What should I do with my IL house?

[Dan Mages]

Back in Feb 03, I purchased my first house. It was a handyman special and needed a lot of love and repairs. I spent the majority of my free income, about 75k over 4 years to make it into a beautiful home. In May of 07 I married my LOML and we decided to settle in Milwaukee where she lived due to her career path being better than mine. That quickly became a transfer to Connecticut. I put my house on the market at a pretty competitive price, but it did not sell. After 1 year on the market, we pulled it and managed to rent the house. My tenants decided to move out about 4 months ago and it is back up for rent. In the 3 months it has been on the market, I have not had any showings. I asked about selling the place, but the market is so bad, that no houses in my neighborhood have sold in the past 3 months, none over $200k and most were short sales or foreclosures. I paid $175k for the house and now will be lucky to get $200k for it. My wife now wants the house gone as she sees it as a liability and a money hole.

I honestly don't know what to do. I want to sell the place, but I put my heart into that place and it really burns me to sell it at such a steep loss, even if I can sell it. Any thoughts? What would you do?

Thanks,

Dan :(

[Matt Meiser]

my LOML...My wife now wants the house gone as she sees it as a liability nd a money hole.

I honestly don't know what to do.

Yeah you do. ;)

[Robert Parrish]

Dan, Your probably going to have to try renting it again. I'm a realtor in Fl and I have $600k homes I can't sell for $300k. Were excepting another wave of foreclosures after the 1st of the year which will add to our inventory of unsold houses. Good luck.

[Lee Schierer]

I agree, continue to try to sell and meanwhile rent it with the understanding that it is for sale and the lease will end upon acceptance of a buyer plus a reasonable time to move out and the house will be shown by a realtor in the meantime.

[Dan Mages]

Are there any accountants here? Since the property is now converted to business use since it was a rental for a year, can I take a tax write off if I sell it for less than the depreciated value? Is the brokers commision tax deductable as well as a business expense?

Dan

[Mitchell Andrus]

Get a bargain, give a bargain. You're even-steven if you bought right. If not (bad timing or other issue), suck it up and don't:

Spend what you may never recover,
Fall in love with an inanimate object.

Bail and move on. The wife is right, taxes, utils and upkeep will wash any 'hold til the market improves' strategy. Houses priced 'right', sell. We just this month sold my MIL's place in 10 days to first-time buyers. It's possible.

In September LOML and I bought a second home for $90,000 under listing price (and $240,000.00 under it's listing price of 3 years ago) because the appraisal said that's what it is worth today. Ours was the first offer in 9 months, but to be fair it was an estate sale and they just wanted 'out'.

The buyer's bank's appraisal will set the final price if the buyers are willing to shove it hard enough. I did. In my case the appraisal trimmed $55,000.00 off the contract price.

.

[Rick Fisher]

Your first loss is your best loss.. That means your better to cut your losses.. If you cant rent it, sell it so it doesnt bleed you slowly..

[John Coloccia]

If it hasn't rented in three months you're probably asking too much. We sold our house in California in 2007. This was right in the thick of the meltdown. I took a loss. Wrote a nice big check. Our realtor wasn't too happy with us because we aggresively dropped our asking price to be a bit ahead of the market.

Fast forward two years. The only other homes that have sold in the area since only sold recently, and they sold for nearly $100,000 less than we did. Same development. Same house. The difference is we were one step ahead of the market, and two steps ahead of everyone else in the neighborhood. It hurt like hell at the time, but two years later we know we did the right thing.

I'm not a realtor or an accountant. All I can offer is whatever you do, be sure that whoever you're working with is aggresive and will get'r done. I feel foryou and your wife. I've been there and it stinks.

Re: losing your work
my wife feels that way when I give away or sell my best work. My answer is, "Do you think I'm getting worse with practice?? The next one will be even better!". Good way to think of it.

[Dan Mages]

Great.... Just to make things worse, the folks across the street from my house just listed their house at $175k with "bank approved short sale" in big bold letters on the ad. This will definately make things even more difficult for me.

Dan

[Art Mulder]

Yeah you do. ;)
:rolleyes::p:p
I think Matt's got it right.

Bought my first house in Edmonton Alberta in 1994. Put about 6-8k into it over 4 years. Sold in 1998 for only about 3k more than we paid for it.
Was I happy? Not really, but the market in Edmonton at the time was basically flat. I got what I could, and that was that.

