More than two years ago, a young family with four spirited children bought a large lot and hired a builder to construct a custom house. They hankered for five bedrooms and two home offices. Their plan? Sell the cramped split-level where the whole brood now live and move to a much bigger space with a bedroom for each child.
“They’re overflowing their little house. Also, their need for home offices became urgent when both parents started working from home,” says Stacy Berman, the family’s real estate agent.
But due in large measure to supply chain issues, the family’s building plans hit multiple snags when both construction materials and labor proved tough for their contractor to obtain. Hence completion of the new place -- scheduled to be done this month -- has been delayed indefinitely.
“Now the family is in a bind. Should they sell their split-level immediately to help finance the new construction? Or should they wait until they’re certain about a move date, in the hope that their split-level won’t fall in value? Both options seem problematic,” Berman says.
The quandary facing this family is shared by countless Americans in doubt as to how to time a potential home sale. Young families especially have always preferred to avoid the need for a disruptive interim rental prior to a move. Also, most wish to sync a move to their kids’ school schedules.
But the issue of timing a sale has become all the more vexing due to economic uncertainties now facing the country. In some areas where home values are still rising, owners are considering a more hurried sale, assuming the good times can’t last. Still, in areas where values are slipping, owners hope a delayed sale will mean greater proceeds if they hold out past a potential recession.
“Timing a sale is always a judgment call. But I encourage people not to postpone if that means putting their dreams on hold,” says Berman, who’s sold property since 2003.
Here are a few pointers for sellers:
-- Ask for consultations with local real estate pros.
Eric Tyson, a personal finance expert and co-author of “Selling Your House for Dummies,” says the best sources of information about a local market are usually real estate agents active in the area.
He grants that many in the field are inclined toward optimism “given that they have a bias toward doing transactions.” But he says you can minimize the effect of any such bias by seeking advice from more than one agent.
“And obviously, take any one agent’s opinion with a grain of salt,” Tyson says.
Besides real estate agents, other solid sources of market intelligence include appraisers, mortgage lenders and real estate attorneys who do business in your area.
-- Seek up-to-date market data.
Because national numbers bear little relevance to your market prospects, housing specialists urge you to review local statistics.
“You want to look at numbers for your neighborhood only. If you live in New York, that could be just one building. But in a rural area, that could be a radius of 10 or more miles around your house,” says Sid Davis, author of “A Survival Guide to Selling a Home.”
Once you’ve defined your neighborhood, he recommends you ask local agents for key data. In particular, request local “list-to-sale” numbers for the last 90 days. These show the difference between asking and selling prices. If this gap is narrowing, the local market should be stable or gaining strength. If it’s widening, the market could be weakening.
Another key set of statistics that Davis uses involves “days on market.” If many properties in the community are languishing unsold for weeks or months, it’s likely real estate demand is weakening. But a quickening pace of home sales could suggest the opposite.
-- Avoid reliance on “average sales price” statistics.
Many market observers depend heavily on data about average sales prices. But Tyson cautions against relying too heavily on these numbers.
“The problem with average sales prices is that the mix of properties that happen to have sold during any given period can really impact the results. For example, if a few unusually high-end homes have sold recently, that could give you an unrealistically rosy view,” he says.
He says a better measure of the relative strength of any market focuses on median sales prices. In this case, the median would be the price difference separating the higher half of the homes sold from the lower half.
-- Take note of home improvement activity in your neighborhood.
Ashley Richardson, a veteran real estate agent affiliated with the Residential Real Estate Council (crs.com), says you can sense whether your local real estate market is on the upswing through simple observation.
“Are people spending money on home improvements? If so, these are signs that they have confidence in the neighborhood and its future,” Richardson says.
-- Don’t base your selling decision solely on market intelligence.
Why consider selling even before your market stabilizes? Because, as Tyson explains, it’s likely any price discounting you’d have to do to sell will be more than offset by savings on the home you buy, especially if you’re moving within the same area or to a lower-cost region of the country.
“If you’re trading up -- or even making a lateral move -- your two transactions will probably come out as a wash or better,” he says.
(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)