Vol 6 No. 49 -August 30, 2006
Deciding when to sell
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, weve 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 youre 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 dont 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 havent
fallen in 50 years, but that doesnt mean they wont fall in
your area, or that they wont start going through the roof again next
Dont be influenced by the huge appreciation weve 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? Theres more to life than a big pay day. If you want to
cash out get on the next plane to Vegas.