Should You Sell Your Home in Boulder Colorado?

If the answer to the question: “Should I sell my home?” is not an automatic “yes,” then allow me to present to you some of the perspectives that will help you come to the conclusion that is right for you. To dive into this topic, you may watch the video below or keep on scrolling to read more.

When considering whether to sell your home, there are two perspectives to consider. One perspective is financial. The other perspective has to do with the mental/emotional labor you may encounter. With both perspectives, we are going to consider all facets if you decide to sell and if you decide to hold onto your home. We will be talking real numbers and real experiences that you could encounter in both scenarios that may be the deciding factor that pushes you in one direction over the other. Let’s dive in!

Financial Considerations for Selling Your Home

When it comes to selling your home, it is important to keep profit top of mind. Do not get hung up just thinking about the final sale price. A high sale price is nice but what matters more is how much, if any, money is left over once your expenses are subtracted from that sale price.

Potential Money Made

Time is the factor that has the greatest influence on your sale price. Depending on the economy and demand for a home in your city, time is what will influence the appreciation rate on your home. As a general rule of thumb, one must own their home for 2-3 years before the appreciation gains of a home will outpace the cost to sell it. If selling without going into debt matters to you, then it is important to consider appreciation. In Boulder, most recently, homes have been appreciating about 5% per year, on average.

Potential Costs

Now for the costs. Here are the costs that go into selling your home. The biggest cost is your remaining mortgage, if you have one, and any loans you have taken out against the home. The next expense is how much money you might choose to spend to get your house ready for listing. I have a video available all about this soon. The next is money that might be spent while you are under contract. For instance, an inspection item might require you to put in a radon system before the sale is complete. Or perhaps you agree to offer the buyer a credit towards flooring in order to keep the deal alive. Next, is the expense involved in having a title company. They are the party that handles much of the paperwork, pays off the mortgage, ensures property taxes get paid, etc. You can generally expect to spend around $2,000. Finally, if real estate agents are used in the transaction, those agents’ commissions will be one of the last significant expenses.  Typically, sellers spend 4-6% of the sale price on the agents’ commissions.

Financial Considerations for Keeping Your Home

Now let’s look at the flip side of this money scenario. If you decide to keep your home and continue living in it, then you are already the best resource for understating your expenses. However, if you decide to rent out your home for a while until you are ready to sell, there is a lot of information I can share with you to help you understand your potential finances. And again, we want to stay focused on profit, not just income. Therefore, it is important to understand potential income and potential expenses.

Potential Income Via a Long-Term Rental

To understand your potential income, you first want to think through whether you plan to get a roommate or whether you plan to rent out your whole home as a short-term or long-term rental. In the roommate or long-term rental scenario, a great resource for knowing what you could charge is Zillow. You could also look at listings on Craigs List or Facebook Marketplace, but I think Zillow is a great place to home in on a particular area and quickly compare multiple listings. Remain as realistic as you can when it comes to assessing how your home compares to the competition. Just because your neighbor’s house with the same floor plan rents for a particular amount per night does not guarantee that your home can garner the same amount.

Potential Income Via a Short-Term Rental

To understand your potential income via a short-term rental (anything less than 30 days), sites like Airbnb and Verbo are your best resource for two reasons. First, you can take a close look at the competition and compare your home to theirs. You can clearly see that homes that present well (i.e., are more beautifully decorated) with modern amenities are booked more often and can command higher prices per night. Secondly, you can see how booking rates fluctuate from month to month. Depending on your location and the state of your home, you can start to estimate what your rental rate might be and how that will vary over the months of the year.

Potential Costs Via a Long-Term Rental

Now, it is time to understand costs that will take away from your overall profit. If you choose to have a roommate in your home, you do not need a rental license. However, if you are renting out your home as a long-term rental (anything30 days or longer), you will need a rental license with the City but not with the County. For the City, your home will need to be Smart Reg compliant, compliant with the Outdoor Lighting ordinance, and meet the rental license inspection requirements. The license itself will be around $200. The upgrades you might need to make to be compliant could cost anywhere from a few hundred dollars to a few thousand dollars depending on the current state of your home. You will also need to hire a program affiliated inspector, which will likely cost you another few hundred dollars. If you choose to hire a management company, that could cost around 10% off the top of your monthly rental rate and there will likely be some additional fees. You should also be financially prepared for unexpected fixes and damages that will crop up during your time as a landlord.

