Author Topic: Should we sell or stay in our house?  (Read 4266 times)

SunshineAZGrl

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Should we sell or stay in our house?
« on: July 03, 2015, 10:18:03 AM »
My DH and I are starting out on a journey to improve our finances. We have made so many financial mistakes that I'm not going to go into detail here but I need some advice on possibly selling our house. Just to give a quick financial backround, I stay at home to care for our 4 children ranging from 6mo to 6 years and DH makes 55-60K per year after bonuses. He is working on a finance degree hoping to open more job opportunities (his company covers the cost of tuition). We contribute to a 401K and that is our only retirement vehicle so far.. it's only got 20K right now and he is 31. I know early retirement with so many kids is never gonna happen but we would like to try to position ourselves to maximize his earnings so we can comfortably provide for our family now and in the future. I'll likely end up working part-time down the road when our kids are a bit older.. I have a degree but very little work experience.

We have a large home (5bd; 2500 sq ft) we purcased foreclosed in 2012. My mom loaned us the downpayment/closing costs and she moved in with us (very long back story here that I'm not going into) but after much tension we asked her to move out 2 months ago. We had to refinace to drop PMI and we decided to cash out some of the equity to consolidate our payments on our car loans, a small SL and credit cards and also to return my mom's downpayment. We left just enough equity for the 20% requirement to remove PMI. We now owe 197,000 and the house appraised for 265,000 though the houses continue to go up in value and housing websites are now saying its worth more. Our current house payment is $1214. The house needs a lot of updating and some repairs and if we stay here we will end up investing a lot into just basic fixes. It also sits on the back of a very busy street so I have a feeling it will be a tough sell whether it is all fixed up or not. It needs new carpet, paint, fixtures, front and patio door. The a/c and water heater are 15 years old and in fair condition. It also needs to be repainted on the outside. The entertainment built-in needs torn out (designed for older plasma tvs) and fireplace is broken. Also the bathrooms (4) need a lot of work. Two of the bathrooms have lanolium that is shot and the shower/bath inserts are quite worn. The countertops in the bath and kitchen are outdated and the cabinet doors need rehung as many are starting to come loose. We do not have the time to tackle these projects with so many little kids and DH working and in school. I kinda just want out of the house before it turns into a money pit! We enjoy having a large home but we don't necessarily love it and want to stay forever. We do appreciate the location and that it's zoned for quality schools. I'm considering homeschooling my kids in the future but still weighing the pros and cons of that.

We got a post card from Opendoor, a company that buys house with no relators or showings, and decided to get a quote. The offer was 257,000 and after fees and closing costs we would walk away with 36,000. They haven't seen the house so they may offer less but we don't know. I just have a feeling that this is going to be the best we can do. If we sell we need to downsize and rent because we aren't comfortable with a mortgage over 200,000K and those don't exist in our area right now. Rent runs about 1300-1400 to stay anywhere close to where DH works and within good school districts.

So should we take the money, start an investment account and rent, or should we stay put and keep fixing the house the best we can?

Thanks for reading and if you have any questions to clarify I will do my best to answer... Also I'm open to any other bits of advice on cutting costs, investments or whatever.

Murse

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Re: Should we sell or stay in our house?
« Reply #1 on: July 03, 2015, 10:32:20 AM »
So the options are cash out and make your monthly payments higher for less space. If it were my family I would stay. By staying you keep the payments lower, rent raises every year your mortgage won't, and you get to capture some appreciation. Now this appreciation may be canceled out by maintenance which has been neglected, but I would still vote for keeping my monthly expenses lower instead of taking a cash out IF you intend to stay in the same area with the 1400$ rents. It sounds like your husbands income should be going up which will make things easier. Do you have any debt other then the mortgage now? Or was it all rolled in?

Dee18

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Re: Should we sell or stay in our house?
« Reply #2 on: July 03, 2015, 10:47:04 AM »
So they would take $24000 in fees and closing costs?  Before making the decision, you could get more information.  Ask a couple realtors what they believe your house would sell for.

SunshineAZGrl

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Re: Should we sell or stay in our house?
« Reply #3 on: July 03, 2015, 11:00:22 AM »
Okay we will definitely talk to a relator and see what they say. I know the offer from Opendoor is low and yes $24000 would go to fees and closing. Also please don't get the wrong idea. The house is perfectly liveable and I wouldn't call it neglected. We have put money into other fixes like a roof leak, a/c repair maintainence, backyard, and plumbing and we repaired holes and have painted the main living areas. We haven't neglected it at all, it's just really worn at this point and needs updating especially compared to many of the newer builds in the area. We have no debt except our mortgage. We have 5K in a savings account. The payment was $1188 before we refied. It's possible another family would jump on the home in the condition because the market is so high here and there are just a handful of schools in the area that have a 8+ rating and we are lucky enough to be in that zoning.
« Last Edit: July 03, 2015, 11:05:19 AM by SunshineAZGrl »

Bracken_Joy

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Re: Should we sell or stay in our house?
« Reply #4 on: July 03, 2015, 11:10:35 AM »
It sounds to me like you should stay in the house, based on the info presented. You wouldn't gain much moving, and frankly staying in the same home growing up is a lovely privilege you could give your children. It sounds to me more like it's a question of you getting overwhelmed and wanting out. I would recommend making a priority list of your fixes, like 'needed in next 1 year, needed in next 5 years, needed before sale but not while we're living here' and then a category for 'not needed but would make home more enjoyable/livable'. Then do price estimates, and work your way gradually down the list.

