A Reader who has had her house on the market for over a year writes:
It has been a nightmare trying to sell my home in Prosper. I’m a single mother of two. I paid about $280,000 for my home 2.5 years ago. Been on the market for two years. One buyer came in and backed out at the last minute, after I’d signed a lease on a rent house. (That was costly!) Now we have another buyer at $263,000 on a $275,000 asking price. I put $40,000 down on this home and with this offer, will only net $3,000. That’s a lousy investment on $40K. It’s a solid buyer, all pre-approved, clean deal and they are paying all fees. I just don’t know what to do! Do you think home ownership is worth it? Everyone keeps telling me that they are going to take away the tax deduction, and I should just sell and lease. What’s the real story? I need a real estate expert? I’m afraid my agent wants me to sell just to get rid of me and make some money off me.
Wow, that’s a tough call. I still believe in investing in real estate now, maybe more than ever, but only if you can afford it and hold it for the long term. The market is improving, but disasters keep happening — Japan, Libya, the Middle East. There are signs of inflation everywhere but in housing it seems, and that’s because of all the foreclosures and short sales out there.
I think that if you need to sell, you should take this offer, maybe counter at $269,000. I think you should be happy you will not be taking your checkbook to closing but will, instead, get a check, no matter how small. Think of it this way: you lived in the home and it only cost you $11,000 (assuming you sell it at $269K) plus maintenance for 2.5 years. That’s $366. per month, and that’s not figuring in your tax benefits, if any. (Some folks don’t enjoy the mortgage deduction thanks to the Alternative Minimum Tax.) So you have a nice home in Prosper with great schools for less than $400 a month. Houses are not ATMs.
Are you secure in your job? Can you hold off for another year? It’s a gamble, because while the market may get better, it could get worse and interest rates could go up. Personally, I think prices will stay flat for several years (sorry) and there is an election coming up, which throws in yet more variables. So you could stay in your home,¬† knowing you may make out the same in a year or even two. It really depends on your situation.
Why don’t you map out a “worse case scenario” if you stay in your home, worse case if you move out. Renting is a great idea if you want to be flexible — someone today at an Urban Land Institute Meeting said Paris France is a city loaded with apartment renters. But don’t give up on housing for the long term. I hope this helps. I really wish I had a crystal ball for you!
Now we need to ask the SecondShelter community what they think you ought to do!
By the way, Darling Homes is raffling off a brand new home in Prosper — check it out!