Tampa Palms, Westchase, Carrollwood and Tampa Bay Real Estate News From Jeanne Prigitano

“I’ll just wait till the market improves before selling my house.”

I’ve heard that a lot lately from homeowners who are considering whether to sell or not. In some cases, it’s a very viable option. If there is no real reason to sell, then you probably should wait to sell. For others, there are compelling reasons that would necessitate a sale ---- job transfer, marriage, divorce, new baby, need to be near family and a whole list of other reasons.

If you need or even just want to sell, here are some things you may want to consider.

· If you are waiting for house values to appreciate, consider that once the market stabilizes (and it has in some areas), normal appreciation is 2% to 4% a year. How long will it take to get to a market value where you would consider selling?

· While you are waiting for your current house to appreciate, the house you are waiting to buy will also appreciate. Sell low---Buy low. Sell High --- Buy High.

· Some neighborhoods are considered declining neighborhoods even in a good economy. If you are in a declining neighborhood, once the market improves, your house may not increase in value but the house you want to buy in another neighborhood just might.

Of course many are not selling because they owe more than what the house is worth. Even though they may qualify for a short sale because of a life changing event, they opt out because they don’t want to damage their credit. The considerations here are most likely different but may still involve waiting for the market to improve. I am finding that some who are finding themselves in this situation are deciding to rent their current home. Again, that could be a very good option.

Before renting your current home, here are some questions and additional items to bear in mind.

· Will the rent cover all my expenses? If you are in Florida and now rent your primary residence, you will lose the Homestead exemption and your taxes will increase.

· If the rent doesn’t cover expenses, you might be better off selling your house and agreeing to hold a promissory note for the difference between the sale price and what is owed. The amount you are paying on the promissory note may be similar to the shortfall in rent receipts. You can move on and not worry about tax, insurance, HOA increases or repairs. I have actually had some lenders tell me that if you agree to pay the difference it may not impact your credit score. Talk to your lender and get all the facts.

· If you are not selling because you don’t want to hurt your credit score so you will be able to buy another house, think again. When buying another house a lender will need to take into consideration that you already have a mortgage. Although you may be renting your current house, lenders may determine if you have the ability to carry both mortgages. In most cases lenders will look at the rent you are collecting but will not allow 100% of the rent value when calculating your ability to pay a new mortgage. In addition, some lenders may require that your current residence be rented for a year before they will approve another mortgage. Once again, speak to a lender.

· Do you really want to be a landlord? What if the house needs repairs? What if you can’t find a tenant? What if your tenant trashes the place? You may want to watch the movie Pacific Heights before you consider renting.

This market presents many challenges. Everyone’s situation is different. These are just some considerations. That is why it is may be important to talk to your accountant or financial advisor, attorney, and lender before making a decision to sell. And, of course, seek the advice of a trusted Realtor once you have made the decision to sell.