Is it a good time to sell your home? Key factors to consider

If you’re asking yourself, “Should I sell my house now?” or just considering your options, there’s not a single correct answer. Market conditions will affect the sale of your home, but it’s also important to evaluate your personal circumstances and reasons for selling.

Is now the time to sell a house?

A competitive market that has favored sellers for years has been showing signs of a slowdown, with sales slowing in April and inventory levels increasing.

Interest rates have been holding steady between 6% and 7%, higher than the record lows of 2021 but historically unremarkable.

According to Fannie Mae’s January 2025 Home Purchase Sentiment Index, roughly 63% of survey respondents said they think now is a good time to sell.

The decision on whether it’s right to sell your home depends on your situation. If you need to relocate quickly for work, family, or other reasons, you may make a different decision than if you’d prefer to downsize to a smaller home. You’ll need to research your local market to help you decide whether it’s a good idea to sell or wait.

If you’re downsizing, consider these options. You could sell your current home and then buy your new home. The advantage of this option is that you'll know exactly how much money you have available; however, the downside is that you may have less time or flexibility when making a purchase. If you have substantial financial reserves or can afford two mortgage payments temporarily, you can also consider buying your new home first before you sell. This lets you take your time when buying and avoid having to deal with a bridge loan or temporary housing.

When to sell your home

Here are a few key factors to consider when deciding whether it’s the right time to sell.

Financial factors to consider

One of the first things to think about is your financial situation. Start by evaluating your current finances to see how selling your home might affect them. Remember that there are costs to selling, including closing costs and real estate agent commissions. You'll also want to make sure that you have a plan for where you're going to live after you sell, which also will cost money.

Personal factors to consider

Getting married, divorced, or having children are common reasons people consider selling their home. Another reason people sell is they need to move for a new job. You also may want to move for health or lifestyle reasons or to be closer to family and friends.

Evaluating your home’s value

A good first step to selling your home is to estimate its market value. Depending on how much your house has increased in value and how much home equity you’ve built, you may make a substantial profit selling now.

You can order a professional appraisal or take a less formal approach by examining comparable home sales or consulting with a real estate agent.

When to wait to sell your home

While there are good reasons to sell your house, there are also good reasons to wait.

You don’t have enough home equity

As you pay off the principal balance of your mortgage, you build equity in your home. If you have a lot of equity, you’ll profit more from the sale of your house. When you sell a home, you should hopefully make enough to pay off your remaining mortgage balance and closing costs. After all expenses are covered, any remaining amount is considered profit. Generally, you’ll want to have around 10% home equity if you’re selling to relocate and at least 15% if you plan to upgrade to a larger house.

If you don’t have much equity in your home, you risk breaking even or losing money on the sale. This scenario can occur when the combined total of your outstanding mortgage balance(s) and closing costs exceeds what you earned from the sale. When you have little to no equity in a home, your mortgage may be underwater, and you may take a financial loss when you sell your home.

If interest rates are rising

Rising mortgage interest rates typically reduce the number of buyers, making it more challenging and less profitable to sell your property. If you sell your home and buy a new one with a higher interest rate, you’ll pay more interest, and your mortgage will be more expensive. This is known as the mortgage lock-in effect, which occurs when homeowners feel stuck in their homes because their current mortgage rate is much lower than current rates.

If you can’t afford the next purchase

If you can afford to sell your house but can’t afford the down payment and closing costs on a new one, you should wait. Closing costs typically range from 3% to 6% of the purchase price and are paid in addition to the down payment. Breaking even on a sale may not generate enough profit to cover closing costs and the down payment.

If you have incomplete home renovations

Incomplete home improvements can be a significant turnoff to potential buyers and deter them from making an offer. Finish any remodeling projects in progress before listing your house for sale. If you need to move urgently and your renovations are in progress, talk to a real estate agent about your options. Depending on the state of the remodel, you may need to sell your home as is.

When to wait to sell your house

While there are good reasons to sell your house, there are also good reasons to consider waiting. Let’s go over a few scenarios when selling your home right away may not be the best choice.

If you don’t have enough home equity

As you pay off the principal balance of your mortgage, you build equity in your home. If you have a lot of equity, you’ll profit more from the sale of your house. When you sell a home, you should make enough to pay off your remaining mortgage balance and closing costs. After all expenses are covered, the amount left over is your profit.

