I am approached every day by owners who tell me they just want to sell their home and would be happy just to break even. They just need to move the home at whatever price the market will bear.
Unfortunately, for someone who bought at the height of the market in early 2005, this may not be possible. It is becoming more and more common for the seller to bring money to closing because after closing costs and real estate commissions they have negative equity in their home. For some owners, they have no choice but to stay in their current home and wait out the current buyer's market. Others consider renting their home and becoming a landlord.
This brings an entirely new set of risks to the forefront.
How much can I charge for rent?
How long will it take me to have a renter with a lease in place? Will they maintain the place well, pay on time and not nag me with every minor detail that goes wrong with the home? These are all very serious questions you need to ask yourself before moving forward into the landlord business.For those owners who bought their houses before the huge price increases of 2005 and have a significant amount of equity in their home, there is another choice.
Do you cash out on your current situation because you have the ability to undercut the rest of your competitors on price? Most research tells us that if you have a well maintained home in a nice neighborhood and price it about 3% under the market, you can still get it sold pretty quickly. This would leave you in the best position of all: having a chunk of cash in your pocket to negotiate with desperate sellers, really desperate investors and extremely desperate builders. You can get homes for over $100,000 below appraisal, builder paid mortgage for the first 6 months, no closing costs, and your pick of the finest lot and nicest interior upgrades. You can find an investor that needs to sell under any circumstances you name, or an owner nearing foreclosure which is becoming more and more common.
You may wind up simply refinancing your current home, choosing to wait out the market, renting a place until you are comfortable with the market conditions, or jumping on a deal that is too good to pass on. Just promise me you will not buy a new house without knowing the details of how long it could take to sell you current home or what price you will realistically attract in today's market. Too many people are going through tough times because they have two mortgages and cannot sell. Research and diligence could be the difference between financial difficulty and growing old in your dream home.
