Would you keep trying to sell a house or rent it out? UPDATE!

[surfgirl]

I also vote for just selling it and taking the hit.

We rented out our house for exactly the same reason and I hated being a landlord. I hated when the phone would ring and it was the tenant and there'd be a "what now". I hated that they treated the house differently because they didn't own it. I hated that they caused damage to it - some repairable, some not. I hated that I had to document the heck of the damage so that they didn't sue me. I hated that their sons were smoking pot in the basement (I had proof). I hated that things that I treated with care were abused.

I loved when they moved out and the damage, as bad as it was, was at least covered by their security deposit. The biggest item ? They dented the stainless steel fridge door -- I put a new outer layer on it, but it was over $1,000 to do so (out of their deposit). They didn't believe that line item, but since I had EXCELLENT photos from listing (I had taken multiple photos of each room in different light and different angles) before they moved it, I could prove the damage. Had I not been the AR landlord BEFORE they moved it, I would have lost in court.

Just sell it. Drop the price, move on.

 

[ameraumi]

Thanks again for your input!

I have asked a couple of friends to walk thru the house and really nitpick at it to see if I am missing things I can do (cheaply!!!!) to improve it. I am also going to call another realtor this week and get a fresh market analysis. After that, then I will re-evaluate what to do.

 

[chris1gill]

You want to sell it. Trust me being a landlord isn't all it's chalked up to being... First, you have a pricing problem. You said you are competing with homes anywhere from 99K-125K, you are above that and you've indicated your bathrooms are an issue. Believe it or not for very small money there are things you can do to renovate a bathroom to look pleasing to the eye. It might be worth spending a few hundred dollars or even a thousand dollars to get on with life. I'd head over to the HGTV boards, they have a real estate section and they'll be brutally honest, which in the end is what you want.

 

[ameraumi]

Just a little update...

I met with a new Realtor and basically it was not news I wanted to hear. She walked in and immediately pointed out new things to fix before listing again - it was good to hear a new perspective but bad because I really do not want to spend more money on this house. She also had all the sold and active listings for my neighborhood and out of 8 sold only 1 was not a foreclosure. One of the foreclosed homes is also a flip and has been relisted.

The other bit of news that was bad for me is that she said my last realtor had me list the house too high. She is also telling me that the assessed value of the house is basically what the house is worth to some buyers. If that is the case I am screwed because the assessment dropped $13k from last year.

She recommended I replace carpets, paint the garage, and caulk the gaps in the baseboards. After that, drop the listing price to $125k which is basically my bottom number in order to break even after fees. It may be that I have to take out a small mortgage on my current home if I come up short. That sucks because this house is mine free and clear. But I guess at this point it is better then being stuck with 2 houses.

 

[Cheshire Figment]

What I did a few years ago was call in Service Master to do a complete heavy duty cleaning, including the carpets. We ignored the Realtor's ideas to replace the carpet or paint. We did make sure that nothing needed repairs. And we provided a detailed list of all improvements (new roof, stove, windows, etc.) and when they were done.

We very specifically stated that we had not replaced any flooring and had not painted so the buyer could choose the colors/styles they wanted. And said we did this to keep the price down rather than consider adding new carpet which the buyer might not want. We found this was a good decision, as the buyer owned a flooring company and was going to replace all the flooring anyway.

 

[leslieh]

Same boat here in MD we bought a home 3 yrs ago thought was a good deal. Put house on market July 08 on and off market, still no sale. Price has dropped 75K. We have had 4 different renters, we try to rent (1 year or less) with a discount if they let us keep on market, which two did. House was built in 1987 on acre of land 32 miles east of Wash. DC. Not enough baths is an issue, 2.5 and on a side road that gets alot of traffic. Going back and forth to list again this summer or wait until next year. We have good renters. So that makes a difference. Its covers payment and taxes.

 

[Shelly F - Ohio]

I would not rent it out. The house behind ours is a rental and man they can not get good tenant. First tennants moved in paid rent once and had to be evicted. So the owner was stuck with paying court cost to get this to happen.
Second family trashed the inside. Walls with big holes, carpet was badly stained, had to replace a few appliances. It has been sitting vacant for almost a year now and just recently was listed for sale.

