Making a Long-Term Selling Plan

In life, preparation is a great motivator and stress reducer, especially when a lot is at stake. After all, the more time you have for planning a wedding, purchasing a car, or setting up a fund for your kids’ college education, the better. This reality also applies to selling your house. While you don’t have to worry about saving like with a home purchase, there are several factors that can make a long-term approach ideal. Discover some of the upsides of this tactic and how to create an optimal game plan.

The benefits

When it comes to selling in real estate, there’s a generally agreed-upon timeline: it’s recommended that you live in your home for at least three to five years first, for both fiscal reasons and pragmatic ones. Financially, a home’s value may creep up, or appreciate, during that time span, making it more valuable, while waiting gives you the opportunity to build equity in the property. Both realities can increase your net profit upon selling, even after factoring in fees like closing costs and commissions.

Holding off can also result in a tax benefit since you can avoid paying capital gains tax on any profit you gain from the sale. The general conditions to qualify for this exemption: you must have owned and used your home for at least two of the five years prior to sale, and you can exclude no more than $250,000 in capital gains from the sale (or double that if married).

From a practical perspective, having years instead of months at your disposal gives you ample time to both get a lay of the land and prepare your place for maximum selling potential. When you aren’t rushed to get it listed, you can make decisions about which changes you want to make and which you’ll forgo. You can also stagger your repairs and updates, making it easier to get them all done and absorb the total cost.

How to plan the perfect sale

A good starting point in determining when you want to sell is to take a bird’s-eye view of the current market to get a gauge of your window of opportunity. For example, say you bought your property in 2023 for $300,000 and realtor.com says its current estimated price is $375,000, which fares favorably to similar local homes. Since you’d be at the edge of the three-to-five-year ownership mark, you could realistically consider selling within the next year rather than waiting the full five years to take advantage of your home’s present value.

In contrast, if you discover that it’s now only worth $280,000 or that a buyer’s market is emerging, it could be a sign to hold off for a few more years or longer. That will give you time to boost your home’s value through high-ROI upgrades or for the market to shift in your favor.

Making home improvements

Once you establish when you may want to go to market, you can start making a thorough checklist of what you could do to improve your home to pique interest down the road. Inside and out, look at your spaces from the critical eyes of a buyer, considering questions such as the following in both the needs and wants categories.

Needs

• Does the carpet throughout need to be cleaned, stretched, or replaced?
• Is the HVAC unit more than a decade old or the roof approaching three decades?
• Has your landscaping seen better days?

Wants

• Does the front door cry out for a sturdier, more eye-pleasing replacement?
• Is there faded paint and nail holes that make the home feel too lived in?
• Do the light fixtures give off a 1990s vibe?

Start by making minor repairs yourself, such as adding a fresh coat of paint to your living room or fixing a leaky toilet, while scheduling out the jobs best left for professionals. And remember that this is a race, not a sprint—you don’t have to get it all done at once!

To ultimately determine if the three-to-five-year math adds up for you, it’s critical that you consult with your real estate agent, especially about the current and near-future markets and the best potential return on investment. Also consider contacting your financial adviser concerning the capital gains tax. Overall, though, if you are afforded the luxury of taking a long-term approach to selling, the odds are that your stress will decrease while the benefits you receive will only compound.