Seller Considerations – Selling then Buying? Maybe You Should Wait.
If you’re planning on purchasing another home after you sell, it’s important to know if you should sell now or wait until later. Answer the following questions before you decide:
- Am I going to sell and buy a more expensive home? Based on recent housing data, there has been double-digit appreciation this past year. It’s very possible we could have double digit appreciation again during the coming year. If you sell now, you could lose the additional appreciation, but it could also cost far more to purchase the more expensive home. For example, you sell your house now for $300,000, and purchase another for $600,000. If you waited another year and market values increased another 10%, you would lose the extra $30,000 ($300,000 x 10% =$30,000) you could have made by waiting to sell your home until later. The problem with that logic is that your new home will now cost $660,000 ($600,000 x 10% =$60,000). You would make an extra $30,000 by waiting to sell your home, but it would cost you $60,000 more for the new home equaling a net loss of $30,000.
- Am I going to sell and buy a less expensive home? In this case, selling now to downsize or buy a less expensive home may not make sense. If you were to reverse the prices above and you sold your $600,000 house, you would lose $60,000 in additional appreciation you could make by waiting until next year to sell. If you were to purchase the less expensive home today, you would save the $30,000 extra it would have cost you next year after it appreciated 10% to $330,000, versus buying today at $300,000. From a financial perspective, it would make sense to wait to downsize because you would be ahead $30,000.
- If I wait to sell what would I be sacrificing in my quality of life? Assuming you had decided to take advantage of the additional appreciation by waiting to downsize, you still have to consider the emotional cost of waiting to sell. Give serious thought to the emotional drawbacks of waiting to sell and make a list of them. Compare the list of disadvantages to the additional money you would be making in the above example and then decide if that dollar amount justifies you waiting until later to sell.
As you can see from the above examples, the sale of a home cannot be determined solely from either financial or emotional considerations. Each option must be carefully reviewed and compared for both benefits and drawbacks. After all, there’s no scientific formula for buying and selling real estate for personal use.