In order to feel good about listing our Florida home, I want to make sure I’d be coming out ahead in the real estate game. It’s not as simple as slapping a price on my home that’s above what I originally paid in 2005. Like most people, I invested a lot of money into my home. According to a recent article by CNBC, home prices are on an upward trend. What’s more, prices have hit all time highs in some real estate markets. A survey by Redfin showed 40 percent of home sellers intend to price their homes above market value, which is up from 33 percent earlier in the year. One of my neighbors plans to list his similar home with a pool for $230,000. He originally paid $200,000. I’m going to wait and see whether his home sells. Another friend purchased a new home before listing her old home. I’m also curious to find out her results. In the meantime, I’m crunching the numbers to determine whether I have invested too much in my home to move.
Trading interest rates
If we sell our home, we will not only be trading actual houses but one mortgage rate for another one. At this time, we have a 2.75 percent interest rate. Our bank said if we took out a new mortgage, we would be looking at a 4.5 percent. Depending on our mortgage amount, we could potentially be paying an additional $25,000 in interest charges over the course of a 30-year loan.
Tallying up the upgrades
We paid $183,000 for our home, which included all the basics. We spent another $11,000 on hardwood floors, new carpet and $2,000 on upgraded appliances and faucet. Other costs included $1,000 for landscaping and $800 for paint and custom window treatments that could not be removed from our existing home. I estimate the true cost of our home be about $200,000 if I include another $2,200 in miscellaneous home improvement costs.
Being willing to wait
According to the article by CNBC, people have different approaches to pricing their home. I am part of the 13.4 percent that would rather price my home high because if the market doesn’t value my home, I can wait until it does. Another 5.7 percent of people said they would price their home high in order to pay off a mortgage. Fewer people price low to avid the risk that the property doesn’t sell. We don’t intend to buy another home until our current home sells because we might be desperate enough to price it low out of fear.
It’s tricky to do price comparison in my neighborhood even though Zillow.com is a helpful tool. Zillow offers a foreclosure sale estimate of $143,000 for a home in foreclosure that is the same model as my own. Few homes in my neighborhood were listed as traditional resale homes. Comparable short sales and foreclosures listed for $108,000 to $120,000. Even with all the upgrades, I don’t think it’s realistic to list my home for $200,000 or higher. If I did list it for that amount, I imagine I’d have to wait for a real estate miracle. All emotions aside, it doesn’t make financial sense for us to sell our home at this time.
More from this contributor:
I’m Not Retiring to a College Town
An Inexpensive Wedding Prevented a Foreclosure
My Home But Not Its Equity Will Matter In the Future