Author Topic: can't sell the house, mortgage is a stumbling block  (Read 4436 times)

outsidethebox

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can't sell the house, mortgage is a stumbling block
« on: March 15, 2012, 08:59:07 PM »
Hi everyone. I am hoping to get some replies that are maybe a bit extreme, frugal wise, and outside the box.

Bottom line is that we can't even start our ERE journey because we can't sell our lovely but moderately expensive home.
20+ years to go on it. The payment and basic cost of living keeps rising and pay cuts kept coming. People can't sell their homes here and many just walk away.

The flip side is that foreclosures of really cute "small house movement" sized homes are going for 1/3 of what they were a few years back. I'm sick of missing out on each one as not that many appear on the market in my $ range.

How do I take advantage of these cheap homes when I can't afford 2 homes? We can jump on the deal for  tiny house #2 but what if medium house #1 never sells? We want to live in the second, not buy it for investment. We just want to be "debt free including the house".
For us, that's when the ERE fun can finally start.

I hope my question is making sense. I asked it at Jacobs site as well.

I worry you all may be so far ahead of me $$ wise that my question wont make sense. I would ask this in a frugal or debt forum but those folks are not extreme. Their idea of frugal and mine are VERY different. They are still consuming and don't plan to stop. We want a radically different approach as in never financing anything again even houses and cars. The idea of not having a mortgage freaks everyone out that we know......as well as no car payments for life etc...

For the record one of my parents never had a mortgage or car payments, so this concept is not new to me. I just did not listen to said parent when I should have.

Thanks












Lars

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Re: can't sell the house, mortgage is a stumbling block
« Reply #1 on: March 15, 2012, 10:47:45 PM »
I read your post here and over at ERE. In order to dig in and answer you're questions, I going to challenge you. As I read your posts, I felt your desire to make a substantial start to your ERE journey and the frustration with the anchor that is your house. Although ERE is a fast way to FI or retirement, it is still mostly marathon with the occasional sprint.  I'm not sure what you want to do is something you can do quickly; It may require a plan that takes years and much patience. 

I almost didn't answer your question because I see this as the summary of your question:
I believe my house can't be sold. It is impossible. Please give me an easy way to solve my impossible problem.

Before I would buy the new house, I believe you must figure out what to do with the current one - you must make the sale possible or make some cash flow from the house.  Can you be more specific about why you can not sell your home? IE Are you considerably underwater? , How much does your home cost each month? Interest on the loan? Thoughts on renting?

Don't be discouraged. If you look beyond the house for now, what can you do to start your ERE journey now? What are you doing now?

outsidethebox

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Re: can't sell the house, mortgage is a stumbling block
« Reply #2 on: March 16, 2012, 01:13:52 AM »
Thanks Lars. We have slowly worked at this for 10 years.  I should mention also that we seem older than most members of these ere boards. We don't really have all the time in the world, and we sort of feel like we just lost a decade in some financial ways. We should not even be calling it "early" retirement anymore.

No one can sell here for many reasons. Underwater, brand new homes are cheap and foreclosed on because builders overbuilt.

I don't feel comfortable renting out the home. We would make terrible landlords as we are picky, neat freaks and have other landlording concerns.

 I can't be the only one wanting to downsize. I wish I could see where those folks posts and what they are doing. All I can find is people wanting government backed refys or how to "walk away". I need neither of those.

You asked what I was doing for ERE now. I do everything I can with a limited budget. This house payment, cost of basic living expenses rising, and pay cuts have limited me, bit I still work every angle. It's my passion.

I realize it's going to take time.  Your right, that's not going to change overnight.

Thanks again for your reply.







adam

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Re: can't sell the house, mortgage is a stumbling block
« Reply #3 on: March 16, 2012, 06:44:52 AM »
You're going to either have to lose a whole lot of money and try and sell it, or you're going to have to accept that you're going to rent it out.

We're in the same situation.  The price isn't so bad, but nobody is looking.  I'm currently renting my old house that we're moving back into, and trying to sell/rent my wife's house.  If you don't think you will make a good landlord, then you need to find a property management company.  After being a landlord for two years I found that I'm not particularly good at it, and if we end up renting my wife's house (which looks likely) we are getting a management company to take care of all that.

