December 07, 2018
How Sellers Make Sense of Home Profitability
Where making a profit from the sale of a home is concerned, much relies on the housing market—both on the national and regional scales and as it plays out in the home’s locale. Sellers are considered to have made profit on the sale of a property when they are able to offload it at a sales price that goes above the amount they paid to take ownership of the property (minus, on the individual level, any investments of improvement or repair they have put into the property while owning it). Raw earnings from equity—since it has been paid in principal by the owner—do not enter into the profitability equation.
A summer Zillow report took a look at profits made from sales of homes by the typical home seller in 2017, taking into account the top 35 metro areas for home sales. According to the report, the typical seller of homes in 2017 had owned the property for a median of eight and a half years. Where actual profits were concerned, results were all over the board. While the typical seller earned nearly $39,000, taking inflation into account lowered that figure to the equivalent of $15,000. And unfortunately, in eight of those 35 metro areas, the average home-seller in 2017 lost money after inflation rather than making a profit—with those in Chicago leading the way with an inflation-adjusted average loss of $20,000.
Still, while sellers of property in Massachusetts and Rhode Island did not see great gains in profitability during the time period in question—no metro area in either state made the top 35—a good portion of our Florida-dwelling clientele did fairly well, particularly those in the Miami metro area. In fact, one of the 100 highest-gaining neighborhoods was the La Gorce neighborhood, where sellers earned a typical amount of $573,000, despite the median period of ownership for that set of sellers falling at under seven years.
Whether they will make a great profit or not, we here at Topouzis & Associates, P.C. do everything we can to be absolutely sure our clients are conveying and purchasing title clear of judgments and defects, which can only serve to strengthen the security a home-buyer will feel about not losing profitability. And we help our clients put into place a good policy of title insurance to make certain. Contact us if you’d like us to do this for you.