If you have only owned your house for a few years, you might be wondering, “Should I sell my house if I don’t have much equity”? Sometimes, it is possible to still turn a profit or break even, even if you have only owned your house for a short time. Considering certain factors will help you determine whether or not you are actually in a position to sell your house, and ow fast you can sell your house.
If you have a fixed rate loan, your mortgage payments are comprised of the interest on the loan, and the principal amount you were loaned. You may or may not know that with a typical 30-year mortgage, you pay very little principal in the first few years of the loan. You primarily pay interest. As the mortgage matures (in oner words, the longer you are paying your mortgage), the more capital you pay towards your loan as opposed to interest. This gradual repayment of both the principal and interest is called amortization.
The advantage to amortization is that you gradually repay the principal and interest, instead of having a large interest payment due when the loan matures. However, the downside is that if you have only been paying your loan for a short time, it is likely that you haven’t paid much towards your principal. In other woods, you haven’t built up much equity in your house.
Before deciding whether or not you are in a position to sell on a house with little equity, find out exactly how much you still owe on the house.
Costs of Selling
Another consideration she deciding if you can sell your house with little equity is the costs involved to sell a house. These costs are part of the reason that if you sell your house too soon ager you buy it, you will most likely lose money.
Some of these costs include real estate agent commissions, the cost of transferring taxes, moving costs and other legal fees.
Appreciation occurs at different rates in different markets. For example, in the Houston Heights,a friend of mine only owned her house for two years before she was required to move for a job. However, during her short time in Houston, the market exploded and the inventory never caught up. Home prices in her area soared and she profited tens of thousands of dollars in only two years.
If you live in an area with a great appreciation rate, it will decrease the time required to accumulate a profit from your home ownership.
The market of your area will affect your home sale in several ways. As of right now, in Houston in 2014, we still have a “seller’s market”. The inventory is low, and the job market is fantastic. People want to move here and they need somewhere to live. These are just two factors that give seller’s control. It wasn’t uncommon in 2013 for buyer’s to have bidding wars over desirable properties, and for buyers to make offers ABOVE the listing price.
Additionally, mortgage rates will be a factor for buyers. It might be a seller’s market, but it’s also a great time to buy because the interest rates are still very low. Low interest rates will encourage buyers to keep buying, which will help you to sell your house.
Other market factors that will affect your home sale include:
- The economic climate in your area (the better it is, the better off you are).
- Whether or not you are close to desirable schools economic climate good in your area
- Crime rate
- Closeness to city
- Average days houses stay on the market
- Margin between list prices and selling prices
Personal finances and other related issues might play a part in your motivation for wanting to sell. You may need to sell if you purchased more house than you can afford, or you lost your job and aren’t bringing in enough income to pay the bills. If you are falling behind and know you won’t catch up, you might need to sell your house before you are able to make money.
Thing You Should Be Doing Right Now if You Plan to Sell Your House
Let’s be real – this could be a whole separate post! However, if after reading this article you think you want to start preparing to sell your house, here are a few things you should begin doing:
- Find a Good Real Estate Agent
- Inspect Interior Systems, Home Improvement Projects
- Interior Cleaning
- Do Your Homework When Pricing
How to Get More Information
If you have a house with little to no equity, but you are thinking about selling, call us! Calling and getting a quote is free, so you have nothing to lose. We can answer all your questions so you can find out whether or not you will be able to sell your house. We can also make recommendations on whether you should sell it to us, or whether it would be better to put it on the open/traditional market.