Say your current mortgage is no longer feasible. Maybe your job situation changed, maybe you’ve had some health problems and the medical bills are oppressive, or maybe you’re just a homeowner looking to release equity you’ve built up in your home. Whatever your reasoning for thinking about selling your home, there is more than one way to go about it. Here are three options that you might want to consider before making any decisions when it comes to selling to extract home equity.
Old School Method
This is just about the only way that past generations of homeowners could release equity. They hired a real estate broker, or maybe a real estate agent who works under a broker, to go through the process of listing and selling their house. This broker or agent may help with a variety of tasks including making recommendations for repairs that should be made, staging the home, capturing listing photos, adding the listing to MLS and other online listing services, advertising and open houses, fielding offers, and helping you negotiate with buyers. When all is said and done, the average real estate brokerage transaction will cost the seller about 6% of the home’s sale price.
Once the home was sold, the previous homeowner would find new accommodations. This means you’d need to factor in moving expenses when calculating the overall cost of selling a home.
Instant Offer Platforms
Real estate platforms like Zillow and Opendoor let homeowners release equity by selling their homes to investors without going through the listing process. You give them some info about your home and send along some pictures and get quick offers. These selling platforms are relatively new. While this does take a lot of the hassle, waiting, and uncertainty out of selling your home in a more ‘traditional’ way, it definitely comes with a cost. You may need to hire a realtor on top of paying platform fees, with these options costing you 10% or more. Once again, those pesky moving costs would have to be taken into consideration, as well.
With a sale-leaseback, homeowners can sell their home and convert the equity they have in it, without having to move. Instead, they lease back their home and avoid the hassle and emotional upheaval that comes along with moving. Kids can stay in the same schools, families don’t need to leave the neighborhoods they’ve built their lives in and grown to love, and nobody needs to try to juggle selling a home and shopping for a new place to live at the same time. It can mean the end to nagging money issues without leaving the home where you’ve made memories, and it can also relieve the burden of taxes and repair costs.
How Should You Sell Your Home?
The answer to this question will vary by situation, but the most important thing to keep in mind is that there isn’t just one way to sell your home and release equity these days. Depending on what you really need out of the transaction, any one of these options may be ideal for you.
Get the money you need now by using equity to buy a second home to put a down payment on your dream home.
If you’re in need of cash and are hoping to turn to your home equity, there are several options available to you. Consult with your financial advisor to decide what solution is best for you.