Situation
 

Maybe a bit personal but I'm trying to get all opinions.

Here's the setup. We have a 1600sqft condo, built in 1970, nice but nothing special. Things broke over the 5 years we've had it so we had to replace carpet, AC and appliances. We got bad advice when buying it and ended up with a bad mortgage and overpaying for the house. Since it's not a real expensive house we decided that we would be better off getting out of the situation and taking advantage of the market. So, house up for sale with some interest but no offers. During the time it was on the market we found a house. New construction by a local builder with a great reputation, significant size upgrade to what we have now, lots of upgrades (tile, hardwood, morning room, finished basement, patio, etc) and in a new neighborhood that will back up to a new middle school the city is building. The offer is for a one off, reduced cost house kind of an opening deal type of thing. The new house itself is probably about $10,000-$15,000 less than anything we could get with similar specs, probably a bit more if we looked at new construction by the same builder. We have a long time to close on the new house but we've had a few offers on our house and they are less than spectacular. This is down to the fact that no houses have sold 'properly' in our neighborhood for a couple of years. The comps we have are a HUD property, a foreclosure and a sheriffs sale which come in $25,00-$45,000 less than the last house that sold for real. That influences the buyers offer plus the appraisal even though in reality they are not comparable to the other houses.

Here's a situation, what do you think? We had an offer and have been going back and forth trying to work out a deal. We knew we would lose money on the asking price because of the overpayment originally and the market and we are going to. To do the deal it will cost us about $15,000 out of pocket and it's a fair amount off the price we paid. Right now we can back out of everything and lose $1000 or we could go on, sell as a loss and get the new house. So, is it worth getting into a significantly better house than we have now that is under priced but will cost us a lot of dosh or is it better to cut and run and lose $1000 or is it better to hold out and hope for a better offer but run the risk of getting a worse one or no other one and then being totally screwed?

I'm fairly sure that it's better long term to press on, take the hit now and get into a better situation long term but my wife just told me she isn't sure she loves the new house, is embarrassed about selling so low and is upset about losing so much money.

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Rent the condo.

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The money is secondary to a home you feel happy in (assuming you can afford to do it - even if it takes a bit of belt tightening), but if she isn't sure...

When we bought our house we spent a little more than we originally intended but still within our means and the reason we did that was we could see ourselves staying in the house for many, many years.

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Not really an option. Association rules mean we can only do it for a limited time and the amount we could rent it for would mean we would lose about $250 a month without including any associated costs of renting.

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My thoughts too.

Mainly,because of watching all those shows on HGTV especially the new Real Estate Intervention show with Mike Aubrey. This other show is a Sell it Now or something like that-the latest was a young couple in Canada who had bought a 4 bedroom cottage on the lake and wanted to sell up and move to California. They had taken the cottage and gutted the inside and made it into a 2 bedroom loft style place. Very cool and contemporary on the inside, but they had not done anything for the outside and it needed it! Anyway, they wanted more for this place than what the market would bear, and had not gotten any offers. So they got a new agent team in, who had tried to get them to reduce the price (they wouldn't) and the couple proceeded to be insulted by the one offer they did get 312,500 vs the 339,00 they were asking. They got all huffy and defensive. Well you can't afford (both mentally and emotionally) to get that way. So they refused the offer. No more offers !!! They went ahead and packed up and moved to California and finally after 5 months (and reducing the price) they sold it for 299,000. They still hadn't learned their lesson- the husband said, does the other agent know we turned down an offer for 312,500. So what, what does he care, his clients got the house for 299,000.

Even if you can only rent for a shiort time, then advertise as a rent with option to buy, the loss would be a tax write off, me thinks?

Ex and I sold our first home in a market at the time that interest rates were 14 percent- sold the house as a land contract, buy put down 5K and then made monthly payments that were actually about 120 above our house payment. At the end of 3 years the buyer had to come up with the rest of the cash for the house.

Tell the missus not to be embarrassed or whatever- one can not afford to worry what the rest of the world thinks in these times, it is what it is.

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:lol: :rofl:
(I thought about that for a loser car I once had...)

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How come you can't rent it out?

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Association rules state we can only rent for a minimum of 12 months and a max of 24 and that has to be built into the lease. We can do a land lease but in order for it not to count as a rental in the eyes of the condo association it needs to be registered and a lot of banks are calling the loans when you register a land lease. We did look into rent to own and rental in general and they weren't that cost effective and were a hassle.

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This is what I want to avoid, just on a much smaller scale. Now or in a few years, we won't get much variance in the selling price. It's a combination of the market and the fact that only 4 houses in the neighborhood sold in the last 18 months, 1 was a for sale by owner and can't be counted as a comp and the others sold via HUD, a foreclosure and a sheriffs sale.

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I would suggest also that you take into consideration that the interest rate on the new mortgage will most certainly have to be lower than what you are carrying now and over the long term that will certainly more than make up for the hit you take for selling low.

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Tricky to answer as everyone's situation is different. To some people that $15k out of pocket would be a lot; to others (actually, I think to a lot of others right now in this economy.....) it'd be a drop in the bucket.

If you can take that loss, I'd say go forward with it - as has been said, the money is secondary to being happy in a home and the new one sounds like it'd be a big improvement for you, and also, the money is offset by it being a very good deal. I'm sure there will be other similarly good deals out there, however - in this market, nothing is a "one off", so if your wife isn't completely sold yet - there will be others.

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It depends on your area doesn't it - $15,000 would be less than peanuts to the price falls around here. My major concern would be OP's wife not being sure she loves it. Don't rush into a house purchase if she isn't sure.

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I would take the hit now and press on but only if it is the house you both really want.

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Hope it works out for you Duncan. I can't add much. We are in a similar predicament. We are actually contemplating selling, and then renting (to save up some $$$), but many homes in our subdivision just aren't selling. I've seen homes that actually have not sold at all and the owners have just taken them off the market. Those that are on the market are generally more updated than ours, but are listed for less than what we still owe. We'd probably lose at least $15k and be stuck still paying off a loan for the difference after we sold it. Just not sure it's worth it ya know.

Good luck in whatever you do.:fingerscrossed: