Is Now a Good Time to Sell Your Home?

By Joel Walsh

If you own a home in a real estate boom market you are probably richer now than you ever thought you could be on-paper. Even if your house is in a real estate market that's rising more modestly you may still be feeling pretty flush, but is it possible to "cash out" your paper wealth?

Assuming you're living in the home you own (if you own investment properties, stop reading this article now and just go talk with a real estate broker or investment advisor), you'll have to find new housing if you sell. That's the point where most people stop thinking about "cashing out" their home's equity. After all, if you'll just end up spending all that money on another house, why bother?

The reality is that most homeowners can, in fact, "cash out." For many homeowners selling property really will be quite a windfall. Not selling now might be the biggest financial mistake of their lives. And still for some, selling would be an equally bad idea. How do you know which category you fall into?

Selling Your Home:  Three Options

If you sell your home, then buy a comparable home in the same market, you'll simply be losing money on the costs involved in real estate transactions. There are, logically, only three scenarios in which it would be possible to actually sell your home and not lose big money on buying another home-and all of them are better ideas than you might assume:

1. selling then renting new housing

2. selling then buying more modestly priced housing

3. selling then moving to a less expensive market

1. Selling then Renting New Housing

Have you checked what rents are like in your community? According to a recent New York Times article, in the most price-inflated housing markeets, such as the Bay Area of California, Boston, New York City, and Miami, renting is now an indisputably better deal, at least in the immediate future. When you add to the cost of buying a house such "hidden" costs as property taxes, interest on a mortgage, real estate transaction costs, and maintenance, owning can easily cost twice as much as renting.

In terms of investment value, housing prices would have to rise far faster than they are rising now for buying a home in an overheated market to be anything but a money-loser for about the
next ten years, and possibly far longer. Given that buyers are now stretching themselves thin to buy homes in the current market, you have to ask: who will be left to buy homes if prices actually do double? In the long term, San Francisco, Boston, and Manhattan may compete directly with Hong Kong, London, and other highly desirable cities in a virtually limitless price war. For now, there aren't enough multi-millionaires in any of these cities to keep prices going skyward forever.

Of course, some markets are still good for buying your own home. According to the New York Times, the cutoff point when buying is more expensive than renting is roughly when it would take more than twenty years' worth of rent to equal the sales price. Chicago is the biggest market in which the Times says it still makes sense to own rather than rent, at least if you're staying longer than a few years. Meanwhile, if you're buying the property as a long-term investment and will be renting it out, the rent may very well be enough to make up for the costs of owning.

2. Selling then Buying More Moderately-priced Housing

In the stock markets, you can manage your risk by selling some of a high-performing stock in case it drops and keeping some of it in case it goes higher. With housing, the closest thing to hedging your bets is to trade down for a less expensive property. Housing prices don't always follow people's tastes exactly, so a less expensive house might actually be more to your liking than your current home. A "less convenient" street may also be less busy and therefore more quiet. Or, your home might owe part of its market value to its proximity to public transportation that you don't use anyway.

3. Selling then Moving to a Less Expensive Market

Moving to a less expensive market might seem like the least practical way to cash out your home's equity. But don't rule it out completely: you don't have to move to Nebraska, just to a nearby market. Particularly if your job isn't close to home now anyway, it might be easy to move from San Francisco to Sacramento or from Boston to Providence.

Depending on your lifestyle, you could even combine some of the options above. For instance, if you're retiring, you might sell your home, spend extended stays in faraway cities you always wanted to visit, and then return to rent or buy a smaller "empty nest" apartment.

Of course, there are intrinsic benefits to home ownership, such as the freedom to change the paint or have guests over whenever you wish without checking your lease. Just don't confuse those
intangible benefits with economic ones. After all, you can't pay the mortgage with intangibles.

About the Author:
Joel Walsh writes for http://www.bayarearealestateadvisor.com about Bay Area real estate.

 

    

The Benefits of A Real Estate Agent 101

By Lori Osenbaugh

Buying and selling property is not as easy as you may think. There are many things that you have to consider when purchasing a home, or when putting a home up for sale. That is why there are real estate professionals out there armed with the skills and knowledge needed to make this process easier. Read below to see how a real estate agent can help you in your real estate transaction.

The Benefits of a Sellers Agent

When you list your property through a real estate company, the individual with whom you list is known as the sellers agent, or listing agent. The very first thing that a listing agent has to
offer a seller is a comparative market analysis, or, a CMA. A CMA compares your property to other real estate property listings, preferably ones that have sold. The goal of the agent is to compare apples to apples. In other words, they compare MLS listings (a.k.a the multiple listing service) with similar square footage, whether or not the property has a garage, the types of flooring the home has etc. In the end of this analysis, the agent provides you with a figure for which he or she feels that your property will sell.

Once you have chosen a sellers agent, you enter an agreement with them, often called an exclusive right to list agreement. This simply creates a legal relationship between your agent and yourself. Once your house is listed in the MLS listings, there is still much more your real estate professional can do for you. Real estate agents advertise property within their office and on their own personal websites. They often send out news letters, flyers, post cards and offer MLS bulletins for other realtors to see so that your property gains maximum exposure. In addition to advertisements, real estate agents also perform open houses on your property, during which potential buyers can see all that is good about your home.

The Benefits of a Buyers Agent

Many people feel that real estate agents are for sellers and sellers alone. But this is most definitely not the case. The first arena in which a buyers agent is helpful is finding the perfect home. Real estate agents have access to the MLS on a level that buyers do not. They can search specific criteria and find the perfect three- bedroom, two-bath home with a fenced in back yard and a rocking chair front porch. In addition, they can narrow real estate property listing searches by capping the minimum and maximum prices that the buyer wishes to spend. Once homes are selected for viewing, the agent then ensures that appointments are set up with the sellers of the homes to view the property.

Next there is the negotiation stage where a buyers agent comes in handy. The first part of this legal area is the writing of a contract. Real estate agents can help a buyer fully understand the ins and outs of an offer to purchase and give them a sense of exactly what they are getting into. Once a contract is created, presented, and accepted, the agent then sets up appointments on behalf of the buyer for things like the home inspection, pest inspection and appraisals. Your agent can advise you as to which investigations and inspections are recommended or required.Buyers agents also have a sense of who is good at these things and who is not, making these decisions easier on the buyer. Then, when closing time comes, the agent is there to help the buyer warm up their signing fingers before signing all of the papers making their home ownership a reality.

About the Author:
Lori Osenbaugh is a licensed Realtor® and e-Agent associated with Keller Williams - Cherry Creek, Colorado. Visit Lori's web site to Search homes in the greater Denver area http://www.listwithcookie.myhomecards.com, which includes customizeable searches,e-mail alerts of new properties, complete MLS listings, local area statistics, news, tips and much more!