Author Topic: Questions re: selling my house: FSBO, when to list home, when to look for homes  (Read 3395 times)

Nick_Miller

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I tried to search for a similar topic but I never find anything much when I search on goggle. I did find a thread from spring 2016 re: FSBO, but when I tried to revive it, the forum gave me a "this post is 120+ old! are you sure you want to revive it?" type of message. Anyways....

Situation
We have decided to move to a different part of the city to access better public schools for my two daughters, who will have 7 and 10 remaining years of school respectively in summer of 2017. This move will set their future schooling "in stone." Everything from summer 2017 forward will be guaranteed, all the way through high school. They would be guaranteed admission to the 3rd best high school in the city (of about 25) and would have a chance, depending on grades/test scores, to get into the best one. (the 2nd best one is very small and kind of weird, not an option).

We MUST have a new address in the new area of town by June 2017, so we're on a 7-month timer to sell our current house and buy another. We owe about $65,000 on our home.

Questions

1) Should I try FSBO first or just find a super awesome agent?

I am an attorney and I'm very comfortable negotiating and taking emotion out of it. My wife, not so much. She has told me that I have to be the one who does all the negotiating. I'm good with that. Our market is pretty good - people say it's a sellers' market. I have not confirmed that with data. We have one real estate agent visit us last week and she was NOT impressive. Wore yoga pants and a baseball cap. Was 30 minutes late. Most of her comments were saying things like "that's cute!" as she would walk through the house. We did NOT sign anything with her, so it was a bad first experience.

Does FSBO generally backfire on the seller as potential buyers (those with agents and those without) all figure that since the seller is "saving" by not paying a listing agent, they the potential buyer can lowball more than they generally would? And yes I know that we'll have to pay at least a 2% or 2.5% fee to buyers agents to encourage them to show our home to clients, so we're only saving about 3% or so.


2) We are planning to sell first BEFORE we start looking.

Is this dumb? I really want to know how much we'll clear from the sale before we start shopping. I think our house will sell in the $140,000 to $160,000 range, but that's a pretty big window. I want to know how much cash we're working with when deciding what price range of new home to look at. I would prefer to keep our new mortgage under $125,000, 15-year.

Yes I know moving twice will be a pain in the ass and we'll have to pay $$ for storage. However, my awesome FIL has a huge house and is willing to let us stay for 3-6 months (probably much longer, but he's not in the school boundary we need to be in by summer), so we could always do that if our house sells quickly. That would give us time to shop and we won't be as pressured to find something as if we only had a few weeks to find a house or risk blowing up a sale. I always prefer to have as much leverage as possible.

I know we can write a sales contract that include a contingency for us having a new house under contract, but that seems like a lot of pressure.








« Last Edit: November 30, 2016, 08:09:39 AM by Nick_Miller »

waltworks

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FSBO backfires a lot, but it's mostly not because the seller doesn't do enough/good marketing - it's because they priced the house wrong (sometimes hilariously wrong, there are plenty of FSBOs that are being "sold" by total nutjobs). The marketing end of things is 90% just having the MLS listing, in my experience. An agent can also deal with a lot of hassles (answering dumb questions from potential buyers, calling around to agents with clients they know are looking at your area, re-tidying after a few showings have messed things up, letting someone in at a random time on a weekend because they just had to see the house again, etc, etc). Selling a house can be a PITA even without the stress of the negotiations.

So the questions are:
1) Can you do a good job of pricing the house right (and you really sort of only have one chance at this per selling season, since many buyers won't look back at your place a second time once they reject it)?
2) Are you willing to drop everything at work and go let potential buyers/agents into the house for (worst case) a month or longer, and deal with the hassle of keeping the place looking nice/staged?

For some people, that stuff is worth ~3%. For others it's not.

I think your basic plan is fine in terms of timing, needing to move twice, etc. It sort of sucks to deal with double transactions where one depends on the other, so if you can avoid that, that is ideal.

-W

Nick_Miller

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FSBO backfires a lot, but it's mostly not because the seller doesn't do enough/good marketing - it's because they priced the house wrong (sometimes hilariously wrong, there are plenty of FSBOs that are being "sold" by total nutjobs). The marketing end of things is 90% just having the MLS listing, in my experience. An agent can also deal with a lot of hassles (answering dumb questions from potential buyers, calling around to agents with clients they know are looking at your area, re-tidying after a few showings have messed things up, letting someone in at a random time on a weekend because they just had to see the house again, etc, etc). Selling a house can be a PITA even without the stress of the negotiations.

