Your Myrtle Beach Home - To Sell or Not to SellGreg Harrelson - Myrtle Beach Realtor

I hope you are having a wonderful summer. I am happy to report that the Myrtle Beach real estate market is alive and active. We are getting close to the end of the summer which means the summer selling months are almost over and the fall and winter buyers will be making plans to come down soon. As I promised, I am keeping my eyes glued to this market and looking for signs that may direct us on what we should be doing.

As for Myrtle Beach real estate, the signals have been a little confusing throughout the past few months. We see more sales taking place yet the price levels are still slipping. We see inventory going down in some areas yet prices are not rebounding. I can imagine how much mail you must be getting from real estate agents wanting to list your property for sale. I want to share a few thoughts with you this month to help you understand the market and to help you navigate through these tougher times.

Many property owners have called me to ask if they should sell or not. Obviously, this is a decision that can only be made by the property owner once they have looked at the market as well as their personal financial situation. It's easy for an agent to tell you to sell so they can get a commission yet selling real estate should be based on a logical view of the short term as well as long term costs and benefits. The following are a few thoughts that I personally consider when determining to sell a piece of real estate.

For Myrtle Beach Resort Properties:


1. Is the property in a positive or negative cash-flow?
In most cases, resort real estate has a negative cashflow, which has to be offset by the owner investing more of their savings into the property to keep the debt paid. If a owner is investing $15,000 per year in negative cashflow on a property that is only worth $150,000, then that is roughly a 10% loss per year. So, the property needs to appreciate by 10% per year just to offset the negative cashflow. None of us can predict the market, yet you have to determine if you believe the market will appreciate 10% annually. Most believe that 10% is unrealistic therefore they decide to sell and eliminate the future losses.

2. Is the age of the property a concern? There are many resort properties that are getting to the age where special assessments are being issued. I just heard a horror story in North Myrtle Beach where each owner in the building was assessed $70,000 to re-face the building. Of course, this is NOT common, yet for the owners in that building, it's very real. Age of the property does influence my decision, yet doesn't always determine my strategy. This is an area that I evaluate to determine future risk of increasing expenses.

3. How long will it likely take for the market to rebound? Once again, it is hard to predict the future, yet it is very important we understand how long it is likely to take to get to a price where the investment can make sense. In the example above, a 10% annual appreciation in value would not help us at all. We would have to pay 10% to make 10% which is a complete wash. So, if it costs 10% in expenses and the property value does not go up at all, then it is nearly impossible to catch up. If it takes the market five years to increase in value, then it would cost $75,000 in cash to wait for that to happen. At what point does the costs exceed any reasonable appreciation one could expect out of this market?

For Primary Residence Homes in Myrtle Beach

 

1. Am I Selling or Repositioning? This market may be an opportunity for those that own a primary residence in the Myrtle Beach market. Let me explain: I have helped many homeowners sell and then buy another home in the Myrtle Beach area, and in each case where my seller has had to sell their home for less money, they were also able to buy their next home for less money. So, selling low and buying low is what is taking place. What you may lose on the existing home is most often made up in savings on the next purchase. The key is to reposition yourself in a property that may have a much better chance of appreciating in the near term.

2. Does new construction exist today? New Construction is a major concern to me personally. I am selling a personal home today at a price less than I want, because I know a builder that is about to start building homes in the area for the same price as I am selling mine. I do not feel that buyers will want my 6 year old home if they have the option to buy brand new for the same price.

3. Are the prices going up where I am going to move? This is similar to the sell low and buy low scenario. You need to make sure that you understand the market where you plan to move. In many cases, the market in the area you are moving is appreciating in price at a faster pace than what you own in Myrtle Beach. This could be a big problem. As you wait to get more money for a home in Myrtle Beach, the prices in the next market could be going up faster. What if the home in your new market goes up by $30,000 while the home in Myrtle Beach only goes up by $10,000? This is another $20,000 loss.

Please note that I am not intending to cause panic, nor am I suggesting that someone sell when they are not currently considering to do so. My intentions are to keep you informed on what is happening in Myrtle Beach real estate today. In my opinion, I feel that those suffering from negative cash-flow may never catch up, and selling the property now is likely the best financial decision. Most people need to stop throwing good money after bad.

I am committed to sharing sound advice to owners like you without using scare tactics to influence your decisions. Unfortunately, the market and the economy may not rebound fast enough to recoup the losses. Therefore, the above points may need consideration.

I am studying the market daily as well as meeting with banks, builders and other important officials to stay informed myself. Many of the thoughts that I share are a result of these meetings. I am honored to be your Myrtle Beach real estate resource and I welcome you to contact me at anytime for any reason.

Committed to Being the Solution.

~Greg Harrelson