Newbie question: what would you do to solve this?

Question

I'm new here as of today, so please bear with me...;) Still learning the lingo and trying to grasp some of the strategies I've been reading about.

I'd like to have some help getting pointed in the right direction so that I'm sure not to miss something specific that might help with my current situation.

My husband and I own a townhome that we'd love to sell. It's too small for our growing family and we just need something that better fits our lifestyle. The townhome is great and has a lot going for it, but our neighbors and their foreclosures have really done us in. We bought it for $13X,XXX eight years ago and a foreclosure just sold two weeks ago across the street for $88,000. Ours is nicer, is updated, etc....but we know we can't compete in this marketplace and still walk away with cash for the next house. It's also making us sick that we would leave this house with practically nothing to show for it as opposed to the nearly $58,000 in equity we would have had just a few years ago.

We want to maximize what we can get out of this townhouse now and possibly in the future (by maybe hanging on to it as a rental) but we really don't know what to do as far as the house we live in next. Do we look for a lease option and live in it and let both houses increase in value (hopefully) over the next couple of years? Do we purchase on a contract for deed? Something more creative that my newbie brain can't fathom yet? =)

I guess my question is....what would you do if you had a piece of property that had dropped significantly in value that you didn't want to sell or live in? What would be your personally favorite technique to not sell or live in it and still find a more suitable place to live and why?

Joe Dube · Answer

Hi,

Bill gave you some awesome advice, I agree with him that your place should be worth more to a buyer than a foreclosed property. Typically REO's need repairs etc... so I'd find out what the quick sale price would be from a local realtor. You can dtermine then if you want to sell through a realtor or sell it yourself using a 5 day sale or perhaps sell with some creative financing. I think you need to do more digging on the market value of the house before making your decision. Keep us up to date and we'll see if we can help out.

Dubeman

Bill Gulley · Answer

Hi, now is a great time to buy your next home, bad time to be a seller.

I would suggest you look for a deal to buy now, and perhaps do something creative like a contract for deed. As to your home, there are basically two options that would make sence, sell it or rent it.

Your rents will need to be about 120% of your principal, interest, taxes an insurance costs to allow for anything to be counted as income from the rental. It will also need to be a one year lease. Some lenders won't count any income since you are not in the business and have no tax return showing rental experience, but some regional and smaller banks will. Selling, I would suggest you make concessions for any sale, but you're not really competing with foreclosed properties since you're property is probably ready at a retail level (REOs usually have problems and investors buy them to repair) and another point is that you are providing good title where banks only provide title in a more "as is where is, any title problem is your problem" manner. So your property is not apples and apples to the foreclosure even on your street.
You might make concessions in buying points for a buyer to reduce thier interest rate instead of knocking off your sale price. That can make a higher price cheaper to get into.

You might consider interviewing some good Realtors in you area as well and see how they would market your home. You might also look for a builder that is holding what you need that takes trades. Good luck, Bill

Newbie question: what would you do to solve this?

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