My cousin who is a realtor said when she has a house that doesn't seem to sell she tells the sells to offer something with the listing such as a gift card to home depot or a new 42" t.v. She said she has had good luck with this deal.

 

[Beckypooh1972]

Someone mentioned a "fire sale". How about a (large) fire. Then collect the insurance to pay off the mortgage and sell the land. Insurance costs will drop as you would only need liability on the land, and taxes would drop as it would not be unimproved land.





This was not a serious suggestion, do not pay attention to it.

 

[leight]

I'd get a property manager in to give an idea of what they would rent it out for. Find out how they screen renters and what their typical renter is in your area. You're already out approx $800 a month based on the mortgage, insurance etc on the house so if you do rent it you will still be paying less then you are now, right? If 1 out 8 houses that sold weren't a foreclosure, then yes, you will probably have to bring money to the table when you close. But you're spending it right now anyway. We rented for years and considered the houses we rented to be our home- we were raising our children in these homes so we took care. I know that we may have been the exception but there are good renters out there.

 

[jedijill]

I agree with the PP. I'm currently looking for a house to rent. There are lots of responsible renters...you just hear the horror stories. I'm a landlord as well as I've previously posted.

The news just ran a story here that there is a 1.1% vacancy rate in Boulder this year and rents are way up. I'm finding that there just isn't that many single family homes and the ones that are on the market are higher rents than years past. There certainly is a demand for rental homes.

Jill in CO

 

[Anne34]

I would also try to rent it out. We rented our last year when we saw real estate prices in the area. We went through our realtor, it was listed for sale or rent on MLS -- we did get some interesting people, but WE got to see their credit reports, job situation, etc and picked out the 5th couple that came with a rental offer. Some of the siturations were scary (forclosure, bankrupcy, no job!, etc....) but we have had an awesome military family who will be here 2 years. We'll see about selling later.

Listing through the realtor did cost a bit (first month rent split between the two agents) but was well worth it for them to screen & get credit reports, etc for us.

 

[SPBendersky]

I would sit back an analyze the exact cash flow formula. Seems to me, that with the tax break you will get since this is the first mortgage, coupled with the Home equity loan allows you to rent at a resonable rate to recoup expense and not create any negative cash flow. Rent it and allow the market to come back. You may find you would not have to rent it as high. Also remember if you sell for a loss you will not recover that money quickly unless you have losses you are looking to recover from. I would hold it for another year depending on what area you live in.

 

[seashoreCM]

You need to get and check references.
You need to interview the tenants.
You need to have an application that they fill out.
It is okay to require that they give you permission to pull their credit report.
You can even decline tenants who appear to be aggressive or obnoxious or unpleasant during the interview, although you need to apply the same standard to everyone you interview.

 

[fletchers5]

Didn't read through all the post..so sorry if this is a repeat.

Renting your house could be a positive move. First off....it is a GREAT tax write off. While you are trying to rent it...you can deduct all your mortgage cost, insurance, taxes, all utilities...any lawn care etc.

Once it is rented you can still deduct your mortgage, insurance, taxes and any repairs.

When renting you DO NOT have to pay for lawn care, snow removal etc....you put in the lease that the tenants are responsible for taking care of the lawn and snow removal.

Also...as far as the rent fee...if $800.00 is what you need to recoup..but it is a high rent amount for your area..consider renting a little cheaper. Right now you are paying that amount and then some and not recouping any of it...when you rent it out at say $600.00 a month..at least you now are getting $600.00 a month to help pay the mortgage.

Yes your insurance may go up a little bit since it is a rental..but again that is tax deductible.

A great no cost way to list the house is Craigs list.
Make sure you get references and CHECK them.
Do a credit check.
Make sure you get a security deposit.

We have rented our home for the last six years...has it been easy..NO...did we have to do an eviction..YES...but right now I have wonderful renters. The advantages sometimes out way the disadvantages.

