Selling your house can be tricky. For most of us, buying and selling homes will rank among the largest financial transactions we will make in our lives. While there are plenty of ways to avoid simple house selling mistakes, it’s particularly hard to know exactly when to sell your house. There are many factors involved. Some of them you can control, like selling your house during certain seasons. Others, like the overall pricing trends in the housing market, you have no real say in. When it comes to the best time to sell your house, here are some important factors to consider. Hopefully they help you get the most value of out any home equity you’ve managed to build up.
A Personal Example
We moved up the property ladder in early 2020. It ended up being an interesting journey, to say the least. We started shopping for a new house in early February. A couple weeks later, we made an offer on a new house for the family. Of course, a few weeks later the entire world found itself in the middle of a pandemic.
As everyone was grappling with end-of-the-world scenarios and figuring out how to avoid contact with anyone but their immediate family members, we had other priorities. We were busy trying to close escrow and meet with all kinds of inspectors and real estate professionals. Come to think of it, I don’t think I’ve ever met as many strangers in a short amount of time as those couple of months!
Our Timing Wasn’t Great
I still remember the scene after my meeting with an appraiser at the new home. The previous owner was coughing at the time. Like millions of Americans, we were both legitimately worried for our own health. The appraiser wiped down everything after the meeting when we got outside the house. Then he handed me some disinfected wipes and said “good luck.” It was quite a memory, as the expression on his face wasn’t something I will easily forget.
I also had to sell my previous home at the same time. We literally listed our home two days before the government shut the whole economy down. There would be no more gatherings for a while. Open houses weren’t allowed at all. As you can imagine, all of these new conditions made selling my house much more difficult than it should have been.
When it comes to timing, we basically hit a one-in-a-million longshot of negative timing. We couldn’t have predicted it, but we sold our home at possibly the worst time ever. Conversely, the sellers of our new home probably feel like they won the lottery by selling right before everything started to fall apart. Luckily, the California housing market was hot enough that our terrible timing didn’t cost us a ton of money in reduced sale prices.
The Best Time is Now – The Basics of Carrying Cost
Pandemic or not, we sold our home when we moved. We didn’t really have much a choice, after all. Whenever someone asks me why I sold right at the global economy was shutting down, the simple answer is “that’s life.” I was temporarily carrying two houses. It was putting too much of a strain on my finances. Continuing to own two houses was not an option, pandemic or not.
When you own a home, there are so many expenses. On top of the mortgage payments, there are property taxes, utilities, and other maintenance or upkeep costs. When you move into a new home, there’s almost no reason to hold onto to the old home. Most people aren’t even able to, financially speaking. You could try to carry two homes for a while, speculating that the value of your old home will rise enough to offset the carrying costs. However, this isn’t a sure thing. While you wait (and hope), your budget will probably be stretched razor thin. In most cases, you’ll need to sell your old home as soon as you buy a new one.
You Always Need a Place to Stay
This is big catch 22 of selling your home. You may keep hearing that the housing market is red hot. Your home has never been more valuable, so why not sell it and extract as much equity as possible? Sure, that’s all well and good. Except if your sell your house, you still need a place to live. And all the conditions that made it such a great time to sell your house also apply to the seller of the house you end up buying next. So are you really gaining that much?
One of my friends was elated when she had a bidding war start on her old property. That celebration was short lived, though. Soon after, she became extremely frustrated by the competition she faced to find herself a new home. In fact, the extra money she received over her listing price isn’t even covering the overbidding being done on the properties she’s trying to buy now. In many places, the market is just insane right now. People are starting to buy homes sight-unseen and waiving all kinds of conditions or contingencies.
I’ve been trying to get her to be more patient, but there’s a chance she might get sick of waiting and pull the trigger. Hopefully, she doesn’t make an ill-advised leap and buy a house she’ll regret owning for years to come. Be careful what you wish for, as they say.
This Knife Cuts Both Ways
So selling your house in a really hot market isn’t always great, since you’ll be forced to also buy in that same market. On the other hand, a really bad market is also a double-edged sword. While you may be able to snag a good deal on a new house, you still have to sell your old home in the same market.
So unless you’re packing up and moving to a completely different city/state/housing market, the best time to sell is probably when there is more of a balanced market. That means you can avoid crazy bidding wars on places you want to buy, but still get a fair deal when you sell.
Some External Factors That Make It a Good Time to Sell
Having said all that, some people have multiple homes and only need to sell. Others are downsizing or selling for other reasons that don’t include needing to buy a replacement property. For these people, the best time to sell is in a hot market. There’s more competition, higher prices, and faster closing. What’s not to like? So what leads to a hot market? At the end of the day, it’s when demand outstrips supply. Figure out when (and where) there is higher demand and you’ll know whether the hot market will continue. Here are a few examples that creates demand.
