If you're one of the more than 300,000 Americans expecting to lose your job this year, you could be hit with a second whammy if you take a job out-of-state and have to sell your house, real estate experts say.
"After losing your job, you may well find your house is worth less. Worse, you could find it may take months to sell the old house, thus requiring you to carry two monthly housing payments," observes Peter G. Miller, an author of books on real estate.
It's the old story of supply and demand. Declining demand for housing often accompanies the loss of jobs in a community, points out Dan Lacey, editor of Workplace Trends, a newsletter focusing on employment issues.
"We're definitely hitting a stress point on relocation. People must move and yet can't move, at least not easily, because of the house price situation," says Mr. Lacey, noting that since the mid-1980s far fewer employers have offered relocation assistance to those they hire or transfer.
If you're caught in the bind of having to sell in a less-than-ideal real estate market, it's tempting to hold out for the price you believe you deserve. But realty specialists say it's usually better to sell at a discount now than carry the property for months in the vague hope the market will rebound.
"The best advice is usually to cut your price, sell it, take your hit and run like hell," says Ira Gribin, a former president of the National Association of Realtors.
Mr. Gribin says many home sellers make the mistake of thinking they're entitled to a price at least equivalent to what they spent to buy their home.
"The market is the market is the market. What you paid for the house has nothing to do with the market value of the house," says Mr. Gribin, who compares fluctuations in housing prices to those of stocks. He says many people willing to take losses on securities are unwilling to accept them on their homes for emotional reasons.
"It's self-justification. It's like the boss who hires someone who doesn't work out and yet won't fire them. Or people who stay in bad marriages. These are the people who fear making a decision. They think life is a dress rehearsal," Mr. Gribin says.
Of course, you don't want to unload your property for a ridiculously low price. "There are a lot of insomniacs watching late night television who think they can buy your house for $12," Mr. Miller jokes.
Still, accepting a price that is slightly less than comparable homes in your neighborhood or that is below what you paid for the property a few years ago could be financially wise when you add up the costs of the alternatives, realty experts insist.
"People are generally hurt when their house remains on the market month after month because they have to pay a number of costs. They have the carrying costs of the mortgage, property taxes and insurance. And then there are a lot of 'silent' costs," Mr. Miller says.
Silent costs include utilities. During a cold season, you'll need to keep the heat on in your vacant home to prevent pipes from freezing. During hot, humid weather, air conditioning is necessary, at least on an intermittent basis, to keep the house smelling fresh.
And after you've moved out of town, don't forget that someone will need to keep up your place. Probably you'll have to hire
someone to cut the lawn, clean the gutters and replace burned-out light bulbs.
In addition, you may bear increased security costs for your vacant home. You may need a burglar alarm or timers to turn lights off and on.
One way to help offset some of the costs of carrying your unsold home is to rent it. Yet renting can also be problematic and expensive.
"I hate to see people become absentee landlords," says Edith Lank, the syndicated real estate columnist. "What are you going to do when the water heater goes at 3 o'clock in the morning and you live in another state?" she says.
Ms. Lank notes that there can be many hassles associated with being a landlord. "Landlording is a skill. It isn't something you can do off the top of your head," Ms. Lank says. You need to know how to price your rental, advertise, screen prospective tenants and check credit. You also need to know how to collect rent from an unwilling tenant and to evict if necessary.
Of course, you can engage a real estate agent who specializes in renting property. But expect to pay the agent about a half to a full month's rent to locate a tenant for your property and then 8 to 10 percent of the monthly rent to manage the rental after that, estimates Mary Hall, a vice president at Silver Spring-based James J. Hall Inc., which specializes in renting residential property.
Despite the costs of holding and renting, it could be the right option in some rare instances, says Mr. Miller, author of "Successful Real Estate Investing," a Harper & Row book that covers property rental. "It's a good idea to hold if you have objective reasons to believe the market will improve in your area," he says.
Perhaps you know that a new factory or industrial center is opening in your area in six months. Or maybe a nearby military installation is expected to expand.
But with the U.S. economy adrift and the Persian Gulf war continuing, many communities may have to wait some time before their real estate markets turnaround. Waiting for the right price is tempting, but it can be against your financial interests, cautions Ms. Lank, the real estate columnist.
"Sometimes it's better to bite the bullet and take the price you're offered," she says.