So the questions are:
1) Can you do a good job of pricing the house right (and you really sort of only have one chance at this per selling season, since many buyers won't look back at your place a second time once they reject it)?
2) Are you willing to drop everything at work and go let potential buyers/agents into the house for (worst case) a month or longer, and deal with the hassle of keeping the place looking nice/staged?

For some people, that stuff is worth ~3%. For others it's not.

I think your basic plan is fine in terms of timing, needing to move twice, etc. It sort of sucks to deal with double transactions where one depends on the other, so if you can avoid that, that is ideal.

-W

Thanks for those great points. The bold one is a big deal. I have some flexibility at work, but I can't just race out on short notice and disappear for an hour or two. Well, I could, but it would cut into my monthly fees earned, and in turn my bonus, so yeah I might end up losing money by scampering around showing the house instead of settling cases.

And yes the double transaction thing is a concern two. It seems like if everyone in the chain is both buying and selling a home, then there could be two, three or more parties who all need to sell a house before they commit to the next one. I figured our approach would at least break the chain and simplify things a bit. Plus, I just think time = leverage. I don't see how you have any leverage when you're pressured to buy a house in a few weeks or so.

waltworks

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Yeah, I like the separate buy/sell part of the plan. That is the way I have always operated and it saves a TON of stress.

The agent is tougher call. I have a decent amount of RE knowledge and could probably do an ok job with pricing but I still use an agent because it just isn't worth the time/effort to do all the little stuff needed and like you, I have a good job where getting interrupted constantly would end up costing me more than just hiring the agent.

If you're in a crazy hot market where you can expect to sell in a day or two, I might skip the agent. Otherwise I'd just suck it up and pay for one.

-W

Another Reader

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On a $160,000 sale you are saving at most $4,800.  What's your hourly rate?  In your shoes, I would interview a few more agents.  Ones with recommendations from buyers and sellers in your neighborhood.

Nick_Miller

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Well, yeah $5,000 isn't chump change. I would prefer to save the money.

But I can easily clear a bonus of a few thousand dollars in a given month, so I might just break even by hustling around for a month, and that assumes it sells in a month.

And yeah I think most of my frustration is that this agent, who was recommended by one of my wife's friends, did NOT present herself as a go-getter. I kept thinking, "Hell what can she do that I can't?" Now I know there are some high octane agents with big networks and connections and resources and fancy photography equipment and stuff. She just wasn't one.

Another Reader

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Your wife needs to vet her friends before taking their recommendations...

Figure out who is selling the most houses in your neighborhood.  Start with who has the most signs.  Look on Zillow and Realtor.com to see who has the most listings and sales.  Call those people and see what you get.

calimom

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If you can financially swing a new mortgage on your future house and deal with double payments for a few months, that is so preferable to moving twice, or being pressured to find "just any" house in your preferred zip code. Unoccupied houses are far easier to sell than occupied ones, especially with kids (and pets?). I do home staging as a side business and far prefer houses that are empty canvasses.

And another vote for a good agent. You clearly have to have a comfort level with whoever you choose. Many FSBO properties get overlooked. Lots of buyers' agents won't even consider a FSBO for their clients.

Good luck with whatever you do. You live in a very LCOL area. $160K for a house - wow!

ender

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FSBO backfires a lot, but it's mostly not because the seller doesn't do enough/good marketing - it's because they priced the house wrong (sometimes hilariously wrong, there are plenty of FSBOs that are being "sold" by total nutjobs). The marketing end of things is 90% just having the MLS listing, in my experience.

The house we bought this year was previously listed as FSBO for about 7% more than we ended up paying for it after they listed it with a realtor.

There's a reason it wasn't selling when it was FSBO and it was definitely the price. They were off a LOT. We could have paid them a fair bit less than the price we got through a realtor had they priced it more reasonably FSBO, but they had it high enough we didn't even bother looking. If they had listed it 10% off what they listed it initially FSBO, both buyer and seller would have benefited. But alas, they listed it so high initially.

