Not so great expectations
Sam Schneiderman, broker owner of Great Boston Home Team, writes about how sellers calculate their bottom line.
Most sellers are reluctant to sell their real estate for less than they paid for it plus their sales costs (attorney, broker, sales or transfer tax / property stamps, recording fees, etc.).
Many are reluctant to sell for less than they paid, plus the cost of significant improvements they’ve made. Still others are reluctant to sell without making a profit over and above what they paid, plus the cost of improvements, plus their selling costs.
Compare that to just about any other item that we use today, with the exception of collectible items that are usually in demand because they are rare. We accept that just about everything else depreciates in value over time, except real estate.
Imagine selling your car, stove or bedroom set for more than you paid. Not likely. Why? Each year it is worth less and less, even if you maintain it and paint or refinish it.
How is real estate different? Have our expectations been realistic?
If I buy a house for $425,000 and live in it for 5 years, should I really expect to be able to sell it for $425,000 or more when it’s time to move on, even if I’ve maintained and painted it to prolong its lifespan?
Maybe its time to re-think the way that we’ve been thinking about real estate and what property resale numbers should really look like. What does (or should) breaking even on residential real estate used as a principal residence really mean?
Buyers and sellers will probably line up on opposite sides, but let’s hear what you are thinking and what your expectations are on this issue. Please let us know whether you are commenting as a buyer, seller, investor, buyer’s agent or listing agent.
