This is a question I get asked all the time. When an owner has passed and has rental property should the heirs sell the Palo Alto probate or trust home with the tenants in place, or wait until the lease is up?
While most years I would say wait until the tenants are gone but with the uncertainty of how interest rates will affect prices and what will happen to a Palo Alto market that has already shown signs of slowing, even with very tight inventory, the answer is not clear cut.
Sell Palo Alto Probate or Trust Home With Tenant: Pros:
- Palo Alto school Priority 1 Registration goes from Jan 12 thru Feb 15th. That is the best chance of getting your child in the school closest to you. There is always a space in a Palo Alto school for a resident, but getting the one closest to you is best obtained if you are a resident during this period. Selling with tenants in a Palo Alto probate rental may allow the buyer to get a leg up on school registration for the next year.
- Interest rates are lower now than they will be next summer, or even in March and maybe Feb. A 3 million dollar Palo Alto probate home has a very good chance of having a loan on it so the less a buyer has to pay for the mortgage the more they can afford for the home. For every 1 point increase in interest rates there is a 10 % increase in payment.
- The inventory is very low and the Palo Alto housing is market still active. It is unknown what will happen as the year goes on. The market could go down as interest rates go up, or if there is a natural disaster, a world event, or terrorist attack.
- Some people who buy Palo Alto homes in Probate or Trust early are happy to rent the house out until the end of the school year because they do not want to move until school is out if they are relocating.
- Harder to show house
- You will not be able to make interior upgrades or stage with a tenant in place so it may depress the price somewhat
- The tenant may be messy or say inappropriate things to potential buyers which could depress the price.
- If the tenant does not have beautiful furniture the professional pictures will not look as good.
Sell Palo Alto Probate or Trust Home After Tenant Lleaves Pros:
- You can have the interior painted, wood floors refinished, new carpet, and any other cosmetic upgrades you want that will help bring in more money.
- You can professionally stage the property and the photos will look much better.
- Much easier to show the house and have open houses which bring in more people and help bring in a better price.
Sell Palo Alto Home in Probate or Trust After tenant leaves Cons:
- Interest rates will be higher which will depress the price. It is unknown by how much because it also depends on how the stock market is doing, most likely for Apple, Google, Facebook, and Linkedin.
- If there is a trade war with China tech stocks could be hurt more than other sectors. This would make less money available for down payments for most of the buyers in the area.
- If the dollar continues to be strong foreign investors will be much less likely to be buying homes in Palo Alto.
- The best time to sell a home in Palo Alto in from Jan thru early June. The second best is the fall. If the tenants are out in June and the home is prepared in July and Aug and on the market in Sept you have missed the best time, but may get the second best time, but only by waiting until Sept to put home on market.
So as you can see the answer is not clear. No one can say for sure what will happen to the real estate market in 2017. If you are in this situation now it is probably a good idea to add your own Pros and Cons to this list to get a feel for what may work best in your situation.
If you have any questions about selling a home in Probate or Trust please feel free to contact me.
Keller Williams Realty