Deciding To Sell
There are many reasons why you might want to sell your home, whether it is to move to a larger home, to downgrade to a smaller one, or perhaps you want to move to a different district, location, or even country. Whatever the reason, you should consider all the information available to you before you make the decision to sell your home.
Consider Your Financial Position
The ideal scenario is to be able to purchase your new home without selling your existing home. However, this flexibility may not always be available to you depending on your financial resources, the current type of home you are staying in, and your own preferences. Buying a new home before selling your existing one entails having enough cash for a down payment without taking equity out of your existing home, and perhaps dual monthly payments for a period of time.
Know How Much Your Home Is Worth
There are a few ways to find out how much your home is worth:
1) Commission a licensed appraiser to obtain a formal valuation. Each appraiser follows a unique valuation approach and, as a result, each interprets the value of a home slightly differently. Relevant fees will apply.
2) Obtain an estimated valuation from Automatic Valuation Models that are available from major property portals. These valuations are derived by collating publicly available data of homes in your area and calculating the valuation based on proprietary formulas. The figures obtained from each property portal will differ due to the different weightings placed by on factors such as location, land area, floor area, etc.
3) Call up your bank and ask for an informal indicative valuation from a banker. Most banks have their own in-house valuers and they will be able to provide an estimated valuation for you, especially if you are already their customer. This is a complementary service provided by most banks to their customers.
4) Contact a real estate professional if you want to explore your home's value. The first thing a professional realtor will do is conduct a market analysis based on current market conditions to calculate an estimate on the value of your home. Based on this analysis, a marketing proposal will be designed according to your goals and requirements for your review and consideration so that you can decide for yourself if this is the solution you are seeking.
Consider How Much Equity You Have
Home equity is the market value of a homeowner's unencumbered interest in their real property, that is, the difference between the home's fair market value and the outstanding balance of all liens on the property.
If you require equity in your existing home to purchase your next home, you should spend time to figure out how much equity you have in your existing home. You may consider getting a bridge loan or home equity loan to use as the down payment on your new home, which you can pay off when you sell your current home. If you do not have equity in your current home, or prefer not to use the equity, you may arrange for the sale of the home and purchase of the new one on the same day.
How Much Does It Really Cost To Sell Your Home?
There are several fixed and variable costs when selling a home. The biggest one will have to be the real estate sales commission. Beyond the commission, the costs to selling a home can total about 1% of the sales price. I derive a commission rate based on an evaluation of the salability of your home.
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Should you be thinking of selling, or would simply like an update of where your property sits in today's market, book a non-obligatory discussion with one of our TemasekClass consultants.