Poll

When should we sell our house?

2019
6 (46.2%)
2020
7 (53.8%)

Total Members Voted: 13

Author Topic: When is a smart time for us to sell our house?  (Read 1139 times)

Linda_Norway

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When is a smart time for us to sell our house?
« on: May 29, 2018, 12:46:17 AM »
We need to sell our house to reach our FIRE amount. It needs to be invested in index funds rather than a house that doesn't generate stash. I made a conservative estimate of what we can sell it for. We can lose 10% compared to what we payed for it 2,5 years ago to still be on schedule for FIRE. But we might also have overpaid for our house...

We know from our previous house that selling a house requires a BIG investment of your time and effort and is very stressful. Especially to do all this work beside a fulltime job. Our current house is standing on the top of a hill with 2 terribly steep roads towards it, where cars without 4x4 often get stuck in the winter. Therefore we want to sell the house when there is no snow, roughly from april to november. In May we will need to compete with many other villas on the market, as that is the busiest month for villa sale.

I think we will reach our additional FIRE stash some months into 2019. We also need to work long enough to finance 2019, because we can only afford to stop working from 2020, given we get enough money for our current house. We are probably not done working before at least half of 2019 has passed.

We know that selling houses in our neighbourhood goes slowly. It can take several months, if not longer.
Another issue is that our lower status community will be joining a higher status neighbour community on Jan 1rst 2020 and the community name will be that of the higher status community. We think people will be willing to pay slightly more for the house when it is in that higher status community. I see current houses on sale, advertising that it will be in the higher status community in 2020.

If we manage to sell in 2019, we will know for sure that we have enough stash to FIRE. It also gives us the freedom to start moving elsewhere whenever it suits us.

Selling in 2020 might in theory generate a higher price, because of the new community. House prices might also have changed (+ or -) by then, nobody knows ahead of time. We should have plenty of time to prepare the house for selling, if we would quit working in 2020. If would give us time to prepare FIRE while living in our current house. But it would also bind us to stay there longer than we want to.

Maybe we should start working PT in 2019 to free up some time to prepare the house for selling?

What do you people think is the smartest thing to do for us? Sell the house in 2019 or in 2020?


patchyfacialhair

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Re: When is a smart time for us to sell our house?
« Reply #1 on: May 29, 2018, 09:52:51 AM »
Voted 2020. It's 18 months away, so not too long, and puts less pressure on you to sell for a certain amount.

Linda_Norway

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Re: When is a smart time for us to sell our house?
« Reply #2 on: May 31, 2018, 12:55:48 AM »
There is a house for sale in the neighbourhood that is a bit similar in style to our house, but it has an additional rental unit.
The view is nice, but not as spectacular as our wide view.
The house is for sale for about the same price as we paid for our house a few years ago. There have come in offers of 95% of the sales price.
The amount I have calculated as a minimum for FIRE for our house is 86% of their sales price. Maybe I should invite that broker to our house to put a price on ours. Get another person's opinion on whether our house is worth the same, more or less than that other house.

elliha

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Re: When is a smart time for us to sell our house?
« Reply #3 on: May 31, 2018, 01:05:59 AM »
I think that inviting a broker that makes a free or low cost estimate is a great idea. I personally would go for the 2020 date. There is nothing that suggests that you will lose money from waiting and some things that suggest that it might be financially better and an extra year is not that much. Plus, you can then be very ready with the house and put it on the market as soon as is possible. You will also have had a long period to prepare practically and mentally so that the move can be as easy as possible.

Linda_Norway

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Re: When is a smart time for us to sell our house?
« Reply #4 on: May 31, 2018, 01:13:33 AM »
Interesting, that is too opinions against my own idea that 2019 might be best. I think DH would also prefer 2020.

RyaninLA

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Re: When is a smart time for us to sell our house?
« Reply #5 on: June 03, 2018, 01:35:27 PM »
Congrats on being so close to fire! Your post conveys a lot of (understandable) anxiety towards selling your home and reaching your FI number. For that reason I voted for 2019 so you can just get it over with. The price you're going to advertise/accept shouldn't be related to your FI needs -- it's just going to sell at the market rate and then you'll have to see if the proceeds are enough for you to RE in 2019 or work and save a bit longer.

