When I talk with homeowners about the price to list their homes, they almost always want to list it a little higher so they have "negotiating room." Unfortunately, in this market adding 5% above where you "should" be listed is enough to price you out of the market, and decrease your showings.
I've been meeting homeowners who purchased a home 4-5 years ago, took out a line of credit on the home and spent considerable money fixing it up and want to sell it at a profit. Lately, it seems I've been the bearer of bad news. Most of the profit the homeowners where hoping to realize, is eatin up by closing costs so they won't get the profit they were hoping for, and in fact it's likely they'll need to bring $5,000-$10,000 to closing. In response to that they say "I'll just rent it for a year!"
There are no current market indicators that show home prices in the Twin Cities will appreciate 5% in the next year so these homeowners can sell and at least break even. All this year I've been saying "it will take until the end of 2009 to even out." I'm not an economist, but I do know how much inventory there is on the market and how long it takes banks to sell foreclosed properties.
If you're a homeowner who is planning to rent your home for a year, you may want to plan on renting it for at least 2 years to make it worth waiting.
Then, bone up on landlord requirements and save some money to fix the house up again before you put it on the market. Here's a workshop that's a "must attend" for you brave souls entering into the land of landlords:
Rental Property Owner Workshop
Sponsored by the Minneapolis Police Department and Housing Inspections
Thursday, October 23, 5-9 pm
St. Mary’s Greek Orthodox Church
3450 Irving Ave. S, Minneapolis
Pre-registration required. Cost: $20 if registered by Oct. 16; $30 thereafter. The fee covers a manual and other materials, a DVD on Housing Court and a box meal.
This 4-hour workshop includes useful information on:
- The ABC’s of property management
- Dealing with tenant behavior issues
- Tenant screening
- Effective leases
- Housing Court
- Working with the MPD and Inspections
- Much more
The workshop is particularly helpful for new owners and those owners/managers who are having problems at their properties. There are more details and a registration form at http://www.ci.minneapolis.mn.us/safe/workshops.asp.