– Run your numbers through a rent vs buy calculator. Factor in EVERYTHING, your tax benefits by staying, other benefits like not having to pay HOA and additional homeowners insurance if you rent… etc…
– If you do plan to sell, be very REALISTIC about your sale. Your net will be sales price – commissions (listing side and buyers agent side) – sellers side closing costs (typically 1% of the sales price – additional credits or concessions the buyer may ask for (these are negotiable but as the market continues to tilt, buyers are asking for more) – prorated mortgage and property tax. Also the 1% estimate I gave on the sellers side are “typical” sellers side expenses such as splitting escrow 50/50, purchasing title insurance for the buyer, paying for the home warranty, paying for county transfer tax $1.10 for every $1000 of the sales price, paying for HOA doc prep, paying for natural hazard and zone disclosure… etc. You may incur more if you have major repair work or major termite damage or any sort of prepayment penalty on your loan.
The commissions you pay are all negotiable and up to you. You can go full service or you can do a for sale by owner or you can use a discount or selected service broker. I would suggest that the commission you offer to the buyers side be competitive with all of your competition in the area.
– If you do sell then take the proceeds and put them in a safe haven or at least a good portion of them. If you are POSITIVE you can make a better return then so bit it. I have a relatively large (by my standards but not by others here) sum of cash I have busted my butt for and 90% of it is in money market and cds… the other 10% is in the market. I don’t get a sparkling return but I sleep at night regardless of the tilt of the market.
– I would encourage homeowners, especially young homeowners to do what Rustico said which is try to hold as many properties as you can as you move through life. Think about it. If you can do it 3 times then by the time you are 50 or 60 you have 3 rentals and they are paid off or close to it… Talk about an instant pension. Just make sure that although you will stay in the home, get to work and start saving money in as prudent as a manner as you can.
– The converse of that is that these are going to be different times. We could indeed have a dip the likes that we or I have never seen. Additionally we may be in a credit crunch situation such that leveraging your home you have lots of equity in (that is presently that you have equity in) may be difficult in the future. We don’t know the lending climate and we don’t know how much equity you will have in a few years.
– On a personal note I did indeed sell one of my rentals (condo in mission vallyey) a few months ago and put the cash away. In that short time the prices have moved down a few percentage points while the proceeds of the sale went into a cd.
Sorry if this post doesn’t help you to decide. Just trying to throw in my two cents.
