A couple of months ago, I devoted a post to advice for first time homebuyers. Today, it’s time to turn to those who are selling their homes, because the market dynamics may have shifted while you were trying to decide whether or not to pull the trigger.
In many areas across the country, the advantage has shifted to the buyer. After a number of years where annual prices rose by 5 to 6 percent, the pace of increases has slowed down. Even with a downshift in activity, there are still plenty of homeowners, who have ample equity in their homes which when tapped, can provide liquidity and peace of mind.
If you are ready to sell, the first step before you list is to consider where you will live next. Are you thinking about a different neighborhood, town, state or region? If so, conduct research as to what it will cost to make the move and to be a homeowner in the new location. Don’t forget to add in travel to see family, if that’s an issue. For near and current retirees, who are hoping to downsize, be careful: you may discover that reducing square footage from what you had in the old house may not make up for the additional amenities that you would like to enjoy in the new one.
In fact, as many older Americans calculate the cost of living in the next phase, they are seeing the upside of renting instead of owning. According to a report by the Joint Center for Housing Studies of Harvard University, the median age of renters has increased from 38 in 2006 to 40 in 2016. In addition to the roughly one-third of renters under age 35, nearly as many are now age 50 and over.
In fact, renters in their 50’s and 60’s are the fastest growing segment of renters across the United States. For many of these folks, having quick and easy access to their money (liquidity) is far more important than more space, a backyard to maintain and all of the other headaches that homeownership demands. As I said, renting is not "throwing money out the window,” rather it is buying flexibility, a concept that becomes more important as people consider whether or not they want to move to a different part of the country to be close to relatives, to try a new adventure or to sample what living in a warmer climate entails.
OK, back to the actual selling of your house. The most important factor is to set the right price. The first three weeks of a home’s entrance on the market are the most critical for creating interest and attracting buyers. The longer the home stays on the market, chances are the selling price will be lower, both in absolute dollars and as a percentage of list price. If there hasn’t been a bite for three to four weeks, it’s probably time for a price cut. And don’t be bashful: if you really want to move the house, you may need to drop below the price you had hoped to get. Try to keep the emotions out of your decision and focus on the long-term goal.
Finally, if you are on the fence, maybe this bit of data will help. According to a new ATTOM Data Solutions analysis of sales of residential real estate between 2011 and 2018 (including single family homes and condominiums), June is a huge month for sellers. Those who sign contracts in June enjoyed a 9.2 percent premium above market value, that’s the most lucrative month of the year.