What are your DH's reasons for wanting to stay until 2020?

coconutindex

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Re: When is a smart time for us to sell our house?
« Reply #6 on: June 03, 2018, 02:41:41 PM »
Currently, Norwegian housing prices are very high - except for a few places on the west coast. Who knows where they are going? Personally, I think I would have aimed for an early sale to take advantage of the boom market. You might loose out on some gains, but it would reduce the chance of a correction or a market crash. I'm conservative, so if reaching FIRE depended on a good price I would grab those money as soon as I could.

I'm assuming you'll be buying a new home? Will it be in the same general area?

lhamo

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Re: When is a smart time for us to sell our house?
« Reply #7 on: June 03, 2018, 04:14:51 PM »
How much of a cash reserve will you have when you leave work?

I left work in June 2015.  DH ended his work in February 2016.  We put our Beijing apartment on the market in April 2016, had a signed contract by August 1, but did not actually finalize the transfer until January 2017.  And we didn't get the final payment installment until late February, and then it took us until April to get the money out of China!  But, the whole thing was survivable because we had a BIG cash stash even when I stopped working, and bigger by the time DH's last check came in.  We could even have gone a couple more years on the cash we had, if necessary, and DH was old enough to tap into retirement accounts without penalty.

If you have enough cash to live on without the house money for 2-3 years, then I would go ahead and wait until 2020, after you have FIREd, to put the house on the market.  Selling and preparing to move are both stressful. 

Linda_Norway

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Re: When is a smart time for us to sell our house?
« Reply #8 on: June 04, 2018, 12:06:48 AM »
Currently, Norwegian housing prices are very high - except for a few places on the west coast. Who knows where they are going? Personally, I think I would have aimed for an early sale to take advantage of the boom market. You might loose out on some gains, but it would reduce the chance of a correction or a market crash. I'm conservative, so if reaching FIRE depended on a good price I would grab those money as soon as I could.

I'm assuming you'll be buying a new home? Will it be in the same general area?

We are thinking about first renting a place somewhere out in the country to see if we would like to live there. We are not intending to stay in the area we are currently living. A replacement home to be bought is planned to cost max 50% of the price of our current house.

I am also conservative when it comes to willingness to take risks. I would also like to cash in soon just to make sure we have it.

Linda_Norway

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Re: When is a smart time for us to sell our house?
« Reply #9 on: June 04, 2018, 12:07:14 AM »
How much of a cash reserve will you have when you leave work?

I left work in June 2015.  DH ended his work in February 2016.  We put our Beijing apartment on the market in April 2016, had a signed contract by August 1, but did not actually finalize the transfer until January 2017.  And we didn't get the final payment installment until late February, and then it took us until April to get the money out of China!  But, the whole thing was survivable because we had a BIG cash stash even when I stopped working, and bigger by the time DH's last check came in.  We could even have gone a couple more years on the cash we had, if necessary, and DH was old enough to tap into retirement accounts without penalty.

If you have enough cash to live on without the house money for 2-3 years, then I would go ahead and wait until 2020, after you have FIREd, to put the house on the market.  Selling and preparing to move are both stressful.

We have 4-5 years spending in index funds and 1/2 year spending in cash.
« Last Edit: June 04, 2018, 12:09:12 AM by Linda_Norway »

Linda_Norway

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Re: When is a smart time for us to sell our house?
« Reply #10 on: June 04, 2018, 12:17:02 AM »
Congrats on being so close to fire! Your post conveys a lot of (understandable) anxiety towards selling your home and reaching your FI number. For that reason I voted for 2019 so you can just get it over with. The price you're going to advertise/accept shouldn't be related to your FI needs -- it's just going to sell at the market rate and then you'll have to see if the proceeds are enough for you to RE in 2019 or work and save a bit longer.

What are your DH's reasons for wanting to stay until 2020?

Maybe I asked him at a moment he was not stressed down. He didn't want to consider selling in 2019 at that moment. I think it is the thought of the coming stress that comes with selling a house.

Yesterday, while he was relaxed, we talked more about it. He thinks that if we don't get the desired price for our house, we can just work a year longer. Then I answered that that means selling in 2019, so that we know if we need to work longer.

I think DH is a bit sceptic to the whole concept of FIREing in 2019. He thinks I am very focussed on the required FIRE amount in my Excel sheet and of course it depends on the stock market at that moment when we will reach the required amount. Two months later the stock market can crash and we could have been set back one or several years.

