Should Equity Seller Even Be Listing Now?

[no_such_reality]

horse trade away Casey.

[spdrun]

I’m not cut out to be a full-time 8-6’er, so that’s what I HAVE to do to survive, pretty much.

[Adame99]

This is a really fascinating discussion, with lots of good information.

OK, since people seem to be speculating about my situation, intentions, what cap rate I can get, etc, let me flesh things out a bit more.

SD Realtor: I really like your point in regards to having a plan, but being flexible about it. My plan for the proceeds is to get back into the equity market, which is where I am much more comfortable. I had to sell my equity portfolio (not my 401K, that’s still there) in order to put down 20% on my recent purchase (a 4 bed/3 bath in a pleasant part of suburbia).

The old place is a townhome in north Misson Valley. The cap rate based on what I still owe on it would be just under 10%. The cap rate based on what it’s listed at would be a bit over 7%. The cap rate based on what I think it could actually sell at is 6%. So it seems to make sense for an investor to buy it and rent it out.

I’ve decided to keep it on the market and counter strong offers (cash or very strong conventional) at 10% above list. First one who accepts takes it.

Strangely enough, even though it’s on the MLS and people are making offers on it, I don’t see it on Redfin, Trulia, or any of the other real estate websites. Not sure if there’s a delay in those sites picking up new listings or if there’s an error somewhere. If it is a delay, that puts buyers who use these sites at a significant disadvantage since they’d be coming late to every party.

[no_such_reality]

Oh, I agree and I wish I had done more.

But for a first time and for a person saying “I don’t want to be a landlord” then selling means his money is going to end up somewhere else.

Having some experience as a landlord is critical before horsetrading.

[carlsbadworker]

[quote=SD Realtor]Now if you are attempting to be a real estate market timer then you may want to consider selling. It was not hard to forecast the previous crash. The frenzy that we are seeing now is not going to last, however it is not going to be a precursor to any sort of crash either. If you think there will be a substantial depreciation event in the near future then sell now. That is a no brainer. I do not, so I would not.[/quote]

SDR, on average, what percentage is the transaction cost for $300-400K home? I cannot image being a market timer in real estate given the transaction cost. I am comfortable selling stock if I think it is 20% over-priced, but I am not that comfortable selling real estate at the same over-price ratio, given the transaction cost (including agent commissions, closing costs, repair costs, etc).

[no_such_reality]

[quote=carlsbadworker][quote=SD Realtor]Now if you are attempting to be a real estate market timer then you may want to consider selling. It was not hard to forecast the previous crash. The frenzy that we are seeing now is not going to last, however it is not going to be a precursor to any sort of crash either. If you think there will be a substantial depreciation event in the near future then sell now. That is a no brainer. I do not, so I would not.[/quote]

SDR, on average, what percentage is the transaction cost for $300-400K home? I cannot image being a market timer in real estate given the transaction cost. I am comfortable selling stock if I think it is 20% over-priced, but I am not that comfortable selling real estate at the same over-price ratio, given the transaction cost (including agent commissions, closing costs, repair costs, etc).[/quote]

Why, your transaction cost is actually higher in the stocks unless you’re trading in a 401K or IRA

On a cash deal, the transaction cost runs around 6%. If you’ve live in the home 2 years, it’s tax free.

Sell you stock for a 30% gain and you’ll pay 30% of the 30% (9%) in taxes.

[SK in CV]

[quote=no_such_reality]

Why, your transaction cost is actually higher in the stocks unless you’re trading in a 401K or IRA

On a cash deal, the transaction cost runs around 6%. If you’ve live in the home 2 years, it’s tax free.

Sell you stock for a 30% gain and you’ll pay 30% of the 30% (9%) in taxes.[/quote]

That’s nonsense. Transaction costs on RE are always higher than on stocks, except for sometimes when selling a personal residence. If we’re talking about “market timers”, then we’re talking investors who will pay the same cap gain taxes as a stock investor.

The OP MAY have an instance where it makes sense to sell now and buy something else because of the taxes, but that depends on whether he’s sitting on a gain or a loss right now. If he’s sitting on a loss, he’s better off holding on MORE than 3 years and being able to write off the entire loss as ordinary.

[no_such_reality]

And again SK, the person posing the question is none of those or they wouldn’t be posing the question.

[SK in CV]

Right, and unless I missed something, we have no idea if he’s sitting on a gain or loss. The likelihood of a taxable gain is almost nil.

[no_such_reality]

Really? He’s talking about trading when it’s 20% over-valued. You really think he’s talking about doing it on an upside down asset?

[carlsbadworker]

[quote=no_such_reality]Why, your transaction cost is actually higher in the stocks unless you’re trading in a 401K or IRA

On a cash deal, the transaction cost runs around 6%. If you’ve live in the home 2 years, it’s tax free.

Sell you stock for a 30% gain and you’ll pay 30% of the 30% (9%) in taxes.[/quote]

Yes, I am trading mainly in IRA.

[Adame99]

I’m not sure if you are referring to me (I’m the OP), but you are right. I am not upside down. I bought the place almost 10 years ago and a lot of the mortgage has been paid off since then.

[Adame99]

[quote=no_such_reality]Really? He’s talking about trading when it’s 20% over-valued. You really think he’s talking about doing it on an upside down asset?[/quote]

OK, finally got the quoting people thing right.

[SK in CV]

[quote=no_such_reality]Really? He’s talking about trading when it’s 20% over-valued. You really think he’s talking about doing it on an upside down asset?[/quote]

I’m not sure what this means really. I don’t think a property is ever over-valued, if it will sell at that price. I know he’s not upside down, but that has nothing to with whether he’s sitting on a gain or loss or even a break even. Regardless, the question has been answered (I think).

[bearishgurl]

Adame, if your condo is near Fashion Valley, those (3-4) large established complexes are favored by USD students as they are just down the hill from campus. When I was an active RE salesperson, there were several agents in my brokerage who bought them for their USD-student children and collected rent from the parents of at least one roommate.

These agent/parent/LL’s also paid all the utilities and HOA dues and just charged the other students’ parents monthly rent accordingly. As I recall, most of the parents of the renting (usually out-of-county) students paid rent to the local agent/parents by the semester (prepaid).

This private school has a good reputation and also has renowned graduate/law schools. Both the undergraduate and graduate schools are fairly selective. At those prices, USD students aren’t usually heavy party animals.

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