There are many reasons to sell a property. Some want to turn their assets into cash, others may have inherited, while still others see favorable market conditions. But when exactly is the right time to sell an apartment or house? Which conditions can influence this “perfect moment”? Does this affect the achievable price? In this guide, you will learn when you should sell your property – and when it might be better not to.
Allow time
A frequently neglected point when choosing the right time is the duration of the sale. Experience shows that, on average, around three months pass from the start of marketing to the handover of the property. Depending on the location and property, this period may be shorter or longer.
Allow for this time in order to achieve an optimal sale price. Shorter marketing periods or hasty decisions can lead to financial losses. If you want to have sold by “point X,” you should therefore start the sales process early enough.
Monitor interest-rate trends
A very significant cost factor is the mortgage interest rate. Anyone wishing to purchase a property generally has to take out a loan for a large sum. The higher the interest rates, the greater the impact of the borrowing costs. Demand for purchases is therefore noticeably higher during periods of low interest rates.
From this perspective, periods with extremely low interest rates are a very good time to sell a house or apartment. As interest rates rise, however, willingness to purchase property declines.
There may also be another effect: When interest rates rise, refinancing becomes expensive. This can put some property owners in difficulty. For them, selling can be a way out of the debt spiral. The result: more properties on the market and therefore potentially falling prices.
The current interest rate has a decisive influence on the perfect time. The more strongly interest rates rise, the more difficult it becomes to sell properties. Falling interest rates gradually increase demand for purchases. The best time to sell a house is during a period of low interest rates.
Monitor the market environment
In addition to the interest rate, the current market environment is an important factor in achieving a good price. Both influence each other even mutually. Nevertheless, there are factors that are independent of interest rates.
The better the market environment, the easier it is to sell real estate. The timing is then favorable. In a weak market environment, you should wait until the conditions improve. In addition to the interest rate, the following aspects are relevant when assessing the market environment:
- Price level: The general real estate market and the current price level are not solely dependent on the construction interest rate. If demand is high and supply is low, prices tend to rise. If you want to find a good time to sell your house or apartment, you should compare prices for similar properties on portals or in advertisements. If these are rising, it may be worth waiting. If they stagnate over a longer period or a decline can be observed, you should sell soon.
- Economic situation: The general economic situation also influences the real estate market. If crises are emerging or unemployment is rising, many potential buyers lack security. This is because the secure and steady income required in most cases for the purchase is at risk. During boom periods, on the other hand, prices are more likely to rise. It is then advisable to wait to sell in order to achieve a better price.
- Local influences: Regional or local events can also influence the timing of a sale. If a major employer in the region becomes insolvent or lays off part of its workforce, the conditions are less favorable. If a large company settles in the area, demand generally grows and the price level rises.
- Population growth: Boom regions attract people. Strong population influx, a large number of refugees or rising birth rates can influence the market. Demand and prices rise. The ideal time to sell lies in the future. When population numbers decline, prices generally also fall in the medium term. A short-term sale is worthwhile.
- Funding opportunities: From time to time, funding opportunities become available. The federal or respective state government launches programs through the Kreditanstalt für Wiederaufbau (KfW), providing real estate buyers with financial support for modernization. Such periods can increase demand and may be a good time to sell.
Individual factors
The market environment is not always the decisive factor. There are individual factors that affect a good time to sell your apartment or house. Therefore, you should always check whether a sale is immediately necessary or can wait. Various key figures play a role here. These include how long you have already owned the property, whether the mortgage has already been paid off, or whether you have a use for the apartment or house.
Even if the financial need may be great, you may benefit from waiting for a better time. However, whether this is feasible or sensible always depends on your personal situation.
Holding period: Only sell after ten years
The so-called holding period can be crucial for determining the optimal time to sell. Private sales of real estate are tax-free. However, under Section 23 of the Income Tax Act, this only applies once one of the following conditions has been met:
- You have owned the property for at least ten years (in the case of inheritances, the testator’s ownership period is included).
- You lived in the property for at least three years immediately before the sale.
If this speculation period has not yet expired, you must tax the income in full. For real estate, income tax can quickly rise to a six-figure sum. Therefore, in such cases it makes sense to wait before selling.
Early repayment penalty: Pay off the loan first
If you are still paying off a loan registered against the property, this is also relevant to the timing. If you sell the property, you must also repay the loan. Banks charge an early repayment penalty for lost interest payments. This depends on the loan agreement and the remaining term of the loan. It is usually lower than the interest payments still due, but it can still amount to a significant sum. The perfect time to sell is therefore after paying off the mortgage.
Time pressure: Inheritance, divorce and lack of personal use as reasons for selling
There are many reasons to sell a property. Frequently, there is no intended use or a change in family circumstances. Typical examples include inheritances, but also divorces or a move. In some cases, renting out the property may make sense. But sometimes a sale makes sense. In some cases, a very quick sale is also desired.
A certain pressure to sell tends to lead to a lower price. Therefore, you should try to find a buyer calmly and without haste. The more prospective buyers sense a certain urgency to sell, the more likely they are to try to push down the price.
Seasonal Timing When Selling a House
The season also influences the ideal time to sell your property. Photos of the house or apartment taken in spring and summer appear more appealing. During viewings, later evening appointments with sufficient sunlight are possible. This has a positive effect on prospective buyers.
There is another reason why selling during the summer months may attract somewhat more interest and thus enable a better price. The summer holidays are an ideal time to move to another city with children. Whether for personal or professional reasons, the change of school year makes it easier for people with children to relocate.
Nevertheless, you should bear in mind that the sales process can drag on for several months. The possibly slightly increasing interest in spring is put into perspective by this as well as by the holiday season. An offer in spring can nevertheless help you reach more prospective buyers and achieve a better price. However, there is no guarantee.
Christmas is a different matter. The so-called quiet season around the turn of the year is not a good time to sell a house. Some potential buyers may not even notice the offer.
Staging: Sprucing Up the House
If you have some time and capital, you should consider staging. This refers to measures that spruce up your house and garden. Paint, modernize, make improvements – all of this has a positive effect on the number of prospective buyers and thus on the price.
The task is to achieve the best possible visual effect with minimal investment. This turns a standard house into an eye-catcher. With good planning, the costs are lower than the resulting increase in value. The sales process is extended by the duration of the implementation. Accordingly, the best time is after staging.
You Determine the Best Time!
To determine the best time to sell your property, you can go through a number of points. A good economic conditions, low interest rates, strong demand and the absence of pressure to sell can be positive factors. If possible, you should wait until the key parameters allow the best possible price and start marketing in spring.
On the other hand, in many cases the desire to sell is linked to a certain necessity to sell. Many factors affect demand and price. You cannot influence most of them, and they change only slowly. It is therefore important to act skillfully in your individual situation, advertise the property effectively and negotiate assertively. Because the best time to sell a house is when you achieve the best price and the most money flows into your pocket net.