| What if you want to SELL..?
"OK Todd, you have ZERO issues talking about what 'Great' deals are out there, but what about us that want to sell? Are we going to take a hit?" This is a question I get asked everyday. Even buyers ask me this, since many have a home they're looking to sell, before they can buy. Pre-2002 Owners Here's the simple answer, and like anything, there are ALWAYS exceptions to the rule... If you bought your home before 2002, you're most likely OK when it comes to resale. Sure, it's not worth what it was on the market 5 years ago, but you're most likely into it LESS than what it's currently worth. Example, I fall into this category. I purchased our home in 1994 for about 100k. If I had sold it in 2005 (we almost did...!) homes exactly like ours, just feet away, were selling for 360k. Oh, and they were on the market less than a week... Today, I would expect somewhere around 190k. Shocking to think that my home has taken a 170k price hit in the last 7 years... The upside is that if I had sold, and bought something larger, that home today would be worth 50% what I paid, and I would be underwater like so many of my clients. After-2002 Owners If you purchased after 2002, and before 2010, you've taken a hit. That's it in simple terms. Is your home worth less than you paid? More times than not, yes. Say since you've owned it you've done improvements. Put in a pool, updated the kitchen, baths. Is the picture looking any better? Well, it depends. If a buyer LOVES what you've done, maybe. If it's their taste, exactly, then you're going to get some of that money back. But here's the reality, if you're home is priced too high, the typical buyer is going to buy the home down the street for 40k cheaper, and put in their own dream kitchen and bath... So, is it a good time to sell? I still say YES, and here's why. Lets say you bought your home in 2005 for 300k, and you put the standard 20% down (60k) so you now owe something like 200k to the bank (you paid down a little of the principal). Homes in your area are selling for 240k. By the time time you pay me (the Realtor) and all the fee's, you're breaking even... Yes, you've lost your down payment, but at least you don't owe anything to the bank once the home is sold (short sale). This is where the other side of the coin comes in... The home you want to buy is a Short-Sale, Bank Owned (REO), or just a standard sale(just like you). It's twice the size of your current home; needs work, but is still VERY nice inside. It's right at the limit of what you can afford, 400k. Now remember, we're talking about a home, that when you bought your old home in 2005, was somewhere North of 700k. You get the financing, and you've now moved up to a larger home, but AT THE BOTTOM of the market. I DON'T have a crystal ball, but I think EVERYONE is in agreement that home values are near the bottom. With this being said, the home you just bought could very well be worth 20% more than you paid in 5 years (a 4% a year increase - we were at over 20% during the boom). The math on that is... a 80k increase. Here's the kicker, if you had stayed in the first home, you would be simply breaking even... It's not entirely about what you SELL your home for, but rather WHAT you're buying on the other end... If you're selling to make money on the direct sale, the chances are you're not going to be happy, even if you bought before 2002. If you're reinvesting, there are opportunities. |
