Is This a Good Time to Sell Your Home?

The market, your plan, and next steps

Young couple on floor surrounded by boxes

Arthur L. Rathell, III |
Posted on Jun 17, 2021

With mortgage interest rates remaining at very low levels, the demand for homes has increased significantly. This topic is very timely since June happens to be National Homeownership Month.

In fact, you may be wondering if this is a good time to sell your own home. With a low inventory of homes and a minimal number of days on the market, this is considered to be a “Seller’s Market”. Selling a home this summer may be a very good option for some local residents, but once you sell your home, where will you live? It’s important to keep in mind that you will be competing with others for that same limited inventory when you go to make a purchase.

So, what should you do? First, find an experienced and skilled realtor in your market to guide you through the process. To do this, review local realtor websites to determine which ones have the most active listings. This is a little tricky right now because inventory is moving so fast. However, the realtors with multiple listings know what is going on in the market. Next, schedule a meeting with your top realtor choices and ask what options you have to sell and buy in your area.

Once you have met with a realtor and you believe you are ready to begin the selling process for your home, the next step is to prepare for the buying process with a mortgage loan originator or mortgage loan officer.

Start by finding a bank or lender that is willing to do a Pre-Approval rather than a Pre-Qualification. What’s the difference? A Pre-Approval requires that a buyer complete an application and submit all of the necessary paperwork---such as pay stubs, tax returns, and other items---for a mortgage underwriter to review before you fall in love with a home and want to make an offer. When this is completed---and if you qualify for a mortgage---the underwriter will generate a Pre-Approval Commitment Letter up to a specific dollar amount with an expiration date, which is usually 120 days from when a credit report is generated. As a reminder, before a lender pulls your credit from a credit bureau, they should get your approval to do so. Once you have a Pre-Approval Commitment Letter, you can begin searching for your dream home.

As an alternative, a Pre-Qualification is usually generated by the mortgage loan officer without requiring the buyer to complete an application. The loan officer will conduct an interview with the buyer, evaluate the individual’s credit, and determine the amount for which the individual may qualify. Then, the loan officer will follow up by generating a Pre-Qualification Letter.

The most significant distinguishing factor between the two options is that having the Pre-Approval Commitment Letter may set you apart from other potential buyers if you are competing on an offer for a property.

It is important to be aware that offers for homes are often coming in above the listing price at this point in time. Unfortunately, the problem with this is that appraisals---usually based on historical sales in markets---may come in below the offered amount. However, lenders typically lend based on the lower value, so the buyer would need to make up the difference.

You also want to make sure you are looking for your new home in a price range with which you are comfortable and that fits with your financial situation. With today’s brisk market for homes, some buyers may be tempted or feel pressured to cash out retirement funds to pay for all or some of the purchase amount of a new home. This is not generally a good financial decision in the long term, and your realtor should respect this position by limiting the properties shown to those at a price point at which you are competitive in your offer and have a comfort level.

Finally, if you remain committed to selling your home and purchasing a new one this summer, be sure to do your homework, get expert opinions, and be prepared. We have a team of professionals ready to assist with the mortgage lending process when you are ready to take the important step of purchasing your new home. Best wishes whenever you decide it is the right time to proceed down this path as a homeowner.

Art Rathell

Arthur L. Rathell, III
First Vice President/Residential Mortgage Manager