Also, most people who do FSBO have no interest in listening to a potential buyer telling them they are pricing it too high. If you do go down that route, try to monitor comparable houses and see roughly how much they sell for. Or even find someone to do an appraisal, that's basically what they do.

And yes the double transaction thing is a concern two. It seems like if everyone in the chain is both buying and selling a home, then there could be two, three or more parties who all need to sell a house before they commit to the next one. I figured our approach would at least break the chain and simplify things a bit. Plus, I just think time = leverage. I don't see how you have any leverage when you're pressured to buy a house in a few weeks or so.


There are a lot of ways around this problem, depending on your family situation and arrangements. Short term rentals, AirBnB, extended stay hotels, etc.

It may very well be worth it to spend $1k or more for short term storage/housing in order to have a a better period of time to look for houses to purchase knowing yours is sold.


LadyFI

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Figure out who is selling the most houses in your neighborhood.  Start with who has the most signs.  Look on Zillow and Realtor.com to see who has the most listings and sales.  Call those people and see what you get.

This. Forget about getting agent recommendations from friends or whatever. Unless they are friends who have recently had a great experience selling a comparable home in your exact neighborhood. (If that was the case with Miss Yoga Pants-30 minutes Late, then I'm not sure what to say).

As a seller you want to be working with the person who knows how to sell houses in your neighborhood. It matters, especially in a city the size of yours (I'm making assumptions on size based on you mentioning you have 25 high schools to choose from).

Good sellers agents specialize. In my city (a medium-to-large city), it's very obvious who the top sellers are in my neighborhood based on a quick look at for sale signs and the neighborhood newspaper...and they are not the same agents who specialize in the neighborhood 12 blocks away or in the equally nice neighborhood 3 miles away.

Anecdote time: I sold a home this year in a large US city. The market in our neighborhood was such that FSBO would have been the kiss of death so did not even consider it. Interviewed four agents. Agent 1 was a total hack. Agent 2 was a friend (very competent, but specialized in a completely different neighborhood across town). Agent 3 was a team that specialized in newer construction kind of in my neighborhood but friends had recently had a great experience with them. Agent 4 was a team anchored by someone with an amazing track record on my STREET. Ultimately DH & I chose Agent 4 because of the hyper-local experience. We closed 6 weeks after hitting the MLS. Agent 2 (the friend) contacted me after the sale congratulating us on the awesome price we got, which was 10% more than what he proposed listing it at. Of course YMMV, but we found that agents vary dramatically and neighborhood knowledge matters a lot. Even though 3/4 of the agents we interviewed were extremely professional and competent, only one agent left us confident that our place would be sold quickly and at the best possible price.

Good luck with whatever you decide.

Edit to address question #2.

This is not something you mentioned at all...but could you rent for a year or so in the neighborhood (or at least the school boundary) you want to be in? Selling a house is stressful. Especially when you have kids and a hard timeline to move. While my recent relocation scenario is not entirely the same as yours, your comment about not wanting to feel rushed and wanting to know exactly how much money you will be working with resonated with me. DH & I relocated (with our pre-schooler) to a new city and had only a vague idea of which neighborhoods we might want to live in. Because of the RE market in our old city we knew we had to move out before selling (it's weird - buyers there were loath to buy places that looked like someone actually lived in - EVERYONE stages their homes) and we weren't 100% sure how long we'd be carrying the cost of that home. So with all the uncertainty with $$ and our ultimate end location, we opted to rent instead of buy right away. BEST.DECISION.EVER. Yes, it was a total PITA to find a decent rental. Yes, it was weird the first 3 months to be a renter again after having owned a home for a decade. And I'm not looking forward to moving 2 times in what will end up being 2 years (we thought we would rent for 1 year, but turns out we will rent for 2 due to some travel opportunities - there won't be time to buy a house!). But I am so glad we went this route. We did not have to deal with the simultaneous stress of selling and buying a home. Plus it gave us the added benefit of being able to relocate without feeling the pressure to make the right house purchase before we were really ready. House shopping this time last year would have been a burden. Next summer when we are planning to is going to be a much better scenario for us.
« Last Edit: November 30, 2016, 11:45:45 PM by LadyFI »

Nick_Miller

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This board never fails to impress...

