Have you been on the fence about selling your home? Well, this summer may be the right time to do it. Chicago is seeing a low supply and a high demand for quality homes. The low inventory is increasing price growth at a quicker rate than anticipated.
Homes on the market are being swooped up in places with low inventory sometimes in a matter of one or two weeks. This is true especially for condos, two- and three-flats (though the high-end market is more sluggish). Any upgrades and updates you put into your home over the past 5 years could really pay off now.
But first, you need to clear a few hurdles before thinking about putting your house on the market.
Your Needs Have Changed
“A lot of sellers are first-time sellers. The first apartment is the starter home,” Sam Ciochon, an agent with Coldwell Banker, said. “They plan to live there for a couple of years and then maybe move to a different city, or decide to start a family.”
We often think of buying a new home in the realm of a family growing by adding a new member to it. This is the perfect reason because you may need more bedrooms, more office space or a bigger backyard. You may need things like a bigger dining room table for family holidays or get-togethers. Buying a home based on an expanding family makes sense but so does a family getting smaller or needs changing.
If the kids go to college and are away from home now, it may make sense to not have three extra bedrooms. You could not need a bigger backyard or as much office space.
The thing to think about is that you may be looking for a change, and so is someone else.
Ciochon said that planning for this when buying your first home is smart, too. “This is exactly why I tell people not to discount 1-bedrooms for their first buy. A lot of people hold out for 2-bedrooms, but end up selling to buy something bigger in a couple of years anyway.”
It’s Ready to Sell
Selling isn’t something that just happens magically. Even selling in a good market, a lot of work is involved to get the right price for it. This can mean minor changes such as painting, landscaping, updated tiling or flooring can help you sell the home faster and at a higher price.
Michael Gerhardt, an agent with RE/MAX, told us, “A rehabbed place is usually preferable. If I have to pay $10,000 more to buy a finished house, it’s well worth it.” On the other hand, he said, “If it needs rehabbing, you might wait for the right investor and it may take longer to sell. Especially if it’s priced too high.”
Remodeling Won’t Solve the Problem Or Isn’t Prudent
This is a common crossroads for a home-owner. You may think adding a new room or tearing down an old wall may make all the difference, but you should consider this heavily. You aren’t simply looking to add something new but you are looking to increase your return on investment.
“Rehabbing is great, but people also make the mistake of putting 40 grand into it, and then the market won’t bear the price they want,” Gerhardt said. Remember that old saying about not wanting to have the nicest house on a bad block? This is why.
If you think you might price yourself out of your own neighborhood with updates, it might be time to sell.
It Makes Financial Sense
Agents understand that the value of location is like cold hard cash. But the best agents look not just at the recent activity in a neighborhood. They keep a watch on the broader market trends as well. Wicker Park has gotten so tony, and some think it’s peaked and time to cash out. [Image: comic illustration of a guy with dollar signs in eyes]
For others, the tax burden is too great, and so selling and moving somewhere less hot would be a good financial decision.
“Markets go up in down. Some get hot, like Ukrainian Village, but it’s new and who knows if it’ll really stay up where it is. Others are still undervalued. The neighborhoods that tend to be the most consistent are those near the lake, like Lincoln Park, Old Town, and Lakeview, where space is tight and there’s less inventory,” Ciochon said.
Gerhardt said he’s seen really quick turnover in two- and three-flats in Chicago, especially in these low-inventory areas like the Old Town neighborhood, suggesting that investors are eyeing the neighborhood for rents and prices will rise along with them (and taxes, of course).
Remember, if you are going to be purchasing in the same market in which you are selling your home, the benefits of selling in a hot market will even out on the buying side.
It Feels Right
No matter what market there is or what investment you have put into your home, you can’t fight when it feels right. This is, of course, only something you can tell. The only other thing that can help you during this whole thing is working with a professional.
“Sometimes it seems like all agents do is open doors, especially these days, and especially listing agents,” said Gerhardt. “As a buyer’s agent, I see people come in armed with research, with properties on their list! It’s great, but I still will look around, pick out a property, and that’ll be the one the client ends up buying.
“Expert agents have developed a short-hand, we get an immediate sense of the value, find the right sales price, understand the process, iron out issues with contracts. You don’t know how often there are problems with contracts,” he said.
Take your time and find a listing agent that you can trust to really know your neighborhood and will honestly assess your home to its market value. Even in this market, something that may seem like a surefire bet to you may need a little help to quickly sell.