Deciding Between Renting vs. Selling Your Home
The Savvy Synopsis
Are you considering renting your home and turning it into an investment property? Or would it be wiser to sell it as you prepare to buy a new home? We weigh the pros and cons on today's show.
Are you wondering what to do with your current house before you buy a new one? Or want to know how to make a reasonable offer on a home? On this episode of the Savvy Realtor podcast, Angie answers three questions from the mailbag.
When thinking about buying a new home, you may have to determine what is best for your current home. Do you sell it? Or do you rent it out as an investment property? Consider all the variables before making your decisions. What risk would you be taking on? Would you have a lot of buffer room between your mortgage and what you could make in rent? Would you rather sell the house to put more towards your down payment on your next house?
When it does come time to buy a home, how do you know what to offer on it? Should you negotiate for less or offer list price? Is there a time when you should offer above list price? All of this depends on how long the house has been on the market, how many people are bidding on it, and what the housing market is like in your area. Refer to your realtor and pull some comparables of other homes in the area so you have a good idea of the value of the home.
If you’re selling your home and have had several contracts fall through, why is that? Why do people back out of buying a home? Angie shares a few instances when people have backed out of buying a home. It might even be worth asking the initial buyers why they decided against buying your home.
Listen to the full episode or click on the timestamps below
0:44 - Mailbag: Should we sell our home or rent it out?
3:05 - Mailbag: How do you know what to offer on a home?
5:20 - Your realtor can help you determine how much to offer, but ultimately it’s up to you as the buyer.
6:48 - Mailbag: Why has our home had the contract fall through when trying to sell?
Get In Touch:
Angie Cole - Contact - Call: 919-538-6477
Note: This is an automated transcription. Please forgive the robots as they tend to make some (a lot of) mistakes...
Speaker 1: (00:02)
It's time for the savvy real tour podcast. I'm Walter Storholt alongside Angie Cole, the owner and broker in charge of a Cole Realty serving you throughout the triangle, teaching you about the ins and outs when it comes to buying or selling a home. You can find the team online by going to eight Cole realty.com. That's a C O L E realty.com or by calling nine one nine five seven eight three one two a that's (919) 578-3128 and now it's time for one of the top realtors in the triangle, Angie Cole and the savvy real tour podcast. Let's answer some great questions to get the ball rolling this week from listeners here in the area. Uh, our first one of the week comes to us from Damien. Damien is in Holly Springs and says, we're going to buy our next home suit. We need to decide what to do with our current home. We could sell it and use the proceeds to help with the down payment, but I'm also considering renting it out and turning it into an income property. What factors should we consider when weighing these options?
Speaker 2: (01:04)
Yeah, I feel like I, I feel like this is a question I get all the time and you know, I don't want to shoot down renting a home because you know what investments is a great idea, right? I personally invest. You need to really weigh the options of okay, what can I get from my home if I decided to sell, right? Like what is my home currently worth in today's market? So are you seeing a lot of appreciation where it makes sense to grab that money and then maybe put it towards a down payment of your next home. Then look at the rental market. What type of income will you receive? You know, if you are just, you know, above paying your mortgage, like you're not recouping a lot of additional money. I don't know that renting is the best route for you. And the reason why I say that is you need to remember that when you are renting a home, you are a landlord and you're also maintaining the home.
Speaker 2: (01:54)
So when things start to break, you need to make sure that you have a buffer for fixing that home. Um, I've also seen some situations, unfortunately where the tenants don't take care of the home quite like the actual owner would. So make sure that if you are looking to rent the home, there's a decent amount of ROI return on investment that makes it make sense longterm. So, you know, there's not that one way is better than the other, but I think it's important as a seller or as a potential landlord to look at all potential risk, um, to decide what is the best route for you to take.
Speaker 1: (02:28)
Yeah, that's a really good point. And a, Damien, a common question I think that a lot of people certainly have is he kind of get that idea of, Hey, I can make this property work for me, but you just gotta be ready for all the other complications that come around with that. It's not as easy as just flipping a switch. Right? There's, there's some more that weighs on your shoulders and you know that from experience, Angie, that you've got to deal with when you've got rental properties you're working with. That is so true. Yup. Great question. Damien. Thanks for submitting that one to us. You can submit questions by going online, by the way, to [inaudible] dot com or give a on social media. Just look up Angie Cole and the Aiko Realty team on whatever social media apps you like to use. Uh, Aaron's got another good question for us. Aaron is in apex and says, how do you determine what to offer on a home? How do you spot negotiating room versus a situation where you should offer asking price or maybe offer more in some cases?
Speaker 2: (03:20)
Yeah, you know, um, this I would say is really determined on how long the has been in the market. So, uh, first of all, always take the guidance of your real estate agent. You should have an agent that's looking out for you and your best interest. Uh, in North Carolina, it's silly not to have someone who is actively working for you because it is free representation. So, um, but the days on the market really can dictate you know, what to offer on a home. If at home, first of all has been on the market for a day and you are the only offer though, you know, I would say try to see if there's some wiggle room. I would definitely try to negotiate and save some money in your pocket. Now if the husband on market for a day and there's more than one author, you can only assume that you will need to probably offer asking price or maybe even go above.
