In a bad spot.. Not sure what to do?

Question

Hey guys!

about every 2 years I look to sell my house and upgrade (if the market is in my favor) well.. I was in contract to sell my house in February of 2015 and to make a LONG story short. We found out the Day of closing that the person buying my house was Now NOT approved for a loan.

since we had to be moved out for the final walk through I had worked out a deal for my NEW house.. which was $20k down payment pay 1500 in rent up to 6 months with the ideal to purchase before the 6 months.

Well my old house didn't sell.. still hasn't sold and i'm now competing with new development in the gated community my old house is in.

I've been making two mortgage payments, money is running out and the time is coming to purchase my new house or lose my money.

What to do?

Jon Holdman · Answer

I think you have a number in mind that you want for the house that would let you pay off the debt and generate the down payment on the new house.  Unfortunately, you must ignore such thoughts.  They lead to overpricing.  Get out there and look at the comps.  Get your agent to give you a new evaluation of what price you will really get.  What you need is, unfortunately, absolutely irrelevant to your potential buyers.

Jon Holdman · Answer

Assuming its actually on the MLS properly and not in some funny status, you need to lower it more.

Have you gone and looked at the competition?  Through a buyer's eyes (i.e., should I choose this one or that one) and not a sellers eyes (mine's worth more because ...).

Are these other houses selling?  Is the builder offering incentives?  If they are, and there are incentives, you may need to match those, too.

Put it this way.  If you lowered to the price to $1000, you would likely have a contract by the end of the day.  Clearly that's too low.  But there is some price that will generate a contract very quickly.  Find that price.

If you rent it and try to buy another house, the rental income will be ignored for qualifying.  Can you qualify for both mortgages?  You typically need two years landlord experience before lenders will count the rental income.  But if you can qualify this might be a way to reduce the bleeding.  Do keep in mind that cash flow DOES NOT equal rent - PITI.   Banks use the formula "cash flow = (75% * rent) - PITI", which is close if you're managing yourself.  If you hire a property manager, (50% * rent) - P&I is a better estimate for cash flow.

Scott Lewis · Answer

Remember when "competing" with other properties you need to look at both the tangible and intangible benefits. While the other homes are new, most likely they will be more expensive per sqft than your home (and if they arent, and the level of finishes are the same, you truly are over priced.) What about location? Would you be willing to throw in some furniture or paint for them? What other intangible benefits can you think to throw in that would enable you to keep your price high. The key here is to negotiate with items of unequal value.

Would you consider seller financing the property? If you were to seller finance it you could offer more attractive terms to potential buyers not to mention a much easier approval process (you only you need to approve them.)

Also, depending on your current mortgage, if there is an assumption clause and you have a favorable rate, you could offer to allow a buyer to assume your mortgage which could lower their closing costs. That being said, you'll need lender approval.

There are lots of nuances to both options I presented above, so if either sound attractive, you'll need to dig deeper into them before moving forward. Also, in the seller financing case, you'll want an attorney or closing company to help you with the documentation so you're covered and can foreclose in the case of a default.

Richard C. · Answer

Post a link to the listing, and people may be able to help you out.

Based on a recent thread here, I would encourage you to make sure it is not still showing as Pending on the mls or any of the major re websites.

Chris Simmons · Answer

rent it while you wait for the competition to thin out.

Martin S. · Answer

You need to be closer to that zestimate from zillow. I'm sure many buyers look at that number. I know I do... I say $209,900

Richard C. · Answer

There are 7 houses for sale in this subdivision, this is the second-lowest priced.  So you are not wildly out of line and will probably sell for close to asking eventually.  But if you're in a hurry, you need to be the best deal, and you aren't.

There is a house on Gold King for exactly $1,000 less than yours.  And the reason they priced it that way is that the listing notes can (and do) say that this is the lowest-priced house in the community.  That house is a couple of years older, but in similar condition and 200 square feet larger.

Pull the listing and re-list at $199,000, and I bet you get interest.

Wade Reeves · Answer

It was a "solid" i was going through a realtor on both sale and purchase.

the realtor blamed the mortgage lender.. but yet i was the guy holding the bag, i received the deposit which only covered 2 months of mortgage.

I guess my only options is lowering.. but i wanted to pay off debt and put that money towards the new purchase..

my house for sale that you asked is 111 little dipper ct Valley springs ca 95252

Joe Moore · Answer

This might be a perfect candidate for a least option.  This could possibly save the day for you.  Ask some of the least option guys for advise.  Good luck to you.

Chris Simmons · Answer

Were you dependent on selling your existing home for the down payment money?  If so, can you get a low down FHA mortgage for your new home?   Your mortgage guy will give you input regarding that option.

Are you working with a realtor to sell your house?  I read that you have lowered the price per realtor recommendation but also read about you selling a house to someone without getting a proof of funds letter and buying a new home without a solid contingency on your first home selling.

You might have to pass on the new purchase if you can get out of it.  Only you know your particular situation and the contracts you signed.  Without those details, we are limited on advice we can give.

In a bad spot.. Not sure what to do?

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