Author Topic: Would you sell this house?  (Read 6389 times)

greenmimama

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Would you sell this house?
« on: May 13, 2015, 07:41:03 AM »
I am going to try and give as many details as you need.

We bought this house in 2012 as an investment, it was a foreclosure, we wanted to fix it up and resell it for a profit, the whole point of buying ti was to make money, just so that is clear, not because we wanted a house this big.

Details:
purchase price: $221k
Money we put into fixing it up: $140k
So at this point we are all in for about $360k
Plus we have lived here for 3 years, it costs us quite a bit more to live here than it did in our last house, because the mortgage is more, heating and cooling it are more, we are constantly finding more projects and they are all $$$ If we would have stayed at our last place, which we would not have done, we were going to move, but just for numbers sake, it probably costs us an extra $1500-$2000 extra a month in the bad winter months.

We have it listed right now for $498k We are getting showings, but not very many and everyone has there reason why they don't make an offer. We knew this wouldn't be an easy flip, we knew we would enjoy living here while we did it, we knew that because of location, it's 25min north of the city, it is on 30 acres, it is a huge 6k sq ft house, we know there is a very limited amount of people even able to afford this in our area. The housing market for homes selling $175k are same day multiple offers, its a crazy hot market right now.

We had a showing last Friday and they said they "would pay $400k for it but not half a million"

I guess I am just frustrated, obviously, we didn't expect it to sell in one day, but we were hoping for offers, it has only been on the market since late March.

I guess I need some other eyes on this, we are emotionally attached to it because we did so much work and spent so much cash.

We can afford to live here on my DHs salary, and we love it, but we want something smaller, something that doesn't take so much money to run. More money to invest that way and less time wrapped up in upkeep.

If we would take an offer of $400 then we would have lost money, if you factor in what extra we have paid to live here. I think both my DH and I are in the mindset of we will stay until we get a better offer.

It rents really well on AirBnb :)

zolotiyeruki

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Re: Would you sell this house?
« Reply #1 on: May 13, 2015, 08:12:24 AM »
A couple thoughts:
1)  When it comes to showings/offers, here's the conventional wisdom I've heard: "Few showings = priced too high.  Lots of showings but no offers = house doesn't show well."  It sounds like you may be overpriced.
2)  If it rents well, could you rent it out on AirBnB more frequently?  Would that income stream pay the mortgage/expenses for the house?
3)  Yes, you want to get your money back out of the house.  But keep in mind that you're also spending thousands of dollars per month on this house.  Six months on the market could easily cost you as much as a $25k price drop right now.

Overall, it sounds like you're more emotionally invested in this house, when you should be eyeing it with a cold, calculating business perspective.

Another Reader

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Re: Would you sell this house?
« Reply #2 on: May 13, 2015, 08:13:36 AM »
The saying in real estate is that sellers set price and buyers set value.  The rule of thumb for residential real estate that is not selling:

No or rare showings, no offers - the listing is priced at least 10 percent above market value.
Showings but no offers - the listing is priced at least 5 percent above market value.

You either paid too much or you over improved.  In your shoes, if I wanted to sell this season, I would reduce the price by 5 percent and see if you can attract an offer.  Waiting for a buyer that is willing to pay an above market price is not likely to work.  You might have to wait years before the market appreciates to the point you can get the price you want.  In the meantime, you will carry a house that's costing you a lot of money that could be invested elsewhere.

partgypsy

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Re: Would you sell this house?
« Reply #3 on: May 13, 2015, 08:41:15 AM »
So the purchase price plus improvements =360K. You are trying to sell at 498K. This is because you say the house costs you more, in terms of heating and expense, than the investment price. The people who may be buying from you don't care that you have to spend more heating or cooling the house than whatever your other house is. In fact if anything it is a deterrent (white elephant, expensive to maintain, heat, cool etc), and those potential buyers are factoring that into the price. And the longer you do not sell, the longer you will be paying those costs.

