Bottom line up front — it depends. It depends on your short-term and long-term goals. Currently, it’s a “seller’s market,” which means that there are more buyers than there are homes available for sale. Along with the historically low rates of financing, we’ve seen bidding wars and offers over the asking price during the past year.
What does this mean for sellers? For most sellers, it’s more the reason to sell now while the market is hot and cash out on their equity. Those who were initially planning to retire or relocate have decided this is the best time to do so. They’ve held on to their property for investment or as a primary residence, but like everyone else, the pandemic has changed their long-term plans.
The real question is “Why do you want to sell your property”?
Do you want to sell to take your net proceeds and upgrade to a larger home? Or downsize to a smaller property? Or take those proceeds to invest elsewhere? Or just bank your net proceeds to take a lifelong dream vacation and early retirement?
There isn’t a right answer. However, you should plan accordingly. You’ll need to assess not only where you’ll be relocating to, but also the potential tax consequence on the net proceeds of the sale. If the property was an investment property, i.e. rental income, then you’ll be able to do a 1031 exchange to purchase the next property and defer the taxes. However, if the property was your primary residence, then your taxes will be treated differently. (You’ll need to consult with your CPA accordingly.)
The cons of selling now
If you plan on purchasing another property in the same area, expect to purchase at the current and higher prices. The home that you purchased 20 years ago, or even 5 years ago, has appreciated much more and you run the risk of being priced out of your own neighborhood.
The pros of selling now
The advantage of selling is to sell high while the market is hot. Although the market data doesn’t show any significant downturn in the market soon, we don’t have a crystal ball. Also keep in mind that the real estate market is very dependent on the local area. If you do decide to sell, then I recommend taking advantage of your proceeds by reinvesting it to other real estate properties to increase your assets. Continue to do this and you can build a sizable real estate investment portfolio, of which you can use for your retirement down the road, or to build longer-term generational wealth for your family and children.
Is it now or never?
If you’ve been sitting on the fence whether to sell or not, then maybe now is the right time for you. If you are planning to keep the property for the long term, and willing to ride the tide of the market, then hold on to it longer. The bottom line is that every person/family’s situation is different and can only be properly assessed individually.
As I tell my clients — don’t try to time the market. Decide based on your goals. Although it’s a seller’s market, you still can’t ask more for your property than what a buyer is willing to pay. The market will always dictate this. The best time to sell was yesterday and the next best time is today.
Life’s short, love where you live.
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Call / Text 213-608-5837 for a complimentary initial consultation, property value assessment, or questions for Selling, Buying, or Investing in real estate. Connect with me @jasonarealtor on Facebook, Instagram, and LinkedIn.
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Jason Agcaoili is a realtor with HomeSmart Realty Group, serving the Los Angeles Metropolitan area, South Bay and Long Beach. He is a member of the California Association of Realtors and the South Bay Association of Realtors. CA DRE #01947185. For more information, please visit JASONAREALTOR.com. (Advertising Supplement)