 

[WDWisTheBest]

I met with a new Realtor and basically it was not news I wanted to hear. She walked in and immediately pointed out new things to fix before listing again - it was good to hear a new perspective but bad because I really do not want to spend more money on this house. She also had all the sold and active listings for my neighborhood and out of 8 sold only 1 was not a foreclosure. One of the foreclosed homes is also a flip and has been relisted.

The other bit of news that was bad for me is that she said my last realtor had me list the house too high. She is also telling me that the assessed value of the house is basically what the house is worth to some buyers. If that is the case I am screwed because the assessment dropped $13k from last year.

She recommended I replace carpets, paint the garage, and caulk the gaps in the baseboards. After that, drop the listing price to $125k which is basically my bottom number in order to break even after fees. It may be that I have to take out a small mortgage on my current home if I come up short. That sucks because this house is mine free and clear. But I guess at this point it is better then being stuck with 2 houses.

It was a good idea to have a new perspective from another Realtor. First, the assessed value dropped only $13K from a year ago. That is good news, it could have been more. Second, you might consider relisting immediately at $125K, your bottom line, without replacing the carpets, but caulking gaps in the baseboards. Can you repaint the garage yourself to save money? Cleaning the carpets can be accomplished without spending a great deal of money.

I would not wait because the selling season is NOW. And, I wouldn't consider renting. You probably need to have only one house. Good luck.

 

[ccgirl]

I could really use some input in what you would do in my situation.

Background:

I purchased a new home last year. Because of Fannie Mae regs, the lender said it would be better for me to refi the old home to buy the new home outright. Old home has a mortgage, new home is completely paid off.

I have had the old home on the market for 6 mos now. It has only had a few showings and a few lookers at Open Houses. It is priced right for the area, the only downside is my bathrooms need updated and I am not willing to sink big money into them knowing I will not re-coop it. As it is, I am going to take a hit on it because of the renovations we did do and the market is still slow to recover. House has appraised at $140K (4 br, 2.5 baths, full basement (1/2 finished), 2 car garage). Balance of mortgage is $110K. Houses in my neighborhood are listed between $134k-$154K and generally on the market 9-12 mos.

The agent I listed with has not done a lot to really promote the house. I made the mistake of mixing business and friendship, as she was a former daycare client of mine. If I relist, it will be with another agent.

I have thought about renting it out and seeing if the market is better next year. If I rent, the rent would have to be about $800/mo, which is the higher end for my area. Granted, most homes rent for $550 and are smaller and no garage. My mortgage pymt is $600/mo, taxes $200/mo, ins $60/mo. I would have to pay ins OOP.

Would you continue to try and sell the house with a new agent or would you go ahead and try to rent it out and see how the market is next year?

Realtor here. I know you said homes in your neighborhood are listed between 134K and 154K but what are they actually selling for? What kind of updating does the bathroom need? A new vanity and floor shouldn't runy you that much. If it costs $2,000 and helps to sell the house so you don't have a carrying cost it would be worth it.

What do you mean your realtor is not doing a lot to sell the house? Do they advertise the house? I find that sometimes homeowners say their realtor isn't doing anything to sell their house because they don't have an open house every weekend. Fact of the matter is that very few houses actually sell as a result of an open house.

Why are you selling the house? I know you bought a new one but why did you buy a new one and not stay in the old one? I ask because that same reason could be the reason others don't want to buy it. Home prices are at an 8 year low at the moment. So, if you purchased the old home within the past 8 years you may just need to bring money to the table to sell it.

Good luck.

Edited: Sorry, I missed your updated post. You are definitely listed high then. I would bring in a professional carpet cleaning company. It's amazing how great they can make the carpets look. Replacing light fixtures is also an inexpensive thing but looks great. Is there furniture in there now? Staging could help as well. What about the paint? Another inexpensive thing that could make a big impact. Be sure to pain the walls a neutral color that would appeal to more buyers. Sounds like you will probably need to bring some money to the closing table to get the house sold. But, you won't have the carrying costs anymore.

 

[2binak]

I would sell the house and if you break even or come up a bit short, so be it. Renting can be very difficult & time-consuming. We have friends who have rented for 4 years because they could not sell their house after 6 months and it's been a disaster. They are actually losing money because they have to maintain upkeep of the house and because their current tenant is constantly behind on payments.

