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Budget for next year and selling our house

Budget for next year and selling our house

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  • wagnerkr wagnerkr's Avatar 10-05-07 | 11:08 AM
  • It's not too early to think about and I'm trying to start working on our budget for next year, but its rather difficult to plan for. We're planning to put our house on the market in the spring and then move once it sells. If it sells quickly our finances will look totally different than if it takes several months. So, I'm budgeting as though we'll be in our current financial situation the entire year, but
    that we won't be.

    Anyone who has sold a house recently or is in the selling process - any tips or information you can give us would be really appreciated. Did you have your house appraised first? Did you go through a real estate agent? How did you determine a fair selling price for your home? IF we get what we'd like out of it is it better to pay off as much debt as possible or leave some debt and save a few $K for a downpayment on a new place? We have never done this before and so any insights would be welcome.
  • Oreo Oreo's Avatar 10-06-07 | 10:56 PM
  • DH and I have sold two houses in the last six years and built two houses.

    Since the market is so slow, the agents are chomping at the bit for any listing they can get that might move.... You can use this to your advantage in a few ways...
    1.) interview a few agents before deciding who to list with -- most agents will come to see the house and prepare a market analysis for you without charge. It will show comps in the area and suggest a selling price for your house knowing your "extras" or upgrades or your houses "low points".

    2.) Ask what the commission rate is. Do the math and see if you can afford to lose the 6% (average commission). Some realtors will give you a point (1%) back at closing which drops the amount you lose.

    3.) While the FSBO approach can save thousands in lost commissions, DH and I have found that it is a tough position. We tried to sell our last house FSBO for a few months. We spent about 2K just in advertising, etc... We also found that agents who look for houses representing buyers don't want to promote your house (no matter how nice) to their customers because there is no commission in it for them. With FSBO, the paperwork and the inspections/legal crap can be overwhelming...
    The same thing happens if you use discount brokers.... We ended up finding a brand new realtor who needed to build her clientel and resume, so she took on our case for only 3% commission, but we still got full service.

    Your question on what to do with your post-sale cash windfall is a big one!!!
    How comfy are you with renting again? If you can stay with family or rent for a year, I suggest it. Pay off your debt, put $$$ into long-term saving and then put half of a home deposit into savings (in that order).... Rent a place that is less than your mortgage and put the difference every month in your down payment account. I would make sure, given the mortgage crisis with poor credit lenders going under, that your debts are really, really low when you go to apply for a new house mortgage.... It's going to be tough to qualify if you are on the fringe.

    We did our last sale when we were pg with Tommy.... It was a rough ride... In fact, the lawyer had to come to the hospital to get me to sign off on the closing since Tommy came 13 days early. We rented the house back from the buyers till March. then, we rented a townhouse for 6 months while our house was being built and we've been here for 2 years. That was hard. Lots of our stuff was in storage and it was hard for Joe to deal with a new place, being crowded since it was small (only 1600 sqft) and no neighborhood buddies.

    Hope this helps!! Good Luck!!
  • wagnerkr wagnerkr's Avatar 10-08-07 | 10:51 AM
  • Thanks Sarah. Those were some great pointers.

    We have no problem with renting again and even downsizing to a smaller place for a while knowing full well that some of our belongings will likely have to be stored during that time. Our current mortgage is $1200/month so if we can find something to rent in the $600 - $900 range that gives quite a bit back each month to put towards debt/savings.

    We are planning to relocate across country and one of the things we still need to do is try to nail down a job for DH. If DH is NOT able to get something lined up before we sell then our back up plan is to move in with MIL for a while. We could pay rent to her (probably save ourselves even more that way) and pay off high credit card balances first and then save the difference toward a down payment on a new place.

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