18 Questions For Every Home Seller (Part 4)

1.            Should I sell my house?

How motivated are you to sell?

You have to sell, or so you think. How urgently do you need to sell? The answer may affect not only the eventual price you realize for your property, but the method by which you sell your house as well.

Some sellers feel the time is right to sell because of market considerations. For example, a shortage of properties on the market might mean an unusually good price. Opportunistic sellers are not highly motivated to sell. If you are such a seller, consider setting an above-market price for their property.

Other sellers feel compelled to sell but may or may not do so with real urgency. For example, a retiree heading for a warmer climate may not see any reason to sell until a high offer 2.is received. Or a family may move to another city but retain the precious house as a rental unit during a poor market. Such sellers will often ask an above-market price for their property.

Finally, consider owners under immediate pressure to sell their property. Such sellers may feel they have no time to realize the full market value of their property, and out of desperation may even try to sell their home during the low-activity period between Thanksgiving and New Year’s. If selling via traditional methods, they will set a relative low asking price.

Alternatives to selling

If you feel highly pressured to sell but think the market is low or have another reason to avoid selling, consider your alternatives. Simply postponing the placement of the property on the market may see prices drop rather than rise, so consider the auction-based selling methods discussed in a later section.

Renting the property instead of selling could help you postpone the sale until the market improves.

To determine whether the rental option makes sense, estimate the expected cash flow. In other words, what is the difference between rental income annually and the expected expenses. Income can be estimated by comparing comparable rental properties in the area, less about 10% due to necessary vacancy between renters. On the expense side, count your mortgage, property tax, utilities not paid by the tenant, anticipated repairs, maintenance, and conversion costs to make the property in the rental in the first place.

Remember, even if the overall cash flow is negative, renting a property is a much better net loss than letting a property languish on the market because your major costs (mortgage, property tax) will be present whether you rent or not.