 

[cats mom]

We had to sell our house in a down market, so I can definitely sympathize. A year or so before we listed investors were knocking on doors asking people if they were willing to sell. Sheesh, had we listed then we probably could have stuck a sign in the yard and got top dollar with the house as is.

But the market was already declining when we listed, so we had to be HGTV ready. We painted inside and out, added granite and stainless, put in new carpet, replaced dated fixtures (the house was only 8 years old - how bad could they really be) etc, etc. Even after all that, we priced 10% under the most recently sold comps.

Trust me, we hated sinking all that time and money into the house and still pricing below market, but a flipper friend who was very familiar with our area insisted that's what we needed to do. Thank goodness we listened! We closed about 30 days after listing, and had we held on waiting for the market to come back, we'd be down another 30% or more now. Yikes!

It sounds like your area is getting hit hard too. So unless you think the housing market has already overcorrected to the downside, and the economy in the area is strong enough to sustain a rebound, I'd cut my losses and get out now instead of gambling on a pricing turn around that could be many years away. It sounds like you could still get out now without too much financial pain.

Recent reports indicate that we may be heading into a double dip as far as RE prices go. And even though prices are down from the crazy highs of 2005-2006-ish, they're still above historic norms in much of the country.

Full disclosure: I'm pretty bearish on RE in general right now. Like you couldn't tell, right?

Good Luck with whatever you decide to do.

 

[ameraumi]

Our market has not recovered yet, as you could probably tell with the foreclosures in the neighborhood. Even the job market has not fully recovered. So I decided to do the bare minimum, cut my losses, and just sell to get out from under it. If I have to take out a small mortgage on my current home, then so be it. We will still be saving money and have only one house.

 

[ameraumi]

Realtor here. I know you said homes in your neighborhood are listed between 134K and 154K but what are they actually selling for? What kind of updating does the bathroom need? A new vanity and floor shouldn't runy you that much. If it costs $2,000 and helps to sell the house so you don't have a carrying cost it would be worth it.
Foreclosures are selling for $75k-$99k. The one and only home not in foreclosure sold for $125k, somewhat newer bathroom, same layout as my house but my has a basement and that one did not. I have 2 bathrooms that would need total remodel - we are talking original tubs, vanities, floors that was done in 1965. The 1/2 bath was remodeled and all have new toilets and lights. I literally do not have $4k or so to sink into the bathrooms.

What do you mean your realtor is not doing a lot to sell the house? Do they advertise the house? I find that sometimes homeowners say their realtor isn't doing anything to sell their house because they don't have an open house every weekend. Fact of the matter is that very few houses actually sell as a result of an open house.
No, the house was not advertised well. I understand houses rarely sell with open houses. I have also discovered she had me overprice the house.

Why are you selling the house? I know you bought a new one but why did you buy a new one and not stay in the old one? I ask because that same reason could be the reason others don't want to buy it. Home prices are at an 8 year low at the moment. So, if you purchased the old home within the past 8 years you may just need to bring money to the table to sell it.
I bought the new house as I was blending families with my SO. We needed more space. The house belonged to me and my late-DH (who passed away in the house) and it was getting to hard on me to live in the house with all of the memories. I was ready to move on. There is literally nothing wrong with the house and it has a very good neighborhood school.

Good luck.

Edited: Sorry, I missed your updated post. You are definitely listed high then. I would bring in a professional carpet cleaning company. It's amazing how great they can make the carpets look. Replacing light fixtures is also an inexpensive thing but looks great. Is there furniture in there now? Staging could help as well. What about the paint? Another inexpensive thing that could make a big impact. Be sure to pain the walls a neutral color that would appeal to more buyers. Sounds like you will probably need to bring some money to the closing table to get the house sold. But, you won't have the carrying costs anymore.
Carpet cleaner is coming Monday. Lights have been replaced and I plan on replacing switch covers too. I painted right before we moved, but the garage needs a fresh coat so I am doing that as well.

bolding mine