When you should sell your home, and when you shouldn’t

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Unless you’re moving to take a new job far away, you probably don’t have to sell your home. But now might be the right time if:

• You want to simplify your life
• There are massive potential profits on the table
• You want to spend less on housing

Renting or downsizing may help you financially or improve your lifestyle.

Selling takes planning

Selling your home is a big decision. And it requires a lot of thinking and preparing. There are moving hassles and costs involved. You also need to consider where you’re going to live next.

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But right now is a great time for sellers. That’s because sellers made an average profit of 21 percent last year. It remains a strong seller’s market in many key areas. Plus, fixed interest mortgage rates remain affordable. That creates an incentive for buyers to purchase.

Review your options and objectives. Now may be a perfect time to list and sell your home. Or it may be better to wait until the timing matches your life goals. Get advice from experts before making a hasty decision.

The best reasons to sell your home

Common reasons why many people choose to sell their homes include:

A job relocation makes commuting impractical. And you may get a tax deduction for the move in this case.

Quality of life issues. You want a shorter commute or nearness to loved ones. Or a nicer town, with “walkability to shopping, work and entertainment,” says Suzanne Hollander, real estate attorney, broker and Florida International University professor. “Or it could be health issues. Maybe you need a home with fewer stairs and less upkeep.”

Affordability problems. “A negative change in financial status can make your current home unaffordable,” says Realtor and real estate attorney Bruce Ailion. Many sell their home because they’re underwater in their mortgage and want to avoid foreclosure.

Divorce. “A home is normally a married couple’s largest investment. So husbands and wives who own property together often sell it when they split up,” says Hollander.

A desire for better schools. You may be able to move into a higher-rated public school district. That may result in a better education for your children.

An amazing offer. “A buyer could make you a generous and unexpected offer, even if your home isn’t on the market,” Hollander says.

Retirement. Perhaps you want to downsize to a smaller, more affordable home. Or you want to relocate to a warmer climate.

Not-so-good reasons to sell

Maybe you simply want to cash in on the current seller’s market. But it may not be wise to sell for the sole reason of maxing out your profit potential.

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That’s because there are risks and work involved. Prepping and showing your home can be disruptive. It may take longer than expected to find a buyer. You may not end up getting the offers you desire. There are steep closing costs to think about. And your next home may not be easy to find or afford.

“Selling because the market is hot is generally not a good reason,” says Shawn Toor, real estate attorney. “It may make sense if your home has appreciated in price and you’re going to move to a market with lower housing prices.”

“But if you’re staying in the same city,” he says, “and not planning to downsize, then the financial gains of selling your home will be spent on your next home.”

Avoid rushing into a home sale because you want to perfectly time the market or interest rates. That can backfire on you.

Why now can be a great time to sell

If you’re truly ready to sell for the right reasons, take advantage of good market timing.

“Today in most markets, values are above their 2007 peak values. This allows for a profitable sale,” says Ailion. “Also, we are well into an economic recovery. But many believe a recession is coming in the near future.”

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Also, note that the Federal Reserve has raised interest rates twice so far this year.

“Many expect the feds to raise rates again before the end of the year,” Toor says. “If that happens, the cost to borrow money could rise and lending criteria may tighten. So if you’re selling in an area where there aren’t a lot of all-cash offers being made, listing now makes sense.”

What to think about before listing

Prior to putting your house on the market, answer these questions:

What are the pros and cons of selling? Make a list of the benefits of selling and moving. Then, compare it to a list you make of the drawbacks. If the pros outweigh the cons, you’ll feel better about the decision.

Where will you live next? Will you rent or buy? What markets can you afford? “Today, it’s more difficult to locate a replacement home,” says Ailion.

What kind of offers can you expect? “Study your local market,” suggests Hollander. “Learn the sale prices of comparable properties in the past three to 12 months.

How will the timing of the sale impact your taxes? Ask your tax planner or accountant.

How quickly do you need to sell? To unload your home faster, don’t price it too high.

Do you need move-out wiggle room? “Say you need to stay in your house for some time after the closing,” Hollander adds. “If so, negotiate with the buyer to rent the home from them for a period of time after closing.”

It’s a seller’s market in many parts of the country. But selling for the right price won’t help unless you’re also selling for the right reason.