Despite the unease and hardships the pandemic has brought, one positive note is that many homeowners are seeing equity in their homes.
This means they are looking to sell. If you own a home and are wondering whether to cash in on your house, and how that works, here’s a brief overview.
What’s Affecting the Market
It may seem counterintuitive that the housing market is doing so well during a historic pandemic, but a closer look sheds some light. Many people are now working from home and no longer have to worry about a commute, so they are looking for more space at home. According to Lawrence Yun, chief economist for the National Association of Realtors (NAR), the “demand is coming from the work-at-home phenomenon that has people looking for bigger homes and caring less about commuting time.” He continued on to explain that “people now see their home not only as a place to live, but as a shelter during a national health crisis. It’s also an office and, for families with children, often a part-time school.”
The age-old principle of supply and demand comes into play here: a limited supply of available housing combined with some of the lowest rates recorded has driven the demand significantly. In a September housing market report, NAR found that purchase applications have increased by 28% as compared to the same time period in 2019. It’s a great time to sell your home, but how do you know if it’s worth doing?
It All Comes Back to Home Value
Buying a house is an investment, probably the largest one most people will make in their lives. When thinking in investment terms, a house has a given value when purchased. Over time, and depending on things like supply and demand in the surrounding housing market, home improvements and upgrades, the value of a home can rise or fall. When the value of the house is greater than the mortgage balance, this is known as equity. Ultimately, homeowners want to do everything in their power to increase the value of the home, as this will create a larger return on the investment.
A Few More Details to Consider
If your home is now worth more than the original purchase price, selling it could put some cash in your pocket. You can estimate just how much by requesting a comparative market analysis to calculate the current value of your home. Subtract your mortgage payoff amount, and you’ve got the net profit. A few more factors come into play, however. If you are working with a real estate agent, they will charge a commission of 5-6%, and the buyer’s agent will also require a commission. Other fees include closing costs and property taxes. After all of these costs are taken out, you will have the true profit. Most homeowners will use this as a down payment toward a new house, but you could also opt to wire the money to your account or receive a check.
Bob Buys Houses Can Help
It’s a process to sell a house and see the rewards of a higher home equity. At Bob Buys Houses, we can shorten that process and pay you cash, no matter the condition of your Salt Lake City, Utah, home. If you’re ready to simplify selling your home and get a cash offer today, contact us or give us a call at (801) 214-0252.