House sale questions

[livacreature]

We bought our house about three years ago.  It suites us fine, but I would prefer to be in a different, more family friendly neighborhood.  Our mortgage is very affordable, as are our utilities.  We put about $1000 dollars into savings monthly at the moment.

There is a lovely house for sale across town.  The mortgage payment on that house is about $60 more per month than we pay now.  I expect that utilities would be higher as well, because it is larger.  Property taxes are about $250 higher per year.  We're going to see it tomorrow.

In my mind, with three cats, an unruley labrador dog, and a baby on the way, it would be easier to buy the new house (if it truely is right now us) and then put our current home on the market.  We could easily afford both payments while still putting a few hundred a month into savings.  However, there is the risk then of our current home taking a long time to sell.  Our neighborhood is on the up due to several large companies opening up and a blooming art community.  The houses around us that are in comparable condition are usually on the market six months or less.

Our current home has absolutely no storage space, so we would have to get a storage unit to put a lot of stuff if showing the house.  I also can't imagine keeping it ready to show with all of the animals and their dirt, especially not while pregnant and dragging butt as is. 

What have been your experiences in moving from one home to another before selling the old house?  What has that looked like financially?  How long did it take? 

[ChristyMarie]

I haven't done it while still holding a mortgage on the *for sale* house.  Logistically it was awesome.  We were able to move out and get settled on our own time table, have all the minor repairs done at once at the old house (paint freshening and such) and didn't have to keep it spotless while living there.  We were also able to take the time to have some things fixed on the new house, carpets cleaned, etc while it was still empty.  One thing you might not think about is the maintenance.  You still have to clean it and take care of the lawn/snow removal or hire someone.

I think the biggest hurdle would be getting approval on a new mortgage while carrying the old one.  If your credit is good enough and the other house is discounted enough to make it worth the jump now I don't see why you shouldn't go for it.  Will you have a down payment on the new one? 

[ChristyMarie]

By the way, from one lab owner to another, I think this phrase is a bit redundant.  ;-)
 

Originally Posted by livacreature 

...unruley labrador dog, ....

[livacreature]

We are willing and able to put down 24% (to be exact) with the down payment and that would still give us a cushion in savings.  After talking to the agent, it is a foreclosure and the company selling is already saying that they will pay closing costs.  I'm not sure if that is typical or not.  The house is about half of the cost of other homes in the neighborhood.  With both mortgages, we'd be paying around $1100 a month, which would be about 25% of our monthly income, which still is under the HUD 30% guideline.  It is moving fast, we were going to wait, but this house popped on the market, and pretty much fits all of our criteria as long as it checks out in inspection.  The snow removal part will suck if this place isn't sold by winter.  We don't have a drive way but do have to get our sidewalk. 

You say you weren't carrying the mortgage for the for sale home.  Had you paid it off or are there other options there?  

Thanks so much!

[ChristyMarie]

If you have that much of a downpayment and you'll be going into with about 50% equity already chances are you can do it.  Have you talked to a bank yet?

We had already paid off our old mortgage when the house we're in now popped on the market.  We would not have gone for the 2 mortgage thing.  Similar situation - it was too good of a deal to pass up so we went for it.  From the time we saw it to closing was just under 30 days!  Sometimes things move fast.

Don't forget you'll be paying double insurance as well.  And you'll want someone (yourself, realtor, friend) to stop by at least once a week to make sure everything is ok.  Can be a good idea to have the water turned off as well. 

Good luck.

[heatherdeg]

If it were me, I would do it.  And I would put 20% down vs. 24% because being the owner of a foreclosure, I can tell you there's likely to be some work that needs to be done to the house.  We regularly look at foreclosures and the most common big problem (that you can't see) is that they don't always winterize the house before it freezes and the pipes crack or burst.  If that happens, it's potential for a mold situation.

If it will be your primary residence, it's absolutely not uncommon for the bank to 1) pay closing costs (FNMA & Freddie Mac often run these kinds of deals--and they will also often give you new appliances if you'd rather pay the closing costs.  This would've been our situation because due to relocation, dh's bank paid closing fees); and 2) they will do the repairs if the house mechanicals don't work (they have to be operable for the appraiser).  Actually, we had a bank offer to do some of these things on a rental property we were buying a few months ago.

The banks are desperately trying to unload the inventory.  It pays for them to help get them moving.

That being said, foreclosures are not usually a full 50% off of going market value.  So I would go into it wondering what issues there are with the house.  And if there are issues, price out the repairs instead of guessing at what it would cost to make sure you know what the work will cost you.  Once you do that, build in a contingency in the contract that the house has to appraise for at least $X (the price of buying it plus the cost of repairs--and usually you build in the cost of selling it so you're at least at breakeven when all is said and done... assuming the market doesn't drop again).  It's easy enough to get a ballpark figure by just getting ONE estimate.  You can schedule an inspection, then schedule various contractors to come cost out the work on the same day.  The banks are usually open to this--especially if you're going to do it during the week (when showings would be low).

Foreclosures are a pain, but you already own your home--so really, there's no lease-end hanging over your head to worry about.  You're in a good position to do it.  That being said, you are not likely to close on the new place in less than 90 days (and that would be a God-send)--which means you can't put stuff in that house for 3mo... losing you market time during a good time of year on the old house.

