There are plenty of sizzling hot real estate markets in California. Some are so hot that homeowners could make an absolute killing should they ever choose to sell any time soon.
Take San Francisco, for starters. The median price of detached homes in this bustling city spiked 23% in 2015, while the median condominium price jumped 21%. Homeowners who bought years ago before the market really started to sky-rocket now likely have quite a bit of equity in their properties, predominantly from a rise in market values. Even if homeowners in this area never really had any intentions of selling any time soon, numbers like these could spark some serious contemplation about whether or not to jump in while the market is still red hot.
If you’re mulling over the idea of selling your home during a hot seller’s market – even if your intentions were to stay put – there is plenty to think about before you make that move.
As always, make sure to get advice from a seasoned and experienced real estate agent prior to making this huge decision.
How Much Higher With the Numbers Rise?
You might be thinking that the numbers couldn’t possibly get any higher, which is why you would even consider selling and capitalizing on a huge gain in the first place. However, the best time to jump out is when the housing market in your area is at its peak.
Homeowners may be tempted to act on a hot seller’s market right away before interest starts to fizzle and the demand isn’t as strong. But it’s best to spend some time taking certain things into consideration, such as determining exactly where the market is continued to head. It’s highly possible that the hot streak could continue, but just how long and how far are the million dollar questions.
Where Will You Buy?
Once you sell, you’ve got to buy somewhere else. Unless you plan on moving to a completely different area where the housing market isn’t as strong, you will likely end up on the opposite end of the transaction, paying huge numbers to stay in the market. Make sure you’re willing and ready to be on the other side of the coin before you jump ship from the home you’re in right now.
The Numbers Aren’t the Only Things to Consider
The idea of selling your home for a lot more than what you paid for it may sound enticing, but lining your pockets shouldn’t be the only thing to consider. A hot seller’s market can cloud homeowners’ judgments, and cause them to forget about the big picture.
Consider where you see yourself in the next few years, and what you need from your home. Homeowners who are starting a family, becoming empty nesters, or retiring sometime soon all need very different things from their homes. If the home you have right now fits exactly what you need right now, it may be worth it to stay put, at least for a little while longer. On the other hand, if your situation will be changing in the near future, now may be a good time to consider the move.
Appraisals Can Come in Short
Your home may be worth a ton of money, but make sure you don’t sell far past what the current market dictates. Why? The buyer’s appraisal could fall short, which means the lender may be unlikely to approve the mortgage amount based on the agreed-upon purchase price. Lenders don’t want to extend a home loan for an amount that wouldn’t be able to be recouped should the buyer default on the mortgage. For that reason, the appraisal needs to come in at or above the purchase price in order to avoid this precarious scenario.
Don’t Rush Your Decision
The last thing you want to do is rush such a monumental decision. Don’t let a hot seller’s market determine how fast you should move into order to potentially seize huge gains. When it comes to real estate transactions, every factor involved needs to be carefully considered. We’re talking about a lot of money here. A hot market isn’t going to fizzle out in a matter of days, so there’s plenty of time to consider every aspect of the situation before coming up with the right answer for you and your family.
The Bottom Line
Knowing that your home is potentially worth double or even triple what you originally paid for it can really get the wheels in your head turning about possibly selling sooner rather than later. But before you make that decision, take the time to meticulously go over the benefits and downsides of such a move. Consider where you want to be today, as well as where you see yourself being a few years from now. A move like this should ideally fit well into both your short-term and long-term plans.
