7 Signs You Should Hold on to Your Property

Key takeaways

• Just because many people are selling their homes in the current market doesn’t mean you should as well.

• Consider holding off the sale if you haven’t built significant equity in your home, owe more on the property than it is worth, or have recently refinanced your mortgage.

• Other more positive reasons to hold on to your home include having a low interest rate or being happy with your current property. 

• Always speak with a real estate professional, a tax adviser or a financial adviser before putting your home on the market. 

We had been in a seller’s real estate market since mid-2020. This means more people were looking to buy than sell homes, and prices skyrocketed. Right now the market has cooled considerably, due to interest rake hikes.

Economists now expect this slowdown to result in lower prices in nearly half of markets across the country next year. Goldman Sachs believes national home prices will likely avoid a correction in 2023, and we can expect 39% of metropolitan areas to experience price declines!

Do your research carefully, examine your financial situation, and wait until you are in a better position to put your property on the market. This will maximize your chances of getting an optimal selling price for your home.

7 telltale signs you shouldn’t sell

Here are seven important considerations to keep in mind before putting your home on the market: 

1. You are not sure you can afford current home prices

The spike in home prices may be great news when you’re the seller, but not so much if you’re on the buying side. An exorbitant price on a new house you buy could eat up your profit and potentially a good chunk of your savings as well.

To ensure that your budget can take the hit, check that you have enough cash to sell your current home, make a 20% down payment, and get financing for the property you’re looking to buy.

2. You don’t have enough equity in your home

If you haven’t built much equity in your home, or owe more than the property is worth, now is not a good time to sell. Consider putting off the sale or renting it out until you’ve generated more equity. You also want to make sure the profits from the sale will cover the selling fees, the closing costs for your new home and any related expenses. 

3. You have just refinanced your mortgage

Interest rates dropped to historic lows in 2020 and 2021, causing many homeowners to refinance and swap their existing home loans for ones with better terms.

If you’ve refinanced your property in the past couple of years, you may want to hold off on selling. Your new mortgage has likely improved your financial situation by lowering your monthly payments. And if you were lucky enough to lock your rates under 3%, you’re unlikely to get a better deal if you buy a new property now. 

4. You are looking at high capital gains taxes

Profits from real estate sales are subject to capital gains tax. The exact rate depends on how long you held the property before selling. If you held the asset for up to a year, it would be subject to ordinary income tax brackets ranging from 10% to 37%. If you held the asset for longer than a year, you’re looking at rates of up to 20%.

You may avoid capital gains taxes if you’ve held and lived in the property for a minimum of two of the five years before the sale. In that case, you can deduct up to $250,000 (or $500,000 for married couples) of capital gains.

If you’ve just bought your home, you may want to wait at least a couple of years before selling it. Speak with a professional tax advisor to determine your particular situation.

5. You are happy as you are

A seller’s market makes it easy to think there will never be a better time to sell. However, there’s no reason to rush into selling if you’re perfectly content living in your current place and have a low interest rate.

The average 30-year fixed mortgage rate has now surpassed 6%. The odds of selling at a high price and securing the same or a better rate on your next home are pretty low. We’re also seeing a 20% increase in rents nationwide, so renting may not be the answer, either.

6. You aren’t emotionally ready to sell 

Selling your home can be an exciting opportunity to start fresh somewhere else. However, the process can also be stressful and emotionally taxing, so it’s important to prepare yourself mentally for what lies ahead.

Set aside some time to think about why you want to move and define your goals for the future. You should also consider talking with a tax advisor and a real estate agent to help you weigh the pros and cons of selling right now. In any case, if you don’t feel comfortable moving, hold off. 

7. You worry about the future

There are always risks when buying or selling real estate. If you worry about finding a potential buyer or a new home, there’s no need to give in to the sense of urgency of the current market.

Take your time, do your due diligence, speak with real estate professionals, and do what feels right for you and your financial situation. It may also be worth your while waiting for a more balanced market, making it easier for you to find a new home at a reasonable price.

Don’t sell your home: Explore equity-based alternatives instead

If you’re in a bind for cash but don’t feel ready to sell your home or take on more debt, consider Unlock’s home equity agreement (HEA). 

HEAs aren’t loans, so there are no monthly payments or interest. You can get up to $500,000 upfront, depending on the value of the property and how much you owe on your mortgage, and still live in your home as normal.

In exchange, you agree to sell your home at the end of the 10-year term; Unlock receives a percentage of the proceeds at that time. You can always buy out the agreement anytime during the agreements if you don’t want to sell.