Author Topic: Time to sell?  (Read 3042 times)

YoungGranny

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Time to sell?
« on: September 09, 2016, 10:23:18 AM »
Here's my dilemma:

Bought a house 2.5 years ago for $163,000 8 miles away from work. I drive to work everyday and know I should be biking but it's on country roads where there's no shoulder and people go 55+ mph. There's been quite a few accidents with bikers lately and as a newer biker I don't feel safe so please no massive face punches.

Anyways, our mortgage is at a balance of $100,000 now. I found a house 2 miles away from work away from the country roads so I'd have a nice cushy bike lane on a 35mph road. The house would cost $210,000. Our house would likely sell for around $185,000. So my question is everyone always says you should stay in a house for 5 years, would it be a colossal mistake to sell now and move closer to work? Should I wait a few more years?

Thanks in advance!

Goldielocks

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Re: Time to sell?
« Reply #1 on: September 09, 2016, 10:36:20 AM »
Work out your closing and moving costs.  Those are the problem with moving before 5 years, usually. 

Include costs to fix up your current home to sell, and the cost to put a bit of money to personalize / fix your new home when you move in (curtains, closet shelves, small updates).

Realtor fees, mortgage transfer fees, property transfer, title insurance, utiity hookups, etc. etc.

------------------------------------

Of course, many people move before 5 years.  We did a couple of times (work transfers) and we definitely lagged in our net worth because of it.

nereo

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Re: Time to sell?
« Reply #2 on: September 09, 2016, 10:48:05 AM »
Work out your closing and moving costs.  Those are the problem with moving before 5 years, usually. 

Include costs to fix up your current home to sell, and the cost to put a bit of money to personalize / fix your new home when you move in (curtains, closet shelves, small updates).

Realtor fees, mortgage transfer fees, property transfer, title insurance, utiity hookups, etc. etc.

^ This.  FWIW, 6% of the selling price is a typically used ballpark figure for what it will cost to sell your home, so for you that would be ~$11,000

Your selling price - remaining mortgage - closing costs would be about $74,000 (again, this is just an estimate).  If you roll all the equity into a new mortgage it would be $134k.
Is it worth it to you?  Only you can decide.... but you could save a few thousand/year by never car commuting again and (ideally) going to a 1 car household.  It will take you a long time though to recoup the extra money spend in the house exchange ($25k price difference + $11k in closing costs + $Xk in buying costs).

plog

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Re: Time to sell?
« Reply #3 on: September 09, 2016, 10:54:44 AM »
I really think you need more in the 'Pro' column than 'Closer to work' to justify moving.  That can't be the only criterion you're using to want to move is it? 

Dicey

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Re: Time to sell?
« Reply #4 on: September 09, 2016, 11:07:18 AM »
Have you considered all other methods of getting to work? Public transit, PT + shank's mare, carpooling, working from home on occasion? What if you move and later want to change Jobs? Will you feel trapped?

We need a lot more detail to be able to help you better.

YoungGranny

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Re: Time to sell?
« Reply #5 on: September 09, 2016, 11:44:09 AM »
Wow thanks for all the replies so far!
 
A bit more of a background: I bought my initial house fully knowing it wouldn't be my forever home. There's significant improvements I'd need to make for it to be somewhat energy efficient, the layout isn't what I'd want forever (ie not great for entertaining my large family and not great for when I want to start a family in the future). So I guess I planned on my next house being slightly more expensive to get some of the things I want. I'm just trying to decide if now is the time to buy or if I should hold tight for a while.

Unless something crazy happens I fully intend on staying at my current company for 10-12years at which point I will be able to FIRE. I have looked into other methods of traveling to work and taking public transportation would bump my 12 minute commute up to a 90 minute commute which I'm not interested in. I've asked to WFH and been denied, and because we have flex-time none of my co-workers have been interested in starting a carpool party. My SO WFH full-time so we obviously do not carpool.

The new house is in a more urban setting and I like the idea of being closer to not just work but the grocery store, library, parks etc. However, because of those things the house is more expensive which perhaps makes it not worth it for now.

I think part of me has regrets about buying my current home 2.5 years ago when I was not quite as mustachian as I am trying to be now. Which reminded me of this old post: http://www.mrmoneymustache.com/2015/07/02/if-you-wouldnt-buy-it-you-should-probably-sell-it/
and of course wanting to downsize to being a 1-car family and rely more heavily on my bike which reminds me of this post:
http://www.mrmoneymustache.com/2013/04/22/curing-your-clown-like-car-habit/

Thanks again for everyones response. I know it's hard to give advice with limited knowledge so I'll answer any other questions I can. You've all given me a lot to think about and I definitely appreciate that!!

frugaldrummer

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Re: Time to sell?
« Reply #6 on: September 10, 2016, 02:45:42 PM »
I see you're only 26.  If you think you'll ever want to have children, you need to put that into your equation.  That more convenient city house may be great for when you're yuppies but may not be the neighborhood/schools that you want to raise kids in, so I'd looks at that aspect. 

