- Home prices don't always go up -- they go down, too.
- Carrying two mortgages puts a lot of pressure on a seller, and an empty house may be harder to sell.
- For every day a house goes unsold, sellers incur a cost.
Some homesellers told me that if they didn’t get their house sold last summer at the sales price they wanted, they would take it off the market before Thanksgiving and wait to put it back on the market after the holidays.
They would “carry the house” until spring. Their logic: During the spring market, they certainly would be able to sell it for the higher amount.
I didn’t say much. It wasn’t my plan. Suffice to say, I’m not a big believer in carrying a house for any length of time.
I don’t have the nerves for it. Through the years, while I have bought and sold four homes, I have never owned two places simultaneously.
One time, I actually lived in corporate housing for seven months, rather than owning two homes.
If the collapse of the housing market taught me one lesson, it was this: Prices don’t always go up — they go down, too.
Who’s to say that next year’s spring market is going to be better than today’s market?
There is nothing in my state’s economic news that gives me tremendous comfort that the market will be improving by leaps and bounds.
As I thought about these sellers’ idea, I could think of seven reasons carrying a house is a less-than-ideal situation.
1. What goes up comes down, including home prices.
2. Evidence has consistently shown that the longer a house is on the market, the lower the offers become.
Taking a house off the market doesn’t eliminate “market time” in the minds of buyers. The first question every buyer factors into their offer is this: “How long has this property been available?”
3. An empty house is a disaster waiting to happen.
Pipes break; squirrels get in; the sump pump goes out; and so on.
4. Time equals money.
For every day a house goes unsold, sellers incur a cost.
Just add up everything (taxes, mortgage interest, insurance, utilities, landscaping, snow plowing, repairs, maintenance and cleaning costs) and divide by 365. That’s the daily cost of carrying a house.
There is a break-even point where selling the house for less will start to net more money than carrying a house.
5. Opportunity cost
As long as the house is “being carried,” money is being tied up in maintaining an empty house rather than in an income-producing asset.
6. Depreciation
Everything in the house depreciates with time: the roof, the furnace, the appliances, the windows.
Time puts additional wear and tear on the house and devalues the house further in buyers’ eyes.
7. It’s harder to sell an empty house.
When the house comes back on the market, it’s empty. The vast majority of homes show better when someone is living in the house.
I’m sure if I thought about this longer, I could probably come up with more reasons. Like I said, I’m not a fan of carrying a house!
Ann Jones has been a respected Realtor on the North Shore of Chicago for nearly 15 years. Her primary market is the Lake Forest/Lake Bluff area but serves clients along the shore as well. Follow her blog at anns-blog.com or on Pinterest.
