The evangelist Mark, who also offers us an account of this encounter, notes here, Jesus looking at him, loved him
(Mark 10:21). Jesus is pleased to hear that the man has a heartfelt desire to live according to God's will. And yet, something is still missing. Hence the command, sell everything you have and distribute to the poor.
It is wrong to generalize this command of Jesus as if possessions in themselves were wrong. In Luke 8:3, we read about women who provided for Jesus and his disciples from their own means
(see also John 19:38–40). Jesus' purpose in this striking command is something else. This is also evident in what he adds after this, And come, follow me!
That is the core of Jesus' command for the man. Earthly matters must become secondary for him. They may no longer hinder him. Now he should follow Jesus, even if it costs him dearly. This will make him rich. By relinquishing his possessions on earth, he will receive treasure in heaven. What will he choose?
22 When Jesus heard this, he said to him, “One thing you still lack. Sell all that you have and distribute to the poor, and you will have treasure in heaven; and come, follow me.”