This afternoon Rob and I met with a client who had purchased a new home through us in June 2005 - the height of our frenzied market. He's relocating out of state and wanted to know his options. We know he's making decisions based on our information, which is why we always Tell It Like It Is.
Option one: it will sell for 82% of what you purchased it for - which means a loss on 18% plus 7.5 % in closing costs, or a total loss of 25%.
Option two: rent it for 53% of your monthly carrying cost, and that doesn't take into account the number of months it will be vacant looking for a tenant, any potential damages, or how long a tenant might stay in the house after stopping rent payments.
Not a pretty picture - but morally and ethically, we need to tell it like it is. How else can we expect clients to be able to make valid decisions on what to do, on how to react to opportunities/offers available to them.
Wow! Sharon, that is really not a pretty picture at all! I hate to be the bearer of bad news!
Pat - it's no fun, but they deserve the truth.
What an unfortunate situation, but you can't change reality, can you? I'm sure he respects your honesty, Sharon. Now he at least has some options even though they are not pretty.
Jeff
Jeff - yes, he does respect the honesty. That's why he called me. People are making very significant decisions in their lives based on what we tell them their options are - they deserve the truth, the whole truth, and nothing but the truth.
Sharon you did what any good real estate did. They might not like what they heard but it is the truth. I would rather hear someone tell me to truth than to tell me the opposite. Have a great Memorial Weekend. And congratulations again on passing the 400,000 point mark. Great post.
Thanks, Lanre.
Sharon, I'm no realtor, just checking out your listings. Really love,love,love the 7233749. Anyway, if this client is relocating, what are the chances he might be able to re-purchase at a lower market price, off setting the 25% loss? Not knowing where he is moving. Not sure how this applys if your relocating within Florida. See I live on the Water and even if I sold at a lower price, can I not purchase something comparable and take my cap with me? Just trying to think of a 3rd option. Judy
Hi, Judy. Yes, 7233749 is a gorgeous house. The kitchen is fantastic.
As to a new property out of state offsetting a 25% loss - well, depending on where in the country you're going, you might be able to purchase a comparable home for 25% less than here, but the point remains that you're still losing 25% of what you've earned and saved - perhaps that's what you'd be living on....
If you move within Florida you can take some or all of your cap with you - if you're purchasing at a lower price you could take SOME of your cap with you. Visit the Pinellas Tax Assessor's site and there is a calculator where you can put in information on your current home, the value of what you'd be purchasing and find out how much of the cap can be taken with you.
Thanks for your comments.