Home Selling in Sanford>Question Details

Mhc2145, Home Seller in Sanford, FL

I am a commercial General Contractor living in a prime area near Lake Mary/Heathrow, in a gated-guarded community. Is it right to sell now?

Asked by Mhc2145, Sanford, FL Sat Jan 29, 2011

Considering retirement
The home is like new-with many upgrades

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Hi MHC -- As others have mentioned, we are in a pretty depressed market right now so it is definitely not the best time to maximize your net in a sale. It might be worth running the numbers, though, if you plan to buy another home in the area because what you leave on the table in the way of "lost" profits might be recouped (or at least transferred) into the new purchase. I see you say that you are considering retirement--does this mean you are looking to downsize? If you have a decent amount of equity in your home and you're looking to downsize, you may be able to find a great home that you can buy for cash or very small mortgage which would make retirement that much easier. Also, since you're a commercial general contractor, you may want to purchase a home that needs some fixing up and get an exceptional deal which would further maximize the potential of your equity.

It's difficult to give you a simple answer. I've found that there are always ways to make good deals with a little creativity and a lot of planning. Please give me a call if you’d like to find out what’s available in the market that might work for you.

Best regards—
Louise Warring
Coldwell Banker Residential Real Estate
407-924-9399
1 vote Thank Flag Link Sat Jan 29, 2011
You cannot fight the market… and the old adage still holds true that, ‘you make money in real estate when you buy, not when you sell’. Playing out the current hand, and gambling on appreciation that may not materialize is generally not a smart investment strategy. If you have plans to retire and sell one day soon, then likely it makes smart Financial sense to fold your hand and sell today, so you can move on to retirement and better investments.

Contact: Hobbs & Company @ 407-416-9845

Ron Hobbs
Palm Springs Realty (Commercial & Residential)
U.S. Housing and Urban Development Approved Broker
Licensed Real Estate Broker, Mortgage Banker, CPA (inact)
0 votes Thank Flag Link Wed Feb 16, 2011
Mhc2145,

Your question is about the Timing of a sale which you seem certain to make one day… but ultimately it is really a question of financial analysis.

There are at least three separate timing related elements to consider when determining what is best for you to do today, and all three will rely on forecasts or expectations about the future and available alternatives. A) Market Timing the price sold/ and price purchased (likely your foremost question here), B) Personal Timing of your Retirement, and C) Alternative Investment Choices (or broadly the opportunity cost of ownership).

The personal timing of your retirement is something you need to consider first. Will you downsize? Relocate to another area of Florida? Perhaps to a another State altogether? If you plan to move, then the market conditions where you intend to relocate To are just as important as the market conditions here locally. While Florida, California, Arizona, Nevada, Detroit, etc… have been hit hard, and are likely to remain distressed markets for a number of years to come, most other areas of the country were affected to a far lesser degree and have/are stabilizing now. The extreme local events here are certainly not the norm on a national basis. So, while considered alone it may not appear to be the ideal time to sell locally in Florida, it may be the perfect time for you to repurpose and redeploy your capital to purchase a home in another area where you ultimately want to relocate for your retirement. If you are remaining in the area, and downsizing, then the calculus is similar, just to a smaller degree on the % differential. But, because of your retirement plans, that combined analysis deserves serious consideration as it relates to your short term retirement goals and objectives.

As for local market timing… truthfully, no one knows, but based upon the acute lingering issues of negative equity, unemployment, foreclosures, and short sales no one can predict with a straight face that prices will be meaningfully higher 5 years from today. Many forget the time period from 1990-2000 when there was a local price boom, followed by basically 0% appreciation for a decade in the Orlando market. If we now start to see inflation without a corresponding increase in wages, then home prices could deflate further in areas with excess supply (like Florida) as the increased cost of credit reduces affordability and pulls down prices. Whatever happens, there will certainly be excess supply, distressed assets and muted demand for at least the next 5 years locally. Even today with historically low interest rates, and positive demographic factors, based upon the current rate of ‘supply’ reduction it will likely take at least that long to work through the inventories (assuming the volumes and market conditions remain ‘stable’ ). So from a price perspective, waiting to sell likely makes little sense if you plan to relocate or downsize in the next 5-10 years.

Finally, if you have equity or assets, you should also seriously analyze your expected rates of return over the next 5-10 years. Primarily, the return on equity in your current property, weighed against the opportunity cost of alternative investments. Expecting anything close to the historical average of 3%/y price appreciation over the next 5 year is certainly wildly optimistic for the local market where prices have continued to show negative y/y returns since 2007. As mentioned above, the easy comparison of expected real estate appreciation outside the area vs negative to flat price appreciation locally is likely a big factor that could drive your decision to sell today. Just as leverage magnifies ROE gains when there is price appreciation, is also magnifies the losses when there is price depreciation. If you believe there is/will be some nationwide economic recovery, then inflation should drive alternative equity returns, while at the same rising interest rates may cause some amount of additional real estate deflation in oversupplied markets. The expected rates of return for competing investment alternatives merits some serious thinking, especially if you are currently holding a highly leveraged but depreciating asset.

