Shirlee, Home Buyer in 60622

What are the costs/benefits of selling a current condo and renting a bigger one?

Asked by Shirlee, 60622 Fri Jun 20, 2008

Looking for a bigger place now that my fiance just moved in, but we're not ready to buy yet a bigger place. Is it the wrong time to sell and rent for a while?

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Torrey Lewis’ answer

You are correct in that you will have to consider the economic costs and benefits of a decision like this. Selling now is not recommended by most Realtors that I talk to, because in this market, you are not likely to maximize your profit. Buyers are looking for deals, and with so much competition in the marketplace, if you can hold off selling, you will probably make more money in the long run.

That being said...

If you sell now, and then rent, you are losing out on a key componant of the real estate world: Building equity. When you rent, you are building someone else's equity, and doing nothing for your own financial gain. If you do find a buyer for your current place, and have the financial ability, I would recommend buying another home. WIth sellers continuing to compete for buyer's business, this is absolutely the market to try and buy another home. If you sell now, then rent, and wait to buy another home, it's my bet that prices are going to begin rising in the next year, and you could miss out on some extra equity in your new place.

If you decide to go ahead and sell your current home, and lease something bigger, make sure that whatever profit you make from the sale goes into some sort of interest bearing savings account, and make sure that you continue to add to it! If you do rent, it should be something less expensive that what you pay now in a mortgage. That way, when you do get back into the market to buy, you won't have to stretch too far to buy your next home.

Hope this helps! Good luck!
1 vote Thank Flag Link Fri Jun 20, 2008
You may want to ask a realtor to determine the days on market and average selling price for properties similar to your own. Then ask them to calculate the net proceeds based on the likely sales price and see if that makes sense for you to sell. Also compare the costs of ownership to the costs of rent and remember to discount your interest expense & property taxes for the deduction you likely take on your income tax returns. If your below water after paying likely selling expenses ask the realtor about fair market rent and see if that makes sense for you to be a landlord.

I would be happy to refer you to a listing agent in your area.
1 vote Thank Flag Link Fri Jun 20, 2008
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