You’ve lived in your current property for several years now and you’re ready to move. Maybe you’re upgrading to a bigger house or downsizing for retirement. Or perhaps you’re going through a major life change, such as starting a new job or getting a divorce. Whatever the reason for your move, you’re now faced with the difficult decision, “Should I sell or rent my house?”
It can be helpful to take a step back, evaluate your situation and weigh the costs of each option before making a determination.
Questions to Ask Yourself
Before deciding to rent or sell your home, ask yourself the following questions:
- Is the move temporary or permanent? If the move is temporary, it might be best to turn your house into a rental property. That way, if you return back someday, you already have a place ready to go. If you sell that home and return back to the city later, you could be paying exponentially more for the same size house.
- Do you want to be a landlord? Managing a rental property isn’t for the faint of heart. It entails advertising the property, screening prospective tenants, dealing with bad tenants, and making emergency repairs. If you’re not willing or able to take that on, you could always pay a property management company to do it for you. Neither of those sound like desirable options? It might be better to sell instead.
- What’s the state of the local housing market? One thing to consider when determining whether to rent or sell your home is whether it’s a buyer’s or seller’s market. A seller’s market is when there are more buyers looking for homes than there are homes available. Conversely, a buyer’s market is when there are more homes for sale than there are buyers. It’s essentially supply and demand. To determine if it’s a buyer’s or seller’s market, check available real estate inventory from zip code to zip code. According to Zillow, it’s a seller’s market if the local inventory is sufficient for less than five months’ worth of sales.
- Do you need the home’s equity? Often times, homeowners need the profits from selling their current house to buy the next one. If this is the case, you may need to sell your home instead of renting it.
- Do you expect your home’s value to increase? There are market cues that may indicate your property value could potentially increase in the near future. For example, are construction plans in the works for a new school? Is a new shopping plaza being built in walking distance from your house? Or maybe a major, well-known employer has announced plans to open up a new location near your home next year. Once the construction is underway or near completion, you might see the value of your property increase, which could potentially make it worth your while to wait. In that instance, you could rent for now and sell later.
- Is your loan balance greater than your home’s current market value? You might hear people use the phrase that they are “underwater” in their mortgage. That simply means that their loan balance is more than their home is currently worth. If that’s true for your property, it’s not a great time to sell. Consider transforming the property into a rental until your house gains a little more equity.
The Surprising Costs to Rent or Sell Your Home
Many homeowners are surprised by how much it can cost to rent or sell your home. There are expenses associated with both processes, some expected, others not.
For example, if you rent your home, you should set aside between 12 and 15 percent of the rent amount for maintenance and repairs. In addition to covering emergency repairs, the funds can also be used toward a new coat of paint or carpet between tenants. Some tenants may make that a requirement before they’ll agree to take the place. If you live in a neighborhood with a high turnover, those little jobs can add up. You’ll also still be making your mortgage payments, which the rent typically covers, of course. However, if there’s a gap between when one tenant leaves and the next moves in, you could be paying the mortgage on your rental and the mortgage for the new property where you reside simultaneously.
If you decide to sell your property, there are costs associated with that as well. For instance, you might decide to hire a real estate agent to list and sell your property. Real estate agents work for commission. Some real estate agents charge a flat-rate fee, but it’s much more common for them to take a percentage of your house’s sale price. Often times, it’s 5 to 6 percent. That means if your home sells for $350,000, the commission would be $21,000, which gets split amongst both real estate agents (if both the buyer and the seller have their own agents) and the real estate broker or agency.
Additionally, whether you’re renting or selling your home, you’ll likely have to stage it for pictures. That means the added cost and time to buy and set up décor, as well as hiring someone to take professional photos for the listing.
Another Alternative to Renting or Selling Your Home on the Market
Renting your house can be a hassle, from bad tenants to late payments and maintenance. Selling your house on the market isn’t always a cake walk either, especially given the amount of time and money you have to put into making repairs, upgrades and staging the property to attract buyers.
Fortunately, there’s a third option that can allow you to forgo the hassle, sell your house quickly and get paid in cash. A home investment company, Meridian Trust pays cash for properties “as is” in Florida, Georgia and Texas. We specialize in buying houses, townhouses, condos, apartments, and multi-family units.
The process is quick and easy. Simply call us and we’ll discuss your property, situation and unique needs. A dedicated, licensed real estate agent can then make you a free, no obligation cash offer.
If you decide to move forward, you have the option to receive your contract by email, fax or overnight delivery. You’ll notice in the contract that there are no commissions and Meridian Trust pays all the closing fees. Nothing will be deducted from your price at closing. What you see is what you get.
Additionally, you’ll get to work with the same licensed real estate agent throughout the process. No passing you off to someone else or repeating the same information multiple times. We strive to make selling your home easy, fast and safe.
Call us today for a free, no-obligation cash offer: (954) 807-9087.
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