Dear Heather,

I am thinking of selling my house but it’s a big decision and I’m not sure that I’m ready.

Undecided

Dear Undecided,

If you have been wondering about selling here are four signs to help determine whether or not you are ready:

1. You’ve got equity on your side

For most homeowners, being financially ready to sell your house comes down to one factor: equity. Following the over-inflated market of 2007, many homeowners found themselves with negative equity, which meant they owed more on their homes than they were worth.

Clearly, selling your home when you have negative equity is not ideal. That is called a short sale. Breaking even on your home sale is better. If you’re in either situation, it is not a good idea to sell unless you have to in order to avoid foreclosure.

For the past few years, home values have been slowly on the rise, although they are far from 2007 levels. However, nearly ten years have passed and that means some homeowners are beginning to build equity. Their homes are now worth more than they owe on them, and that trend will persist as they pay down their mortgages and home values continue to hold.

How do you know how much equity you have? Mortgage balance minus home value and sales expenses equals equity. How do you know how much your home is worth?

Either have it appraised or ask your real estate agent to give you an opinion of value. Just a note here, this can use up a lot of an agent’s time and resources so it really is not fair to ask them to do this unless you are intending to list with them.

So how much equity is enough? That is a personal decision. But it is important to understand that even if you have negative equity, consider the fact that you have lived in the property for a number of years or the rent you have received on your investment. There are few things in life that you can purchase and sell later for the same or a higher price. If your home has recovered enough value to provide at least 20 per cent equity for your next purchase plus costs, [it’s worth considering], as most lending institutions require at least 20 per cent as a down payment on a new mortgage.

2. You’re out of debt with cash in the bank

If you didn’t have all your financial ducks in a row your first time around the home-buying block, you probably learnt a few things the hard way, and have some savings put aside. Start by taking a hard look at your finances. If you’ve paid off all your non-mortgage debt and have three to six months of expenses in your emergency fund, that’s a good sign you’re financially mature enough to buy a home again.

3. You can afford to buy a home that fits your lifestyle better

Another factor to consider is how well your home meets your current everyday needs. Perhaps you could use another bedroom to accommodate your growing family. Or maybe your kids have all moved out and you’re ready to downsize. Empty nesters can really benefit from selling. It’s very freeing to sell a large home, pay cash for a smaller one, and invest the rest in your retirement. I would recommend keeping your monthly payment to 50 per cent or less of your income.

4. You can cash flow the move

Don’t get so carried away by the excitement of your next home that you forget to account for the cost of leaving your current one. Hiring professional movers? Be sure to save up cash to cover the cost of packing up and hauling your stuff away.

You should also invest a little to get your current place ready for prime time. Typically, dollars are well spent in these areas:

• Paint

Paint is the number one investment when upgrading. Buyers love the look — and smell — of fresh paint.

• Curb appeal

You only get one chance to make a first impression. Plant flowers, trim shrubs, and paint the outside trim.

• Kitchen and bath

You don’t need expensive appliances or countertops, but new faucets and fixtures go a long way.

Want a bonus tip that doesn’t cost a dime? Clear out the clutter. Neat closets and tidy shelves make your home look larger.

The only remaining thing to consider is whether you are emotionally ready to sell.

If the numbers show you’re financially ready to make a move, great! But don’t forget, selling your home is an emotional issue too. Before you call your agent and she places the For Sale sign in the front yard, take a minute to answer just a few more questions:

• Are you committed to keeping it ready to show for weeks or months?

• Are you ready to hear the reasons why potential buyers believe your home is not perfect?

• Are you ready for honest — and sometimes hardball — negotiations over what buyers are willing to pay for your home?

• Are you really ready to move out and leave the place where your family has made memories?

Don’t get me wrong, I am not trying to talk you out of selling your home (these are things which a real estate agent can help you cope with), I just want you to be completely ready when you do decide to move on to the next stage of your family’s life, as these sorts of emotional issues will come up.

As you can see, the decision of when to sell your house isn’t solely based on market conditions. You have to take your personal situation into account, and that’s where expert advice comes in handy. A reliable real estate agent will give you a clear picture of what it’s like to sell your house and if now is the right time for you, both financially and emotionally.

• Heather Chilvers is among Coldwell Banker Bermuda Realty’s leading sales representatives. She has been working in real estate for 28 years. If you have a question for Heather, please contact her at hchilvers@brcl.bm or 332-1793. All questions will be treated in confidence. Read this article on Facebook: Ask Heather Real Estate