If you don’t have much equity in your home, you risk breaking even or losing money on the sale. This scenario can happen when the combined total of your outstanding mortgage balance(s) and closing costs exceed what you earned in the sale. When you have little to no equity in a home, your mortgage may be underwater, and you may take a financial loss when you sell your home.

What Is An Underwater Mortgage?

An underwater mortgage happens when the principal balance of a mortgage is higher than the home’s market value. An underwater mortgage can occur when a property’s value drops or a homeowner misses mortgage payments. A homeowner selling a house with an underwater mortgage may need to pay a significant amount out of pocket to complete the sale. This scenario may not be as common right now due to the high demand for homes.

If you haven’t built much equity in your home, consider waiting to sell until you can make a profit. Most experts recommend living in a home for about 5 years before selling to at least break even on the sale.

If the housing market supply is high

If the housing market is flooded with more homes than buyers – it’s a buyer’s market, and you should consider waiting to sell. Home sellers are at a distinct disadvantage in a buyer’s market. As the seller in this situation, you’ll be competing for the attention of buyers. You may have to sell your home for less or entertain buyer concessions and requests, such as handling repairs before the sale.

Even if the national housing market shifts to a buyer’s market, you can still sell your home in a buyer’s market. It’s just that it isn’t an advantageous market for sellers.

If you can’t afford the next purchase

If you can afford to sell your house but can’t cover the down payment on a new one, you should also wait to sell the home. Just because you can make enough to cover your existing mortgage and closing costs doesn’t mean you should sell. You’ll likely need a significant amount of capital to close on a new house, and for many home sellers, that capital often comes from the sale of their current home. Breaking even on a sale may not provide enough to cover closing costs, lender origination fees and the down payment.

If you don’t have enough savings to afford your next purchase, you may want to wait to sell your home.

If you have incomplete home renovations

If you’re in the middle of remodeling your kitchen, you might want to pump the brakes on listing your house. Incomplete home improvements can be a huge turnoff to potential buyers and drive them away. Finish any remodeling projects in progress before listing your house for sale.

If you need to move urgently and your renovations are in progress, talk to a real estate agent or REALTOR^® about your options. Depending on the state of the remodel, you may need to sell your home as is.

FAQ

Here are answers to common questions about whether the right time to sell your home is now.

What is the best month to sell your house?

June and early summer months tend to be the best time to sell a house. Prospective home buyers with children typically want to move into a new home before they start school. Many buyers are also not thrilled about attending open houses or moving during the cold winter months.

What is not worth fixing when selling a house?

When selling your home, there are situations where not making repairs could be more beneficial to you than fixing them. For example, some sellers may decide it’s not worth repairing:

• Cosmetic wear and tear
• Small cracks in the driveway or walkway
• Minor, nonhazardous home system problems
• Older appliances that still function safely

How much equity should I have in my home before selling?

The recommended amount of home equity before selling depends on why you want to sell your home. The general rule is about 10% equity if you’re selling to relocate and at least 15% if you want to upgrade to a bigger house.

What about real estate agent commissions?

Traditionally, home sellers paid a commission (often around 6% of the sale price) to their listing agent, who split the commission with the buyer's agent. However, in late 2024, a federal lawsuit settlement involving the National Association of REALTORS^® and several real estate brokerages changed the rules. Now, who pays which commission is up for negotiation, which could save you money as you sell your home. Make sure that you communicate with your agent and are aware of who will be responsible for agent commissions as part of your home sale.

Do I pay taxes when I sell my house?

You may be subject to capital gains taxes when you sell your home. However, the IRS has provided guidance that if you have a capital gain from the sale of your primary residence, you may exclude up to $250,000 of that gain from your income or up to $500,000 of that gain if you file a joint return with your spouse. Generally, you qualify for this exclusion if you have lived in your home at least 2 out of the 5 years prior to its date of sale. Consult with a tax professional if you are not sure about the tax implications of selling your home.

The bottom line: Before listing your home

Selling a house is a big decision that requires serious consideration of multiple factors. If you’re not confident you’re ready to sell, holding off is always an option.

Be sure to research your options before deciding to buy or sell to make sure you’re making the most financially informed decision. This might include consulting with real estate professionals or preparing your home for a sale.

If you’re ready to sell your house and purchase a new home, start the mortgage approval process online today.