Author Topic: Reader Case Study: Repairs to sell home?  (Read 2028 times)

MyCircus, MyMonkeys

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Reader Case Study: Repairs to sell home?
« on: April 19, 2016, 08:47:07 AM »
Background info:
Life situation: married, one child, living in Colorado Springs.
Net Salary/take home: $59k (this is after health/life/medical insurance, and pre-tax retirement)
Liabilities: primary home- $251k balance; originally financed at $274k (3.75% for 30 years)
          Only credit card- $3800 balance; credit line to $17k, 14% interest

I want to sell my primary home.  I believe a realistic listing price is $285k (based on my own market research; anywhere from $275k to $300k).  My rough estimates show my gain as approximately $9,400 (assuming a ďcost to sellĒ loss of 10% which includes the following estimates: 6% for realtor fees, 1.50% for seller-paid closing costs, and 1.00% for estimated repairs/concessions). I have requested a realtor provide professional market research to determine an accurate listing price; this is unavailable as of this morning (maybe a few more days?)

My long term goal is to buy a smaller home that is more affordable- Iím looking for a max price point of $230k.  I want to rent for a few years, and get our financial life in order (saving for husband and daughterís college, maxing retirement, etc.).  Iíve already reduced the easy monthly expenses such as cable, cell phones, grocery budget. The last, and largest, remaining item to reduce is our mortgage expense.

My question is this: my home currently needs a few repairs.  We tried to remodel our stairs (and failed miserably), so we need to install new carpet on the stairs, and replace the handrails/newels/spindles.  Without too much detail, I believe our repairs would be about $2,400 (known cost of materials plus estimate of labor). Trust me- if I could post a picture I would- the stair repair is MANDATORY. Iím sure I could list without repairing, but it would definitely cost me more money (than the repair) in a lowered asking price.

Iíve been aggressively paying off my credit card balance, so I have no money saved for this. Should I save for the repairs now, and try to sell next spring?  If I save for repairs now instead of continuing to pay off my credit card, my remaining credit card debt of $3300 would take longer to pay off.  A potential option is that I now qualify for a 0% transfer credit card (didn't have the credit score previously), but I havenít done that yet as weíve been making $1k+ payments each month and I didn't think an inquiry would be worth it if I can pay off the credit card in 3-4 months anyway. I believe my other option is to use my credit card to finance these repairs, then use the gain from selling to pay off my credit card.

Given current potential rental prices, I believe we would save between $200-$400 a month (this is just a comparison of my current mortgage payment versus current monthly rental prices; this potential savings amount doesnít include unknown owner expenses like repairs); but I would also need about $3k to move now (rental deposit, utility transfer fees, storage costs to declutter current home for quick sale, moving supplies and truck rental).  So, total needed to move would be about $5,400 (cash needed to move plus estimates for repairs).

I think itís worth it- except Iíve spent the last 18 months paying down our credit card debt, and I donít like the idea of using the credit card again. Worst case, we can stay in our home, and live like everyone else.  We can technically ďaffordĒ it (which is what my husband thinks), except we really canít (MMM-style).  Any thoughts?

Life in Balance

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Re: Reader Case Study: Repairs to sell home?
« Reply #1 on: April 19, 2016, 09:02:44 AM »
You mentioned selling next spring.  Maybe you could pay off the credit card (this summer), then save the money to fix the stairs (this fall), and then save up the moving costs (winter/spring) so that you are able to sell the house and transition to a rental without creating debt?

MyCircus, MyMonkeys

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Re: Reader Case Study: Repairs to sell home?
« Reply #2 on: April 19, 2016, 09:33:21 AM »
That is an option that I've considered; but my real problem is that my spouse does not really agree with my plans.  He loves the idea of retiring early, but hates any aspect of getting there (ie, living on less than you earn). Thus, he (and my daughter) are not on-board with the MMM-type changes I've made/been making; it took months of discussion for cable to be cut, and I'm getting push-back on the new cell phone plan.

As an example, my husband wants to epoxy the garage floor (this is at a DIY cost of $500 for a 3-car tandem garage), oh and we really "need" a shed to store our junk (as if a 3 car tandem garage isn't big enough), and we should add insulation to our garage so our bathroom is warmer in the winter (he's right, it does need to be done- but not if we sell).

I think selling now would remove all the fighting about the above repairs (these are all in addition to what I've identified as required to sell). I'm hoping that by renting a cheaper home with the approximate same "standard of living" my family has gotten used to (square footage, neighborhood, etc.) will show them how much better we could be doing. 

I know these are communication problems that need to be addressed ASAP- but I don't want to spend an extra $200/month for counseling (that he may not agree to). When I tell him about our budget (what I paid, what we have left), he appears to agree with me and our plan-then spends $15 on breakfast while at work.


CCEddy54

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Re: Reader Case Study: Repairs to sell home?
« Reply #3 on: April 22, 2016, 12:00:52 PM »
Hi, so I get what you are saying about selling to save money, but why would you rent a house that would only save you 200 a month? Are you counting the money you should be saving by not paying taxes, water and sewer as well? If you put a plan together on paper with the amounts you are paying now and what you can save buy renting smaller (less heat ect...) and show them that this needs to be a group effort to get the results for a better life down the road. I see you will have a better chance at winning this for all of you. I did this with DH and it is working, he wants a better life together, than a life of struggle together. Don't get me wrong I still have to remind him of why I say no to things every once in a while.

BFGirl

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Re: Reader Case Study: Repairs to sell home?
« Reply #4 on: April 22, 2016, 12:18:02 PM »
1.  Selling the house to avoid repair/improvement arguments only delays addressing the differing viewpoints you and your husband have about money.

2.  It seems to me that you and your husband need to seriously discuss your joint financial goals and how to achieve them.  Your husband thinks you are doing fine and you want to tighten the belt more.  You will probably both need to compromise.  You might also want to discuss setting amounts for discretionary spending, so that if your husband wants to spend $15 on breakfast from his discretionary spending, then he can do so without worrying that you will be mad.

3.  If you decide to sell, yes, you probably need to repair the stairs.  For any other repairs, ask your realtor to advise you.

MyCircus, MyMonkeys

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Re: Reader Case Study: Repairs to sell home?
« Reply #5 on: April 26, 2016, 10:26:43 AM »
Thanks everyone for the comments.

I have a realtor coming to provide their analysis in person (for both our primary and rental home).  The analysis for the primary home will probably be more realistic than for the rental home (since the realtor will be able to assess condition of interior of primary home; versus the rental home, which will probably just be based on known facts-square footage, location- and not include assessment of potential repairs to interior condition).

I suppose when I have actual numbers, then I can play with our budget and see what shakes out. 

Metric Mouse

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Re: Reader Case Study: Repairs to sell home?
« Reply #6 on: April 27, 2016, 06:18:16 AM »
Yes, you clearly need to schedule counseling because your husband wants to insulate and paint the garage. And if he's gonna continue to buy breakfast, you should probably just divorce.

But seriously, I'd say the best thing to do would be to keep paying off the credit card to show your family how serious you are about saving money. Remember - that debt is 'hair on fire' serious shit. The house, the stairs, the garage, breakfast - it can all wait.  Get rid of that debt, get the budget for the move, and then have a talk with your family.  Remember, their lives and goals and happiness matter too!