Sure, if you can rent it, that'd be fine and give you time. Can you find a property maintenance company that'll take care of that for you? If not, cut the losses and get out.

[Robert Parrish]

Dan,
Get a realtor to do a CMA for you so you can see what properties are going for around you. If you are pricing yours higher than the comps it will take a long time to sell if ever! Also 60% of are sales here are short sales.

[Ken Fitzgerald]

Dan,

In 1982 I sold a house in Joliet, IL. The local economy there was in the dump and interest rates were in the 13-14% for a GI loan....I don't know what the regular consumer rates were at the time. It sold in one month. I paid $75K for the house.....I put I don't know how many dollars into finishing an unfinished basement and I sold it for $77,500. I had lived in it for 4 1/2 years. I sold my GI loan to another qualified veteran. The loan he assumed was around 6% which was extremely low at the time. I didn't recoup what I had put into the basement but didn't care. This country boy wanted out of Chicago, had accepted a transfer to Idaho and wouldn't consider not taking his family with him. By the time I paid the realtors fees, I made nothing on the sale and lost the time and materials in finishing the basement. But...I didn't have the aggrevation and financial responsibility of owning a house 1800 miles away.

Locally a young biomedical engineer works for a local medical center. He took this job and moved here from Michigan. He's in one of the military reserves and has a lot of time invested in it. He still owns a home in Michigan on which he's making house payments and he is paying rent here. He's not making enough to continue paying rent here and house payments there. In less than 10 years he can retire from the military reserves BUT...if he declares bankruptsy, they will boot him out. Talk about a Catch 22!

Myself....I would not want the aggrevation of having a financial responsibility hanging out over 1000 miles away. I would put it up for sale and take the loss. Life is too damned short to let things eat away at you. It's only money.

[Mitchell Andrus]

Can you offer a seller's mortgage?

you can sweeten the deal if you can offer seller financing at an attractive rate, perhaps 1 to 1.5 below bank rates and a break on the downpayment. Banks charge a premium to finance more than 80%. PMI (private mortgage insurance) is costly. With a 5 or 7 year balloon you'll get paid off with nearly 100% of the face value of the note to that date (very little principal is paid the first 5 years) and make 4 or 4.5% in the meantime. You may elect to keep it going instead of calling the balloon, your choice.

Assuming 175,000.00, 20% down and 4.5%: 1st year interest = approx $7,400.00, principal paydown = $1,930.00 + $35,000.00. 1st year in pocket: $44,300.00.
.

[Dan Mages]

Can you offer a seller's mortgage?

you can sweeten the deal if you can offer seller financing at an attractive rate, perhaps 1 to 1.5 below bank rates and a break on the downpayment. Banks charge a premium to finance more than 80%. PMI (private mortgage insurance) is costly. With a 5 or 7 year balloon you'll get paid off with nearly 100% of the face value of the note to that date (very little principal is paid the first 5 years) and make 4 or 4.5% in the meantime. You may elect to keep it going instead of calling the balloon, your choice.

Assuming 175,000.00, 20% down and 4.5%: 1st year interest = approx $7,400.00, principal paydown = $1,930.00 + $35,000.00. 1st year in pocket: $44,300.00.
.

VERY interesting. I will have to float this past my wife, a lawyer, and probably an accountant. I would probably also have to hire an accountant to manage the mortgage. Now you got me thinking. :D


Dan,
Get a realtor to do a CMA for you so you can see what properties are going for around you. If you are pricing yours higher than the comps it will take a long time to sell if ever! Also 60% of are sales here are short sales.

Yep. We have a very good agent managing the house. According to her, 20 houses have sold in the past year with 1.1 baths and a 1 car garage. The highest price paid for a comp is 201k. Currently, there are 9 comparable houses on the market. The last one to sell in my neighborhood sold for 190k, but has a 2 car garage and the lot is twice the size as mine. She recommends just under 200k for the selling price, putting me at a loss of at least 50-60k...

Some days I feel like I am being punished for being the responsible one for buying within my means, paying my mortgage on time, and maintaining and updating the house with pride and quality.

Dan

[John Shuk]

Offer it up as a prison for Gitmo detainees.
Seriously, I'm sorry to hear of your trouble but at some point you need to decide if you want to own a house so far away from where you are and at what cost. If the neighborhood declines the house value will decline more. Kind of like selling a stock at substantial loss or at total loss.