Believe it or not, there are cons to selling a home. Whether you are downsizing, making a lateral change or upgrading, selling a home means considering taxes, equity and monetary access. If you are wondering, "what are the cons of selling my home?", you will find some answers to that question here.
Buying Versus Selling
"Can there really be cons to selling my home?" you may ask. There are vast volumes of information found in bookstores and online about the benefits of buying a home. For many people, their home may be the single largest asset they own during their lifetime. Instead of paying for someone else to build equity, homeowners build equity that can be accessed during financially difficult times. Homeowners also get greater tax deductions for mortgage interest and property taxes. Owning a home may, at some time, present the issue of selling the home. While most of the information found involves selling a home for profit, there are some cons to review when considering selling a home.
If you have owned your home for an extended period of time, you should look at the annual property tax issues before you sell. This can be a significant con to selling a home. The reason is, some counties maintain the fair market value of a home at the last official assessment, meaning when it was bought or refinanced. Selling a home and moving into a house of the same size, or perhaps even smaller, may cost you more annually based on the current property tax assessment.
There are times when selling a home is based on a life event filled with emotion and a need for change, such as divorce or death. Divorcees are often seeking to sever ties and start a new life. However, divorce is stressful enough as it is, and adding the sale of a home to the process only adds more stress. The market may not be conducive to getting the ideal price for the home, and both parties may be forced to take less than what they could otherwise get for the house.
Inheriting a home can leave beneficiaries needing to liquidate many assets to deal with debt on the estate. Beneficiaries may also be eager to cash out and get the money. The same problems lie with closing an estate out as with a divorce. Selling quickly can greatly reduce the amount of cash the family can obtain from the sale. Moreover, if estate taxes are due, the fair market value of the home is considered rather than the sale value. Thus, the taxes are greater, while the cash liquidation is less.
Loss of Equity Access
A family's first home is often a modest home that fits the essential needs of the family. As life goes on, you may get promoted at work, have children, or take on an elderly family member. As your family dynamic changes, there may be the urge to upgrade your home for something bigger. This may be to "keep up with the Jones'" or to simple improve your lifestyle based on your new circumstances. When you do this, the new home upgrades utilize all profits from the old home as a down payment, but restart a mortgage for 15 or 30 years for a larger amount. You may be upgrading, but unable to afford anything extra, therefore, taking out a home equity loan if you need capital may be out of the question.
As you can see, there are many reasons that would cause a person to need to sell a piece of real estate. but wonder "what are the cons of selling my home." The primary cons of selling a home boil down to a possible increase in property taxes depending on the county you live in, not getting the fair market value due to emotional or hasty sales, and losing access to equity. Of course, speaking with your financial advisers can help you determine whether the pros of selling your home outweigh the cons. Each scenario is different.
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