Before You Begin
Remember when you bought your very first home? It was likely fun, exciting, a little bit scary...but for the most part, it was also likely pretty uncomplicated.
Guess what! This time it's different. This time you're the seller and most likely you have a current mortgage (perhaps more than one!), a rather unpredictable marketplace, and what might be a very real possibility that, not only might your home not be able to sell for the price you paid when you purchased it, it might not even be able to sell for what you currently owe on it...and there just might be a significant difference between what you owe and what the market will bear.
What this all boils down to is that there is a lot more "due diligence" needed if you're planning to sell your home today than has been true in the past...certainly for the vast majority of home owners. You need to be armed with the facts on several fronts:
- What is the availability of financing for your prospective home buyers, and how does that impact your home's "saleability"? For example, given currently available financing, if you own a condo which is NOT FHA or VA approved, but your likely buyer will need FHA financing, what do you suppose will be the impact on your ability to get your property sold?
- What is the currently indicated market value of your home and what is the nature of your competition? In other words, in your general area, what, if any, impact is there by distressed properties, either foreclosures or short sales?
- What is the absorption rate in your area (for example, if there are currently 60 homes on the market in your area, and only 40 homes sold in the past 12 months, your area currently has roughly 18 months worth of inventory, assuming no other homes get listed)
- What is the total of all outstanding liens on your home (this means first mortgage, any additional mortgages, home equity loans, lines of credit, or anything else that might have resulted in a lien being attached to your home)
- Are you in a position of being able to cover all costs associated with the selling of your property or not?
- Are there things you can do to make your home more "saleable" in the current market?
- Given the market conditions for your current home, will you realistically be able to sell your home and move on to your next location
- If you are planning to purchase another home, what is the general availability of properties that meet your criteria for a new home?
- If you will need to secure a mortgage for that next purchase, what is the availability of financing that would meet your needs?
Gathering this basic information before taking the necessary steps to put your home on the market can save you a great deal of time and distress later on.