You have to stop thinking about it as your 'home' and start thinking about it as an investment (that's probably losing money if you're like me).  That was the hardest part for me because the house I rented was my first house.  Renting the one we're living in now will be hard for the wife for the same reason.  I'm already over it now.

arebelspy

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Re: can't sell the house, mortgage is a stumbling block
« Reply #4 on: March 16, 2012, 09:01:30 AM »
Sent PM.
I am a former teacher who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and am now settled with three kids.
If you want to know more about me, this Business Insider profile tells the story pretty well.
I (rarely) blog at AdventuringAlong.com. Check out the Now page to see what I'm up to currently.

AJ

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Re: can't sell the house, mortgage is a stumbling block
« Reply #5 on: March 16, 2012, 12:25:20 PM »
Hi everyone. I am hoping to get some replies that are maybe a bit extreme, frugal wise, and outside the box.

Rent the house. That might not be extreme advice for most people, but it sounds like it would be a comfort-zone-shattering experience for you at this time. That is a good thing, as it sounds like your comfort zone is holding you back financially. Hire a property management company, if you think you would be a terrible landlord.

The way I see it, you have to select from the following options:

1. Sell at a loss and buy the tiny house you want.
2. Rent your house and buy the tiny house you want.
3. Stay living in your current lovely-but-expensive home.

Sometimes, no amount of out-of-the-box thinking will get you out of having to make an difficult decision.

HeidiO

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Re: can't sell the house, mortgage is a stumbling block
« Reply #6 on: March 16, 2012, 05:24:29 PM »
Some options: If your selling will make you lose too much money, don't sell.  Or sell at a loss.  Can you satisfy your mortgage?  I have heard (but don't know for a fact) that short sales are not that big of a hit to your credit.   Buy your tiny house, rent it out, move in later, when you can sell the bigger one for more money.  Keep your house, and since you're stuck in it try to enjoy it.  Rent out a bedroom or 2.   Good luck.  Sometimes we focus on the bigger things that we can't do immediately, instead of the smaller things we can do.
Heidi

adam

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Re: can't sell the house, mortgage is a stumbling block
« Reply #7 on: March 19, 2012, 08:05:11 AM »
Do the math.  Always do the math.

For example, if we couldn't sell the house we're currently in and did not choose to rent it, it would cost us about $1300/month to sit empty.  If we took a $10,000 loss on the sale of the house, that's really only 7.5 months worth of payments.  Most banks will give you a really small interest rate on the difference, my credit union quoted me 0.001% on the loan balance if I had a short sale.  I'm not sure the term of a loan like that, but if you figure 5 years that's not so bad.

The Money Monk

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Re: can't sell the house, mortgage is a stumbling block
« Reply #8 on: March 20, 2012, 08:51:07 AM »
Hi everyone. I am hoping to get some replies that are maybe a bit extreme, frugal wise, and outside the box.

Rent the house. That might not be extreme advice for most people, but it sounds like it would be a comfort-zone-shattering experience for you at this time. That is a good thing, as it sounds like your comfort zone is holding you back financially. Hire a property management company, if you think you would be a terrible landlord.

The way I see it, you have to select from the following options:

1. Sell at a loss and buy the tiny house you want.
2. Rent your house and buy the tiny house you want.
3. Stay living in your current lovely-but-expensive home.

Sometimes, no amount of out-of-the-box thinking will get you out of having to make an difficult decision.

Totally agree. There isn't always going to be an option that you are happy with. YOu have to look at all available options, weigh the pros and cons, and choose the least-objectionable option. No use fretting for weeks over it.

I imagine that whatever you choose (whether it seems like a crappy outcome or not) you will be much more at east once the choice is made and done with. So much of the suffering in these situations is the worry, and very little is the actual lifestyle you are stuck with after the choice is made.

Good luck with your decision.

SpendyMcSpend

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Re: can't sell the house, mortgage is a stumbling block
« Reply #9 on: March 22, 2012, 03:23:46 PM »
Are you underwater?  If so, save up the difference then sell it.