Housing Market 2024: 6 Factors To Consider Before Selling Your Home

So you’re thinking of selling your home, but you’re not sold on the idea just yet. Maybe the size of your current house isn’t working for your family or you’d like to relocate. Whatever the reason, you want to make a decision that’s financially sound .

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The red hot seller’s market of the past few years cooled significantly in 2023. However, it hasn’t turned ice cold. While low inventory may still keep sellers seeing higher home prices, Zillow expects for more homes to hit the market this year as people stop trying to wait out a decline in rates. In total, the real estate marketplace company has forecasted a 1.9% home value growth over the course of the year.

Given these changes in the market, there are several things that you should consider before listing your property. Here are the six factors to consider before selling your home this year .

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Amount of Equity in Your Current Home

Before deciding if you should sell, Ashley Oshinsky, real estate agent with the James Real Estate Agency, LLC, based in Waterford, Michigan, said to take a look at the mortgage payoff balance.

“Access a seller net sheet, which can be provided by most realtors or title companies,” she said. “The net sheet will break down the other major costs when it comes to selling, like real estate commission and transfer taxes.”

She said you can plug different sale prices into the net sheet to find out what your bottom line is when it comes to selling.

If you’ll likely be in the red, Dan Belcher, CEO at Mortgage Relief, an Oklahoma-based company that specializes in pre-foreclosure and short sales, said selling isn’t ideal. “Refrain from selling your house, unless you’re trying to avoid foreclosure or bankruptcy,” he said. “You want enough equity to pay off your mortgage and selling costs.”

On the other hand, he said you’re in good shape if you’ll walk away with at least a 20% down payment for your new home.

Closing Costs

The potential gross proceeds of your home sale might be excitingly high, but that money won’t all go into your pocket.

“Most sellers forget that there are significant closing costs when they sell — often more than double those of buying,” said Katie Wethman, CPA, MBA, real estate agent with The Wethman Group at Keller Williams, based in Arlington, Virginia. “I tell my sellers to budget 7% to 9%, and that’s not including prep costs and repair work on the house itself.”

Selling Prep Expenses

Putting your home on the market isn’t always as simple as having your agent create an online listing. “Even in a hot market like ours, sellers can maximize their ROI by making the house show like a model,” said Wethman, who is licensed in Virginia, Washington, D.C. and Maryland. “That takes time and money — fresh paint and deep cleaned or new carpet and other flooring are typically the best bang for the buck, but new appliances and countertops can make a house feel ‘new’ to a buyer and create an emotional draw.”

In addition to updates, investing in proper staging might also help you get a premium for your home.

“Staging is the one expense that sellers push back on most often, but is arguably the most important thing they can do,” Wethman said. “Today’s buyers grew up on HGTV and are used to seeing homes that are completely neutral and look like a magazine shoot, which makes it easier to envision themselves living there.”

Where You’ll Move

If you sell your home, you’ll need to find a new place to live. “If you want to stay in the area that you live in now, rising home prices and mortgage rates mean that selling and buying in the same area could mean higher monthly costs, unless you’re looking to do significant downsizing,” said Danielle Hale, chief economist at Realtor.com. “Of course, paying more for a home that is a better fit for your family may be well worth it.”

On the other hand, Hale said if you currently live in an expensive area, you might consider moving somewhere cheaper. If you take this route, she said you might be able to financially downsize. “In other words, even if the square footage of your home doesn’t change, you might see lower monthly costs,” she said. “If this is an option you’re considering, think about not only the costs of the home and mortgage, but also the general cost of living and potential new tax and living environment in your new home.”

Rent vs. Buy Your Next Home

You currently own your home, but that doesn’t mean you can’t rent your next one.

“I often work with seniors who are downsizing and want to rent,” Wethman said. “While there are advantages to this, it often comes at a high financial price to insert a new large expense — one that grows with inflation and market pressures — into their fixed-income budget.”

She said she’s often able to help these clients find a condo to purchase that meets their needs while protecting their nest egg. It is important to note, however, that while rental prices rose at a slower rate than they have in the past few years, they’re still high. Rents, according to reporting by USA Today , are still 29% higher than they were before the pandemic.

Tax Implications

Selling your home could leave you with a hefty tax bill.

“For most homeowners, the capital gains exclusion, which allows you to pocket the first $250,000 — $500,000 if you’re married — in gains on the sale of your home, without having to pay taxes on them, means that you’re not likely to pay taxes on the proceeds from your home sale,” Hale said. “But homeowners who have lived in their home for a long time or have seen substantial home gains should be aware of the potential tax impact.”

You probably don’t want to give Uncle Sam a chunk of your profits, so get this sorted out before putting your property up for sale.

Crystal Mayer contributed to the reporting for this article.

This article originally appeared on GOBankingRates.com : Housing Market 2024: 6 Factors To Consider Before Selling Your Home