Author Topic: advice on selling primary residence  (Read 2179 times)

intellectsucks

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advice on selling primary residence
« on: February 04, 2015, 02:50:39 PM »
I have a couple of questions for the mustachian real estate pros.  I bought my house about five years ago and the value has declined pretty steadily(about 12% during that time).  I believe that the main factor causing the decline is that my neighborhood is getting and will continue to get worse.

So here are the numbers:

Mortgage balance is $157,000 at 4.875%

Payment is $1301 PITI

Comps for our house range from $145,000 at the low end to $168,000 at the high end (this data comes from 2 realtors, zillow and Redfin.com).  The low range are houses that are much more outdated and with less desirable features than ours.  The high range has multiple of the following; hardwood floors, big open upgraded kitchen, deck, finished basement, garage or more square footage.  Our house has an AWESOME kitchen, a nice deck with a front and back yard, a detached garage and a fireplace.

Iíve met with two realtors who gave somewhat conflicting opinions.

The first told us to hold out for at least a year.  He said that 2015 looks to be a good year for real estate, especially in Philadelphia.  He said the odds of our home value continuing to decline, and then declining MORE than our principal payments on our mortgage are very low.  After a year plus, we will have more equity, be able to get a higher selling price (even if itís only slightly higher) and will have more in savings.

The second said that while real estate in Philadelphia is probably going to have a good 2015, our neighborhood probably will not participate.  He said that previously bad areas in Philadelphia that are being gentrified are driving prices up and pricing out the residents of those areas.  Theyíre moving to our neighborhood and surrounding neighborhoods and driving the price down.  He said that we should sell now, even if weíre slightly underwater to avoid further losses.  I tend to agree with this realtor.

If anyone with some expertise in the Philadelphia real estate market would like to offer an opinion as well, let me know and I will e-mail you more specifics.

The questions are as follows:

1.       In the words of The Clash, should I stay or should I go?  Iím leaning VERY heavily towards go.  Current plan is to put the home up for sale this spring or summer

2.       Should I make any improvements?  Iím kicking around the idea of redoing our flooring (our carpets are really old and look like theyíre commercial carpets.  No dirty or too worn but REALLY ugly), as well as redoing one of the upstairs bedrooms (the walls are a weird textured finish, almost like stucco and the previous owner used it as an office and used what seems like thousands of anchors to put shelves EVERYWHERE).  Iím worried that without those improvements we wonít be able to ask a price in the higher range, as we wonít compete favorably with the other houses in that range.  However a lot of people are telling me not to do a thing, as I wonít be able to recoup the cost.  I will be doing all the work myself (with help from some contractor friends and family) so that will cut costs by a ton.

If you need any other info or pictures, let me know.  Thanks in advance for all your opinions and advice!!!

 

jmusic

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Re: advice on selling primary residence
« Reply #1 on: February 04, 2015, 04:26:12 PM »
The questions are as follows:

1.       In the words of The Clash, should I stay or should I go?  Iím leaning VERY heavily towards go.  Current plan is to put the home up for sale this spring or summer

2.       Should I make any improvements?  Iím kicking around the idea of redoing our flooring (our carpets are really old and look like theyíre commercial carpets.  No dirty or too worn but REALLY ugly), as well as redoing one of the upstairs bedrooms (the walls are a weird textured finish, almost like stucco and the previous owner used it as an office and used what seems like thousands of anchors to put shelves EVERYWHERE).  Iím worried that without those improvements we wonít be able to ask a price in the higher range, as we wonít compete favorably with the other houses in that range.  However a lot of people are telling me not to do a thing, as I wonít be able to recoup the cost.  I will be doing all the work myself (with help from some contractor friends and family) so that will cut costs by a ton.

If you need any other info or pictures, let me know.  Thanks in advance for all your opinions and advice!!!

For #1 I'd recommend the coin flip method (can't take credit for this, I heard about it elsewhere on the forum).  Basically, flip a coin with "stay" or "go," and if the result of the coin flip fills you with dread, then do the opposite.  Really, it sounds like you've already made up your mind though.  Just quit postponing the decision and rip off that band-aid!

#2.  It's probably a good idea to do repairs, but I wouldn't cross over into "improvements."  Also, if you're doing the work yourself, it's easy to let time slip away.  Draft an agreement with your Realtor and SET A DEADLINE (Ready or not, it's on the market by ____).

ShoulderThingThatGoesUp

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Re: advice on selling primary residence
« Reply #2 on: February 05, 2015, 10:13:48 AM »
What part of Philadelphia are you in? We sold a house in Cheltenham Township, Montgomery County last year that we had done a lot of improvements to. We did okay on money in vs. money out, but we sold a renovated house for under $100/sf because it just wasn't that good a neighborhood, and the property taxes in Cheltenham are off the hook. If you want, I can PM you my selling agent's name; I thought she was a very-low-bullshit realtor.

Can you rent the thing?

Fishingmn

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Re: advice on selling primary residence
« Reply #3 on: February 05, 2015, 11:01:48 AM »
I'm a Realtor for what it's worth.

Personally, I'd base your decision on whether now it's a good time to move for you - not on trying to guess what real estate prices are going to be a year from now.

The only thing I'd maybe add is that the Twin Cities is off to a really strong start in 2015. It's possible that this will be the same in Philly. Are you planning on buying something new once you sell? You may be better off selling now if you plan on buying something else given the activity level and low interest rates.

In regards to the updates - who do you think is going to buy the home - an investor or owner occupant? If it's an owner occupant I'd probably recommend a low-mid grade flooring upgrade. Most retail buyers want a home that's move in ready and don't have a lot of left over cash to invest in redoing the flooring. If you can make the bedroom look better with your own sweat equity go for it.

intellectsucks

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Re: advice on selling primary residence
« Reply #4 on: February 05, 2015, 03:52:22 PM »
Thanks for the replies guys.  I'm in NE Philadelphia right near frankford and rhawn. 3 blicks from the shiny new methadone clinic! !! Yay!!

I have two really good realtors I can work with but I appreciate the offer.

In regards to renting it out rents in my area range from 1000 to 1300. Even at the high end I'd be taking a loss and I think rents will be dropping with prices.

I definitely don't want to sell to an investor as they will be asking far too little. 

My plan is to rip up the carpets next week and see whether I can refinish the floors underneath. If not I'm thinking of going with new engineered hardwood.