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The housing market is still red-hot with homes continuing to be listed and sold at lighting speeds nationwide. Housing inventory continues to remain low, sparking bidding wars and pushing home prices higher, hitting an impressive record over the summer.
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The September national median listing price for active listings was $380,000, up 8.6% compared to last year and up 20.6% compared to 2019, according to data from Realtor.com. While sellers can get top dollar for their homes in this market, is it all worth it in the end?
There are several variables that sellers need to consider before listing their homes on the market. Selling a home comes with expenses, fees and tax issues that can eat away at profits.
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“If you purchase a home, there could be pretty substantial costs associated with that: transaction fees, taxes, closing costs, if you get a mortgage — these things all come with the cost of buying a home,” Len Kiefer, deputy chief economist at mortgage giant Freddie Mac, told The Wall Street Journal. “In general, the shorter your time in the home, the less time you have to make up for those costs.”
According to the Mortgage Bankers Association, while closings costs depend on the loan product, it typically amounts to 2% to 5% of the loan amount. On a $356,700 home, Freddie Mac estimates closing costs to amount to more than $8,600, added the WSJ. While you can sell your home whenever you wish, you also risk losing money if you decide to sell within a few years of purchasing. According to Zillow, selling your home in less than a year removes any financial benefit of homeownership.
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Another thing to consider is that while you may have raised the price of your current home, so have other sellers. When you sell your home in search of a new one, you can expect to pay a premium.
Last updated: October 11, 2021