Vol 6 No. 49 -August 30, 2006

Deciding when to sell your house
By Louise Bolger
SUN STAFF WRITER

Did you ever wonder what it would feel like to cash out a really big pile of chips in a Las Vegas casino? Cashing out in casino gambling and stock market trading is done every day, but cashing out your home has a whole different set of realities attached to it.

In an escalating real estate market, we’ve all been tempted to take the money and run, especially when it seems that the top of the market may have been reached. But, living in a home that you own is not the same thing as cashing in your winnings at the black jack table or selling Standard Oil stock. There are several questions you need to ask yourself before putting up the for sale sign.

First of all, is this the house you and your family live in? Most homeowners feel that living in a home they can afford and that they are comfortable in should take precedence over a healthy profit. Unlike other investments, your house is more than just a place to let your money grow. It is also the place you call home. If you find yourself in a declining or stagnant market, unless a dip in value would really hurt your future bottom line, or you’re planning on moving soon anyway, usually the smart thing to do is hang on to the house and ride it out

Of course, if you own an investment house, you may feel differently, especially if you are carrying an adjustable rate or interest only mortgage that is going up on a monthly basis. A lot of investors are pulling out of the current real estate market cycle because they perceive their short term profit will be down.

Whether or not the home you own is the one you live in or an investment, you need to be happy where you are. Do you like the neighborhood, the neighbors, the school system and the local amenities? Also, if the home will require substantial renovations and upgrades in the near future, you may be more inclined to sell the property and move on.

Selling and moving also costs money. Realtor fees, moving expenses and the potential of paying more property taxes for a comparable home should be weighed carefully. And don’t forget, with interest rates increasing, you may end up trading in a lower rate mortgage for one at a higher rate substantially increasing your monthly carrying charges.

You also need to be aware of and analyze the local economy. You can never say it enough that all real estate is local, particularly so in Florida, where living in a waterfront community is dramatically different from living off the water in a comparable home.

Real estate values are very uneven. Nationally home prices haven’t fallen in 50 years, but that doesn’t mean they won’t fall in your area, or that they won’t start going through the roof again next year.

Don’t be influenced by the huge appreciation we’ve all experienced during the past five years. Typically, long-term home prices tend to increase only about 3 to 5 percent a year. The bottom line is, if your house feels like home, you can afford it, and if you have no urgent need for the cash, why move? There’s more to life than a big pay day. If you want to cash out get on the next plane to Vegas.

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