You'll get there, it just takes time! And don't think children completely remove the chance at FI. 31 is still young, and while children do make it harder to FIRE, there are others on this forum with 4 and 5 children who are well on there way there!

SunshineAZGrl

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Re: Should we sell or stay in our house?
« Reply #5 on: July 03, 2015, 11:18:06 AM »
Thanks Bracken_Joy. Your right about us being overwhelmed with the work involved in a larger home. We are fine staying here for at least a few more years and it's a good point that staying in the same home is a privilege for our kids. I really like your idea for make a priority list for stuff to get fixed over the years.

Another Reader

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Re: Should we sell or stay in our house?
« Reply #6 on: July 03, 2015, 12:46:05 PM »
Run from Opendoor as fast as you can.  They will tell you they "pride themselves on offering a fair price."  Do NOT believe them.  Their offer is nowhere near market value.  What they will do is start with a number a little below the market value range, based on comps which may or may not be comparable.  They will adjust for the negatives they see about the house from what you tell them.  Then they deduct THEIR holding costs and selling costs, which have nothing to do with the market value of your property and are not part of a normal sale.  Of course, they also require you to pay closing costs and use their service providers.  If you then agree to this, they will send someone out to "inspect" the house and "adjust" for condition.  Mind you, they have already adjusted for what you told them, so they are double deducting for defects.

Somehow, in this shell game, they end up with the number straight out of the flipper's bible.  The net offer is 70 percent of After Repair Value (ARV) less repair costs.  Imagine that!  Yep, these earnest young techies are no different from the people putting up bandit signs saying "Cash for Your House!" or "We Buy Houses - Any Condition".  They are more efficient at pocketing your equity than the folks that go to expensive guru classes and send out yellow post cards and fake handwritten notes on lined yellow paper, because they get you to come to them.

Look carefully at the "27 people" on their website.  Two of them are past employees of the Wall Street groups that suckered the GSE's into the laughably below market bulk sales of foreclosures several years ago.  Several others are graduates of Mitt Romney's Bain Capital.  Do you think these people have your interests in mind?  Run as fast as you can.

This house may not be exactly what you want or need, but if you decide you might want to sell, talk to the two or three most productive agents in your area.  Show them the house, get their analysis of fair market value, and a list of the improvements they think are critical to a quick sale at a good price.  When you have better information, you can make a reasoned decision about what is best for you.

SunshineAZGrl

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Re: Should we sell or stay in our house?
« Reply #7 on: July 03, 2015, 01:20:41 PM »
Thank you Another Reader! I definitely had a feeling this might be a shady company. There isn't must history to go off of because they are newer to the scene. We only filled out the free quote to see what it said. I guess I was just thinking it might be a way to jump ship before having to roll up our sleeves. I already talked to my husband and he agrees that we need to stay put and stash some money away for expected repairs.

RobinAZ

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Re: Should we sell or stay in our house?
« Reply #8 on: July 12, 2015, 06:58:28 PM »
I am in Phoenix- a group called UpTown offered to come by my place and mentioned an offer around $200k for my house, which is about $5-10k under FMV.  Their model is to add square footage to increase value.  I didn't pursue the conversation, but I am considering it.  On the other hand, we like the school where we are at, and we can't buy a new house because 1) we are both self employed now and need another tax year of income proof, and 2) prices have gotten so much higher.  But I have a fantasy that the $35k in proceeds pays off my car and credit cards, and leaves me $15k left over to stash.  Lol, just don't know where we will live after that!!


escape

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Re: Should we sell or stay in our house?
« Reply #9 on: July 13, 2015, 06:47:15 AM »
Sunshine,

Another thought... You have four kids under 6. How hard do you think they will be on new fixtures as they grow up? I think the first kid related mishap on the old carpet or in the cruddy looking bath tub will make you glad you kept the fix up cash in the bank to put in nice stuff when they are older. :)

In the mean time, the poster above gave excellent advice to work on a list of things you need to get done. Work on the most urgent stuff, save for the bigger, emergency stuff, and do a few quick, inexpensive things that just really make you feel better as you have time and resources. . For us, one of those things was rehanging the kitchen cupboards. Lee Valley has a huge selection of affordable hinges & it took my sweetie like two hours total to replace the hinges in the whole kitchen with a reversible drill with a screw driver bit. It's something you can do in stages, like taking down the one you always bump your head on first and replacing it a week later if you have to. 

Phoenix is crawling with shady *ss flippers right now. They are mostly drooling over the idea of conning people into giving them their equity so they can make a quick buck at the expense of the previous owner. You have lots and lots of more positive options, even if you do decide to move on, besides panicking and giving your equity away.