Home-selling problems in life planning
Most home-selling problems stem mostly from greed. People want to get top dollar in what is one of the biggest transactions they'll ever make. While that's understandable, it's foolish. Real estate simply is no longer a short-term investment. Besides, the value of owning your home is made up of far more than just the profit you make on its sale. During the years when you had a mortgage on your home you were able to take advantage of the deductibility of home mortgage interest. You also were able to "save" the dollars you paid in mortgage principle, rather than "spending" it as you would have had you been a renter. Finally, and most importantly, you were able to get all the emotional, spiritual, and psychological benefits of ownership. In effect, you had a home rather than just a house.
I tell people that their goals should be to quickly sell their home for its market value. I suggest they place as much if not more emphasis on the speed of the sale rather than the size of the price. The sooner you sell the sooner you can move on with your life and/or earn interest on the proceeds from the sale.
What if I can't sell? (or) I'm afraid of losing money.
There are few homes, if any, that can't be sold ... for the right price. Every market has periods when demand is down and supply is up, yet sales still take place. How? The seller lowers his price to the point where his product becomes more attractive than the alternatives. To make this into a rational problem you need to be more specific. Instead of asking "What if I can't sell?" it makes better sense to ask "What if I can't sell for as much as I want?" The solution to that question is easy: you lower your price.
Losing money on the sale of your home would indeed be a shame. And while it would have an economic impact, worrying about it is still irrational. That's because there's really nothing you can do about it. If the current market value for your home is less than it was when you bought the house, you will indeed get less than you paid. You may have added many improvements to the property, but if your home was already at the top end of its value range when you bought it you may not even get back the money you put into it. To make this into a rational problem you need to be more specific and focus, not on getting back what you paid for the home, but on getting as much as you possibly can. The only people who "lose money" on real estate are those who are in the real estate business and who don't get any use or emotional benefit from the property. You need to balance the time it takes to sell and the price you're getting.
In order to put the right price on your home you need to become an expert on your local real estate market. Ask at least three or four brokers to visit your home and give you an estimate of its value in today's market. Make sure they back up their estimates by citing the recent sales of comparable properties.
Study those comparables and see how your home measures up. Is your street nicer than the street of the similar home that sold for $125,000? Are the rooms in your home smaller than those in the similar house that sold for $140,000? Unlike the comparables, do you have a new furnace and roof? The idea is to determine not an exact price but a range of value, and then to estimate where within that range your home falls. Realize that homes at the upper end of the range will take longer to sell than homes at the lower end of the range.
Don't immediately sign with the broker who gives you the highest estimate. He may be overestimating in order to get your listing. It's not uncommon for brokers to first talk up a home's value, and then after a bid comes in, hammer on the owner to come down in price dramatically.
Stress to the brokers that you're interested in a speedy sale, and ask for their suggestions on what you can do to your home to make it more salable. New neutral paint schemes and some minor cosmetic steps¡ªlike thinning out your furniture and adding some strategically placed mirrors¡ªcoupled with an attractive price may make the difference between a home that sells in a week and one that lingers on the market for a year.
You need to place your trust not in your broker but in the magic of the marketplace. Do everything you reasonably can to make your home salable, and then be prepared to act on the signs the market sends you. If you find lots of people visiting, but no one making an offer, there's something wrong and you may need to reduce your price. If no one is visiting, you almost certainly need to lower your price. Remember, a home's value is determined not by what you paid for it yesterday, but by what a willing buyer will pay for it today.
This is one instance where I'm not a big believer in lengthy appeals. Certainly engage in savvy negotiating, but don't spend lots of energy trying to squeeze every last dollar out of the deal. Sell for the best price you can get and move on with your life.
tags: home, life
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