Now, if you LOVE the new house - everything about it is PERFECT for you, it's in a great school district, it's right where you'd want to be to raise kids - then I'd say go for it.  Interest rates are about as low as they're gonna be right now, and the price difference is not that great IF you are getting other significant benefits with it.  For instance, if you would have to spend $20k to renovate your current house into one that you like, versus the new house is already set up the way you like, plus you can save significantly on driving costs - well then, it may be worth it.

If, on the other hand, you're someone who would rather raise your kids in the country, or that in-town school district isn't as good or the neighborhood has higher crime - I'd stay put.

Just don't forget to calculate ALL the costs of moving into your analysis too.  Real estate agent fees, costs to fix up the home you're selling, costs to decorate or fix things in the new house, moving costs.  Make sure the new home is really worth the financial hit.


Mother Fussbudget

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Re: Time to sell?
« Reply #7 on: September 10, 2016, 02:51:49 PM »
Tangible value - $$ cost of the loans & fees + monthly mortgage.  Others have covered this well (above).
Intangible value - impossible to assign a dollar value to.  Will living in one house provide more "happiness" over another?

IMHO:  Go with what brings joy into your life.  Having $25K more in mortgage value may be a small price to pay if the resulting 'home' brings you joy.  Only YOU can value the intangibles.   Good luck - whatever you do.  ;-)

MBot

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Re: Time to sell?
« Reply #8 on: September 11, 2016, 07:59:20 PM »
I see you're only 26.  If you think you'll ever want to have children, you need to put that into your equation.  That more convenient city house may be great for when you're yuppies but may not be the neighborhood/schools that you want to raise kids in, so I'd looks at that aspect. 

Now, if you LOVE the new house - everything about it is PERFECT for you, it's in a great school district, it's right where you'd want to be to raise kids - then I'd say go for it.  Interest rates are about as low as they're gonna be right now, and the price difference is not that great IF you are getting other significant benefits with it.  For instance, if you would have to spend $20k to renovate your current house into one that you like, versus the new house is already set up the way you like, plus you can save significantly on driving costs - well then, it may be worth it.

If, on the other hand, you're someone who would rather raise your kids in the country, or that in-town school district isn't as good or the neighborhood has higher crime - I'd stay put.

Just don't forget to calculate ALL the costs of moving into your analysis too.  Real estate agent fees, costs to fix up the home you're selling, costs to decorate or fix things in the new house, moving costs.  Make sure the new home is really worth the financial hit.

+1. Great perspective

YoungGranny

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Re: Time to sell?
« Reply #9 on: September 19, 2016, 10:51:20 AM »
I see you're only 26.  If you think you'll ever want to have children, you need to put that into your equation.  That more convenient city house may be great for when you're yuppies but may not be the neighborhood/schools that you want to raise kids in, so I'd looks at that aspect. 

Now, if you LOVE the new house - everything about it is PERFECT for you, it's in a great school district, it's right where you'd want to be to raise kids - then I'd say go for it.  Interest rates are about as low as they're gonna be right now, and the price difference is not that great IF you are getting other significant benefits with it.  For instance, if you would have to spend $20k to renovate your current house into one that you like, versus the new house is already set up the way you like, plus you can save significantly on driving costs - well then, it may be worth it.

If, on the other hand, you're someone who would rather raise your kids in the country, or that in-town school district isn't as good or the neighborhood has higher crime - I'd stay put.

Just don't forget to calculate ALL the costs of moving into your analysis too.  Real estate agent fees, costs to fix up the home you're selling, costs to decorate or fix things in the new house, moving costs.  Make sure the new home is really worth the financial hit.

+1. Great perspective

Lots of great advice given. The layout of our current house makes it almost impossible to get the design and flow we would want. Plus the current house is actually in a better school district/safer area while being much more conveniently located. We also found out we could get 10k more for our house than we originally thought. So with all those factors in place, and kids being on the horizon we've decided to take the plunge and submit an offer.

Even with the set-back we can still FIRE in our 30's which is great and the new house functionality should provide us flexibility for years to come and a great home for our future family :)

Thanks again for everyone's advice!