Hello,
My wife and I have our house on the market, where it has been sitting for about 50 days, with a moderate amount of traffic (3-4 people a week at the beginning, 1-2 people a week now), but no offers. In order to facilitate the sale, and to move closer to work, we are living in an apartment while the house is on the market. The house is currently listed with a real estate agent, who is under contract for 4 more months, and who we owe 6% if it sells. Additionally if the house sells, we will owe 1.5% on it for state excise tax, and ~ 1.5% for seller closing costs, so call it 9% in total. With the current housing expenses, I calculate it is now approximately break even for me to sell the house today at the current price, or to wait until the real estate agent contract expires, reduce the price by 10K, and do For Sale by Owner
At 260K, the house is right in the middle of the price range both by total dollar and $/ square foot for the local area, both in terms of listed and recently sold. Zillow reports local prices increasing rapidly in recent months, as much as $5k for house in last month. (I know Zillow isn't all that accurate). At 250K I think it would edge to the lower 40% of the price range, and drop into more search criteria.
The largest local employer near the house is in a boom cycle for profits, however there is some signaling going on that layoffs & attrition are coming down the pipe. (I have no concern for my own job, but it could affect local market)
The house is structurally sound, but not up to date (in terms of interiors), with older kitchen, bathroom, and carpeting, so it will not bring a premium price. Since we are living in the apartment, it is clean and showing as well as it can without spending $$$ to replace the carpeting, or countertops or appliances.
My question is, should I reduce price now to facilitate the sale, or wait and reduce price later
The Numbers
House List Price - 260 K
Mortgage owed on it - beginning of list - 245 K ( I am a bit psychologically pegged to this number)
Mortgage owed on it now - 20K (I recently started reading MMM and realized I had a big cash stash earning no interest better used for paying down the mortgage)
Mortgage Payment (Principle + Interest + Escrow) = 1700
Money if sold today = 260K - 9% = 236.6 K
Money if sold in February (FSBO) = 250K - 5% - interim expenses = 237.5 K - interim expenses
Monthly expenses on House
Interest = 20,000 * 5.875 % =~ $ 100
Taxes = $ 200
Water/sewer = 80
electricity (this might be reduced, but it has electric heat which is still needed) = 50
House Insurance = 50
Earthquake insurance (since I dumped most of my stash into it, I am more comfortable with this) = 40
Misc (various upkeeps, gas to drive over there weekly) = 70
Total = 500
So selling the house in February would net to 237.5K - $500 * 4 months = 235.5 K
Last years Net take home pay for myself + wife (gross pay less taxes, insurances, 401K contribution) = ~130 K
Savings on take home pay = 70K
Savings rate =~ 54% (probably just shy of 60% if 401Ks are included)
Paying down the mortgage has used a majority, but not all, of the non-401K stash.
Cost of apartment = 1100 / month. Approximately 20 miles closer to work for both wife & I
I see it as basically a wash between selling now, and reducing the price and selling later. Is there incentive to reduce the price to sell now ?
What actions should I be taking to increase the stash ? Various thoughts I have had
- Leave price at 260K, see if it sells. Attempt to sell at $250K FSBO when real estate contract expires
- Drop price to $250 K now, as real estate agent has been suggesting, and see if it sells
- Drop price to $250 K, but only if real estate agent is willing to take 4% commission instead of 6% (she eats 5K, I eat 5K)
- Move back into the house (severely frowned on by the wife)
- Rent out the house ( frowned on by the wife )
- Focus my efforts on reducing expenses in other areas, which might have $200-$400/monthly opportunity if I can increase my badassness level