We moved out of our last house and lived in "corporate housing" (completely furnished place--at a cost of roughly $2k/mo where the unit itself empty on a full-year lease would've run MAYBE $950/mo).  We have two dogs, two kids, homeschool & dh works from home.  Best money we ever spent--no question.

[APToddlerMama]

Posted and it deleted.  I sure don't love this new format.

Anyhow OP, I had said that as someone who took an 80K loss on a house that took TWO full years to sell, I would never in a billion years in this market suggest that you own two homes.  Granted, it sounds like you are in a better situation as we lived in a not nice neighborhood that had been really hard hit by foreclosures, but still...I just wouldn't want to risk it.  That is just my two cents though and if you feel like you can easily swing it financially for a loooooooooooong time, I'd go for it.   At least in my area though, it hasn't been uncommon for houses to sit for well over a year or more.  And is your realtor going to tell you those cold hard facts?  No.  Because they will make money a) when you buy your new house and b) when you are forced to sell your house for less than you wanted because they convince you that is the only way you'll get out and not have two mortgages to keep paying.  (Yes, I am cynical about this ;))

[GirlBoyGirl]

Tough decision! We are in a similar situation. We want to sell our house, eventually to move to a better school district, but more immediately to save money. My sister rents out her townhome and has offered us am amazing deal on rent so that we will finally be able to save money for once in our lives! Our expenses will drop by about $500/month. So anyway, we are left with the decision- do we move out now so the house can sell better without us in it and risk paying rent and mortgage indefinitely or stay put and risk the house not selling and my sister finding different tenants? Well we decided to go ahead and move. This house will never sell with us in it. By the way, I have 3 kids under 20 months and it looks like a daycare threw up in here. Even with the house clean and everything in its place, the house is ruled by baby stuff and toys. Even our small master bedroom has a crib in it! The realtor is confidant she can sell it better without us in it.
She also said she was trying to sell her daughters house, she had a baby and 3 dogs, and it wouldn't sell. So finally she kicked them all out and it sold in 2 days. I think you would have better luck selling if you moved out and left the house staged for showing. Have you talked to a Realtor to get their opinion? At any rate, good luck!!!

[livacreature]

Welp, we're having the agent come tomorrow to see about putting this place on the market.  It is in good shape besides the animals everywhere.  The house had a couple of major issues that we aren't prepared for (all of the plumbing had been stripped and half the wiring was missing).  A bit sad about that, but we really liked the agent, and there are other homes in the neighborhood that look promising.  I also talked to a friend of mine who has several rental properties in our current neighborhood.  While we don't want to jump into renting our place, if it doesn't sell within say a year, he said that our property should be pretty quick to be filled.  He has something comparable down the road that brings him about $900 a month, which would more than cover the mortgage on this place.  I hate this type of thing, DH is handling most of it, but I'm so worried about crashing and burning.  I'm also starting to debate dropping to part time with my job, but DH is switching roles at work, so the income difference there ultimately shouldn't be that big.  Blah.

[mnnice]

I think it could make sense in your situation, but it does sound like that your potential new house is not maybe as big a bargin as you thought with plumbing and electrical issues.

We'e bought without selling my current house once, but that was so a different era.  We also had a relocation package that would paying for having two mortgages for six months.  We ended up only owning two house for just about a week and it did make the actual move easier.

We currently own our house that is for sale and rent another. The house we own is occupied by a tenant.

Empty houses hide no flaws and I am not convinced that they sell better personally.  I think my house looks better with my tenant's furniture in it (which is too big of scale for most of the rooms BTW) than it did empty.  Of course it helps that her household is very clean (cleaner than mine)

Personally, in our situation we are very reluctant to buy in our new town, both because of the uncertanity of DH's job situation and the general real estate situation (lot of inventory, but very few decent houses, very long times on the market, falling prices).  I really don't want two houses that I can't sell.

[heatherdeg]

Originally Posted by mnnice 

Empty houses hide no flaws and I am not convinced that they sell better personally.  I think my house looks better with my tenant's furniture in it (which is too big of scale for most of the rooms BTW) than it did empty.  Of course it helps that her household is very clean (cleaner than mine)

There is research showing that empty houses don't sell as well as houses with stuff in it.  Ergo the staging business.  But really, most people can't picture the size of their stuff in a house without something to compare it to already in there.  I think the OP wasn't looking to EMPTY the original/current house so much as declutter and take out the extras (which is a key point when staging).

[livacreature]

Well, our house was on the market for all of two days.  We got and accepted an offer last night.  Only one person looked at it.  The real estate agent loved the house, but had been worried about the cat smell.  New buyer LOVES cats, LOVED the cat doors cut trhoughout the house, and thought our little social guys should be included to expand her clowder! (Ha, no, but we will throw in the fridge!)

She's flexible with the closing date, so now we just have to find our new place.

I'm really surprised with how quickly it went down.

Two weeks ago, it was theory, and then BOOM!  Thanks for the input everyone!

[TiredX2]

Congrats on it going so well!

[heatherdeg]

OMG--that's AWESOME!  I hope the rest of the process goes smoothly!!!!

[ArtsyMomma]

Wow !! Congratulations!!!! The house we are buying was only on the market for a few days also. We knew exactly what we wanted, when we found it, we made an offer. Good Luck finding a new place too!