The market tells you what you can get for it. Someone told you they would buy for 400K, but not half a million. I would take their (and the unspoken actions of others who have looked at this house and not purchased) at their word for it.


greenmimama

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Re: Would you sell this house?
« Reply #4 on: May 13, 2015, 09:00:26 AM »
So the purchase price plus improvements =360K. You are trying to sell at 498K. This is because you say the house costs you more, in terms of heating and expense, than the investment price. The people who may be buying from you don't care that you have to spend more heating or cooling the house than whatever your other house is. In fact if anything it is a deterrent (white elephant, expensive to maintain, heat, cool etc), and those potential buyers are factoring that into the price. And the longer you do not sell, the longer you will be paying those costs.

The market tells you what you can get for it. Someone told you they would buy for 400K, but not half a million. I would take their (and the unspoken actions of others who have looked at this house and not purchased) at their word for it.

No we are not trying to sell the house for that price because it costs us more, we set that price because that is actually what we think it is worth. I know what we pay to keep the house up no one cares about, I was mentioning that because it factors into why we want to sell it. Not that it has any determination on price.

Yes I am emotionally invested in this place, I will completely admit that, I have really tried to take a step back, I have compared and compared, I will see what my DH and our realtor thinks about a 5% decrease.

Roland of Gilead

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Re: Would you sell this house?
« Reply #5 on: May 13, 2015, 09:04:47 AM »
Think of it like a stock.   You bought the wrong stock and it only went up 10% instead of 30%.  Sell it and move on.   We don't always make perfect investment decisions.

Jeremy E.

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frugaliknowit

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Re: Would you sell this house?
« Reply #7 on: May 13, 2015, 10:12:34 AM »
The house has not been on the market very long (1.5 months?).  Does your realtor feel the activity is low for a 6K square foot home?  Since it has a limited market, maybe that is appropriate...?

What is the basis for your asking price?  What are the comparables, if any? 

If you're unsure of it's value, consider hiring an appraiser for an objective opinion of value.

BlueHouse

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Re: Would you sell this house?
« Reply #8 on: May 13, 2015, 02:04:55 PM »
I would keep it on the market.  You said you knew it wouldn't be an easy flip due to the number of potential buyers interested in owning such a large home.  So, I would just settle in for the long haul.  It's very possible that people just want to see it and aren't really qualified buyers.  I wonder if you could stipulate with your agent that because you know it will take longer to sell, you will only show it during certain times and only to qualified sellers. 

And then I would probably also make it much more exclusive by severely limiting the show times (not an open house) to one day per month.  I know this is not traditional, but I lived in a house that was on the market for 4 years through my high school years.  I can tell you that being in constant show mode is tiring and so is having to leave the house whenever someone feels like showing up -- even if it's dinner time.  Also, I hate to admit it, but my brother actively sabotaged the sales process and chased off several potential buyers. 

It took time to find the right person to buy that house, but eventually it sold.  And I think it would have sold in the same amount of time or quicker if it hadn't been so accessible all of that time.


greenmimama

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Re: Would you sell this house?
« Reply #9 on: May 13, 2015, 02:23:56 PM »
Our realtor does vett  the potential buyers to a point, making sure they can afford it, and knowing some things about the property, the location is doubly checked and our 30 acres is a bit irregular, so that too is mentioned, even though it is on the listing too.

Yes, I am sure you are right we need to settle in for the long haul, but I just have these days where I get really antsy, and I guess this is one of them. I am also tired of the cleaning required for showings, we have 3 young boys and the showings have all been at least a week apart, so just enough time to clean everything all over again, sigh.... Thanks for the opinions, I have read everything and taking it into consideration.

