Home sellers are facing tough choices today, as the majority of homes listed for sale over the past year have failed to sell. The decision that they must make is no different today than it was during the boom market, it’s just not nearly so easy.
Four Choices For Home Sellers
- Stay In The Home
- Sell The Home
- Lease The Home To Tenants
- Abandon The Home
You might be facing this decision now (or soon) due to a change in jobs, a change in your family, or perhaps a different life-altering event, and you should know that you have options. It’s not so simple today to just put your home on the market and sell it, as more and more homeowners find themselves “upside down” in a home that has fallen in value by 30% of more since 2006.
Stay In The Home
Many homeowners have chosen to stay in their homes, as their motivation for moving is not nearly as great as the financial repercussions of selling their home right now. This most likely is a good decision, so long as a move will not be necessary in the next five years. Values will be dropping for the next several years, and choosing to wait for a year or two will result in a lower sales price.
Sell The Home
If you know you must sell your home within the next few years, it is imperative that you speak with a professional immediately. Your value is dropping and the highest price a home seller will get is going to be found today. I strongly recommend you feel a sense of urgency, but also take the time to do your due-diligence. Hire the company with the best real estate internet marketing plan and you will be able to get the top dollar that today’s beleaguered real estate market has to offer.
If you are upside down in your home, you should speak with a REALTOR® Short Sale Specialist. Beware of the many scams running in the short sale market, as many people will tell you that they can buy your home right away and negotiate on your behalf with your lender(s). Work with a REALTOR®, as their code of ethics require to treat your fairly, and ensure that the REALTOR® you choose can demonstrate a significant number of short sales on their resume. Also, have them show you their success rate and selling the homes and having the home seller walk away owing nothing more to the bank!
Lease The Home To Tenants
Leasing the home to tenants is the traditional option of choice for home sellers who are upside down in their homes. While this is a good solution for not having to sell short, home sellers need to plan on being a landlord for a minimum of ten years before the decision will prove to be the best economical solution. Many home sellers are choosing this route right now, mistakenly thinking that it will be for just a year or two.
The fact is, many of the homes that failed to sell have moved from the “for sale” market, to the “for rent” market. This is creating a price war on rental rates, and vacancies are starting to rise. The prudent home seller will not take this decision lightly, as it could end up costing them tens of thousands of dollars and could end up leading to foreclosure. If you have a long-term outlook as a landlord, I am confident that home values will return to a level that will allow the homeowner to sell the home for a profit, though not anytime soon.
Abandon The Home
This option is not one that many have taken in the past, as the negative costs almost always outweighed the benefit. But in today’s real estate market, many homeowners are choosing a strategic default and walking away. Even if you never plan on doing this, you need to understand that as a home seller, some of your competition is choosing this course of action.
The real estate market, like any market, is competitive. Values are formed based upon scarcity of supply and the demand for the homes that exist in the local market. Anything that one competitor does in a market has an impact on all the other competitors, and if a small but growing segment of the market is choosing strategic default, then values will continue to fall.
Ultimately, the best decision that you can make depends on the significance of your need to move. Sit down with a knowledgeable real estate broker who can explain your current local housing market conditions and develop and understanding for the duration of each of your choices. Yes, the housing market is not in good shape, but you do have choices as a home seller, and you should make the choice that is best for you.