Speaker 2: (04:07)
So it really depends on days in the market and what your competition looks like for that home. Now make sure that your real estate agent though is doing their due diligence or the due diligence for you and pulling comparables because even if a home's been on the market for a day, maybe there's multiple offers. But what if the comparables come back and the home is overpriced by $20,000? You know, then you need to make sure that, you know, are you in a position to be able to offer list price or above to win out on that home, but understanding that you know what the appraisal might come in low and then more than likely the seller would expect the buyer to make up the difference between purchase price and appraisal value. So you know, really taken the guidance of a professional, a real estate agent in regards to, you know, can I, can I save money? Can I negotiate? Do I need to go in with full? Asking price or go above is really important and working with an agent who understands our market because if you are not aggressive enough or understand the complete situation of that home sale, more than likely you might lose it to the next buyer that comes in behind you.
Speaker 1: (05:14)
Yeah, I think that's important to know. Angie and Southern then is a difficult decision for a lot of people to deal with. It is shorted trying to take that right path. They don't want to overpay for a home, but you also don't want him to lose a home that you're really interested in. So I know that through the processes that we've gone through, that's where we really, really lean heavily on the real estate agent's experience. When we worked with, with your team and with Vicki, it was just a very tough, you know, tell us the right answer. What should we do? You know, and it's
Speaker 2: (05:42)
say the toughest thing though, the, um, the toughest thing is when we do have multiple offers and you know, the home is priced where it needs to be and there's multiple offers. But given our client the guidance of how far above do you go, because in all reality we have to leave it up to the client. And you know, sometimes we can put in a super strong offer and it still doesn't win. But also you want to be cautious. You know, we don't want our client paying 10,000 above and come up. Well, you don't ever truly know. But what if the next offer in line was only a thousand dollars above, right? You've now paid a spread of $9,000 above the last offer. So it's really tough for us as a real estate professional to give you guidance as far as how much above to go in the asking price above the list price because we want you to save money too. We don't want you to put every single dollar into this home or to so-called overpay for it. So it's tough, you know, and it's one of those things that we don't ever, we don't always know the right answer either. Right? Um, as far as how far above. So sometimes I ha we have to leave that up to the client to make that decision. Yeah. You know, how much do they truly want that home?
Speaker 1: (06:49)
Gary is in Knightdale and says, Andrew, we've tried to sell our home over the past couple of months, three times. We've gone under contract only to have the deal fall through. At first we blame the buyers, but now I'm wondering if it's something that we're doing wrong or maybe it's our agent. Is this typical?
Speaker 2: (07:04)
I've had in all of my years of real estate, I've had, I think I've had two sellers. Nope, I've only had one seller where there's been three terminations and it honestly was completely out of our control. We had one that was someone relocate into the area, then fell through. We had another one who had I think issues with financing. Um, one person just had like a change of heart, you know it and it was so frustrating. But yeah, three times is getting up there. I think you need to dig deep and ask yourself, well why did this by or back out on us? Because normally they give you a reason, right? Is it, once again, did they have a change of heart? Did they something out of their, you know, realm is why they backed out or was it because of inspection issues? You know, is there inspection issues that are popping up that, you know what, maybe you as a seller, you need to go ahead and get those fix ahead of time so you don't run into that same issue down the road. So I don't have an answer for you, but I will look at the reasoning of why the buyers are backing out on you. Because yes, I've only had that happen once in all my years of being in business that I've had three, actually it wasn't even three terminations was two terminations a third worked out. So third time was a charm. But yeah, three times is a lot. I don't know who to blame.
Speaker 1: (08:20)
Maybe it's not so much finding someone to blame here, but you know, we had that conversation earlier in today's show about finding a real estate agent, questions to ask, you know, interviewing that agent maybe now would be a good time, Gary, to talk to some other agents just to get a second opinion at this point because we're not blaming your agent and saying it's that. But you know, maybe it's time for an outside perspective to get some analysis here. So, but you would need kind of the specifics of that to truly determine, but it is unusual so you shouldn't hesitate to reach out and seek some other advice.
Speaker 2: (08:50)
Yeah, no, I, I completely agree. And you know you have every right, you know, as a kind of the consumer, as being the seller to ask for other opinions. You definitely can. Now us as agents, we can't reach out directly to you because you are with another agent. But you know, if you want to do your research and ask, ask around, you know, thoughts, opinions, run with it. But once again, make sure you understand why those initial buyers, why did they back out on you because that would be good stuff to talk through.
Speaker 1: (09:15)
Yeah, that's a great point, really good question there Gary. Thank you for submitting that one to us as well. You've been listening to the savvy real tour podcast. I'm Walter store Holt alongside Angie Cole. She's the owner and broker in charge of Aiko Realty here in the triangle. And if you have questions for Angie, we invite you to go online to a Cole realty.com listen to past podcast episodes on the website, read the blog and all the great information including the option to find a home right there on the website. That's a Cole real T. dot com and you can also call Angie with your questions. (919) 578-3128.