John, Home Seller in San Francisco, CA

Should I sell my TIC now?

Asked by John, San Francisco, CA Mon Apr 26, 2010

I have a 1 BR 600 sq.ft. TIC near Cole Valley that I purchased a year ago. I will be moving in two months. I would really like to sell it but do not want to lose that much money. Would it make sense to sell it now or should I wait until the market improves?

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6
TIC's have taken an especially hard hit in the last year or two and it's hard to tell when the TIC market will improve. Financing on Condos is still so low, and prices have come down too, so many buyers are shunning TIC's until they've exhausted their Condo options. It's really hard to say when the TIC market will improve, but if you don't sell now I would be cautious in your assumptions about when you'll be able to match or beat today's prices. That could be 2 to 5 years from now.

So I would calculate what you would be making or losing per month in rent vs. carrying costs and make sure holding onto it for up to 5 years is a viable financial option (as mentioned below making sure you can rent it is obviously important - if your building had evictions via the Ellis Act you may not be allowed to rent it) . And also compare that to what you might lose by selling now.

I'm just going to presume you put at least 20% down since most TIC lenders require that - so while I doubt you would get all 20% back - you should get some cash back. It's an investment loss that may or may not lose more value before it improves - and again, I'd compare that to your carrying cost options and what else you might do with the money you do cash out with - eg, is there a better investment option - or a great real estate buy where you are moving to that you would want or need the money for?

And like those below me, I'm very comfortable with TIC's and wuold be happy to hear from you if you would like to interview me and/or get a home value report. Contact details on my Trulia profile and website (below).
Web Reference: http://www.SFisHOME.com
0 votes Thank Flag Link Mon Apr 26, 2010
Obviously get a market analysis done so that the decision is based on a reasonably knowledgeable source of data. Much will depend on what you paid, the borkerage fees and the transfer tax. Then you should talk to your accountant for tax implications which should be factored into your specific situation.
0 votes Thank Flag Link Mon Apr 26, 2010
Jed Lane, Real Estate Pro in San Francisco, CA
MVP'08
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Dear John,

Eric has the best answer. You should get a Comparative Market Analysis done by a realtor and then decide. The market is getting better (two out of 3 of my listings just got multiple offers) but it'sl not a great market for sellers. The government may extend the first time buyer credit (which brought many people out looking.) If it does you can factor that in. At the moment, you have missed that opportunity.

Best,

Sally
0 votes Thank Flag Link Mon Apr 26, 2010
Hi John
It also depends on what the TIC is. If it's in a two unit building for instance, with an owner in the other unit, that means that it would be more desirable. If it's in a six unit building and you haven't won the lottery yet, that's another thing all together.

There are quite a few TICs out there and with condo prices coming down, so have TICs. Best to have a knowledgeable real estate agent look at it and help you evaluate.

You should also look at your TIC agreement and loan docs. You may have limits on what you can do in terms of renting the unit.

If you have other questions, don't hesitate to call.

Good luck. Best

Eric
Web Reference: http://www.SFHotBuy.com
0 votes Thank Flag Link Mon Apr 26, 2010
John,

We deal with a lot of TICs, and my answer would depend upon whether or not you intend to rent once you leave. These deals are complicated, and the financing right now is not favorable to sellers, but I would want to see your unit and talk about price before making recommendations. Contact info is below.

Best Regards,

Lance King/Managing Broker
lance@fixedrateproperties.com
415.722.5549
DRE# 01384425
0 votes Thank Flag Link Mon Apr 26, 2010
Hi John--Whether you decide to sell will have more to do with what makes sense financially. If you just purchased the TIC interest a year ago, it's likely it hasn't appreciated and you will have to cover key selling costs such as broker commission and transfer tax. Another important factor is what type of financing will need to be involved (i.e., is this an interest that would require a buyer to obtain fractional financing, or is it one that is situated in a two-unit building?).

You may want to look at renting out your unit, if that's possible as per the TIC agreement. That would be an immediate option. Buyers who purchase TICs are typically not expecting to move within a year, as TICs are a bit more challenging to sell now that condo prices have dropped.

I'd recommend running the numbers and seeing what you can afford to do. I'm sure any of the agents here, myself included, would be happy to provide a market analysis and some solid counsel.--Eileen
Web Reference: http://insidesfre.com
0 votes Thank Flag Link Mon Apr 26, 2010
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