@Another Reader, I think my wife needs to vet her friends period :)  She has some doozies

@calimom, I get the appeal (to some) of an empty home. Other folks have a tougher time visualizing what an empty home would look like with actual furniture in it. I guess there are two camps there. But even though we could "swing" a short period of double mortgage payments, I have no interest doing that. We will be rolling all the equity for Home 1 into Home 2, and the amount of equity we manage to squeeze out of Home 1 will, in part, determine the price range we look for in Home 2. I do not want a new mortgage of over $125,000, 15-year. There's a small chance my FIL might give my wife an "early inheritance" to help us with the transaction, since buying his house for a discount doesn't look like it would work (mostly because of schools), but no matter what, we need to cap costs. I am still considering using an agent, though! I spoke to one yesterday who has experience in our area, and she seemed very knowledgeable. She's coming over next Tuesday after work to check out the house and share her thoughts.

@ender, well I think my FIL's house is a great option for a few months. He has like 3,000 square feet - plenty for us for a few months if our house sells in early spring. I think we can find something in our desired area if we have 2-3 months to look around. And you all have convinced me to interview a few more agents. Part of me despises paying someone big $ for something I could probably do myself, BUT the "hassle factor" is real, and I am not a real estate expert.

@LadyFI, As I mentioned above, we have a new Realtor coming in on Tuesday. She sells in this neighborhood and she has a big firm behind her. And yes we're in a pretty large city (top 20 or so nationally). I don't think Miss Yoga Pants-30 Minutes Late really has any expertise in our area. My wife's friend used her a few years ago, but that was in a neighborhood 5 miles away or so. I will definitely be picking interviewing agents.

Thanks so much everyone!


Krolik

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Is Redfin available in your area? Their commission is 1.5% for selling. We bought a house with Redfin and it was really good and smooth experience. Don't know however if selling would be also so easy.

MayDay

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We sold FSBO 2 springs ago.  We didn't "have to" move, we just wanted to if the price was right, and the price was only going to be right if we didn't have to pay full commission. 

It was easy for us.  We are in a pretty brisk market, in a big subdivision.  90% of people driving into the neighborhood to look at houses will drive by our house, so we stuck a sign in the yard and didn't put it on the MLS.  We listed in April, had 2 showings in about a month (so way lower traffic than if we had been on MLS, but the 2 that looked were dead serious- they had already looked at all the other houses FS in the neighborhood, and were ready to buy).  We closed in July.  In May/Jun when the market was really heating up and all the spring listing were going under contract leaving people desperate, we started getting a ton of calls (I had left the sign in the yard in case things fell through).

But our market works for that- it has very very low inventory, and FSBO is pretty accepted.

In the end we paid our buyers realtor a 2% commission, and our realtor a 1% commission just to handle paperwork, which was well worth it.  We saved about 7K, and we would have still had to do all the cleaning/staging work if we'd used a realtor.

The biggest time cost, by a mile, was cleaning/staging the house, updating paint, doing minor repairs so it was move-in ready, etc.  That was huge.  Showing the house periodically was not a big deal.  All our calls to look at it were evenings and weekends.

If you need a specific neighborhood on a specific timeline, I would definitely start looking now, while getting your house ready to sell.  If you can afford to potentially carry two mortgages.  We couldn't, and we knew our market goes fast, so we have been renting for 15 months.  Just this morning we finally saw a perfect house, and we made an offer (still waiting to hear back).  So it took 15 months of waiting to jump on the perfect house.  That informs my advice not to wait.  Your market may vary.

MsPeacock

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Your wife needs to vet her friends before taking their recommendations...

Figure out who is selling the most houses in your neighborhood.  Start with who has the most signs.  Look on Zillow and Realtor.com to see who has the most listings and sales.  Call those people and see what you get.

This! I am former military and moved *a lot* for about 15 years. In my experience, finding the busy, organized, well-connected "sells a lot of houses" realtor is the way to go. They will have good assistants and an excellent network of other realtors, and will know exactly how to market your house. Interview 2 or 3 of the best realtors and get them to give you an estimate of expected sales price and specifics on how they will market your house (e.g do they have mailers, do they advertise and if so when and how often will your house be featured, who does the photos, do they help w/ staging or have a staging service, do they have realtor showings (basically an open house only for realtors), do they do open houses (mostly a waste of time IMO, etc.?)

