Helpful Tips For Home Sellers

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The Long Island real estate market has been tough on many homeowners during the last few years. Many homeowners have given up on trying to sell their homes. They’ve convinced themselves that they can hang on for a few more years.

If you’re reading this article and you fall into this category of homeowner who’s going to wait out the “bad market”, then this article is for you!

I’m not going to “sell” you on the idea that now is a “great time to sell”. This article isn’t about that. Rather, I want to focus on a few bits of information that may help you figure out things realistically now and gauge whether or not waiting is in your best interest.

Let’s start with whether or not you plan to sell and buy another home. Obviously this depends on one important element; Equity. Most owners who want to sell now and buy another home need the equity in their current home to buy another. And everyone has their own level of comfort when it comes to how much money they want to put down on the new home, how much of their equity represents lifetime “nest egg” savings, etc. All of this must be thoroughly considered before selling your home or deciding to give up on selling and “ride out the down market”.

One thing that must be pointed out is the historically low mortgage interest rates and how that can impact your purchase. One bit of information that’s helpful is knowing how much you can save on a mortgage payment.

Mortgage Rates Sept 2010

In 2003 (where home prices are today), a mortgage savings in the current market is much more advantageous than it was back then. So if you’re looking to sell your home and purchase another home, using a portion of your equity as your down payment on a new home, the mortgage interest rate of today is simply tremendous.

Now many homeowners who are elderly or nearing retirement, want to pay cash for their home and have no mortgage. These types of homeowners don’t have a mortgage on their current home or if they do, the amount owed is minimal.

Of course, you have to take into account where you’re moving to. For instance, if you’re selling and buying in Florida, you should pay close attention to the fact that prices in Florida are down over 50% in many areas. You can still sell your home now, in 2010, and still very easily buy the home you want in another state like Florida, pay cash for it, get a great deal, and bank the rest of your proceeds from the sale of your Long Island home.

I think it’s important for homeowners to realize that during the time of between 1987 and 2006, you gained a lot of equity (see the graph below).

1987 To 2010 Housing Appreciation

Notice that in 2010, despite all the bad press, from 1987, if you measured your equity appreciation from then, you’re home has increased in value over 50%. On Long Island, the value of homes almost double the national average. Clearly, Long Island real estate is still valuable, indeed, your home is still very valuable!

Of course talking about the long-term appreciative value doesn’t help many homeowners who are looking at the last four years, where they’ve seen nearly 40% of their equitable value disappear. But real estate cycles throughout history tell us that there is an ebb and flow to the housing market, just like any other market. In the video below, I can’t help but continue to go back to this and wonder how different life would be if, in 2007 or 2008, if homeowners listened to me (when I pleaded with them to sell their home for a little bit less than what they wanted).

The History of the Real Estate Market (Roller Coaster)

Now that roller coaster went down…and it went down a lot. Now in the late fall months of 2010, the coaster is still going to be going down well into 2011.

But, there are bright spots for homeowners who really want to sell. No, let’s scratch that and say it like it is, some of you reading this really need to sell. Your life is on hold. Your life is on hold because you don’t want to “give your house away.”

If you have equity in your home and it’s enough to get you into another home or at least get you moving on to the next chapter of your life, the good news is, over 70% of people surveyed believe that now is a good time to buy. So, they’ll be buyers out there now, during the late fall and winter months and they’re serious about buying!

Tom McGiveron Time To Buy

I want to really stress that I know many different homeowners who are struggling with the idea of having to stay in Long Island when they’re kids are in other states or they have a second home waiting for them in Florida or Utah or where ever. And because they can’t sell their home for what they think it’s worth, they’re not selling and in exchange for that sacrifice and reduction in quality of life, they’re guessing that they’ll be able to sell it next Spring for more money (which is completely not rational) or maybe “in a year or two”.

Here’s a helpful tip, read my previous articles about holding off on selling and start by reading this one – 4 More Years.

For other homeowners, the “choice” of not selling isn’t a luxury. Many homeowners bought at the height of the market and cannot sell their homes for more than what they owe. They have no equity. Others are in the same position, but purchased their homes many years ago, but refinanced their homes above and beyond what it is worth today.

Each time I meet homeowners who are “upside down” on their home value, I really do get a sickness in my stomach. It’s tough. But you still have choices. Strategic defaults are viable choices if you have not suffered any financial hardship and just want to sell your home to get out of it.

Other homeowners who have lost a job or suffered other life circumstances that have negatively impacted their ability to pay their mortgage certainly have choices to avoid foreclosure.

All in all, as a homeowner, you have choices and that’s the most helpful tip I can provide. Don’t give up just because your last real estate agent couldn’t sell your home. Don’t think that you can sell your home next year for more money than you can today. The time to “guess” or use your “gut instinct” and gauge the market is long gone.

Information is the key and going through the numbers and honestly asking yourself whether or not sacrificing the next 2 to 5 years of your life is worth the 8% or so you’re home might increase in value through that time (and to get back to 2006 levels, it would need to increase 35% on average – see 2019).

There are bright spots and right now is one of them. Buyers know that now is the time. The only difference between now and this time next year is that your home is worth more!

Should you have any questions or want to schedule an appointment to see me, please call (631)831-9048. Please feel free to share this article on social networks and with your friends or family!

By Thomas McGiveron, Licensed Associate Broker
Realty Connect USA

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