We Are Going to Move in 2016 …Should We Sell or Rent Our Chesterfield MI Current Home?

Rick Giese associate broker at RE/MAX Advisors was asked this question this week: Should We sell or rent our current home to move? This is what Rick showed them to help them make their decision.
 
 
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Tags:
Rent
Sell

Industry:
Real Estate

Location:
Clinton Township - Michigan - US

CLINTON TOWNSHIP, Mich. - Dec. 20, 2015 - PRLog -- This is a very interesting question. I was at a listing appointment yesterday with potential sellers and they asked us what I thought. First off, I had to let them know that this decision is going to be entirely theirs but what I would like to do is give them some information on some things that they may not be thinking about.

In our example let’s say that the house is worth $150,000 today and if they were to rent the  home they could rent it for $1,200 per month. And their balance to pay off their mortgage is $115,000. In the Chesterfield Township, Michigan area we have seen consistently a 3% to 5% steady increase in the value of homes over the past couple years. Now let’s look at what each scenario looks like for the seller.

Selling the house for $150,000 with a payoff of $115,000. Just paying the typical seller side closing costs here in the Southeastern Michigan area.

$150,000.00 Sales Price

$11,549.20     Seller Closing Costs

$115,000.00 Mortgage Payoff

$23,450.80   Net to Seller

So as you can see the seller would have a Net proceeds of $23,450.80 after selling the house at the current mart value.

No let’s look at the renting scenario.

$1,200.00      Per Month Rent

$14,400.00   Annual Proceeds

$10,800.00   Annual mortgage payment

$1,440.00      Property Management fees for year

$13,140.00    Total Carrying Costs

$1,260.00      Profit to Seller

Now this scenario is not taking into consideration that during the 12 months that their house is rented out that nothing will need to be repaired or replaced. Not sure that this is really even possible. But we will say OK, no repairs for a year.

Now we will look at selling the next year with 4% Increase in value. Remember here in Chesterfield Twp, MI  area we are averaging 3% to 5% annual increase in home values, so we will split the difference at 4%

$156,000.00 Sales Price (4% above previous year)

$12,006.06    Seller Closing Costs

$108,000.00 Mortgage Payoff

$35,993.94    Net to Seller

Here comes the alarming part a seller.

$23,450.80   what they would make to sell today

$35,993.94    what they would make if you sold after 12 months

$12,543.14     Difference between years

$13,140.00    Cost to maintain the home for one (without ANY Repairs or Costs)

-$596.86        Cost to hold home

It literally costs them to hold the house for year rather than sell today. Again we have not even factored in any repairs of appliances, Furnace, Central Air, Hot Water heater, Roof, nothing at all.

So I did say that the decision was entirely up to them to make, but we would just explain what this means to them. We will let you know what they decide. They did have a few things to do prior to listing their home for sale or rent and Christmas is in a few days. So they would hold off until probably after the new year.

If you need any assistance in selling your home please feel free to call Rick Giese associate broker at RE/MAX Advisors at (586) 242-3100 or you can email me at rick@rickgiese.com to go over all your options with you.

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Rick Giese
***@rickgiese.com
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Email:***@rickgiese.com
Tags:Rent, Sell
Industry:Real Estate
Location:Clinton Township - Michigan - United States
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