Spend your energy making your house show as well as humanly possible. You can make back the 5K in realtor commission by using your time and energy to keep the house and yard looking like you are about to be featured in House & Garden magazine. Touch up all the paint, clean clean clean, pack stuff up and stick it in your FIL house to minimize clutter, fold everything in every closet and make sure they look spacious, line up the stuff in the pantry, etc. etc. Basically make a "fantasy house" that will sell quickly. Also buyer's realtors will want to show a house that looks great. As you know if you've bought a house - many houses look awful - and are hard to sell. Make yours easily to sell.

Do not use a realtor who is a friend of a friend or just starting out, or offering some sort of discount to get clients.

south of 61

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I have bought and sold twice using FSBO.

We sold our house FSBO the day after we listed it (three showings, two offers). How - we had it appraised before we listed it. Not some realtor trying to promise us the earth - but an actual appraiser that the banks use. It cost us $300 - worth every penny.
We knew we set the price for what the bank would lend - so we know that any deal wouldn't fall over on account of not getting financing. We priced it right and it sold straight away.

FSBO is not uncommon here, we bought the house that way, sold it that way and bought the next one that way. I do see lots of wing-nuts listing places way above what they're worth. Without the appraisal we would have listed our place about 15 - 20K higher than we did (on a 400K house) , so I think the appraisal was super helpful in tempering our expectations and pricing it to sell.
Good luck!

Jon Bon

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Don't stick a for sale sign in your yard and call it FSBO

Do find a flat fee agent

I have done this a few times, it costs about $500 bucks and it gets you into the MLS just like everyone else. You supply the pictures, description and even the sign if you want.

I did see someone comment about "running home for showings" you will not do this. You will buy a $20 lock box from Lowes. Put the key in it and you are done. I have only ever gotten calls from realtors, so they are very easy to google and make sure they are legit if that concerns you.

I am sure this makes people uncomfortable with strangers in their home, however its exactly what a listing agent would do. Your agent is not showing your house, the buyers agent is showing the home to the buyers. So the process is exactly the same as if you listed with a 'full service' agent. You just do the negotiation and contracts yourself which you would do in a FSBO anyways.

I have done a flat fee agent 2 times, best money I ever spent and probably saved about 3% of 500k?

Not trying to throw stones here but realtors are not doctors, I can't operate on myself but I sure as heck sell my own home.

Good luck! YMMV


Fishingmn

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Don't stick a for sale sign in your yard and call it FSBO

Do find a flat fee agent

I have done this a few times, it costs about $500 bucks and it gets you into the MLS just like everyone else. You supply the pictures, description and even the sign if you want.

I did see someone comment about "running home for showings" you will not do this. You will buy a $20 lock box from Lowes. Put the key in it and you are done. I have only ever gotten calls from realtors, so they are very easy to google and make sure they are legit if that concerns you.

I am sure this makes people uncomfortable with strangers in their home, however its exactly what a listing agent would do. Your agent is not showing your house, the buyers agent is showing the home to the buyers. So the process is exactly the same as if you listed with a 'full service' agent. You just do the negotiation and contracts yourself which you would do in a FSBO anyways.

I have done a flat fee agent 2 times, best money I ever spent and probably saved about 3% of 500k?

Not trying to throw stones here but realtors are not doctors, I can't operate on myself but I sure as heck sell my own home.

Good luck! YMMV

I'm a Realtor for what that's worth but as a mustachian do like saving people money.

I like the Redfin suggestion or Jon Bon's suggestion above. The main caveat I would add - if doing it yourself please do hire a professional photographer. You want your home on MLS and you want great pictures. Look up obeo.com if you need a company - I use them and have always been happy with their photo's and the cost is under $150. A wide angle lens as well as knowing how to best frame pictures for real estate is critical.

I do think an agent adds value to a large percentage of sellers - just don't think you need to pay 6% to get that.

jinga nation

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Nick_Miller, I didn't see this mentioned but have you considered renting out the house?

ender

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I like the Redfin suggestion or Jon Bon's suggestion above. The main caveat I would add - if doing it yourself please do hire a professional photographer. You want your home on MLS and you want great pictures. Look up obeo.com if you need a company - I use them and have always been happy with their photo's and the cost is under $150. A wide angle lens as well as knowing how to best frame pictures for real estate is critical.