 

Axecleaver

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Re: Would you sell this house?
« Reply #10 on: May 13, 2015, 02:27:39 PM »
The money you have invested in the property is sunk cost - it has no bearing on what the house will sell for today. You need to get some comps, and don't ask your agent for them. Agents pull comps that support whatever story you want to hear so they get the listing. You need to do your own comps, and the way you do that is to find properties like yours that have sold recently. Not listed - sold! Zillow is helpful for this, but only pay attention to the actual sale price. Your county may have a website you can use. Anything more than six months old is usually too old to matter. It may be tough to find true comparables at that price point, do your best.

Once you have three comparable properties - which come close to the acreage, the square footage, and any special features of the house like a pool or barn or whatever - you should have a good idea what the property is worth on the market. With thirty acres, you're probably in a more rural area, and the price point you're at - somewhere between 360 and 500k - is a tough one in rural areas. There just aren't that many people who can afford it, no matter how beautiful it is.

Keep us posted, good luck getting out from under your mansion!

dsmexpat

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Re: Would you sell this house?
« Reply #11 on: May 13, 2015, 02:29:58 PM »
The money you have invested in the property is sunk cost - it has no bearing on what the house will sell for today.

greenmimama

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Re: Would you sell this house?
« Reply #12 on: May 13, 2015, 02:31:57 PM »
The money you have invested in the property is sunk cost - it has no bearing on what the house will sell for today. You need to get some comps, and don't ask your agent for them. Agents pull comps that support whatever story you want to hear so they get the listing. You need to do your own comps, and the way you do that is to find properties like yours that have sold recently. Not listed - sold! Zillow is helpful for this, but only pay attention to the actual sale price. Your county may have a website you can use. Anything more than six months old is usually too old to matter. It may be tough to find true comparables at that price point, do your best.

Once you have three comparable properties - which come close to the acreage, the square footage, and any special features of the house like a pool or barn or whatever - you should have a good idea what the property is worth on the market. With thirty acres, you're probably in a more rural area, and the price point you're at - somewhere between 360 and 500k - is a tough one in rural areas. There just aren't that many people who can afford it, no matter how beautiful it is.

Keep us posted, good luck getting out from under your mansion!

I am comparing the homes myself, but like you said it is really hard to get a comp, then when I find something really close (in sq footage and such) it is 20 miles away in a different town with a much different price for houses, it is next to impossible to get comps. I will look again though, thanks.

greenmimama

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Re: Would you sell this house?
« Reply #13 on: May 13, 2015, 02:43:13 PM »
I just checked again and we seem to be right where we should be with the weird comps that we can find.

So I guess we just wait and see.

And yes, I realize that what we spent has no bearing on what we can sell the house for, my question, wasn't how much is the house worth, my question was, if this was you, would you sell it?

I think like a PP mentioned, we need to think of it more like stock and sell, even though we love it, it's impressive and it's fun to live in, we can move on.

zolotiyeruki

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Re: Would you sell this house?
« Reply #14 on: May 13, 2015, 03:22:09 PM »
... my question was, if this was you, would you sell it?
In response to the original question, I would shout "YES, I WOULD SELL IT!"  A 6k sqft home is ridiculous.  Heck, we've got twice as many kids as you, and I feel like our 3400 sqft house is ridiculous.  That's a huge amount of capital *and* monthly cash flow that you have tied up in a home that you're not planning to keep for the long haul.

Cassie

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Re: Would you sell this house?
« Reply #15 on: May 13, 2015, 04:35:54 PM »
I would lower the price. There is a lot of room to lower some & still make $. With 3 boys having it on the market for years would be horrible.  I raised 3 boys so I know how it is:))

greenmimama

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Re: Would you sell this house?
« Reply #16 on: May 13, 2015, 05:06:47 PM »
... my question was, if this was you, would you sell it?
In response to the original question, I would shout "YES, I WOULD SELL IT!"  A 6k sqft home is ridiculous.  Heck, we've got twice as many kids as you, and I feel like our 3400 sqft house is ridiculous.  That's a huge amount of capital *and* monthly cash flow that you have tied up in a home that you're not planning to keep for the long haul.

