Beyond the initial decision to take an international assignment, the most difficult, and emotionally charged decision most assignees have to make is whether to sell their home or rent it out. Unless your employer has a very generous policy, leaving it vacant probably won’t be an option for you.

Dealing with the emotional issues around this decision isn’t easy. Most people are attached to their homes. Deciding to sell can make a temporary assignments seem a lot more permanent. On the other hand, the idea of someone else living in your home can be off putting, bad renters can strain your relationship with the neighbors and the market may decline. Focusing on the more objective issues around logistics, sale and rental costs, the market and return on investment and company home sale and rental assistance may help make the decision easier.

 

Logistics    

 

The single largest decision factor here may be how likely you are to return to the same location at the end of your assignment. If it’s the only office your company has in your home country, the chances may be pretty good. If its not, then you need to objectively assess where you may be located a few years from now. The need to sell a home at the time your return may greatly increase the complexity of purchasing a new home. And if your company had a home sale plan you chose not to use at the start of your assignment, they are unlikely to sell the home on the same terms when you return. Factor into your decision the stress and time required to manage a rental property from overseas.

Another logistics factor may be timing. You need to plan on 45 to 60 days from the time you decide to rent your home to the time you may sign a lease. Advertising, screening tenants, negotiating leases all take time. If you decide to sell your home you should plan on 30 to 45 days to closing from the time you have a contract of sale. Keep in mind that you don’t need to be present for these events to occur. Powers of Attorney or using a property manager or broker to rent your home allows them to represent you in these transactions.

 

Costs    

 

Selling your home means you can expect to pay real estate commissions of 5% to 7% of the sales price, depending on what you negotiate with your agent. Some additional closing costs are negotiable between the buyer and seller like surveys and appraisals. Some are paid by both buyer and seller like recording fees, document preparation fees and express mail fees.

Many times there are items identified in inspections which require mitigation or repair. If your home doesn’t sell before you leave you’ll need to consider dealing with these matters from a distance in your decision making process.

If you are going to rent out your home there are normally two costs. Broker’s Fees are charged by an agent who secures and screens a tenant for your property. They cover advertising, credit checks, and lease signing. Fees vary greatly by market and by broker so you’ll need to negotiate your best deal. Property Management Fees are the cost to hire someone to look after your property, collect your rent and deal with your tenants on your behalf. Expect to pay around $200 a month, depending on the value of your property and what you negotiate into the agreement. And keep in mind that these are management fees only. They generally don’t include maintenance items like lawn care or any property repairs.

If you are renting, remember that no renter will care for your home the way you would. Factor into your decision making process a fix up budget at the end of the rental period. You may need to repaint, replace carpets, fix damage and refresh landscaping.

 

The Market    

 

Many international assignees choose to keep their homes because they expect the market to appreciate while they are on assignment. Take an objective look at the market in your area and remember that betting on appreciation is taking a gamble. What kind of sure rate of return could you earn elsewhere if you sold and invested your equity over the life of your assignment? What is the psychological cost of worrying about a rental and declining market prices during your assignment. Six months down the road if you change your mind, how hard will it be to sell from your assignment location?

 

Finances    

 

The tax implications of renting out your principal residence are complex and involve not only expenses and income, but depreciation and impacts to your cost basis and capital gains. If you are thinking of renting, you may want to get the advice of a tax professional.

If you decide to sell, you’ll need to determine where to invest the proceeds from the sale until you are ready to buy a new home. If your equity is sizable, this could be a great time to review or create a personal financial plan with advise from a professional.

 

Company Assistance    

 

There are many different types of home related relocation assistance programs offered by companies ranging from buying your home from you, to paying closing costs, to sharing property management and maintenance fees and paying a portion of the mortgage when the property is vacant. Make sure you understand exactly what the company is offering you. Are the home sale assistance programs the same if you sell before you leave or sell when you return? Does the policy encourage you to rent by offering more generous rental than sales assistance?

The bottom line is that this is a highly personal decision. Taking the emotion out of the equation is never easy. Expect to second guess yourself if the market rises and you sold or if it falls and you held on. Choose the best answer for your family and know that it is not going to be perfect.