A Must Read for Sellers!
Many homeowners have been hesitant to list their homes for sale because of a belief that a rebound may be just around the corner. Some sellers that have already listed their homes for sale have rejected reasonable offers or have been unwilling to negotiate because they also feel a recovery is near.
For anyone that has their home listed for sale or has even considered selling, they should give serious consideration to the following points.
1. An Increase in Sales Does Not Equal an Increase in Prices – Many markets in Florida experienced a substantial increase in activity, a sign that usually indicates a seller’s market where prices are rising. Many sellers have read about this uptick in activity and have anticipated a recovery in prices. The truth is, in most cases, prices have not risen despite the increase in sales. Because of excessive inventory prices could remain flat for years to come.
Conclusion– An increase in activity translates into a greater opportunity to sell your home at the right price, not necessarily at a higher price.
2. Season – The majority of the activity is generated during season. This year’s season is in full swing, or will be in a couple of months.
Conclusion- The selling season is usually a great time to take advantage of a substantial increase in activity .
3. Economy – The two major concerns with the U.S. Economy are unemployment and the U.S. Deficit. The unemployment picture has recently improved with the unemployment rate dropping to below 9%, and jobless claims dropping last month.
Conclusion- The timing is perfect to sell given all the recent positive improvements announced by the media.
4. Recent Developments – The Federal Reserve just announced yesterday, that they will be keeping rates near zero until 2014. This means they don’t expect the economy to improve enough to where it doesn’t need assistance from Fed Policy. If it takes several more years for things to improve there may be no benefit to waiting until later.
Conclusion- Waiting to sell is unlikely to yield any additional profit or increase in sales price.
5. Risk and Cost of Waiting– The risk and costs associated with waiting could be significant. Consider the following:
A. Carrying costs– How much will it cost to hold onto the home for another 3 years including:
– Mortgage expense if any
– Repairs and Maintenance
B. Opportunity Costs– If the home were sold and the equity reinvested in another investment, how much could the seller make on the money that isn’t being invested because it’s still in the house. (The home is a non-performing asset and has been for several years, now.)
C. Potential Depreciation– Homes have dropped in value nearly 40% in the past five years. If we have another crisis, we could see a significant drop in real estate prices again in the future. Keep in mind, we still have serious issues that need to be addressed, including:
1. The European Debt Crisis
2. The U.S. Deficit of over $16 trillion.
3. Middle East Political Unrest
4. Oil Production and pricing worldwide
5. A slow-down in the demand for emerging markets like China
Conclusion- A new crisis in any one of these areas could have a severe impact on Real Estate Prices, which would mean selling at a later date could result in a significant loss.
6. Recent History- For several years many sellers have held off on their decision to sell. The result of this strategy has been more aggravation and pain, and less money. Definition of Insanity:- “Keep doing the same things over and over again and expect different results”.
Conclusion- It may be a good time to change the strategy and list the home for sale.
7. Distressed Properties- There is still a tremendous backlog of foreclosures and delinquencies. There has been a delay in releasing foreclosed homes because of fraudulent bank signing issues. Realtytrack projects another 8 million homes will come to the market as distressed property sales over the next 3-4 years. The release of this inventory could depress home prices further and for many years to come.
Conclusion- Selling a home now may make more sense that waiting to see the impact of foreclosures on future real estate prices.
8. Emotional Considerations- Every seller should ask themselves: What would it mean to me if I were to sell the home today?
– Does the small possibility of getting more in the future, outweigh the benefits of being able to move on with your life?
– Is having the burden of owning the home for several more year really worth it?