hiring a home appraiser, make sure that you choose a licensed professional with a solid reputation. They will give you the most accurate number.
2. Budget for Selling Costs
Just because you are selling your home doesn’t mean that you will be able to avoid expenses. In fact, seller’s fees can amount to around 10% of the home’s sale price. During a home sale, the seller is responsible for paying the following:
- Realtor Commission Fees for Both the Seller’s and Buyer’s Agent
- Mortgage Payoff Cost
- Home Staging Fees
- Professional Cleaning Fees
- Repair Costs
- Attorney Fees
If the list seems long, that’s because it is. There are a ton of expenses associated with a home sale. While it’s possible to negotiate who pays what, generally, the seller is responsible for the bulk of expenses.
During this time, you will also need to determine your equity or how much you’ve paid toward the mortgage against how much is owed. This will tell you how much you stand to profit from the sale of your home (not including it selling for more than its listing price).
3. Prep Your Home to Sell
As a homeowner, you will be responsible for ensuring that your home is ready to be placed on the market. This means that you’ll have to dedicate substantial time, effort, and money to prepare your home. Before going on the market, your home should be:
- Clean: If you have had animals or your home was smoked in, it’s recommended that you have your home professionally cleaned before having it listed. Professional cleaners should address pet dander, the smell of cigarettes, and any other hard to clean issues. You can start decluttering and putting your belongings in storage.
- Professionally Staged: A professional home stager has been trained to present your home in a way that highlights and accentuates its best qualities. Moreover, they bring in decor, furniture, and more to entice buyers with a gorgeous setup. It’s not a step you should skip if you want to get the most out of your home sale.
- In Good Condition: Unless you sell your home in “as-is” condition, you’ll likely have to make some repairs to get it in the best possible shape for selling. This can mean significant repairs and upgrades such as installing a new water heater and updating the HVAC system or smaller repairs like oiling squeaky door hinges and fixing a leaky faucet.
4. Hire a Local Real Estate Agent
There are many reasons to hire a real estate agent when selling your home. However, this fact usually speaks to buyers the most:
According to NAR data, homes sold with the assistance of a real estate agent sold for $71,000 more than those sold by the owner alone.
That’s right. Your real estate agent can help you sell your home for more. Way more than you’d get without their help. However, that’s just a small portion of the value that real estate agents bring to a seller. Here are the benefits of hiring a real estate agent when selling your home:
- Real estate agents help you price your home to sell. They know the market and how to maximize your profits without scaring buyers away.
- Agents handle the heavy lifting, so you don’t have to. Agents take care of scheduling showings, fielding calls from interested buyers, and advertising your home.
- Real estate agents have a fiduciary duty to act in your best interests, divulge pertinent information, and help you get the most out of your home sale.
Overall, one of the key benefits that real estate agents provide during a home sale is support and expertise. Whether you are new to the process of selling a home or a seasoned veteran, a real estate agent will provide support and guidance to ensure that the process is as pain-free as possible.
5. Negotiate with Buyers
This can be the most challenging part of the home selling process. Once you have accepted an offer from a buyer, you will need to sign a purchase contract, also referred to as a purchase agreement or sale contract. This document lays out the terms of the purchase, including the reasons, if any, that the agreement may be voided, the seller’s responsibilities, and the buyer’s responsibilities.
With both parties trying to leverage the situation to their advantage, the negotiation process can take some time. However, your real estate agent will help you negotiate a sale that you’re happy with, regardless of how long it may take. They know how to play the game and will take advantage of the current seller’s market.
Once all the terms of the purchase contract have been fulfilled on both the buyer’s and seller’s side, the closing process can begin. Be sure to keep your wallet open during the final stage of the selling process because you’ll be on the hook for closing costs. During the closing phase, the final details are worked out, and the process of transferring ownership of the home and property will take place on closing day.
Keep in mind that it can take over a month to close. This is usually due to the buyer’s lender completing the mortgage process, appraisals, title search, and the final loan paperwork. Your title will be inspected to ensure that there are no liens on the property. When everything is set and double-checked, the property will be transferred, and escrow funds will be released. Job well done!
Selling your home is never easy, but it could be a decision that boosts your financial stability, launches you into your dream home, and increases your wealth. While you’ll certainly face some challenges, selling your home in 2021 has a lot of promise. With the right local real estate expert by your side, you’ll find that you have more to gain by selling your home than you originally thought!