Real Estate Matters: If you want to sell your home, don’t wait
By Ilyce R. Glink and Samuel J. Tamkin,
I live in Atlanta and love listening to you on the radio. Do you think it is better to put a house on the market now or wait until spring? It is my mom’s house that I’m thinking about, and she recently moved into an assisted living facility.
She doesn’t need the proceeds from the sale immediately to fund her living expenses, and I could wait a couple months to sell, if you thought that could mean several thousand more dollars — in a hopefully stronger market or better time of year for home sales like spring or summer.
Then again, every month that goes by there are costs associated with owning her home, such as utilities and taxes. My mother paid cash for it and doesn’t have a mortgage. I’ve read various opinions online and would value yours.
Here’s the bad news: There’s probably no way you will recoup the expenses you will incur over the next few months if you wait to sell your mom’s home. In most real estate markets, if home prices are rising (not a sure thing) they certainly aren’t appreciating at a rate high enough to cover the cost of utilities, taxes, insurance and upkeep on a home.
In addition, it’s tough to keep a vacant house from sprouting problems, which could in turn require expensive fixes if someone isn’t there to keep an eye on them.
Home prices in some areas depreciated so quickly and so dramatically that investors have come in and bought up huge numbers of properties, which has now brought back life to those real estate markets.
If prices have dropped by, say, 70 percent in your area and there are now bidding wars for homes coming onto the market, you could either sell now or wait a few months in the hope that the market continues to rise. In general, however, we think it’s gambling to try to time the market. If it works, you’re lucky; most people miss the top or the bottom.
Consider these possible consequences of waiting: If economic circumstances change for the worse in the future, and you could have sold now, you will regret not having done so. On the other hand, if the housing market has leveled off and things don’t change much for the next year or more, you will have incurred expenses by holding the home, which will reduce the amount of money you get out of the home.
Let’s say it costs you $500 per month to cover your mom’s expenses — a number that is low, but that makes the math easy. That’s $6,000 per year. If the house is currently worth $100,000, you would need about an 8 percent appreciation or about an $8,000 increase in the price of the home a year from now in order to break even on the expenses. That’s because when you sell your home at a higher price, you’ll probably pay a higher commission on the sale of home and may have other expenses on the sale that are tied to a higher purchase price.
We’d guess that most homes in the Atlanta metro area won’t appreciate that much this year or even next year. If there are many foreclosures or underwater mortgages in your mom’s area, it could be quite some time before her home appreciates to a level that would justify the additional expenses.
Our general advice, and it applies in your situation, is that you should fix up the property and get it ready for sale, then list it so that you can take advantage of all the serious homebuyers shopping during the holiday season. If it doesn’t sell, you should make sure you’ve got the home priced right, and that the broker is onboard with an aggressive marketing plan, then try to make the most of the stronger spring selling season.
Ilyce R. Glink’s latest book is “Buy, Close, Move In!” Samuel J. Tamkin is a Chicago-based real estate attorney. If you have questions, you can call Ilyce’s radio show toll-free (800-972-8255) any Sunday from 11 a.m. to 1 p.m. Contact Ilyce and Sam through her Web site, www.thinkglink.com.