I think this is a good suggestion. Anecdotally, having gone through the home buying process recently, a lot of homes have terrible pictures.  The one we bought was staged really poorly too and the pictures didn't do a good job showing how the house was really laid out. More of a "here's some features" rather than "here's what living here would be like."

My feeling is that if they had both staged it better (seriously, they had recliners in the "dining room" ???) and taken better pictures it would have sold for quite a few thousand more. As it is, the appraisal was $2k higher than our purchase price in a hot market anyways which sort of validates my feeling.

Jon Bon

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For sure when it comes to marketing and staging, get some professional pictures done and de-clutter a little bit. A storage unit costs like 50 bucks, and throw some of your bigger items in there.

Fishingman's response was excellent, lots of people do in-fact need a full service realtors. Just most of them are not mustachians!




Nick_Miller

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Hey everyone! Update time...

We met with a Realtor on Tuesday night. She was great! (and cute!) Her sales are in the top 30 of her 500-agent agency, so I was impressed with that. More importantly, she sold a very comparable house just down the street from us two weeks ago. She sold it in 8 days for a fair price, based on the data we reviewed. She spent a ton of time with us, working around our schedule, and gave very (very) specific advice on de-cluttering, what to repaint, how to reposition furniture, etc. She pays for professional photos - she says they make a huge difference, and from looking at Zillow and other sites, I tend to agree. Dark photos = I immediately lose interest.

So our plan is changing now. We'll probably skip the "living with FIL" stage. She thinks she can get us into a new house within with the 45 days or so we'll schedule for our own closing. She will suggest a list price next week (we haven't signed with her yet), and if we're in agreement we'll probably sign with her.  She said our city's home inventory is really low now (3.5 months worth) and she thinks we can sell our house pretty quickly even in the winter. Frankly, our yard looks pretty bad in the spring, so selling in the winter actually means we'll have greater curb appeal.

Re: pricing strategy, she said the idea used to be to list high to leave lots of wiggle room for negotiations. But she says that frequently results in potential buyers being so turned off by the price that they don't even bother. She says her preferred strategy is to list it right at what the market says it's worth, which frequently results in (pretty quick) full-price offers, and even multiple offer situations, where the selling price ends up exceeding the listing price, because once people get attached to the idea of owning the home, they sometimes are more willing to pay a bit more than they would have been initially so avoid it being snatched away from them. Does this sound right to anyone? The attorney in me sees the logic in what she's saying. I can really see people getting attached to the idea of owning a certain home once they put in an offer on it. 

Buying a home in the winter/early spring will also give our kiddos time to get used to the new neighborhood before summer hits (my older daughter will be 11.5, going into middle school, and we'll probably let her stay home this summer at least every other week, sprinkling in a few week-long camps along the way). There is also less competition for us in buying a home in winter/early spring, although there is less to choose from.

I am 99% sure she will suggest a list price in the $139,900 to $144,900 range, based on the comps she showed us, so we should clear around $70,000 after the mortgage is paid off. We're looking at homes in the $175,000-$200,000 price range now and our online searches show some nice homes in that range in the area we want, but they are usually snatched up within 10 days. Putting $70,000 down should result in a new mortgage in the $105,000 to $130,000 neighborhood, which we can handle.

I guess I am not a full Mustachian now! Well, I probably never will be. We aren't interested in renting out the house. I don't want to be too leveraged, especially as I still owe student loans. And using her will probably only cost us $4500 or so. Yes, that's a large amount of money, but from a hassle perspective, if she can sell it in 2 weeks, I will consider that money well spent. We would also hopefully be able to avoid some storage costs, having to move furniture over to my FIL's (he wouldn't have enough beds for us), having to change our address twice (ugh I hate thinking about that), etc.




« Last Edit: December 08, 2016, 09:59:35 AM by Nick_Miller »

LadyFI

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That's a great update!

Your potential agent's pricing strategy sounds appropriate especially if you want to sell quickly. Savvy buyers will know that it is a fair price and that they will have to move fast and with a good offer.

Good luck!