Last year we put our house which is paid for on the market expecting it to sell quickly, and purchase another house with a mortgage. Our realtors say to lower the price $75k to sell it, but we feel that won’t give enough to invest for our retirement. Would we be better off to rent our house to cover the expenses and wait out the market, or lower the price and see if it will sell?
It seems like you are at a crossroad or cross purposes. You can hold out for a higher sales price but if your house has been on the market that long you probably are not going to get it. But you might, stranger things have happened.
At the same time $75,000 of perceived value that can be turned into real money isn’t really investable money for your retirement fund if nobody wants to pay that price. Right now you’ve got $75,000 of nothing.
The true value of something is that value at which the buyer and seller agree and based on what your realtor is saying, that’s a lower number. There are a number of factors that come into play to determine value. Many of those factors are beyond your control.
The things that are hurting the sale of your home now are the slowdown of mortgage lenders and the poor economy. This leaves more unsold houses sitting on the market and that just depresses the value of all the homes trying to sell, including yours.
If you sell your current home for less now, you will probably be able to purchase your new home for less as well. If home values rise again in the future, which they always do over time, you’ll potentially recover your $75,000 when you sell the next house.
If the decision you make is that you’d rather sell the house now that let it continue to linger on the market waiting for a buyer that may never appear, lowering the price and good marketing by your realtor is probably the best bet.
Besides, no realtor is going to aggressively market a home that is overpriced and not going to sell. Why waste their time.
Thanks for the question.