Selling 3 months after a bad comparable


#1

Hi folks,
I was planning to sell my North San Jose house in September 2018 when my tenant lease would expire. A similar house in the neighborhood (same sq ft, same floorplan, similar condition) sold in April 2018 for $1.5M, which is close to the current redfin estimate and Zillow estimate. However another exact same model with similar condition sold yesterday (June 2018) for 1.3M, sold by an out of area agent I believe. Do you guys think this comp will affect my sale in September 2018 ? The tenants are ready to go month to month and so I have an option of selling in March 2019. I need to sell by end of 2019 to get the 500K primary home capital gains exemption. I need to sell for monthly cash flow due to a job loss. Between Sep 2018 and March 2019, there’s obviously the economy uncertainty, interest rates and buyer-seller market changing dynamics risk. What do you guys recommend ? Thanks in advance.


#2

The latest comp will most definitely affect your sale price. The market is softening now with less demand, and I’ve seen prices decline to levels at the beginning of the year. I believe this is a temporary slowdown so later this year or early next year may be better. Since your tenants are willing to do month to month, I would reassess the market each month and decide to sell at that time if the market has picked up.


#3

The fall is never a great time to sell. You have a lot less buyers shopping. If you can wait for spring, that’s the better option.


#4

Actually, that used to be true, but I noticed in the last couple years that the “spring” selling season starts earlier and earlier and ends earlier too. In 2017, October - December was actually pretty crazy lasting until April 2018. I think people started to realize that spring is crazy, so they wanted to beat the rush and look in winter where it is typically softer.


#5

The $1.3m comp will impact your buyer if they are financing. Appraisers can use comparables as far back as 1 year, providing they make adjustments for time. It might not be a bad idea to ask the buyers how they negotiated such a great deal. Everyone want’s to tell that tale! Perhaps it was a Corp Relo? A family sale? Perhaps the buyers want to flip the house? Who knows…The data the buyers provide might allow you to sell your homes strengths and let any buyer of your home know the reason why that one went at $1.3 and why this one is worth $1.5. Better yet, If the home is in an area where cash sales are prevalent, you might not have an issue attracting buyers at that higher price point.

Thanks for reading,

LoansbyJW


#6

Personally, when I hear JOB LOSS, I have a tendency to want to go into mandatory full self-preservation mode. So for me, I would sell asap so that you are helped immediately financially. I could care less about what might happen down the road if my immediate financial status is about to take a serious dump. It depends on your specific circumstances, of course…


#7

Hope you didn’t work for Tesla :frowning:


#8

I do have 1 year expenses worth emergency funds but high chances that future income won’t be as high as last income, hence the concern.


#9

No need to panic. I lost my job 4 years ago but my net worth has more than doubled since. The secret to that? KEEP ALL YOUR ASSETS.


#10

Ok, not everyone is as fortunate as you. Some of us actually live in the real world, where a job loss is going to have a significant impact. If one is able to rationalize that his/her future income is going to be less MOST LIKELY, I think it would be prudent to act sooner than later. Again, YMMV as they say…


#11

Oh wow, I’m actually not living in the real world. I’m living in my own little bubble… :rofl:


#12

Sound like this is a cashflow negative property and the loss is significant to warrant selling. If this is a cashflow neutral or slight negative, this would be a non-issue and it is probably best to keep this property.


#13

It is cash flow neutral, since I bought the property in 2009, but currently only ~3.5% (rent/value)


#15

If this is cashflow neutral, I would keep it, especially at 2009 prices and probably low < 4% interest rates and prop13. You can never buy this house again at these prices.


#16

OMG. Keep it!!! Keep it!!! I would kill to possess a property like that :crazy_face:


#17

Well, if your main income stream is kaput or about to be lower, I don’t know that I would be so worried about that…


#18

I wish I could keep the rental for ever. But I have primary house with a $8400 PITI (bought in 2015), which might be hard to make payments with a potential future salary expected to be around half of my last drawn income.


#19

I wonder if we can buy out partial ownership of the house. This way you can get instant cash without selling and still keep the house for future appreciation and cashflow (but would be shared with new investor).


#20

Maybe you can convert that into a rental instead and move back to your old home? I know it could mean a downgraded living standards but there has to be some short term sacrificing for long term well being.


#21

inflation is your friend and it is coming! :slight_smile: