Once we made the decision to stay in Europe for the foreseeable future, we had to decide on what to do with our main house. Our original plan had been to rent the house for a year. That way, we could always come back if we were tired of the journey. It has now been 18 months since we left the U.S. Frankly, the pull to go back is not there. There are people l miss, but most of my family no longer reside in the U.S. The same goes for my husband, most of his family are in Rome. Selling our primary residence was therefore not a very hard decision. We had a family rent the place shortly before we left. She signed on for a year, with the option to extend. She fell in love with the area and sub division and decided to purchase a home of her own.
We were left with two choices, rent it again, or sell it.
Here are the reasons why we decided on selling:
– It was the biggest piece in our portfolio. Even though the rent covered the mortgage, insurance, HOA fees, etc..etc.. and even had some profit left over, it was still a big amount to pay every month. Just the 3 months that it was unoccupied (2 months plus to decide to sell after having it on the market for rent, but we did not feel comfortable with any of the renters, having been burned so many times) while we prepared to sell and to actually sell it was an outlay of over $16,000. This included having to leave all the utilities on, repairing things that were broken, painting, pool repairs and of course mortgage. We don’t like dipping into our savings when the house is empty.
– Renters are not the best at keeping your place in tip-top shape. For instance, the renter used the A.C a lot. She did not change the filter (which cost like 10 bucks!). Instead, she just ignored the water that was seeping out of the walls from a back flow of the condenser. You couldn’t miss it. It was in the master closet. Anyway, end result was $1100 repair for something that could have been avoided (came out of our pocket). Her dogs also destroyed some doors and some part of the deck, but we were able to deduct damages from the deposit.
– To get tax-free profit from the sale, you had to have lived in the house for 2 out of 5 years before selling. Since we did not know how long we would stay abroad, we thought it better to take the profit now, than have to force ourselves to go back before we were ready so as to take advantage of the deduction.
– Property values in Texas never skyrocket, unlike California. There is just so much land, the hottest subdivision today might not stay that way for long, as new ones pop up continuously. Our house was only 7 years old. In Texas, a lot of people consider that old, which is insane! Our last house in California was like 60 years old, and was still “younger” than our previous one which was built in 1923!. Right now, it’s a seller’s market as the economy is booming in Houston especially. We felt it wise to sell.
– We never look back. I tend to love things when l have them. That house was special to us. It was newly built, and we got to choose the cabinets, floors, etc. It was a wonderful house, but once we left, that was it. There is no insane emotional attachment. I always buy with selling in mind. For instance, l can’t swim, but made sure we had a pool so l could sell at a premium when the time came. My husband did enjoy the pool though..as did the neighbors. I was fine watching from under the pergola! Even if we moved back to the U.S, l am pretty sure we would try another state, just for kicks!
– Despite the fact that we had property managers, it was still a pain to deal with. I liked using my own workers because they were like 60% cheaper than the workers used by them (they don’t really care very much since it’s not their money). Time differences made it a challenge also.
Things to consider before selling your house include:
- Ask yourself why you are selling. Make sure it is not because you are trying to keep up with the Joneses. It is important to make sure you are not doing it just because you were told you could afford a bigger mortgage or because your friend who makes less money than you, bought a bigger house and now you feel you must get an even bigger one :-) . When all is said and done, you need to be able to afford both selling and buying.
- Can you afford to sell? I know it sounds like an easy question. The fact is that there are numerous fees that go into selling. Real Estate agent fees average 6% of the sale price. There are the real estate taxes, escrow fees and so on. In Texas, the average amount you have to pay is about 11-12%. It is a lot of money, especially if you are in a state like Texas where your house might not have appreciated that much. It is also common for the buyers to request helping with their closing costs. For the most part, sellers to have to bring money to closing since they end up making $0 from the sale.
- Are you okay with renting? You may have to downsize assuming you are going to be renting. For us, where we no longer lived in the country, it was a moot point. Make sure to check what renting would cost you as opposed to staying put. Believe it or not, in some places, owning is actually cheaper than renting. Do your homework.
- Don’t even think about trying to be cheap with Realtor fees. I don’t think l can stress this enough. 6% of the sale price sounds like a lot to part with. It can however save you a lot of heartache. Let’s say for instance, you haggle with the Realtor and he/she agrees to a 4% fee. This will mean either your Realtor keeps 3% and must now find a buyer’s Realtor that will accept just 1% (nope.. ain’t gonna happen). More than likely, the scenario would be 2% for each side or your agent takes just 1%. You can almost guarantee that your house will sit on the market for a long, long time. There is no incentive for either agent to show your property since they would be earning less than usual. They are going to show the full commission ones and steer everyone away from you. You end up saving 2%, but have to cover your mortgage for months while it sits on the market.
- Forget about trying to sell it by yourself. Yes, l know some people get lucky and do it with no problems. Are you really going to chance such a big chunk of your estate on your non-existent knowledge of real estate? Do you really think that a Realtor would steer people to your property knowing they will get paid very little if at all?
- Don’t let your property become “stale”. People usually have an exaggerated opinion of how much their house is worth. They don’t listen to the Realtor, and price it higher than the what the market will bare. A direct result of that is that buyers stay away from you, leaving the house to languish and become stale. By the time you see the light, your pool of buyers is now smaller, and you more desperate. This might lead you to sell for less than you might have gotten had you just listened to the Realtor. You have to be objective. Look at things from the viewpoint of the buyer. That awesome shade of marble in your bathroom that cost you thousands? It might be the very first thing the buyer wants to rip out if they buy the house.
- Go neutral with your color scheme. Very few buyers will love the reds, purples or whatever colors you have. Keep it simple. It just might be worth it to have the house painted before you prepare it for sale. You want a buyer that comes in and pictures it as their house. You do not want the distractions of loud colors. People are basically lazy, and will move on to the next house, especially in a buyers market.
- Fix it up. Take care of the little things, the big things too, so you can command top dollar for your property. Buyers love nothing more than finding things that need fixing during their home inspection, and then asking for a huge discount off the selling price. You should fix it ahead of time. You want them to come in, love it..and invoke the feeling of “I’ve got to have it”.
- This is the most important part of all. Find a great and knowledgeable Realtor. That will make the difference. Two of our neighbors were Real Estate agents. We could have used either one of them to sell our house. We, however, wanted someone aggressive, successful and had a great track record of sales in the area. Don’t worry about offending, don’t worry that it’s your cousin Sheila and you feel terrible not hiring them etc. It’s all about you and the Benjamins :-) . You have to do what is best for you, and you alone. We had a buyer within a week. Sadly, they did not qualify for the home loan at the last minute, despite what their bank had said originally. This delayed our sale for 21 days while it was tied up, but we had another buyer within 2 weeks and the sale went through.
Thanks to the internet, it is now possible to sell your house without being in the same continent!
- The Realtor, once we found the right one, kept us in the know via email.
- The repairs were done on our behalf through her for the big jobs. She paid for some and we reimbursed her via easy pay through our bank. All you need to do this is the recipient’s email address and telephone number.
- The handyman that we use for the properties took care of the little jobs like painting. Since he was familiar with us, he did the job and we had the bank send him a paper check, as he is old school and doesn’t even have a smart phone :-) .He knew we were good for it.
- The escrow company would email us any papers that we needed to sign or have notarized to us. I would print them out, sign and send back. We were not able to notarize the needed papers till close of escrow. The reason being that unlike the U.S, the notaries here are more like lawyers. They needed the deeds of the property etc..etc. and it turned into a real fiasco, so l explained this to the escrow company. I suggested signing them all at once before closing.
- Once all the closing papers were emailed, we took the train to our nearest U.S consulate in the Malaga suburb of Fuengirola. There, they were notarized at a cost of $60 as opposed to the nearly $500 that the notary was going to cost ;-) . We had to show our passports of course. The escrow company arranged for Fedex to pick up the package, leaving a day leeway before final closing date, just in case there was some last minute things to fix.
- Everything went smoothly. Having been a notary myself years ago in California, l am aware of the need to check and cross check ;-). Having also bought and sold at least 9 properties, it was one of the easiest real estate sales we have ever done.
- Once the monies were distributed, we had our share wired into our account.
Would we do it again? Absolutely! It was great. There was very little stress as everyone involved were professionals. We had done our homework.
- I researched Realtors in my area, and settled on 3 to begin with. I emailed all three. One took over a week to reply..mmm..Nope. The second one replied in 2 days which wasn’t too bad. We picked the lady that replied in less than a day. We picked her not just because of the response time, but because she emailed me back with all the recent sales data from our area. She had also had her assistant look up the records of the house and had a pretty good idea of what it should sell for.
- Once l hired her, she went over the place with her inspector and pointed out things that needed to be fixed. We got the ball rolling and were ready to go live within two weeks.
- I checked her sales history, making sure to take note of how close to the selling price the listing price was.
- I checked the average time before her listings sold
– We now have just two rental properties left. A lot easier to deal with and they give the least amount of problems. If we ever decide to move back to Texas, we can move into the house that is currently rented and keep the condo as the only rental.
So far, we are happy renting for a change.. anything breaks, we just call the landlord. I must say we are awesome tenants though, perhaps because we have been on the other side. We take care of things! :-) .
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What do you think? would you have kept the property instead of selling? What about home ownership? is it for you? Would you ever consider selling your house from abroad?