Selling a house can be a stressful process, particularly in today’s rapidly changing market. Although sellers enjoyed a strong seller’s market throughout much of the COVID-19-fueled housing boom rich with bidding wars and record-high prices, rising interest rates have shifted these power dynamics to the point that many prospective sellers might feel downright paralyzed by home-selling “what ifs.”
If you’re one of the many homeowners who feel paralyzed by indecision, allow us to help you play out the various scenarios and move forward. Here are some of the top “to sell or not to sell” questions floating around today, plus a reality check weighted with expert forecasts rather than hearsay or fear.
‘What if I want to sell now, but feel locked in by my current low-interest-rate loan?’
A recent Opendoor survey found that out of all housing market issues, 77% of homebuyers and sellers are most concerned about high interest rates. As a result, many potential sellers are postponing their moves for fear of future affordability woes.
“According to the FHFA national mortgage database, 90%-plus of outstanding mortgages have interest rates less than 6%,” says Amit Arora, vice president of investments for Opendoor. “So there isn’t a huge motivation for many sellers to list.”
This tracks since 72% of sellers also plan to go out and buy a new house, and with current interest rates hovering around 7%, many sellers are afraid to give up their lower interest rate when they sell to then repurchase their next home.
Reality check: The truth is, high interest rates do not need to hold a seller back. For one, if sellers are sitting on any amount of home equity in their current home, selling could make them flush enough to make an all-cash offer (or near that) on a new house, circumventing mortgage rates.
Sellers can also snag a lower rate by buying down their rate with the lender, or shopping for new-construction homes where builders might offer rate buy-downs as well.
Another possible option: an assumable mortgage. True to its name, this is where you assume, or “take over,” the mortgage of the home you’re buying—as well as its low interest rate.
“You may be able to apply with the same mortgage company that the seller of the home you wish to buy uses and see if you can qualify to take over the existing mortgage,” says Jonathan Rundlett, regional owner of EXIT Mid-Atlantic.
‘What if I sell now, then home prices rise?’
Some sellers might hesitate to list their homes right now thinking that their property might appreciate even more in the near future—and then they’ll be sorry they sold it for less.
At the moment, prices might continue to go up some, but the escalation has seemingly slowed from pandemic times.
Realtor.com® predicts only a modest decline in prices of just 0.6% for 2023 as a whole.
So if you’re thinking of selling, you could wait; but you’re not really going to make that much more than if you sold now. That’s because most sellers are likely selling one house and using the funds from that sale to purchase another house. In this scenario, it is not as important to “time” the market to sell at the peak.
Courtesy of Realtor.com