Author Topic: Is there lemonade to be made out of these lemons?  (Read 4245 times)

Loretta

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Is there lemonade to be made out of these lemons?
« on: August 27, 2014, 04:52:16 PM »
I need help.  Twice now this year I have attempted to sell my 1bed/1bath condo in the DC suburbs.  I must move out of this unit for my mental health, with reasons I shall not go into here.  My outgoing is $1310/month including mortgage, HOA, and property taxes.  I could rent the place for $1200-$1250.  Without selling I would not have funds to purchase another place and so would have to rent.  I would not feel terribly confident covering my mortgage and a rent payment on my salary alone. 

My mortgage balance is $132,800.  My asking price is now $195,000.  I paid $227,000 in 2007 for the place.  I rented it out for 3 years while I was out of the country with flighty tenants and flaky prop mgmt.  Unfortunately all my funds are tied up in the property.  I have been aggressively saving up cash for a down payment on a new place, in addition to the equity I have.  (reduce my TSP contributions, quit putting extra toward my mortgage, more meals at home, etc.)

How can I move if I don't sell the place?  How could I make this work?  Is there lemonade to be made out of these lemons? 

penguin456

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Re: Is there lemonade to be made out of these lemons?
« Reply #1 on: August 27, 2014, 04:57:53 PM »
There is a price at which it will sell and you have quite a bit of equity. Can you drop the price enough to unload it?  You might have to rent for a year to build up a larger downpayment if you dont enough out of the current place.

Loretta

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Re: Is there lemonade to be made out of these lemons?
« Reply #2 on: August 27, 2014, 06:06:30 PM »
Also, this is day 42 of being on the market with one drop in price about 10 days ago.  If I really want to get the fuck out of here, what would be a good length of time to stay on the market? 

My realtor is giving me a decent discount and some cash toward closing on my next place if I use her, but I also need to protect that equity I've built.

Longwaytogo

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Re: Is there lemonade to be made out of these lemons?
« Reply #3 on: August 28, 2014, 07:59:21 AM »
I am in DC suburbs as well, thought our market was generally doing decent. How does your place show?

If it's small de-cluttering can go a long way (could even store some stuff at friends/relatives if its stuff you don't want to donate/sell) . Maybe some painting, minor repairs etc.

See if your Realtor could spring for professional online photos of the place looking its best or if you/friend is capable of getting good ones if his discount is so that he won't pay for it. Also not sure if your Realtor is a friend or where the discount comes in but sometimes you get what you pay for IMHO.

Short of that like Penquin said there's a price point at which it will sell. Have you had many people look at it?, any offers?

Loretta

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Re: Is there lemonade to be made out of these lemons?
« Reply #4 on: August 28, 2014, 06:17:45 PM »
Thanks, Longwaytogo and Penguin456.  I've only had people come through during the 3 open houses the realtor held.  No offers but good traffic for open houses.  The place shows well.  The photos on the MLS are professionally done.  It's a 4.5% full service listing.  The 1bed/1bath condo on the first floor layout just isn't terribly popular at the moment I guess. 

Longwaytogo

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Re: Is there lemonade to be made out of these lemons?
« Reply #5 on: August 28, 2014, 07:56:08 PM »
The question I would have is how the 4.5% is being split. Assuming your agent is not willing to work for 1.5% then my guess would be a 2.25 to 2.25 split (between buyer and seller agent). So on a your 195K condo the commission would be $4,387.50 vs the "normal" 3% at $5,850.00 on a similar 195K condo or an additional $1,462.50 for doing the exact same amount of work.

I'm not a Realtor but did take and pass class when I was considering doing it as a side gig. i also have a friend and relative that do it. technically "steering" is illegal but people are financially driven so that $1500 could loom large as a buyer agent. (your agent does'nt care because listing is really less work than showing a buyer 20 houses, making multiple offers, etc.)

I could be wrong or just a pessimistic skeptic, but just my thoughts. Maybe others with more real estate experience then me 9 or someone who is a realtor) would have more info/ opinions. But for example paying the full 6% commission would be cheaper than say dropping your price to 180K to sell it.

daverobev

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Re: Is there lemonade to be made out of these lemons?
« Reply #6 on: August 29, 2014, 08:30:54 AM »
So you're down ~20% vs 2007.

What has happened to the prices of houses you're looking to buy in the same 7 years? If they are also down 20+% then no problem. Sell yours at a loss and buy at a cheaper price.

You've got two options - lower your price, or wait.


unpolloloco

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Re: Is there lemonade to be made out of these lemons?
« Reply #7 on: August 29, 2014, 11:29:18 AM »
Reiterating the point to lower your price or wait.  40-something days isn't all that long on the market for most areas (I realize DC tends to be shorter than most, however).

The market for a 1BR isn't great compared to a 2BR (opens up possibilities for a nursery, office, roommate, etc.), so you'll need have yourself priced lower than comparably sized 2BR units.

arebelspy

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Re: Is there lemonade to be made out of these lemons?
« Reply #8 on: August 31, 2014, 12:41:44 AM »
There's a price you can put it at (and every price below that) where you'll get 10 offers the first day.  There's a price you can put it at (and everywhere above that price) where you get no offers.  And then there are the in between prices, where maybe it takes a week to get 1 offer, or maybe you get a few within the first 3 days.

Your asking price of 195k is apparently at the "no offers" point on that spectrum.  If you want to sell, you'll need to reduce that price.

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Without selling I would not have funds to purchase another place and so would have to rent.  I would not feel terribly confident covering my mortgage and a rent payment on my salary alone. 

Okay, so renting is out.  How about selling it on owner financing?  Tricky because of your mortgage though (will have to do a AITD or Sub2 or something potentially ugly).  Rent to own for a few years, and then can retest the for sale market if that falls through after awhile?
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Loretta

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Re: Is there lemonade to be made out of these lemons?
« Reply #9 on: September 21, 2014, 08:35:31 AM »
OP here.  I've now got my condo up for rent in addition to for sale and have actually, finally, had some traffic on it.  I've spoken with a few folks I know in real life who are successful landlords and have a better feeling toward it myself now, if a sale is not going to happen.  I am trying to be optimistic.  I have another open house scheduled for next weekend.  Thanks for all the advice above. 

jnc

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Re: Is there lemonade to be made out of these lemons?
« Reply #10 on: September 21, 2014, 01:47:53 PM »
Am not familiar with DC market but when you are selling, you can list at an attractive price, generate multiple bids, and essentially be able to sell for much higher than your listing price. Anyway I don't know if that would work for your market and you've had it listed for a while, so this point is moot now.

Don't know if you plan to keep listing it for sale if you get a tenant first. If you do, you need to be mindful of what kind of lease you arrange with the tenant and any sorts of protection they get if/when you get the place sold.