Low Interest Rates
When interest rates go down, demand for mortgages goes up. The lower the borrowing rate, the lower the mortgage payments. This makes homes more affordable compared to renting. It pushes more buyers into the buying pool. Lower interest rates also tend to increase stock prices, which creates a wealth effect for many buyers. This can entice them to want to upgrade their housing situation, since they start to “feel rich.” This will also directly increase demand.
Booming Job Market
When the local job market is robust, the housing market heats up too. It’s no coincidence that the Seattle property market has been booming for years, ever since Amazon started expanding its vast reach into our daily lives. The same goes for Northern California home prices, as all the major technology firms are hiring like crazy and paying higher and higher salaries. These factors drive up demand for housing, raising the prices.
Major World Events
Major shifts in world events and culture trends can also have an impact. It used to be common knowledge that living in major city centers was the most expensive, but moving out to the suburbs was more affordable. However, so many buyers adhered to this trend that demand for houses in the suburbs skyrocketed. Now it’s just as expensive to live there than directly in the city itself.
Believe it or not, it’s better to sell your house at certain times of the year. Even in hot housing markets, houses listed in Spring and Summer typically sell faster and for more money than annual averages. Selling your house in the Fall or Winter is often more of a chore, as families want to be settled before school starts in September or avoid moving during the hectic holiday season of November and December. If you live in an area that gets the full winter experience, no one wants to move in the negative temperatures of January and February either.
Going one step further, houses that are listed on Saturdays get more viewings in the first week than houses listed on any other day. Conversely, houses listed on Tuesdays get the lowest amount of viewings. Small differences can make a big difference!
This will vary from state-to-state, but there are often certain tax incentives that cause housing demand to surge. For example, the First-Time Homebuyer Credit gave people a big tax break if they made the plunge on home ownership. There are various other local, county, state, or federal incentives that come and go too (usually related to which government is currently in charge of those jurisdictions). In short, you should pay attention to any tax help that potential buyers might be getting that would encourage them to buy your house.
The housing market can heat up and cool off in a matter of months. Every year, real estate typically goes through ebbs and flows. If you’re planning to sell your house, you need to remember that it’s not a quick process. By the time you prepare your house, hire a real estate agent, take photos, construct online advertisements, host open houses, and finally close the deal, months could pass by. The average U.S. house takes roughly two months to sell, including an average of 25 days on the market. So if you planning to sell your house in the Spring in order to capitalize and eager buyers, start preparing in January. Or if you want your family to be settled into a new place by the start of the next school year, don’t wait until August 1 to list your place.
Random Fun Stats About the Best Time to Sell
Statistics can be very misleading, but that hasn’t stopped people from trying to predict when it’s the best time to sell. If you just follow the numbers, you can predict exactly when it’s best to list your home, down to the day of the week and time of the year! Here are a few fun stats if you are into that sort of thing…
- The best time to list a home is on a Friday in San Francisco but Thursday in Los Angeles.
- The best days to list a home is the first two weeks of May if your house is located in Chicago. However, it’s best to list your Miami pad in the first two weeks of July.
- A New York apartment sells for as much as $3,100 more on average and 11 days faster if you list the home on a Friday between May 16 to May 31.
Your House Still Matters Regardless of Timing
No matter when you sell, remember that the usual advice on how to make your home attractive still applies. Even in the hottest market, there are still plenty of homes that languish on the market without a buyer. In fact, we have a whole article about potential mistakes you can make when selling your house. Make sure you perform any basic repairs, give your house a thorough cleaning, and hire real estate or legal professionals to handle the complicated paperwork.
Put yourself in the shows of the potential buyer. Would you want to buy your home right now, if you were hypothetically seeing it for the first time? Taking good care of your house while you live there will help it always be a good time to sell.
The Bottom Line
After all the hoopla of dealing with the onset of the pandemic with no traffic to my listing at all, we were able to sell our home three months later. I have to be honest — I was sweating bullets the entire time. After all, I’m not independently wealthy or anything. I’m not about to keep paying for two homes just because I can.
Fast forward twelve more months. Now, it seems like a totally different world. While the pandemic has been tough on all of us, it didn’t turn the world into a post-apocalyptic warzone. Science is prevailing, as vaccine rollouts continue to push us pack towards normalcy. On the housing front, we luckily got into a bigger home just as were all stuck at home. So we got to enjoy a little more space during lockdown. In fact, tons of people now tell us how lucky we were to decide to sell when we did. It sure didn’t seem that way, though, when I was struggling to pay for two houses at the onset of the pandemic.
I’m sharing my personal home selling story for one reason — to demonstrate how unpredictable the world can be. You can plan for months and try to time the housing market perfectly, but there are no guarantees. Is there a best time to sell a home, mathematically? Absolutely. Sell on a Friday in the second half of May if you own in New York City. Just don’t expect your plan to always work out, regardless of where you live.
Here’s a guaranteed way to feel good about your decision: enjoy your home while you live there. Let your family and financial circumstances dictate when it’s time to sell your current home. Let the chips fall where they may. That way, you can rest easy, even if you missed out on an opportunity in hindsight.