Expect Little Price Change After 1 Year

REAL ESTATE q&a

Expect Little Price Change After 1 YearBy Talia Freedman

Q: I bought my house about a year ago and I’m not really happy in the neighborhood. I’d like to sell my house, but I need to get more than I bought it for to break even. What should I do?

A: That is a tough situation. Since you bought your house such a short time ago, it’s possible that it’s gone slightly down in value, slightly up in value or stayed about the same. Even if it did go up in value, it’s going to be a relatively slight fluctuation since the market hasn’t changed all that much. All of that said, even though each contract is unique, you’ll need to plan on about 10 percent of the sales price in closing costs. That’ll give you a good idea of what you’ll walk away with when you sell.

If you’re really determined to move, take a good look at your finances and figure out if you can afford to take the hit that may be coming down the pike. If you’re lucky, you’ll be able to afford to pay off your mortgage and then have some money left over for a new down payment. But if you owe more than you can get from the sale of the house, you’ll need to bring the cash to closing to make up the difference. That won’t leave you anything for a down payment on a new house, so make sure you have enough money to make a move once you sell.

If you can’t afford to buy something new, you could sell, and rent something while you build up a new down payment. This isn’t ideal, but if you’re really determined to get out of the house you’re in, it might be a good alternative to buying something else right away.

Assuming you are going to sell and the comparables aren’t ideal, you might decide to at least wait a couple of months and sell in the spring when the market picks up a bit.

One last option I’d like to mention is holding onto the house you’re in and keeping it as a rental property until the market turns around. That may make sense if you’re going to end up renting for a while anyway. Just keep in mind if you’re going to buy something new you’ll need at least a signed one-year rental agreement or a full year of provable rental income to offset the debt in the existing mortgage.

Good luck with whatever you decide.

Talia Freedman is a Realtor with Signature Southwest Properties
— This article appeared on page 3 of the West Side Journal