Here is a quote of what I recently wrote in the 2019 FIRE cohort thread:

DH and I talked a bit more about our FIRE date. He likes to have a little more financial security so that a 10-20% crash in the stock market isn't a problem for FIRE.
We also discussed what working PT would cost. We think that working 20% less hours (4 days a week working) would only lead to 15% less income, as we pay high taxes on high income bracket. DH thinks we only need to work 5 weeks longer if we work only 4 days a week from now on. We have decided that I will ask my job to work 4 days a week from half of august. I hope they will accept that. Then DH will ask for the same. I will use DHs heart issues as an argument and say that we need to travel away during the weekends more often.

This plan made my day. As I think we could FIRE somewhere during the first half of 2019, I would mind working only 5 weeks longer, especially 4 days a week.

DH also thinks he wants to continue to work as long as he has his current heart issues. We have normal health insurance by paying our taxes, but the extra health insurance that our companies offer give you a prioritized place for operations. On the other hand, this costs about 700-800 US dollars a year to buy privately, so we could consider to buy it anyway.

RyaninLA

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Re: When is a smart time for us to sell our house?
« Reply #11 on: June 04, 2018, 07:27:42 AM »
It sounds like you have a case of channel fever! I can relate. Glad you came up with a plan to taper off your work and accommodate your DH's desire to have more of a buffer. We've been in this bull market for a long time and who knows when it will correct. When it inevitably does, you'll be happy to be able to relax and stay confident in your financial future. Have you stress tested your plan?

Linda_Norway

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Re: When is a smart time for us to sell our house?
« Reply #12 on: June 04, 2018, 09:56:37 AM »
It sounds like you have a case of channel fever! I can relate. Glad you came up with a plan to taper off your work and accommodate your DH's desire to have more of a buffer. We've been in this bull market for a long time and who knows when it will correct. When it inevitably does, you'll be happy to be able to relax and stay confident in your financial future. Have you stress tested your plan?

Not stress tested. But backup plan in case we need more money in the future is simply to go back to work in some way: consulting on your own terms, a part time job, a low stress job. One of these.
We also expect 2 windfalls in the form of inheritances some time in the next 10-20 years and those are not included in the calculations. We can also sell our cabin which is for the moment kept out of the calculations because we want to use it in the future (worth 1 1/2 year spending).

Linda_Norway

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Re: When is a smart time for us to sell our house?
« Reply #13 on: June 04, 2018, 01:14:13 PM »
DH is most afraid of having to rush into another modus right after having stopped to work. Not only selling the house, but also moving out, maybe selling some of our furniture. That sort of thing. I understand it. Selling in 2020 gives more peace of mind for that process, but less for the house price.

But DH was okay with me to contact a broker who just sold a kind of similar house in our neighbourhood and very fast as well. I want to get a price indication from an other person and some hint about what we should do to increase that price.

PhilB

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Re: When is a smart time for us to sell our house?
« Reply #14 on: June 05, 2018, 02:01:15 AM »
I don't know if this would work with the way brokers, etc charge in Norway, but is one option to market it in 2019 at a high enough price to allow immediate FIRE, and if you can't achieve that then remarket in 2020?  What I definitely would worry about in your position would be selling in 2019 at a price that doesn't allow you to retire until 2020.  You are then stuck renting and either buying a house that will stand empty or sitting on a pile of cash and hoping the housing market doesn't move against you.

Linda_Norway

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Re: When is a smart time for us to sell our house?
« Reply #15 on: June 05, 2018, 02:34:46 AM »
I don't know if this would work with the way brokers, etc charge in Norway, but is one option to market it in 2019 at a high enough price to allow immediate FIRE, and if you can't achieve that then remarket in 2020?  What I definitely would worry about in your position would be selling in 2019 at a price that doesn't allow you to retire until 2020.  You are then stuck renting and either buying a house that will stand empty or sitting on a pile of cash and hoping the housing market doesn't move against you.

Yes, good idea. 1/2 to 1 mil Norwegian crowns would make all the difference for the retirement time.

We can remarket with a 5% price change of the original price. Or we can remarket at any price after x weeks/months waiting.

I think that is what a house below us did. They put it for sale last year for an incredibly high price. It wasn't sold. Now it's for sale again at a much lower price. Still not sold, though.

As I posted elsewhere, I found a calculation mistake in my Excel sheet. Now I think we need approx 50.000 USD more than I had planned. That means I don't think we can stop working in spring/summer 2019. We probably need to work most of 2019. That makes the choice easier, then it will be 2020.

But we could use your idea and put it on the market for 50.000 - 100.000 USD more and see what happens.