by John Miro
If you've been following along, you know we've been trying to sell our house. Shortly after my last post, we got an offer.
This was about 60 days after listing. Our agent told us going in that the average days on market for our community was 64, so we were right on track. I will say that after 45 days, each day on the market feels like a week, and each day put us closer to thinking we would never sell it.
I was thinking about having to be a landlord, and with a house three hours from this one, it would be tough to be a long distance landlord. Sure there are management companies, but renting out this house did not seem right. It is my opinion that cheaper homes make better rental properties as they are easier to pay off to start a positive cash flow.
How It Went Down
We listed our house at $143, which is where it was listed when we bought it four years ago. Because our local market is insulated, it didn't see the large upswings and drops that big urban areas saw. That is why we felt comfortable listing it at this price.
After 30 days we lowered the price to $139,900 to get it below that psychological threshold. Though we were getting a lot of positive feedback, our price point was in a tough spot. Most people were either looking around $125,000 or $150,000. Our house fell in the middle, making it a bit too expensive for the lower end buyers, and not enough house for those with a budget of 150k.
This is one of the reasons I'm sour on real estate and home ownership. The only houses worth buying are foreclosed junk with room to make a profit, or very expensive homes that go up big in value when the market is right.
After the thirty day mark, showing started to decrease. Because we had to move at some point, we decided to lower the price again, to $137,000. This sparked a new flurry of showings, and within a few days we had an offer. The offer was for $128,000, well below our original asking, and slightly below our “break-even” point. Plus they were already talking about more concessions for our cracked driveway.
My first thought was to not even counter, but as I said last time, it's only money. You can always get more money.
We came back at $132,500 with a 60 day close, and after one counter, we agreed to $132,000 and they would get the washer and dryer. Because they had already laid it out there that they would probably ask for repairs on the driveway, I was not optimistic for a smooth transaction.
Though the closing date was 7 weeks away, the contract still called for a fairly speedy completion of the Buyer's duties, like obtaining financing and the necessary inspections (home, driveway and radon.) Specifically, the contract said they had 15 days to complete the home inspection.
On Day 12, they finally called and said the appointment would happen in one week, beyond the 15 day date. I smiled inside thinking that if they came back with a ridiculous list of demands, that I would simply invoke the contract clause that states they waived their inspection contingency since it happened beyond the date allowed. After the 15 day period the contract allowed them 7 days to notify us of needed changes. Once we got past Day 22, I could breathe easier because the contract stated that they must buy the home as-is.
On the morning of Day 23, we still hadn't heard their demands. They had just completed all the inspections a few days prior, and I was excited at the thought of not having to make any repairs. By midday I had a report from my Realtor that they had gotten their demands in the day prior, on time. I was a bit disappointed, but they weren't asking for the sun and moon. The damage on my end was about $2,000, half of that attributed to the need for us to install a radon mitigation system.
I asked my Realtor what he thought, since they had missed the 15 day deadline. The contract we signed was a “specific performance” contract, which means that a judge can bind either party to act under its terms, forcing a reluctant seller to “perform” by selling, or a shady buyer to go through with the sale. Furthermore, the contract stated that “time is of the essence,” an important clause that needs to be in their to let everyone know that the dates and deadlines within were important and missing them had consequences. My Realtor told me that I probably did have grounds to refuse repairs, but fighting that out in court could take a year and be expensive.
I chose the easy road and had him negotiate the list of repairs down a bit, with a gentle reminder to their agent how benevolent we were being in choosing not to fight them. In consulting with another friend who is a Realtor and another friend who is a real estate lawyer, it isn't always as easy at it seems to convince a judge to compel specific performance.
Time to Downsize
Now that the ink is dry and the “Sold” sign is posted in the front yard, the reality of moving sets in.
We are moving to an apartment that is half the size of our house and twice the cost. It is in a highly urban area, where wer are used to living in rural or suburban settings.
We have already started selling items on Craigslist and to acquaintances. Our living room sectional is gone. The remaining two couches are already sold. Our dining room set will be gone in a few days. Bags and bags of items will be donated to Goodwill or given to friends. There will be no more need for my shed full of lawn and garden tools, something that I am 99 percent happy about. Though I like having a small bit of earth as my own, fighting a weekly battle with nature, who is winning the battle with man by a score of 1,343,565,345,435,345,244,554 to 17, was beginning to grow tiresome. For someone like me, too busy to have an awesome yard and too uninterested in the whole concept to hire a landscaping service, an apartment is perfect.
Renting Vs. Buying
The debate over whether to rent versus buy is one of the most discussed in personal finance, and probably the hardest to answer with a “one size fits all” approach. There is no right answer for all scenarios, and rental and housing markets differ wildly across the country.
Things to consider are property taxes, how long you will live in the home, the condition of the home, etc. A couple big repairs like a main sewer line or a furnace can quickly put you in the negative. Because most mortgages have you paying off closing costs and interest, not to mention PMI, at the beginning, chances are if you sell in the first few years of ownership, the equity you think you have is minute compared to what you've spent in taxes, insurance and upgrades.
We move about every four years, so I have no intention to buy again until I know where I'm going to be for at least ten years. At that time I'd love to buy a two-flat with the potential to turn the entire property first into an income property, and then convert it to a single family home. That is a prospect that seems so far down the road, and so deep into a life that I have never been able to live.
In five years I could be in Washington DC, New York or London. Or I could be back in the town where I just sold a home. The point is I have no idea what my life is going to look like beyond five years, and I'm done trying to plan for it. It's better to just live in a camp that can be easily transplanted and enjoy the nomadic life.
Home ownership isn't for everyone, and it's probably not good for a civilized society that everyone be tied to one location. Many industries rely on a mobile job force and it's time I just accept my role at this time.