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Taking a loss on your home. LONG!
Hi ladies! I didn't even realize that this board existed. Hopefully some of you can give me some thoughts on my current situation.
When MH and I bought our home we had the intentions of it being a starter and moving within 5 years. Well, 8 years and 2 kids later, we are busting at the seams. We've had our home on the market for a year. It is currently listed less than what we owe. We don't HAVE to move, but thought it would be a good idea to try to take advantage of the current market. Yes, we'll take a loss on our home, but we'll hopefully make it up in years to come on a lower purchase price. Our listing just expired and we've met with a few other realtors. Two houses on our block have sold within the past 6 months which have brought our comps way down. The realtors that we've met with are suggesting that we lower our asking price bringing us to $30k below what we owe. YIKES!
MH and I are struggling to decide what to do. In the end, I know that we need to make a decision that best suits our family, but your input is appreciated.
Here's some more info -
1) We are on the fence about a 3rd child. I'm creeping on 37 and not getting younger. If we stay in this house we cannot have another child.
2) The school district isn't the best and I don't want my boys staying here long term. Kindergarten will start in 1.5 years for my oldest.
3) We are willing to take a loss and make it up on the purchase (eventually), but we don't know how much of a loss is realistic vs just plain crazy!
4) If we make the decision to take the house off of the market and re-list it next year do you think the market will get better or are we still on a decline for a while?
5) Do I just sell and get out? We aren't in a bad area at all, but our home has a weird layout. We have ONE bathroom upstairs (huge negative), we have three bedrooms, but two of them are railroad style which means you need to walk though my oldest son's room to get to the nursery (another huge negative). We have a nice sized yard (positive)! The home is move in condition with no major repairs needed (positive). We've just replaced all of the windows and the heating system.
6) Our home is relatively the same size as the other two homes that have sold on our block, but the other homes needed a lot of work, while ours does not. Of course when looking at comps, the banks aren't concerned with move-in condition vs fixer-upper.
Thanks ladies, any advise that you have is appreciated. Again, I know this is a decision that MH and I need to make on our own, but I've never sold a home before and I don't know much about the market, so your insight is appreciated.
Re: Taking a loss on your home. LONG!
7 years ago we bought in the height of the market. We couldn't afford to live in our dream area. A couple months ago we sold for a 145,000 loss. Yep, 6 digits. HCOL. Last month we bought our dream home for 190k less than it was 7 years ago. We also have a MUCH lower interest rate now. I'm thrilled, regardless of our "loss"
i would stage the railroad bedrooms as one bedroom and a study
I would take the loss now.
Thanks for the input so far, I appreciate it.
We can afford to take a $30k loss at this point. It is a lot of money, but if it means getting out we'd strongly consider it. I guess my bigger concern was whether or not the market would improve a bit within the next year. The more I think about it, the more I realize that the market fluctuates, but most likely won't make a significant bounce in one year. I guess that's my answer? We sell now and take our loss. Move to our forever home and we don't look back.
As far as the railroad bedrooms go, when we first moved in we had it as a guest room/office, when we added one child to the mix it was a nursery/play room. Now with two kids it is tough and tight to put them in one room so we have the nursery and toddler room. It's not ideal, by any stretch.
The market isn't going to bounce back that much in one year so I would put it on the market at this point and hope for the best. You said you can afford to take the loss now so I would just do it and save while the house is on the market.
We sold at less than what we would have preferred but we got a great deal on our new house and are so much happier. I had to tell H several times that we were getting out of the old house and spending a few extra dollars to sell it was worth it.
If your home was on the market for a year and didn't sell, you weren't well priced. Any good realtor should give you a realistic expectation of what to expect. You said the school district wasn't that great, which is a pretty major issue and will steer buyers away, particularly if there is a better district nearby.
I would look into the foreclosure rate and unemployment rate for your area. If both are low, the market is more stable and you might have better luck in a year. That said, you might also be looking at slightly higher prices in a year.
One other thing that might be helpful in selling - DH and I would DEFINITELY pay a premium for a house with more upgrades. If you have done big ticket improvements (roof, siding, windows, water heater, etc) make sure you include that in the listing.
Thanks for your feedback. Our realtor priced our house for us. I honestly didn't know how any of this worked. He came in and told us what he thought was a reasonable price. We listed at that. In the one year that it was listed, he never came back and suggested to re-adjust our price. We had showings, but not a ton and none of them resulted in an offer. I probably should have discussed it with him, but I don't know what the comps are and hoped that he would have provided more guidance.
As far as the schools go, they aren't the best, but they aren't bad either. I would just prefer to send my kids to a more favorably ranked school system rather than a moderate one. That said, the town with higher ranked schools systems also carry higher home price tags. In my opinion, there are separate buyers for the town that I'm currently in vs the town we'd like to move to.
You bet we included all of our upgrade in the listing!! I was going to take any edge I could over our competition.
Thanks again!
This is a concern for me. And, I think you might need to find a new REA. A house shouldn't sit for a year at one price if it hasn't had any offers. Agree with PP - highlight heavily all your upgrades and improvements.
We took a $50K hit on our home which was a really tough pill to swallow. We originally listed at $675K and then readjusted to $650K and then sold at $550K.
When the offer for $550K hit the table it was a very emotional time. After being in a home for 8 years, we were gutted at the thought of selling it for less than we paid, plus all the money we put into it. I brought up putting it off and my agent told me that within 6 months, my $550K house would be work another $50K less. He was right. We were losing equity at an alarming rate because of the market conditions. I look back at the homes that were my competition and they are now priced in the high $400Ks. from when we sold in February.
If you can afford to take the loss and get out, for all the reasons you have mentioned, and what others have posted, I would get out.
Even if you don't have to worry about school for another year and a half, it will be nice to find the place that will be your "forever" home and settle into it before elementary school comes into the picture.
We are currently building a home and the rate we got on our mortgage plus the lower taxes in our new area, make it very doable, despite the fact that we sold at a loss. It's great not to have that stress anymore and just move forward. Good Luck!
Keep in mind that in addition to the $30k you're losing by selling below what you owe, you will also have 6% of your selling price to pay in realtor's fees plus excise taxes and other costs. In my area, it generally costs 8-10% of the selling price to sell your home.
So, for us, we'd be looking at bringing $30k+ to closing even though we could sell our house for what we owe.
We are in this situation right now exactly (well we haven't sold yet but on the market and looking at a loss similar). It's horrible, isn't it? We're getting our new place (forever, dream home) at a real steal but the pain to get out of this place is so bad that I can't let myself get excited about it yet. If I could turn back the hands of time....