Most property owners we speak to all say the same thing. “We don’t HAVE to sell.” Which is very true, especially when a seller is not physically moving from the home. The main reason they say that is because the pricing strategy presented in alignment with the current market statistics is typically lower than they had hoped for.
It’s no secret, the Northern Outer Banks market is still in the midst of recovery, now with a rising inventory. We’ve tracked these cycles for many decades and the results are always the same. It’s a 20-year cycle. If the major down happened in 2009, we are merely halfway through before the next possible boom, based on recorded history.
Now, if you find yourself in the very common situation of having a home here on the OBX that you aren’t using as much anymore, don’t like the current market price, and feel like you don’t have to sell it, here’s what you need to know.
What exactly are my options if I don’t have to sell?
1. Recognize the big picture
Just because you don’t HAVE to sell, does not automatically mean that keeping the home is the best financial decision. Talk to your financial planner and tax advisor and get their opinion of the big picture financially.
2. Consider the amount you personally use the home
If you’ve gotten to the point of only visiting the home once a year, it could actually end up costing you more in the long run to keep it. We have very extreme weather on the Outer Banks. Homes left alone with deferred maintenance can often time develop big-ticket repair items the longer they sit.
3. Place the home in a trust
If you have children who are available and willing to step in and take over the management of the home, there could be some tax advantages in your estate by leaving the home to them in a trust. Check with a tax advisor for more
detailed information. I found this article below helpful as a starter.
The Tax Advantages for Creating a Trust for Real Estate
4. Consider making improvements
Outside of the economic market conditions of supply and demand, one of the other reasons some homes are experiencing a challenge on pricing is due to being in the original state. Buyers today have very different expectations of homes than they did when I started in 1997. If you are planning to keep the home for a few more years, do the improvements, enjoy them, then sell when you are ready. One word of caution, consult a real estate professional first so they can help you maximize where to spend your money so it makes the most impact to a future buyer.
5. Place the home as a year-round rental
Yes, that means less income overall. It also means less expense. Tenants in a year-round situation generally pay their own utilities, do the cleaning, change the filters and more. There is a huge shortage of affordable year-round rental homes in the area. This is also something you can manage yourself, with very little time and energy. Hire a maintenance guy to check on the place and handle the minor issues that come up. If you’re already not using the house, why not have just one family enjoying it year round.
6. Consider short term retirement in the home
So many buyers I’ve worked with over the years actually bought the home for future retirement. It’s unclear why more don’t actually do it. However, if you decided to just retire here for 5 years, enjoy the beach, do some improvements, the home could have a much different value then.
7. Take a closer look at what the home is costing each year to own
This is probably the best advice I can give. More often than not, the amount needed to price strategically compared to the amount it will cost to own the home for another 3 to 5 years is usually the same. I know it can be challenging to drop that price another $25,000 in order to sell, but what will it cost you to own it annually for the next 5 years? That’s not including any major deferred maintenance that will come up along the way.
The truth is, timing is everything. If you’re ready to sell, take a serious look at these options and decide the best course of action. First of all answer the most important question I presented in the beginning….
Just because I don’t HAVE to sell, does that mean keeping this home is in my best financial interests?
When you commit to looking at the big picture, as well as all other possible options and calculate the best move for your situation. If you need help discussing these or any other strategy, please feel free to reach out salesinfo@beachrealtync.com
Written by Ilona Matteson, Director of Broker Development.