|Should I Sell My House?|
|Sunday, 13 February 2011 15:57|
“Should I sell my house?” is a question that pops up in the minds of home owners at time of turbulent economic conditions. In a changing economic environment, the financial situation of individuals and organizations also undergo a lot of change. There are cost cutting measures, downsizing and offloading in today’s economic meltdown. Thousands are losing jobs resulting on thousands of home foreclosures.
Millions of people every year are faced with the decision as to what to do with their properties that they might have moved out of or paid off. The options usually are either to sell the property and try to make as much as you can from it, or to rent it out and make it into a secondary stream of income. There are good and bad points about both sides, and the final decision should be researched before either course of action is actually taken.
The question “Should I sell my house?” should be discussed against the backdrop of the present economic conditions in the region. Currently we are in a severe cash crunch due to the markets crashing almost in all sectors, especially in the housing sector. Similarly individuals and families who have lost their jobs with low or no other source of income need some financial help to overcome the grim situation. The equity they have built over the years comes in handy in these situations as they can use the home equity for temporary relief from bankruptcy or for mere survival till they make alternative arrangements for a regular income. If you are lucky enough to have a job and comfortable income there is no need to sell your house as long as you live in it.
When home prices start sliding it is a matter of concern for the existing home owners. They get caught up in the dilemma of “Should I sell my house? Or keep it as an investment”. It depends on your financial situation and various other factors such as the demand for similar properties in your area, the availability of such properties and the prevailing prices and the cost of selling and so on.
First of all if you are thinking of selling your house you should first research the average house prices both on a national level and in the local area, and how they have changed over the last few years. If the country is in the middle of an economic downturn, and so prices are very low, then selling often isn't the best option. If on the other hand you happen to live in an area where the prices are rapidly rising then usually selling is a good way to make a substantial amount of money. Prices in local areas usually rapidly rise because of ease of commute to large cities or economic investment.
Also finding out if there is any large scale construction planned for the area in the next few years is a good way to judge how the house prices will likely look. If the house you are trying to sell is in what at the moment is a fairly run down and low cost area, then it is often worth waiting if the area is soon to be rejuvenated. By the same token of course if the house is in an idyllic and quiet area, but that a highway is soon to be built very close by, then the price will likely drop.
If the house prices in the area are rising at a lot more then inflation and the national average, then the house should be kept until the prices reach their apex. This is particularly common in inner city areas, where more and more people are finding that houses that were worthless a few years ago are now worth more than houses twice the size outside the city. Barring any catastrophic collapses in the housing market completely, houses that are rapidly becoming higher in price should be kept rather than sold, for maximum potential profit in a few years time.
A good example of this would be the story of a woman in London recently who bought her house in the 1970s for a little over the equivalent of £70,000. Having paid the house off in the late 80s, she decided to sell the house, although she noticed that the house prices in many nearby areas were rocketing upwards because of the great demand for property in the city. She in the end decided to rent out the house, and continued to do so until 2006. She then finally sold the house for approximately £2.5 million dollars. This of course is much more than the house would normally have been worth because of the area being in demand.
By contrast the rental market is a little harder to predict and is certainly less stable then the housing market itself. Generally rental demand is related to either the age of the local population or the house prices in the area in relation to typical local income. This basically meaning that if there are a lot of younger people who cannot afford their own house, or generally low levels of income, then rental properties will be more in demand.
When renting out a property you either need to ensure that you can make enough to cover any payments you might have, or that you are making a sufficient profit to make it worthwhile. If the house is older or in need of regular repairs then it can end up costing you a lot of what you make in rental income. In this case it is best to either get the house repaired and liveable before you rent it, or to just sell it on if these costs appear to be very substantial compared to the value of the property. If the house needs complete new plumbing and a new roof for example, then a quick sale might be preferable than a costly refurbishment.
The main benefit of renting out a property rather than selling it of course is that the property essentially then adds to your net value. Also by this stage you have either paid the house off or are covering the cost of the mortgage through the rental income. Allowing you to then buy another property as soon as you want to. Keeping a house on the open market instead can be costly if demand is low as well as the process stopping you from buying other properties at the same time.
Overall the best course of action is usually to look at both the state of the house, and the prices of houses in the area. If they are either falling or rising greatly, then the house is probably better if kept and rented out until the prices reach an optimum level. If the rental demand is low and the prices are fairly stable then selling the property might be easier and will allow you access to the money tied up in the property quicker.Quote this article on your site
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