I agree, but I think we call it hedonistic adaptation, it doesn't seem that big, because we are used to it. Once we sell this one we will hopefully be in an RV for at least a few weeks, so anything else we buy in a normal size will seem large, instead of anything we buy seeming tiny compared to our monster house now :)

john c

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Re: Would you sell this house?
« Reply #17 on: May 14, 2015, 03:24:25 AM »
You love the house and location.  Is there something you could do to the property that would allow you to stay there?  Can you chop up the house into smaller units and rent them out?  It sounds like you're in the country, so zoning would be less of an issue.

In my area in the 1950s and '60s the beautiful Victorians from the 1890s to 1910s were chopped up into apartments when nobody wanted them anymore.  Only in the last 20 or so years have folks been buying them up and restoring them.  Also, in some parts of the country it's common for people to turn their basements into apartments.  In a 6k sq ft house, you could make 4 1500 sq ft units.  Live in one, and rent the others out.  My guess is that this would more than cover your expenses.


rmendpara

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Re: Would you sell this house?
« Reply #18 on: May 14, 2015, 09:55:44 AM »
So, to be clear, you want to sell for something smaller, because it's costing you more to live in/operate than you expected? You're not selling because you need to move for work or some other reason, correct?

If that's the case, and you have a basis of 360k, then why not drop it to 450k and see how that works? Looks like you're still making a huge profit. If it goes another 2 months at 450 and no new offers, then lower again by 25k.

Since it appears to cost you 2k/mo over what you would otherwise pay, I'd be lowering the price by more than that to snag a buyer. 25k reduction every 2 months should eventually land you more visits.

Very few people want a 6k sqft home on 30 acres, so your pool of buyers is just limited. It's not going to sell like a 250k starter home, close to the city, in a good school district, 1500-2000 sqft, and I doubt it rents for enough to provide a good return on what you have (if it does, consider just renting it out and moving away until it sells).

It doesn't sound like you're attached to the home because you love it. Pardon my words, but it sounds like you're greedy. You want to sell at 500k, but no one wants it at 500k. You have a HUGE margin to reduce in order to get rid of it since your cost was only 360k. What are you not telling us? From my seat, it doesn't seem like a "we love the house" issue, unless I'm missing something?

greenmimama

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Re: Would you sell this house?
« Reply #19 on: May 14, 2015, 12:10:53 PM »
So, to be clear, you want to sell for something smaller, because it's costing you more to live in/operate than you expected? You're not selling because you need to move for work or some other reason, correct?

If that's the case, and you have a basis of 360k, then why not drop it to 450k and see how that works? Looks like you're still making a huge profit. If it goes another 2 months at 450 and no new offers, then lower again by 25k.

Since it appears to cost you 2k/mo over what you would otherwise pay, I'd be lowering the price by more than that to snag a buyer. 25k reduction every 2 months should eventually land you more visits.

Very few people want a 6k sqft home on 30 acres, so your pool of buyers is just limited. It's not going to sell like a 250k starter home, close to the city, in a good school district, 1500-2000 sqft, and I doubt it rents for enough to provide a good return on what you have (if it does, consider just renting it out and moving away until it sells).

It doesn't sound like you're attached to the home because you love it. Pardon my words, but it sounds like you're greedy. You want to sell at 500k, but no one wants it at 500k. You have a HUGE margin to reduce in order to get rid of it since your cost was only 360k. What are you not telling us? From my seat, it doesn't seem like a "we love the house" issue, unless I'm missing something?

Yes, we are selling because we want to, because we bought it as an investment and would like to get our money back out of it. We have enjoyed living here, like I said before, it's a great house, but we never bought it intending to stay here.

I don't think it's greedy to want to get everything out of the market that you can. I don't know what I am not telling you, I'm not hiding anything or leaving info out, on purpose anyways, if you have a specific question, you could ask.

