Like many things in life, having the right timing when selling your house can really pay off. But it’s impossible to optimally time your home sale and the inevitable move that follows unless you understand seasonal trends, what “the right time” actually means, and the selling process itself.
Here’s what we’ll cover:
- The best time of the year to sell a house
- 5 factors that help to determine the right time to sell
- Preparing for a sale
When is the best time of the year to sell a house?
According to the National Association of Realtors, home sales generally increase significantly in spring and the busiest months tend to be May, June, July and August. The slowest months tend to be November, December, January and February.
And while it’s true that buyer demand tends to be highest in May and June, that doesn’t automatically mean it’s the right time to sell.
In fact, if you want to maximize the profits you get from your home — as well as the speed at which your house sells — then there are a number of considerations you should take into account before putting it on the market.
At Opendoor, when we are asked about the best time to sell a home, our answer has always been the same: The decision to move on to the next chapter in your life is a personal one – and should take other factors into account than just the seasonality of the housing market.
→ Want to close in just a few days at a competitive price? Learn how we make selling your home easier.
Maybe you’ve accepted a new job, you’re expecting a baby, or your grown-up children are about to move out. No matter the reason, when you sell a home should align with your current needs and your long-term goals.
How to know the time is right to sell your house
1. Your finances
Personal finances are often a driving factor behind home sales.
If you’ve occupied your home for several years, you may have equity you can use as a down payment on a new home, to supplement your retirement, or to pay for other big expenses. As Marketwatch explains, if the house you’re selling is your primary residence, and you’ve lived in it for at least two of the past five years, you won’t pay capital gains tax on the first $250,000 (single owner) or $500,000 (married owners) on the “gains” from the sale.
Another financial factor is whether you have enough cash flow for the costs associated with moving. According to the American Moving and Storage Association, the average cost of an intrastate household move is $2,300, while the average cost of an interstate move is $4,300 (average distance of 1,225 miles).
These numbers do not include the cost for making repairs to your current home before listing, sprucing up a new home before moving in, and buying new furniture and appliances. The timing may be right to sell if you have extra savings to support these expenses.
On the flip side, your financial circumstances may mean now is the wrong time to sell. For instance, if you owe more than your home is worth, also known as being “upside down” on your mortgage, you may want to wait so you don’t lose money on the sale.
Instead, as The Balance suggests, you might want to talk to your lender about modifying your loan, apply for a refinance from another lender, or explore a government-sponsored refinance program like HARP. Once you’ve built up more equity, or the market value of your home has increased enough to provide you with equity, it may be time to reconsider selling.
If waiting to move isn’t an option, consider renting the property for a year or two to cover the mortgage payment and build equity before selling.
2. Life changes
We can’t always plan for life’s biggest changes. Sometimes things arise, and you realize you need to sell your home quickly and move away. A few examples of circumstances that might trigger such a move are:
- A new job
- Aging parents who need your help
- Placing your kids in a better school district
- A medical condition that requires living near a specialty hospital, or accommodations such as trading stairs for a single-level home
Selling on a short timeline can be stressful, but there are ways to ease the process. If selling traditionally, consider selling the house as-is. You’ll price the home a bit lower in exchange for not making any repairs, which can be costly and time-consuming.
You could also consider selling your home to a direct buyer like Opendoor. At Opendoor, we take a single service charge to provide you with a hassle-free sales process without listing, showings, and months of stress. You’re in complete control of your moving timeline, and you can choose your own closing date.
→ See how the costs of selling to Opendoor compare to a traditional sale.
3. Upgrading or downsizing
Sometimes a home no longer suits your needs or lifestyle. Maybe your family has outgrown the number of bedrooms, or your pets need a larger yard. Perhaps you need office space to launch a home-based business.
The decision to sell your home and upgrade could be spontaneous. More likely, it will require time to consider exactly what you want before you take the plunge. Walk around the house and take inventory of the spaces you use and how they meet your needs. Are closets overflowing? Is the kitchen cramped? Do you need another bathroom?
Some homeowners might come to a different conclusion, that they need to downsize. Are there spaces you never, or rarely, use? Has regular maintenance become daunting? You might want to save money, reduce clutter, or save time on home and yard work.
Downsizing to a lower-cost home could free up money for luxuries like travel. Or, maybe your kids have left the nest and you simply no longer need the extra space. On the other hand, you may want to wait to downsize if you have college-age children who may need to move back home. And moving, even downsizing, carries its own costs.
4. Seasonal changes in real estate
Personal factors aside, sometimes it’s best to sell your home during peak months to take advantage of higher sales prices. If you’ve been on the fence about selling your home, the calendar could be your guide.
Nationwide, home sales tend to pick up in February, increase even more in the spring, and peak in the summer, according to the National Association of Realtors (NAR). But the pattern could vary according to your geography. For example, thanks to the mild winter weather, home sales in Phoenix hold fairly steady year-round, spiking in March and again in May. Sales in colder climates might spike later in the summer.
→ Want to make a smart decision about when to sell? See local real estate trends in your area.
Make sure that you do some research and familiarize yourself with the current trends in your local market, or read our housing market guide to get a macro perspective on the trends that affect real estate. Additionally, you can talk to a seasoned real estate agent to fully understand how seasonality impacts your local real estate market. If possible, consider deferring the sale of your home a few months to take advantage of most favorable conditions in your locale.
→ You can sell fast at a competitive price. Learn how selling to Opendoor works.
5. Other housing market factors
There are other market factors to consider besides seasonality. One of the biggest is the inventory of houses for sale in your area. Low inventory means it could be a good time to sell, since buyers may clamor for any available properties and may be willing to pay top dollar for your home.
If you’re curious about the inventory in your area, check out our local real estate trends data including median sale prices, the number of active listings, and days on the market (DOM). The DOM tells you how many days the home was on the market before it sold. A low DOM can signal low inventory and higher sales prices.
Another consideration is mortgage interest rates. When interest rates are low, buyers are motivated to take out mortgage loans. More buyers mean more sales, which could translate into less time on the market, or more money, for your home. Similarly, buyers are motivated when they are worried interest rates might go up soon. Sites like Kiplinger will forecast these interest rate hikes based on the activity of the Federal Reserve.
Changing interest rates can make quite a difference for home buyers and sellers. For example, a 0.5% rise of the interest rate can result in a 6% increase in the monthly mortgage payment (our numbers include monthly principal and interest only) and a ~5.8 decrease in house purchasing power.
Even with rising mortgage interest rates, NAR has predicted modest growth for sales of existing homes in 2018. To find out more about the market conditions and average selling price in your area, you can read the latest reports at the NAR housing statistics website.
Preparing for a sale
Whether you’re trading up, downsizing, relocating or simply scratching an itch to move, there are several things you can do that help your house sell for more money. Here are a few tips:
- Price your home competitively or start with a cash offer to get your home value.
- Consider home improvement projects that have the highest return. Use our home improvement calculator to see projects that can add the most value.
- Clean and declutter your home so it’s a pleasure to walk through.
- Improve curb appeal since that will be a buyer’s first impression.
- Consider hiring a professional real estate photographer so your photos stand out.
Moving is a life-changing decision. All things considered, the best time to sell is the time that’s best for you. Once you’ve taken a step back, looked at the big picture and weighed all your options, you can feel confident selling your home at any time you are ready for it.
By Gina DeMillo Wagner
Opendoor is not a financial, tax, legal, insurance, or investment advisor, and this article is meant for informational purposes only. Opendoor always encourages you to reach out to an advisor regarding your own situation.