If you are one of the many home owners considering selling in the near future, chances are good that the following thought has at least crossed your mind "I don't want to lose out on profit by selling too early". While this may seem like a legitimate concern, especially considering the ongoing increase in home prices, Realtor.com recently pointed out three flaws in this thinking. In reality, there is little reason to be overly concerned with the timing of your sale within the current market as long as it fits your personal timeline.
The thought process behind the timing concern is understandable; after all, home prices rose at a yearly rate of 6.3% in 2017 and the median existing-home sale price rose 5.8% in January compared to the same time last year. However, there are at least three reasons why you shouldn't be overly concerned with holding out on your home sale.
Reason #1: Predicting the future is hard.
Even for experts, which most home owners are not, predicting the future is often somewhere between difficult and impossible. Just as with the stock market, short term fluctuations are the rule rather than the exception. For instance, let's consider a hypothetical home owner who considered selling their home in December, but instead chose to wait one more month for a bit more profit. You might think from the information given earlier that they made a wise decision; however, even though prices rose 5.8% from January 2017 to January 2018, they actually fell by 2.4% in January compared to December! Considering the median existing-home price of $240,500, this delay of one month cost the home owner over $5,000!
Reason #2: Waiting means your next home is more expensive too.
Ok, so the one-month delay didn't work out in our hypothetical home owner's favor, but maybe it was just because they didn't hold out long enough? What if they had waited an entire extra year, so that home prices had risen on average by about 4% as forecasters have predicted for 2018. This would mean that they sold for approximately $10,000 more than they would have a year prior. Of course, they now have to find a new home to live in, and, just as their home's price rose by 4%, so did the average listing! As a result, they will have to spend more on their new home than they would have had to before, erasing their net profit on the delay!
Reason #3: You are selling for a reason.
Finally, there is an important difference between delaying a hypothetical home sale and a real one: you have to actually live there while you delay! Generally, those who are selling their home are doing so for a reason; perhaps their growing family needs more space, or their grown children have left them with too much. By delaying the sale, you are delaying the resolution of the reasons that drove you to consider selling in the first place. Because of this, delaying a real home sale is not the sterile numbers game that it appears to be as an abstract idea.
Source: "Afraid of Selling Your Home Too Soon—and Missing Out on Tons of Cash? Consider This"
