Should I Sell or Stay Put?
Should I Stay or Should I Go Now. . . . If I stay there will be trouble. . . If I go it will be double
How good of an idea is ?Let?s wait out the market?? Well, for those of us who are visually motivated the two charts below show the following scenario: If you own the average home in Reno or Sparks, your property values dramatically rose between 200 and 2005. We all know what came next ? between late 2005 and today, home prices have been rapidly adjusting. I included a base line on each graph to show what your home appreciation would have been in an average (3% annual increase based on nationwide statistics) market place.
Soooo? If the questions of the day is, ?Should we sell now or wait out the market?? As your real property portfolio manager, I am inclined to say that the answer is sticky. Here are the three different basic situations that cause people to move and the answers are different for each.
1. We would like to move it on up, to the East Side, to a deluxe home on a golf course with cherry and granite and our dream floor plan. Well, if you have been a smart real estate owner and have some equity, you are in a great position. You can actually sit down with a calculator and hammer this one out. Take your mortgage payment, subtract your monthly tax advantage, add a $200.00 pad and hit the newspaper. If homes in your area are renting for that amount or higher, KEEP IT! Why not let someone else pay for your child?s education or your five room retirement villa in Cabo. Please remember, if you keep this home as a rental, you will need to do 100% financing on your next home so be prepared for some sticker shock, but if you move up now while you can really stick it to the seller of your dream home and harness the tax advantage of two mortgages while you wait out the market for the next five years, you will hopefully be able to buy low and sell high ? every investor?s dream.
2. We are tired of maintaining this home/yard and are ready to downsize into something more manageable. Besides, last time we had our home appraised, we had enough equity to buy one of these new homes we are seeing outright. Well, the market that has driven down the prices of these new homes has driven down the final sales price of yours too. It will be important for you to gauge the value of low maintenance and lower power bills from a smaller, more efficient home. There is no doubt about it, you will get less for your home, but how much is it costing you ? emotionally too, to stay and if it is going to be a minimum of five years before you can sell and the homes that you are shopping for are increasing in value too (faster even because newer homes appreciate more quickly than older ones for the first five years) can you stick it out and run the risk that you might still be stuck mowing that lawn and dusting 2900 square feet forever? If you want something different, get out now and reap the emotional benefit of loving the house you are waiting out the market in.
3. We need to get out of Dodge, either for personal, financial, or lifestyle reasons. There will never be a good time to sell if you are planning on leaving town or drastically changing your lifestyle, don?t mess around with the market. ?Sold has been a very elusive carrot on a very long stick for overprices, unstaged, under marketed homes for 18 months. There is nothing more frustrating than wanting to be somewhere else and stuck in a home/situation that you hate. Stage it, clean it, inspect it, repair it, price it right and market the pasts off of it, yesterday. Contrary to late customs and beliefs, a ?for sale? sign isn?t just a pretty lawn ornament. Instead of asking to see the ever popular CMA (read next month?s letter about why I refuse to price a home with a CMA), ask what the market absorbtion rate for your home is. Your absorbtion rate is the rate at which homes similar to yours in size, location and condition are selling each month. If 5 homes like yours are selling every month and you would like to be in escrow within 30 days, you need to be in the top 5 for price in your area. Let?s face it Toto, we?re not in Kansas anymore and the buyers that we have been beating up for five years are ready to take a little back for themselves. If you don?t want to be in escrow in the first 30 days, don?t list yet. The longer your home is on the market the further your offers will be from your list price?guaranteed.
I know that it is tough love, but just like most tough love, someone has to love you enough to give it to you!