Potential Costs Via a Short-Term Rental

In a short-term rental scenario, you will need a rental license. The cost varies from City to County, but you can expect to spend a few hundred dollars for the license. Next are the costs to get your home rental ready. At the very least, you will need multiple sets of sheets and towels but depending on the current state of your home, it may be worth spending a few thousand dollars to update some of your furniture and décor to command a higher nightly rate. Next are the fees that a site like Airbnb charges. You can expect a service fee of around 3% of your nightly rate. State and local taxes for Boulder County are around 5%, while the state and local taxes for Boulder City are around 14%. If you choose to hire a manager to run your rental, the cost for this usually varies from 10-30% per booking depending on the manager. You may choose to use cleaners between your bookings, which usually costs $100 to $400 depending on the cleaner’s rates and the size of your home. And then there are the miscellaneous expenses like stocking toilet paper and soap or hiring a plumber if the sink gets clogged.

Mental/Emotional Considerations for Selling Your Home

When it comes to the mental/emotional consideration to selling your home, if you’re feeling unsure but pressured to make a decision now, I encourage you to take a moment to consider your future needs. Is there any possibility that you will want to live again in the general area that your home is currently located? How far in the future do you imagine that to be? One year? Three years? Ten years? Whatever that point in time may be, in what ways do you imagine your life to be different than it is now? Will there be more or less people living with you in your home? Will you need your home to function in ways that are different than your current needs? For instance, might you be working from home? Might you have more or less children or aging parents in your home? Might you need a home that serves you as you are aging? Whatever your needs may be, is your home already able to serve those needs or does it possess the potential to serve those needs via a remodel?

Whether you are considering selling, holding on, or potentially remodeling one day, imagine this possibility and then take a moment to notice how this daydreaming makes your body feel. Even if your mind is feeling unsure, our bodies tend to clearly signal what we truly desire. How does this imagining make your body feel? Do you feel energized, curious, hopeful, exhausted, overwhelmed, or burdened? Our bodies’ reaction often holds the truth even when our minds feel cloudy. Hopefully this line of thinking can help you better understand what you truly desire when it comes to selling or holding onto your home.

Mental/Emotional Considerations for Keeping Your Home

Renting out a home can involve a heavy mental/emotional toll depending on your disposition and comfort with risk. Before choosing to rent out your home, I encourage you to ask yourself some questions. Are you okay with the wear and tear your home will most likely incur? Are you okay with holes in your walls, chipped countertops, ruined landscaping, oil stains in your driveway, and your custom ordered and now discontinued hardwood floor having to be ripped out because your renters overflowed the dishwasher (true story)? Secondly, are you okay dealing with difficult or potentially explosive personalities? Humans are unpredictable and can quickly change their attitude no matter how they present themselves upon your first meeting. As a former mediator with City of Boulder, I regularly saw unnecessary conflict between tenant and landlords. Do you have the temperament that can roll with unexpected drama?  

Finally, it is important to know that a fair amount of legal liability can come with being a landlord. Colorado is quite favorable towards tenants these days. It’s important to be aware of the many ways you must be in compliance with Colorado’s Fair Housing laws. You may even want to have an attorney on hand, so you do not accidentally open yourself up to being sued. None of this information is meant to scare you. Rather, I think it’s important you are aware of some of these realities as there have been many landlords in the past who wished they had never gotten into the rental business. It is important to know whether this potential mental/emotional risk is worth it to you.

Conclusion

I hope this blog post has offered some additional insights as you are considering whether to sell or keep your home. Perhaps you have some new financial perspectives that may influence your decision or some new perspectives about how you may be impacted mentally or emotionally. Take the time to both build out a spreadsheet and tune into your body. Both can be great sources of insight.