I hope I didnt make a 20k mistake at 19...

[Nathan Boyer]

I'm less than a year into real estate and hope I didn't just cause my mom to lose 20k. I am the agent representing her in both transactions. Situation explained below. Looking for guidance please. She wanted to downsize and had a large line of credit on her current home and used that to buy the smaller home. New home is under contract and after finding a small roof leak in current home, she is scared that the current home will never sell, so she wants to back out of the contract on the new home and take a loss of 20k.

Value of her Current Home: around 390k

Current debt: 60k line of credit

Been on the market for a week and we have had 2 showings and one tomorrow. We had it listed at 415k and after two showings suggested to lower it. It's now at 400k. A lot of the sites like zillow haven't updated the price in several days.

House under contract:

Originally listed for 220k. After 2 weeks it dropped to 200k and I suggested an aggressive offer of 180k with 20k deposit since she was very confident in the home and we both knew it was a great price.

Sale price: 180k

Cosmetic repairs needed but not urgent: 30-40k

Closing in 2 weeks.

Earnest money of 20k.

There Is a 1 bed apt above garage that could be rented out for 550-650/month

Costs to hold both houses:

Taxes: $910/mo.

Insurance:$80/mo.

LOC interest: $843/mo.

Total: $1833/mo.

Her main reason for selling is to reduce her monthly costs. After selling her current house her monthly savings would be around $650. If she has held both houses for 3 months, it would take 6.7 months to recoup the costs and save her 32k over the never 5 years.

Her Financial Position:

Age 55

Plans to work for 15-20 more years.

Monthly income: $2300/mo.

Overtime: $1000/mo.

Savings: 30k

Retirement account: 50k

The issue is that the house she owns now that is currently on the MLS has a leak in either the roof or siding(not sure yet). Her biggest fear is the holding costs of having both houses and the possibility of future unexpected costs that could arrise (like the roof that just happened) and her running out of cash.

She wants to back out of the contract on the new house. Lose the 20k earnest money deposit. Take out 20k from her retirement, pay 2k in penalties for taking it out. Fix the roof problem. (Roof would cost less than 10k) List house again. After that goes under contract she would find another house to buy.

I'm looking for suggestions. I really don't want her to lose out on 20k and be back to the start again. I think its wiser to go ahead with the house and if she has to take out of the retirement if cash is running low.

I've thought of asking the sellers of the new house to push back closing to get a more time to solve the problem.

Please Help!