It feels like a lifetime ago that I first started updating this site with the painful process of selling my first home and the equally arduous process of finding a new home. Since we have moved into this home The Wife and I have watched our baby boy turn into a real life kid at the age of 7. Our daughter wasn’t even conceived when we bought this home. We have grown to absolutely love the community, and would not consider leaving the school district. So why are we even thinking about selling?
The first reason we are selling is completely superficial. The Wife and I have not treated this home like our ‘forever’ home just yet. We haven’t done work to it that we wanted since we didn’t think we would be living here forever, and we have talked throughout the time we have lived here about what that ‘future’ house may hold. I think this is in part because we both grew up in much larger houses and we see ourselves upgrading at one point or another. That upgrade either means a move or a huge construction job. Are either of those things ‘necessary’ absolutely not as I don’t feel like I have out grown my home in anyway. To be honest, the home checks so many of our boxes (close to town, 4 bedrooms, master bath, fire place, fenced in backyard, etc. etc.). So with the idea of it not being ‘our forever home’ hanging over our head we started to notice something in the past 6 months which is the main thing that prompted all of this.
Houses are coming off the market at an unbelievable speed in my neck of the woods. I wasn’t a homeowner until the tail end of the last housing boom but I imagine it had to feel like this except times 10. The same model home in my same neighborhood are going up and coming down at a much larger price and a lot quicker than even a year ago. It makes me feel like I should strike while the iron is hot, because if the market cools or crashes, the opportunity to cash out won’t be there.
Sharing the Numbers Behind the Plan to Possibly Move
The reason I don’t share my exact net worth on this site is because it makes me feel uncomfortable to know that some friends or family may check the site and know exactly the cards I am holding. It shouldn’t make me feel this way since I am an open financial book for most, but nonetheless it does. Notwithstanding, I don’t feel the same about my house since all you need to do is put in my home address in the google machine and basically pull up my purchase price.
With that being let’s talk real numbers:
I bought my house $485,000 5 years ago; I have the house on Zillow Make Me Move (more details below) for $630,000; My current mortgage debt is $345,000. This leaves me with equity of $285,000. This service this debt it costs me $3,000/mo (that includes homeowner’s insurance and ungodly long island taxes of about $12k a year).
So, when I started to play with the numbers a few months ago I came up with the following equation.
If I bought a $700,000 home with a $250,000 down payment I would have a note of $450,000. If I got that note at a 4% interest rate and if my taxes were approximately $15,000 per year servicing that note would cost me about $3,400/mo.
Alternatively
If I bought a $400,000 home with a $150,000 down payment I would have a note for $450,000. If I got that note at 4% interest rate if my taxes were approximately $12,000 per year servicing that note would cost me about $2,200/mo. In this case I would have about $100,000 of cash to expand the home.
For me, keeping my monthly nut is roughly the same spot is a very big deal. I am positive that my family could sustain an extra $400/mo without affecting our lives all that much. Sure it may be a tad tight at first, but I don’t know a person who didn’t feel a bit crunched when they first moved. The Wife and I have very little interest in changing a lot about our lifestyle right now so neither of us is willing to make a major sacrifice to make this work. As such, I am not budging on the sales price.
How I Plan on Selling my Home
My only tool to sell would be Zillow Make Me Move. The tool allows my home to show up on Zillow with my requested sales price. I have had some good traction with individuals. What I have found really annoying has been the pushy real estate agents. I get that my decision not to use a broker is not the norm for the Long Island market, but as this post sort of indicates – I don’t care if it sells any time soon! The two I have chatted with, at length, have been particularly bothersome. I am not naive to the process, but currently, I am the outlier. I do not need to, nor do I care, if it sells. I am not paying someone 4% or $25,000 to rush me out of a house when I have no where to go!
How Likely is a Sale and Subsequent Purchase?
It currently feels like a sale is very unlikely. I need a lot of stars to align:
- I need a motivated buyer who understands that this particular home is not up for negotiations; AND
- I need a qualified buyer who has 20% down payment to even start the process with attorneys; AND
- I need to find a home within a very small school district that either needs a ton of work or is absolutely perfect; AND
- This home needs to be exactly price perfectly; AND
- This all needs to happen prior to rates rising; AND FINALLY
- It all has to happen at the exact same time
