While recent activity indicates improving conditions in the real estate market, serious consideration should be given to a number of factors that will allow respective sellers make the best possible decision.  These factors include:

1. The Quality of Life –  Every seller should weigh carefully the emotional benefits that occur with the sale of their home.  Every seller should ask themselves, “if I were to sell today, what would that mean to me and how would selling improve my life?” Remember, working hard to make a good living only makes sense if your spending wisely to enjoy life.  Don’t let money overwrite your happiness.
2. The Amount of Time it Will Take to Sell – Don’t fall into the trap of putting life on hold because you think you will get more money next year. A good formula for determining how long it will take for you to get your price is to take the actual sales price from recent closings multiplied by 5% per year until you’ve reached your desired price.  Don’t be surprised if it take 5 or even 10 years before you’ve reached your desired selling price.  And then ask yourself, “do I really want to lose 5 to 10 quality years before I move on with my life?”
3. Carrying Costs – Once you’ve determined how long it could take you to sell your home, add up the actual cost of home ownership for the year.  Be sure to include mortgage principle and interest, taxes, insurance, property association fees, utilities, assessments, club membership dues, repairs, and maintenance cost.  Many sellers minimize this cost by looking at one month’s total cost, which appear negligible.  Instead, add up the entire cost over 5 to 10 years.  The cost can be substantial.
4. Missed Opportunity Cost – Many sellers overlook the time or investment value of the money that is tied up in their home.  The real cost of home ownership must include the profit that would be generated if you were to reinvest the equity in your home into a fund or program that offers a healthy rate of return.  If you’re earning 5% a year in other investments multiply the equity if you were to sell today by 5% for each of the 5 to 10 years that it would take to sell the home.
5. The Risk of Additional Deprecation – With 5 consecutive years of continued price depreciation, a very sluggish economy and a weak real estate market, it’s important to consider the possibilities of more depreciation during the coming years.  If property values have dropped 10% per year consider the possibility that this could continue an additional one, two, or three years.
6. Shadow Inventory – Every seller must be very sensitive to the number of properties owned by the banks that haven’t been listed, the number of properties that are in the foreclosure process, and the number of homeowners that are presently underwater who may eventually lose their homes to foreclosure.  In addition to the 4 million homes that have already been foreclosed, there could be an additional 8 million that will become foreclosures.
7. Pent-up Seller Demand – Sellers must also take into consideration the number of properties that will be listed once the market begins to recover.  According to the National Association of Realtors, as much as 10% of all homeowners could be waiting for the market to improve before they list.  Sellers could be competing with foreclosures and pent-up sellers for years to come.
8. Interest Rate Increases – Historically, low interest rates have had a very positive impact on buyer activity.  If sellers wait for a likely increase in interest rates, significantly fewer buyers will qualify for their home.  With fewer buyers, prices could drop once again.  Low interest rates have temporarily created an ideal “window of opportunity” for present buyers.  This window is directly benefiting all sellers.
9. Analyze Key Market Indicators – Every seller should consider the 4 key real estate indicators: supply, demand, consumption, and value.  Compare the number of listings this year against the number of listings last year.  Also, compare number of sales year-to-date this year with number of sales last year, year-to-date.  Consider the month’s supply of homes available for sale and compare that number to the six month’s supply considered to be normal in a healthy market.  Finally, look for any changes in prices during the past 12 months.  This information can be very telling in terms of what will happen during the coming year.
10. What’s My Next Step – Having a next step is critical in making the best decision.  Every seller should ask themselves two important questions: if I sell today, what’s my next step; and if I don’t sell today, what’s my next step?  A comparison of the two answers can be eye opening.