Yes it is def. a lot less people looking for this kind of house, we did think about splitting it up and renting parts out, but rentals in this area are pretty cheap, so I don't think it would work out in the end.

TrMama

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Re: Would you sell this house?
« Reply #20 on: May 14, 2015, 02:48:54 PM »
Yes, I would sell. DH and I have bought and sold a few houses now. The last 2 houses were on the market when the kids were toddlers. Frankly, keeping the ho use show ready was horrible.  IME, the price you set determines how long it takes to sell. Drop the price 10% and get your money (and sanity) out of it now.

I cannot imagine the task of keeping a 6000 sq ft home clean with 3 kids living in it. The mind boggles.

Dicey

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Re: Would you sell this house?
« Reply #21 on: May 14, 2015, 03:08:02 PM »
Not sure if I'm missing something, but it seems like you are trying to make back all of your costs, including utilities for the entire time you lived in the house. Consider that you could not have lived for free all this time anywhere. Figure out what you would have paid to live in smaller quarters for the same time period and include it in your calculations. I'll bet it gives you a net resale number you can live with.

Also, make sure your pictures are wonderful. Anecdotally, some friends sold their house recently and the listing photos were terrible. It cost them both time and money. Digital photography is cheap, so make sure you have photos of everything and arrange them in a logical order so prospective buyers can "walk" through your house. Also consider (if you haven't) some overhead shots to show off the land and the siting of the house.

furrychickens

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Re: Would you sell this house?
« Reply #22 on: May 15, 2015, 07:41:15 AM »
1. 1.5 months is nothing in real estate terms. Yes, cheap houses may sell like hot cakes, but rural property in general - particularly at that price - takes a long time to sell. Depending on how rural, I've heard averages in years, not months.

2. Evaluate your holding cost versus your sunk cost. There is a tension here. In wanting your sunk cost back, you're costing yourself holding costs. Either lower the price or admit you're being irrational.

greenmimama

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Re: Would you sell this house?
« Reply #23 on: May 18, 2015, 06:52:09 AM »
The price for sale is not based on anything but local comps,would I like to get all my money back, you bet, but it has no determining factor in the set price.

We did have professional pictures taken and boy did they make a difference, I wish I could post the listing on here without the address, so you could see them.

We are upgrading the landscaping a bit and then we will drop the price a bit and see where that gets us.

Thank you all for your suggestions

greenmimama

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Re: Would you sell this house?
« Reply #24 on: May 31, 2015, 10:31:34 AM »
If anyone is interested, we did accept an offer last week, our original asking price was $498,800 and we were offered $455,000 plus we are taking the appliances and a few other smaller thing in our favor, we took the first offer we were made, and we are now under contract with a different house, pending the close on our own home, but I am so excited, it's half the size and very well insulated, so the utilities are really low, it even has a whole house woodburner hooked up to the furnace, so we could even have a lower cost to heat in the winter.

zolotiyeruki

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Re: Would you sell this house?
« Reply #25 on: May 31, 2015, 12:29:48 PM »
Thanks for posting the follow-up.  That's great!  It sounds like you made a tidy profit, too.  Here's hoping you'll love your new house!

Dicey

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Re: Would you sell this house?
« Reply #26 on: May 31, 2015, 12:53:24 PM »
If anyone is interested, we did accept an offer last week, our original asking price was $498,800 and we were offered $455,000 plus we are taking the appliances and a few other smaller thing in our favor, we took the first offer we were made, and we are now under contract with a different house, pending the close on our own home, but I am so excited, it's half the size and very well insulated, so the utilities are really low, it even has a whole house woodburner hooked up to the furnace, so we could even have a lower cost to heat in the winter.
Sounds like you got the right price. Best wishes for a speedy closing and off to your next adventure...

furrychickens

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Re: Would you sell this house?
« Reply #27 on: June 02, 2015, 06:24:19 AM »
Awesome. Glad you got relatively close to the asking price in the end.