Should You Sell or Rent Your Home?
Moving? Should you sell your home, or rent it? Here are five points to consider.
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Recently a number of my friends have started playing around with the idea of moving, which then leads to a decision of whether to sell their homes, or rent them. This discussion seems to be happening a lot lately, most likely because the employment market is changing and people have more opportunities to change jobs.
I decided to ask one of my good friends, Ben Ellis of E&G Real Estate here in Phoenix, AZ, for a few of his best tips to help people decide if they should rent out their current home, or sell it, when they move. Ben is a real estate broker who started a property management company, so he can see both sides.
Before I jump into the tips, I do want to start out by saying that the decision to sell or rent out your home is a BIG one, which means that these tips are meant to get you thinking and to start conversations, not as financial or real estate advice. If you looking in to this decision for yourself, it’s important to seek professional advice, which leads in to the first tip.
Tip 1: Bring in the Professionals
Because this is such a big decision, you want to be as informed as you can before you commit to a path.
If you are ready to truly examine this decision for yourself, the very first step is to talk with local experts to make sure you are getting all the right information for your area. When I asked Ben which types of people to speak with, he recommended at the very minimum contacting: a local property manager (who can give you honest information about the rental market in your area), a local real estate expert (an agent who has recently completed transactions in your area is a good place to start, NOT your cousin’s best friend who does real estate “on the side”), a mortgage broker or banker (to see if your current mortgage can, or should, be adjusted), and possibly your financial advisor or accountant (to discuss your longer term goals).
If you don’t have any of these people in your Rolodex, start by asking for referrals from people you trust. You can search online reviews, but often times the best connections are made by referrals.
Tip 2: Examine Your Equity
If you bought when the market was low, you hopefully have some equity in your home. If you bought when the market was high, you may owe more for your home than it can currently sell for. Considering the amount of equity, or the amount you owe, on your home may be one of the biggest deciding factors for you. If you have equity and can sell your home, you can use that equity as a down payment on your next home. If you don’t have any equity, you may need to get approval for a short sale or be prepared to bring additional cash to the table when you sell.
A local real estate expert will be able to help you determine the real, current value of your home, and a mortgage broker or banker will be able to help you discover if there are options to refinance. Talk with local professionals to get a good idea of what will happen if you do decide to sell your home. Ben was quick to point out that the term local should focus as close to your neighborhood as possible. In larger cities especially, find a real estate agent who has done transactions in your zip code or ones close by to make sure they really understand the market around your home.