When looking at the data, and the oversupply situation, I believe it is unlikely there will be significant price appreciation locally for the next 5 years… prices have stopped their free fall, and have begun to stabilize in some areas (especially for moderately priced homes) but prices could quite easily continue to trend lower over the coming years for custom homes priced above $400,000 in the local market.
0 votes Thank Flag Link Wed Feb 16, 2011
Hi Dp2 - I was in Lake county (Mount Dora) but moved to Altamonte Springs. I'ts about a 15 mile move. Yes the high end is ruff. If you ever need stats for Central FL just give me a call - as you are aware this Economist loves numbers.

Email is John@JohnABennett.net

Best to you.

John
0 votes Thank Flag Link Mon Jan 31, 2011
John, I didn't realize you were in Seminole, although I knew you were relatively close to Orlando. BTW, thanks for the stats. I knew that the absorption rate on $900+K properties was high in that area, but I didn't realize that it was that high.

Mhc, if you're willing to pursue some of the more creative alternatives, then you might consider doing a swap, or selling with some seller financing. Another option is to work with one of the temporary executive house leasing companies in the area.
0 votes Thank Flag Link Mon Jan 31, 2011
Hello GC,

I have worked the Lake Mary/Heathrow area for several years now. I finally see prices stabilizing in your area and even a slight uptick in pricing in certain areas Heathrow included. For example, last year there were several homes in the very low 200's a few even lower in Heathrow, and now most prices are above 250k with less inventory available. However, prices are still in the doldrums and have no real discernible upward momentum. From what the reports are saying our recover lies with the job market and as we see less unemployment we will see more stimulation in the housing sector.

So long story short, if it was me I would hold until more of the foreclosures exit the market and home inventory gets a bit tighter. However, if you are looking for a deal, now is the time to buy and taking a bit of a hit on the selling end may be worth the savings on the buying end.

Hope that helps,

Jennifer De Vivo
Realtor
The De Vivo Team
407-921-1310
Web Reference: http://www.devivorealty.com
0 votes Thank Flag Link Mon Jan 31, 2011
Hello. It all depends on your motivation. Yes the prices are low (and may drop lower because of the volume of distressed properties) but the demand is steady due to the historically low interest rates so if you wanted to take your funds and invest in something else, now might be a good time! Happy to discuss further if you were interested. Best regards, Sally
Web Reference: http://www.SallyCorrick.com
0 votes Thank Flag Link Sat Jan 29, 2011
Mhc, I work your area, I live about 8 miles away. If I guess your area right - Heathrow, Alaqua Lakes or Magnolia- prices area trending lower. Cause is that there are many high end homes on market and there is a lot of inventory on the market. Quick search turned 29 recent sales, average price per foot 147.85 and 192 days on market.

Dec Stats ORRa
RANGE

40O k TO 500 K 13.5 MONTHS SUPPLY
500k TO 600K 15.5
600K TO 700K 21.5 MONTHS
700K 800 18.7
800K TO 900K 11.4
900K TO 1,000 K 45.5 MONTHS SUPPLY
1,000K UP 28.9 MONTHS SUPPLY.

SO, IF you can - hold.

John
0 votes Thank Flag Link Sat Jan 29, 2011
If you do not need to l, now is NOT a good time to sell. No matter what you hear or read , prices are very depressed due to short sales and foreclosures. In the next 24 to 36 months many ARM's will become due and change to higher interest rates. Existing homeowners will be faced with higher mortgage rates and payments. We're at least 3 years away from a better market. If you can hold out, do so! if you'd like to discuss this, please email me: bassethound1@earthlink.net. Thank you for your interest.
Marilyn
0 votes Thank Flag Link Sat Jan 29, 2011
I think that it is a great time to sell as the market is coming back! Do keep in mind that it is different in every area but I have seen a large influx of homes going on the market in my general area as well as an increase in prices. I am sure that you have plenty of Reators to choose from being a general contractor but do know that I have the resources to help you pick the top Broker and Agent in your area or any are in the U.S. Please contact me if you need some help and best of luck in your endeavor!

Best Regards,
Frank Dolski MBA, ABR, e-PRO
Associate Broker
CARTUS Certified Relocation Specialist
Coldwell Banker Hearthside Realtors
f.dolski@cbhearthside.com
215-803-3237 (mobile)
215-794-1070 x103 (office)
http://www.FrankDolski.com
Web Reference: http://www.FrankDolski.com
0 votes Thank Flag Link Sat Jan 29, 2011
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